The rising costs of food are caused by factors such as energy costs, geopolitical tensions, labor shortages, and failed harvests due to climate change, according to a new study by a German university.
Ironically, food production itself is a major cause of climate change. Measures such as CO2 pricing and sustainability in agriculture, however, come with costs that affect both manufacturers and consumers. The question is: who pays for these climate regulations on food production?
According to a study by the Potsdam Institute for Climate Impact Research (PIK), regional value chains play a key role. In wealthy countries like the US, agricultural costs make up less than 20% of the total food price, compared to 70% in regions such as Sub-Saharan Africa. This difference illustrates how food chains operate worldwide.
The consumption of processed products has a large ecological footprint. In wealthy countries, residents spend a lot on luxury products and eating out, while basic food consumes a larger share of income in poorer countries. Climate measures therefore have a heavy impact on consumers in low-income countries. Producers in these regions pass on price increases directly and one-to-one, threatening food security.
The PIK study simulated two scenarios: one in which climate measures are strictly applied and one in which everything remains as before. In wealthy countries, consumer prices rise by a factor of 1.25 by 2050, while prices increase by 2.73 times in poorer countries. The effects are more severe in poorer countries: consumer prices rose by a factor of 2.45 and producer prices by 3.3.
Without ambitious climate measures, the global population risks even higher food prices due to extreme weather conditions and disrupted supply chains. Investments in sustainable agriculture and fair CO2 pricing can help overcome these challenges. Financial support for vulnerable populations and regions is essential to make the transition just and guarantee security, concludes the German study.