Global food prices, which still near record highs, are starting to come down for some items, while the U.S. is quietly urging farmers to use more Russian fertilizer.
The United Nations Food and Agriculture Organization (FAO) reported a drop in food prices for the third straight month after reaching historic highs in March – but they are still far above last year’s. Its food price index, the cost of a standard basket of commodities, fell 2.3% in June compared with May, but it is 23% higher than in June 2021.
Wheat prices were down 5.7% compared with last month, but were still up 49% over last year. Vegetable oil and sugar also dropped compared to last month. Meat, however, was up 1.7% from May and 13% from a year ago, reaching a record high. The same thing with dairy: Up 4.1% month-over-month and 25% year-over-year.
The global agricultural situation is concerning enough so that the Biden administration has been signaling agricultural companies, banks and others that it’s OK to deal in Russian fertilizer.
Russia, an important exporter of fertilizer, has experienced a 24% drop in exports this year. The decrease occurred because of economic sanctions placed on Russia following its invasion of Ukraine – even though fertilizer is explicitly exempted from those sanctions.
Despite the exemption, many banks and others are reluctant to facilitate Russian trade of any kind for fear of running afoul of the sanctions. Bloomberg reports that American officials have been quietly urging players in the supply chain to step up their trade in Russian fertilizer.