Addressing Inflation Requires Global Food Systems Transformation

With food prices playing such a significant role in inflation, particularly in the Global South, many hoped that the long-awaited grain shipments from Ukraine would start to bring relief from the global food and cost-of-living crisis. However, the conflict’s continued impact on global wheat and fertilizer markets is just one supply chain instability undermining food security. Endemic structural issues within global food systems mean that food prices are also at the mercy of surging fuel prices, energy shortages, and climate shocks—all of which bring the threat of widespread hunger and poverty to a world still recovering from the COVID-19 pandemic.

Governments leveraging short-term actions—such as social protection measures and targeted farm subsidies—also run the risk of exacerbating inflation with high and inefficient public spending. At the same time, countries must sufficiently shield farmers, food producers, and those most impacted by the current emergency so they can build additional resilience in light of the compounding crises they face.

The perennial challenge for food systems is to ensure that both farmers and consumers are treated fairly—affordable food cannot mean low prices for farmers, but high prices risk runaway inflation. Strategies for increasing food productivity can achieve this balance, but this cannot come at the expense of the environment—which would ultimately restrict productivity in the future.

The first front in the battle for more resilient food systems is, therefore, sustainable intensification. Food systems must move beyond the agricultural treadmill in which new technologies boost productivity for first adopters—bringing prices down for consumers—become ineffective once they saturate the sector and the market adjusts. This continuous cycle brings inherent challenges for the farmers left behind by new developments.

The global community must invest in sustainable agricultural intensification that equips farmers to produce more healthy and nutritious food while also maintaining their livelihoods and not exhausting land, water, and energy resources. For instance, improving the efficiency with which farmers use fertilizers while also developing and adopting alternative sources of nutrients can both improve productivity and reduce exposure to fertilizer supply shocks is a key example of this approach. CGIAR’s Excellence in Agronomy (EiA) initiative has worked with farming communities to optimize and de-risk fertilizer use, but smallholder farmers in developing countries need more accurate recommendations tailored to their contexts.

Secondly, food systems must be decarbonized to drive down the hidden environmental costs of production—which will ease inflation pressures now and preserve natural resources for the future. At present, agriculture’s contribution to climate change and environmental degradation is not factored into food prices. Transforming food systems will require cutting-edge innovations that reduce the water and carbon costs intrinsic to food production while allowing production to cope with the inevitable impacts of climate change. For example, reducing the cost of storing food or transporting it to market goes hand in hand with the transition to renewable energy.

At the same time, new, hardier crop varieties can safeguard food production without the need for excessive use of fertilizer, pesticides, water, and energy. Support and investments are needed to scale up next generation breeding programs and develop crops that meet the needs of farmers and consumers and deliver more climate-resilient, affordable, and nutritious food. This includes varieties of staple crops with advantageous nutritional profiles—traits that reduce the drudgery of weeding, threshing, or cooking and resistance to pests and extreme weather.

Finally, stabilizing food systems to prevent escalating inflation requires greater market integration, particularly in low-income countries, where food prices may collapse in rural areas while increasing in urban areas. Food price monitoring tools, such as the Excessive Food Price Volatility Early Warning System play a vital role in raising the alarm of a pending food shocks or crises, but this must be combined with preventative measures that strengthen food systems in advance by integrating local, regional, and global markets. Investing in and empowering national agricultural research and extension systems (NARES) to improve market information services for farmers and level the playing field by providing new opportunities for smallholder farmers and broadening supply chains.

The world is suffering from recurrent shocks. The key is to act now to protect food systems—not just over the next 12 months, but for the coming decades. Short-term measures are necessary to address today’s food crisis, but they must also be a staging post on the way to longer term resilience that prevents and pre-empts future crises. While focusing on the current crisis, it is critical that the opportunity to address the underlying challenges in food systems is seized upon in a way that ensures stronger and more sustainable food systems for the future.

Author: Marco Ferroni
Marco Ferroni
Marco Ferroni is the Chair of the CGIAR System Board, board member of the Global Institute for Food Security at the University of Saskatchewan and recently Adjunct Professor in Agriculture and Environmental Sciences at McGill University.

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