Global demand for non-essential food products shrinks amid squeeze on household incomes
This year, with the sole exception of Asia-Pacific, we expect to see a slowdown in food and beverages output on a global scale. Output will increase by just 1.4% and sector investment will grow by 4.3%, down from 6.5% in 2022.
There are several factors keeping prices high and leading consumers to cut back on non-essential food items. Primary among these are supply challenges, much of which have been impacted by the war in Ukraine. With the non-extension of the Russia-Ukraine grain deal, the impact of the war on the global food industry remains severe. Ukraine accounts for 4% of global wheat supply, 13% of corn, and more than a third of the global sunflower oil trade.
Fertiliser shortages are also a challenge. High gas prices in 2022 hampered production in Europe, while Russian fertiliser exports decreased sharply due to sanctions. Farmers and food producers in developing countries are especially affected by the lagged effect of the 2022 fertiliser price spike.