A Turning Point in Global Food Pricing

Unilever has shared details of its response as fresh warnings sound about the conflict in Ukraine representing a threat to global food security, while European markets brace for spiking food prices.

The Agricultural Market Information System (AMIS), an inter-agency platform to enhance food market transparency and policy has issued a stark message that the abrupt escalation of conflict between Russia and Ukraine represented a significant threat to global food security.

Russia and Ukraine are crucial plater in safeguarding global food security, as they are both leading producers and exporter of cereals. Together the countries make up nearly a third of global wheat exports, 19 percent of exported corn, and 80 percent of exported sunflower oil - the third most traded vegetable oil internationally.

From the EU and the US to Japan and South Korea, much of the world is implementing sanctions designed to squeeze the Russian economy in response to the country’s military action against Ukraine.

AMIS is urging restraint from all parties on any move that would leave the food and agriculture markets exposed o the wider consequences of conflict.

Even if trade in food and agriculture can be shielded from the rapidly unfolding conflict and ensuing sanctions, chances are global food security is going to take a hit.

Compounding Existing Pressures

Food inflation is already a significant challenge across various markets.

“The crisis comes at a moment when international food markets are already struggling with soaring prices and the continuing fallout from the COVID-19 pandemic,” noted Adriana Herrera, chair of AMIS.

Late last year, global food prices hit a fresh ten-year high after rising more than 30 percent in 2021, and this upward trajectory has continued into 2022.

Managing the Challenge

At a recent media event hosted by Unilever at The Hive, its innovation hub based in the Netherlands, this inflationary outlooks, and the impact it is having on consumers around the world was underlined.

Commenting on the developing conflict, Unilever’s President of Foods & Refreshment, Hanneke Faber, stressed that Unilever’s top priority was the safety of its Ukrainian workforce, which consists of 146 people.

Faber confirmed that the food giant does expect an impact on input costs, although the extent remains to be seen. The company is responding with innovation, reformation and pricing segmentation. Faber added that Unliver is also leveraging reformulation to get products as cheap as they can be.

At the same time, the company is employing a Robin Hood strategy of premiumisation with brands like Ben & Jerry’s alongside the development of more affordable options, something Faber described as “Going high, going low.”

“We are trying to limit the price increases we have to take,” she concluded.