The Global Food Price Index Continues Rising in 2021
Food expenditures as a portion of disposable income have trended downwards in the U.S. for more than 50 years, but the trend could be reversing as food prices have risen sharply over the past months.
Since June 2020, the UN’s Food and Agriculture Organization’s (FAO) food price index has risen for nine consecutive months, with almost every food group setting new three-year highs in 2021. If the trend continues, food prices could begin to outpace income growth and monetary support from governments.
The one outlier in changing food prices has been meat prices, which have lagged behind with a minimal increase since mid-2020.
This graphic tracks the FAO’s food price indices along with their year-over-year (YoY) changes, showing the rapid price increases many of our staple food groups have had over the past year.
The Rising Food Prices of 2020 and 2021
Over the past five years, the FAO’s food price index has fluctuated by a few percentage points, but the arrival of the COVID-19 pandemic brought significant volatility.
Sugar and vegetable oils saw the largest changes, dropping by double-digit percentages (-19.2% and -12.4% respectively) in March of 2020, before recovering with the strongest overall price surges of the various food groups.
Food Price Indices Month-over-Month Change
|Date||Food Price Index MoM Change||Meat Price Index MoM Change||Dairy Price Index MoM Change||Cereals Price Index MoM Change||Vegetable Oils Price Index MoM Change||Sugar Price Index MoM Change|
The food price index increased by almost 17% YoY going into 2021, and while dairy, cereals, sugar, and vegetable oil prices all increased by double-digit percentages, meat prices rose less than 1% on average in 2021.
Surging Demand for Food at Home Drives Higher Prices
Although food prices have always fluctuated depending on weather conditions and global trade affecting food supply, this year’s increases were especially driven by a weakening U.S. dollar and increased demand due to the COVID-19 pandemic.
The pandemic resulted in severe changes to the world’s eating habits, with restaurant walk-ins and reservations down by more than 60% while demand for food at home increased as people stocked up on essentials.
To go alongside this, trade and supply chain disruptions in essential agricultural materials like fertilizer resulted in an inconsistent output from farmers and food producers, causing issues right as demand surged.
Meat and Dairy Prices Aren’t Keeping Up
As other food prices rise, the lack of significant increases in meat prices could reflect the avoidance of more expensive food products during tighter times, a lack of supply chain disruptions and constraints compared to agricultural sectors, or a larger societal trend of reduced animal product consumption.
Although dairy prices increased by 10% YoY in 2021, this increase was less than half of the price increases of cereals and sugar (21.7% and 22.3% respectively), and less than a quarter of vegetable oils prices which rose by 44%.
Plant-based alternatives are rapidly growing in popularity as nearly one in four Americans are reducing their meat consumption while veganism is rising in select European nations. Interestingly, despite these trends, 2020 also saw U.S. meat purchases rise as 43% of Americans have been buying more meat since the start of the pandemic.
Fighting the Fear of Inflating Food Prices
Whether meat prices catch up soon or not, the general trend of rising food prices poses a new inflationary pressure upon people around the world.
With in-restaurant dining taking a backseat, the increased prices are felt by everyone as they stock their cupboards, and inflation fears have been brewing as nations make their way out of the pandemic.
Rising government deficits and an increasing money supply represent efforts by governments to support citizens and national economies, but could ultimately be a key factor fueling the rising food prices.
One thing is certain, if food prices continue rising by double-digit percentages in the coming months and years, incomes and government support will struggle to keep up.
Sand, Steel, and Cement: The Annual Production of the World’s Building Blocks
Humanity produces a staggering amount of sand, steel, and cement every year to build the cities and spaces we live in.
Essential Materials for City Construction
From the buildings around us to the sidewalks we walk on, sand, steel, and cement are an important foundation for all urbanization. Every year, the world produces an immense amount of all three materials in order to supply the continuous construction of human-built environments around the world.
Using data from the U.S. Geological Survey, this visualization shows the steel, sand, and cement produced in 2020, to help put in perspective the amount of raw materials we produce and ultimately consume every year.
The Concrete Facts of Cement
Cement is the indispensable glue that binds together the materials that make up concrete highways, sidewalks, and buildings.
With concrete being the world’s most consumed material (beaten only by water), it’s no wonder that the world produced 4.1 billion tonnes of cement in 2020.
2020 Cement Production by Country
|Rank||Country||Cement Production (in million tonnes)|
|#4||🇺🇸 United States||90|
|#12||🇰🇷 South Korea||50|
While cement-based concrete has a variety of benefits like being fire-proof, hydrographic, and frost-resistant, the IEA estimates that in 2019 the cement sector emitted 2.4 GtCO2, which accounted for 7% of global CO2 emissions. The production of concrete also requires high amounts of water, with calculations from 2012 finding that the concrete industry’s water withdrawals made up 9% of all industry water withdrawals (1.7% of total global water withdrawal).
To combat high carbon emissions and water consumption in concrete production, Swedish power company Vattenfall has developed a concrete mix which reduces the amount of cement needed, and as a result cuts down CO2 emissions by around 25%. Shifting the world’s concrete production to this new method could be the first step in greatly reducing cement and concrete’s impact on the environment.
Steel Recyclability Steals the Show
While cement is the most commonly used material in the world, steel is the most commonly used metal. With 1.8 billion tonnes produced last year, steel fulfills a variety of structural and construction needs, along with being an essential material for the production of vehicles, mechanical equipment, and domestic appliances.
One of steel’s greatest strengths is its ability to be infinitely recycled, making it the most recycled material in the world with new steel products containing an average of 30% recycled steel. While the world produced 1.8 billion tonnes of steel in 2020, since 1900 the steel industry has recycled over 25 billion tonnes of steel scrap, reducing iron ore and coal consumption by 35 billion and 18 billion tonnes respectively.
Global Steel Recovery Rates by Sector
|Sector||Steel Recovery Rate|
|Electrical and domestic appliances||50%|
Source: World Steel Association
The steel industry is also highly aware of reducing its environmental impact, with steel plants reusing the heat and electricity from process gases to provide between 60-100% of the plant’s electricity requirements. Along with this, ~90% of water used by the steel industry is returned to the source after being cleaned and cooled.
Yet steel production still emits around two tonnes of CO2 for every tonne of steel produced, largely due to the majority of the world’s steel production taking place in China’s coal-reliant plants. However, fossil-free steel is on the horizon, with carmaker Volvo partnering with the Swedish steelmakers SSAB to explore the development of fossil-free steel for the automotive industry.
More than Beaches
Completing the trio of essential city-building materials is industrial sand and gravel, with 265 million tonnes of the material produced in 2020. Primarily composed of quartz, feldspar, and other minerals and rock fragments, industrial sand and gravel is also called silica sand or quartz sand.
“It’s actually the most important solid substance in the world because without sand, we have no modern civilization.”
– Vince Beiser
While steel and cement are opaquely visible in their end products in our cities, industrial sand and gravel primarily makes up the transparent glass walls and windows of our world. It also serves essential functions as foundry sand, forming molds and patterns for various metal castings.
Just like steel and cement, industrial sand and gravel is an essential building block of the cities we live in. As the world continues its shift towards reducing carbon emissions, it is clear that these essential materials cannot be replaced, and rather must be improved upon.
Visualizing 50 Years of Global Steel Production
Global steel production has tripled over the past 50 years, with China’s steel production eclipsing the rest of the world.
The Rise of the Steel Age
From the bronze age to the iron age, metals have defined eras of human history. If our current era had to be defined similarly, it would undoubtedly be known as the steel age.
Steel is the foundation of our buildings, vehicles, and industries, with its rates of production and consumption often seen as markers for a nation’s development. Today, it is the world’s most commonly used metal and most recycled material, with 1,864 million metric tons of crude steel produced in 2020.
This infographic uses data from the World Steel Association to visualize 50 years of crude steel production, showcasing our world’s unrelenting creation of this essential material.
The State of Steel Production
Global steel production has more than tripled over the past 50 years, despite nations like the U.S. and Russia scaling down their domestic production and relying more on imports. Meanwhile, China and India have consistently grown their production to become the top two steel producing nations.
Below are the world’s current top crude steel producing nations by 2020 production.
|Rank||Country||Steel Production (2020, Mt)|
|#5||🇺🇸 United States||72.7|
|#6||🇰🇷 South Korea||67.1|
Source: World Steel Association. *Estimates.
Despite its current dominance, China could be preparing to scale back domestic steel production to curb overproduction risks and ensure it can reach carbon neutrality by 2060.
As iron ore and steel prices have skyrocketed in the last year, U.S. demand could soon lessen depending on the Biden administration’s actions. A potential infrastructure bill would bring investment into America’s steel mills to build supply for the future, and any walkbalk on the Trump administration’s 2018 tariffs on imported steel could further soften supply constraints.
Steel’s Secret: Infinite Recyclability
Made up primarily of iron ore, steel is an alloy which also contains less than 2% carbon and 1% manganese and other trace elements. While the defining difference might seem small, steel can be 1,000x stronger than iron.
However, steel’s true strength lies in its infinite recyclability with no loss of quality. No matter the grade or application, steel can always be recycled, with new steel products containing 30% recycled steel on average.
The alloy’s magnetic properties make it easy to recover from waste streams, and nearly 100% of the steel industry’s co-products can be used in other manufacturing or electricity generation.
It’s fitting then that steel makes up essential parts of various sustainable energy technologies:
- The average wind turbine is made of 80% steel on average (140 metric tons).
- Steel is used in the base, pumps, tanks, and heat exchangers of solar power installations.
- Electrical steel is at the heart of the generators and motors of electric and hybrid vehicles.
The Steel Industry’s Future Sustainability
Considering the crucial role steel plays in just about every industry, it’s no wonder that prices are surging to record highs. However, steel producers are thinking about long-term sustainability, and are working to make fossil-fuel-free steel a reality by completely removing coal from the metallurgical process.
While the industry has already cut down the average energy intensity per metric ton produced from 50 gigajoules to 20 gigajoules since the 1960s, steel-producing giants like ArcelorMittal are going further and laying out their plans for carbon-neutral steel production by 2050.
Steel consumption and demand is only set to continue rising as the world’s economy gradually reopens, especially as Rio Tinto’s new development of atomized steel powder could bring about the next evolution in 3D printing.
As the industry continues to innovate in both sustainability and usability, steel will continue to be a vital material across industries that we can infinitely recycle and rely on.
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