One year into the Ukraine conflict, the war and sanctions imposed on Russia continue to have major implications on global food and energy markets as both countries are significant exporters of grains (especially wheat and barley), agricultural fertilizers (such as potassium, nitrogen, phosphorus); and Russia is a major global producer and exporter of crude oil and natural gas.
In January 2023, the FAO global food price index continued decreasing after peaking in March 2022, down by -0.8% month-on-month (MoM) and by -3.2% year-on-year (YoY), driven by a drop in global prices for vegetable oil, dairy, and sugar.
Global economic growth is projected at 2.9% for 2023 which is below the pre-COVID-19 pandemic historical average. The economic slowdown will likely lead to weakening demand and result in declining commodity prices (i.e., energy, agriculture and metal) in 2023 and 2024, but prices will remain at historically high levels compared to their average over the past five years.
Access fertilizer has improved somewhat as prices decreased 40% since peaking in early 2022 – but they are still above the historical average. Global agricultural production prices are expected to decrease by 5% in 2023, yet they will remain higher than in the past. While lower costs for agricultural inputs brighten the prospects for global food production, climate change and uncertainty surrounding the Russia-Ukraine war continue to impose risks on global food prices.
The global food crisis has been partially aggravated by food trade restrictions put in place by countries to increase domestic supply and reducing prices.
As of 11 February 2023, 23 countries have instigated 28 food export bans, and 6 have implemented 5 exportlimiting measures.
This does not happen in isolation. COVID-19-induced negative impacts on household income and demand have resulted in global supply chain bottlenecks, rising inflation, and record debt in many countries, disrupting the economic recovery from the pandemic. Evidence points to an unstable food security situation among Cambodian households, particularly for the most vulnerable and those living in flood-prone areas.
In the Asia Pacific, Cambodia is among the countries most exposed to rising energy prices owing to its comparatively high net fuel imports relative to GDP, limited domestic access to electricity, and reliance on fossil fuels. In fact, soaring oil prices coupled with a cyclical economic slowdown in the US and China, Cambodia’s largest trading partners, are key factors dampening economic growth in Cambodia, which is projected at 5.2% for 2022 and 5.6% for 2023.
To understand how these shocks are impacting food availability and access to markets in Cambodia, the World Food Programme (WFP) together with the Agricultural Marketing Office (AMO) monitors the retail and wholesale prices of key food commodities as well as market functionality in 56 urban and rural markets across the country (see Methods section). Market chiefs are also interviewed to assess market functionality, including supply and demand issues. An average of around 1,000 traders and market chiefs are called every two weeks.
Summary Key Findings
In January 2023, the cost of the WFP basic food basket (BFB) continued dropping after peaking in October last year, amid declining global food, fertilizer, and fuel prices. The cost of the BFB was USD 25.9, down by 2.3% compared to the previous month (month-on-month, MoM), but still 2.9% higher than during the same period previous year (year-on-year, YoY). The cost of the BFB continued to be lower in rural areas at USD 25.2 (-2.2% MoM) as compared to urban areas USD 26.5 (-1.9% MoM).
Prices of most key food commodities in the basket remained stable or declined in January, including for duck eggs (-5.3% MoM), morning glory (-12.4% MoM), pork (-0.7% MoM), vegetable oil (-4.7% MoM), mixed rice (+1.6% MoM) and snakehead fish (+1.1% MoM). Easing food prices were linked to easing prices for fuel and agricultural inputs. Cambodia’s official imports of fertilizer picked up notably in January (by 27.3% YoY). As a result, prices of most food commodities approximated previous year’s levels, except for duck eggs (+15.4% YoY) and snakehead fish (+11.6% YoY) which remain significantly higher.
After a high in November market functionality deteriorated slightly, driven by unreliable price stability-predictability and insufficient quantities of essential goods, linked to increased consumer demand during the Chinese New Year holidays and declining fuel prices.
As of January 2023, dry season rice cultivation exceeded the national targets due to favourable rainfall conditions and water for irrigation being sufficiently available. However, the price of diesel, which is important to agricultural production, and agricultural fertilizer remained relatively high (+15.1% YoY).
Source: World Food Programme
