Latin America's Food Price Crisis

 A surge in the cost of corn-based Latin American staples such as tortillas, tamales and arepas risks fueling food insecurity and hunger from Mexico to Argentina.

• Corn prices hit nine-year high, partly due to Ukraine war

• Cost of Latin America's staple tortillas and tamales jumps

• Some 267 million people face food poverty in the region

The surge in the cost of corn - which is used to make Mexico's staple tortilla - forced Marco Antonio Jimenez to raise the price of his tacos by two pesos (10 U.S. cents), but he said many of his mainly low-income customers could no longer afford the 20-peso snack.

"When the price of tortillas increases, I have to increase the price of tacos. Many people prefer not to buy anything anymore."

Latin America had the biggest increase in food poverty globally between 2014 and 2020 due to the reduction of economic growth rates, extreme inequality and serious climate events that predated the pandemic. In Mexico, longer and more frequent droughts have forced farmers in some corn-growing areas to switch to less thirsty crops in recent years. Such factors mean the region is especially vulnerable to the impact of higher grains and fertilizer costs linked to the war in Ukraine. Rising fertilizer prices can lead farmers to cut their usage, causing production to fall. 

As the pandemic wreaked havoc on the region's already weak economies, the prevalence of food insecurity rose to 40.9% from 31.9% between 2019 and 2020 in Latin America and the Caribbean, according to the latest FAO data. Accelerated inflation is expected to push 7.8 million people more into food insecurity this year, according to new estimates released by the Economic Commission for Latin America and the Caribbean (ECLAC).

Food and drink inflation in six countries - Colombia, Paraguay, Mexico, Chile, Brazil and Uruguay - hit double digits in March, with women and people with informal jobs set to be hit hardest, ECLAC said. Central American countries such as Guatemala and Honduras, which rely on corn-based foods like tamales and pupusas, are particularly at-risk from rising grains prices after the 2020 hurricanes Eta and Iota wrecked crops and exacerbated hunger. Caribbean countries, which are heavily dependent on imported grains and fuel, are also threatened by food insecurity due to an increase in debt burdens during the pandemic.

We are seeing the perfect storm," said Carolina Trivelli, senior adviser for strategic analysis at the Food and Agriculture Organization (FAO). "We need a package of temporary and focalized social policies for the most vulnerable populations and measures to support food production," said Trivelli.

Governments are taking emergency measures to rein in inflation. Mexico has suspended import duties for a year on a range of essential goods including corn, while Argentina - where inflation could top 70% this year - proposed a bill this month to tax companies that earn "extraordinary income" as a result of the fall-out from the war in Ukraine - mainly commodities firms. Biden pledged $331 million in funding for food security in El Salvador, Guatemala, Honduras, Haiti and Colombia.

The food crisis looks set to last until well into 2023, calling for public policies such as direct welfare payments or school lunch programs to help the poorest.

Corn price hike forces Mexicans to cut back on tortillas (trust.org)