CGTN
According to a recent report from the UN’s Food and Agriculture Organization, the 2021 grain price index rose 27.2 percent while wheat prices rose 31.3 percent, as overall grain prices climbed to their highest levels in nearly a decade. Because China purchased a large amount of foreign grain from overseas in 2021, some overseas media claimed that Chinese imports have raised international prices and exacerbated the risk of global food security.
The accusations are groundless and malicious, without evidence, and also illogical. In fact, soaring international grain prices are the result of many factors. Firstly, global grain supplies have decreased due to the COVID-19 pandemic, insect infestations and floods. Large grain-producing countries tended to protect their internal supplies as well, thereby reducing exports. At the same time, climbing transportation and logistics costs caused by the epidemic and a decline in logistics capacity aren’t conducive to the global grain trade. The resulting supply decline is bound to lead to a rise in prices.
Second of all, global quantitative easing monetary policies, especially the unlimited monetary easing policies of some developed economies, have led to excess liquidity worldwide. Surging prices and inflation have subsequently carried over to the grain sector.
Thirdly, a monopoly in the international grain market has also boosted the jump in prices. China is a major grain consumer and producer but it can’t dictate prices. Instead, the four major international grain merchants – ADM, Bunge, Cargill and Louis Dreyfus – control almost the entire grain industry chain, and 80 percent of all global grain transactions. That can influence international prices because the monopoly’s actions are bound to affect the sector. China is also a victim of rising prices because it imports its grain from the four merchants. Fourth, speculation in international grain markets has also raised prices.
