“Tariffs should not affect basic consumption products,” says FAO official

In Guatemala the cost of food affects families that are in poverty and extreme poverty who have to allocate their primary income to meet those needswhich is known as the high cost of living, so it is also a trigger for social discontent.

David Laborde, Global Director of Agrifood Economics and Policies of the United Nations Food and Agriculture Organization (FAO), was visiting Guatemala last week and provided a Perspective on food prices on a global scale and its effects on inflation.

This organization carries out the food price index and analyzes different variables, such as the evolution of the climate, the phenomenon of The girl geopolitical situations, Shocks of supply and demand, The use and employment for energy production and recently the variable of the situation for the imposition of tariffs between countries.

Laborde, said a Free press That the trend of food prices for this year will remain in a high range, but not at the 2022 and 2023 scale, when multiple factors were presented.

Warned that In a stage of “conflict” tariff between countries with developed economies, the injured will be consumers.

In 2025, how does the FAO food price index analyze?

It is an index of price pricing towards the future of Commodities (raw materials) that is wheat, corn, palm oil among others, and the index was very high in 2022, but then began to decrease in 2023 and early last year.

As of June 2024, it began to rise again, and the latest February 2025, which shows us that we are at 2023 levels, but below at the 2022 level. In statistics we are too high in terms of the food price index.

We are compared to the food crisis of 2007, 2008 and 2011.

What are the reasons?

There are multiple causes of these increases; First we observe too dry weather conditions in Argentina and Brazil, which affected corn, soy and bean crops (for human food and industry); worst wheat production conditions in Russia; A decrease in palm oil production in countries in the south west of Asia and in New Zealand and Austria there are adverse conditions for crop production.

We see that the general supply will be reduced and high demand, prices increase.

At the situation of tariff policies between developed countries, what have they studied?

We are in a state of uncertainty on a global scale, it is difficult to establish which tariff rates will be. These uncertainties affect economies, USA, It is reducing its support to third countries and that can lead to less economic growth and low demand consequently. Therefore, prices will decrease, and if countries carry more tariffs, that will lead to a price increase.

If any country comes into commercial conflict with the USA, and decides to put a 25%tariff, for example, Even in the future corn prices, that means that there will be a differential will be 15% for the inhabitants of the country.

This depends on several parameters and this “revenge” game that would affect countries, But we see that basic consumption products are not affected.

Is there a potential inflation or stability in food prices?

Worldwide in general and the current situation, we do not see an increase in inflation. However, prices remain high and inflation is not needed per se to affect people directly, but prices.

Does that mean it is a latent risk?

Just now at this time, prices are above the weighted average. They have risen, then stabilized horizontally, but stabilized in a very high price index.

For example, the kilo of corn is traded at US $ 1 but then makes an increase in US $ 1.5, which translates into 50%inflation. But if corn is quoted to US $ 3 a kilo, but tomorrow increases US $ 0.05 cents, it is an increase of just 2%, But for consumers it is worse to be in the second position than in the firstso that delta is already important and what level that change is being given.

¿Why is the food division sensitive and its impact on homes in Guatemala and Central America?

These jumps in the increases impact the poorest consumers than the richest. People who are in the line of poverty and extreme poverty allocate their primary entry into food. Some producers in turn are net buyers, for example, a coffee producer has to spend on buying their food and depends how much the value of food and coffee evolves will affect households on a very small scale in a very different way.

That is why it considered that it is important to maintain surveillance in this situation and generate solutions and new programs to solve these situations.

Why do it be said to generate a climate of political instability?

In many countries with a low and medium income when prices increase, many homes begin to conceive a feeling of insecurity and then the expression of the cost of living, they take to the streets to protest against their authorities. In some countries, violent demonstrations will be registered and we see that even social disturbances in North Africa or simply decides to punish the government in the following election even when governments are not direct responsible per se.

In the last presidential election in the United States, when the conditions were favorable for the administration Mr. Biden (Joe), prices in the economy were so high that the electorate was bothered and associated him with the authorities, and President Trump (Donald) said that prices would bring them down when decreasing, even in high -income countries the issue is of a political nature.

¿Why is it important? Because people are spending and erring on this type of supplies in food daily.