Reports that the Treasury asked UK supermarkets to limit price increases on basic foods sparked strong reactions this week. Supermarkets were said to be angry, and former officials from the Institute for Fiscal Studies and Marks & Spencer criticized the idea of price controls. Yet the outcry overlooks two key issues. Food prices rose sharply over the summer and are expected to climb further due to the Iran conflict and a likely strong El Niño, building on a nearly 40 percent increase since 2020. Britain’s food system remains highly vulnerable to these events. Reliance on global markets for affordable supply is no longer assured. Roughly one-third of fertilizer trade passes through the Strait of Hormuz, and half the world’s food depends on artificial fertilizers, so disruptions will affect supplies over the coming year. Other choke points include the Strait of Malacca, Black Sea ports, and the Panama Canal, where drought has cut grain shipments that make up 16 percent of world trade. UK policy assumes that shortfalls in one region can be offset by supplies from elsewhere if markets stay open. This held for decades as malnutrition declined and UK food choices expanded. However, world hunger has risen since 2014, worsened by Covid-19. Dependence on a few major producers, which account for 60 percent of output, and the rising chance of simultaneous shocks from climate change increase the risks. A strong El Niño could bring hotter, drier conditions to parts of Asia and Africa and wetter weather elsewhere, historically linked to a 9 percent rise in global food prices. Britain imports much of its fertilizer and gas, so higher costs are already straining farms. Three of the five worst harvests on record occurred in the last decade, with last year’s losses exceeding £828 million and a decade total of £2.3 billion. Most farms have faced extreme rain or drought recently.
