Business
Global Food Prices Set To Soar As The Oil And Gas Crunch Continues
Oil and gas prices have risen dramatically this year as a result of under investment and recovering demand.
·Higher fuel prices are weighing on global food supply chains, with transportation and farming costs continuing to climb.
·The hardest hit will, once again, be those living in developing economies that are still struggling to recover from the impact of the pandemic.
The potential for a knock-on effect of rising fuel prices to be felt by other industries is becoming more likely, as oil and gas prices continue to rise to an all-time high, companies are finding it hard to maintain their costs and may have to shift this burden to the consumer any day now.
Petrol prices have risen higher and higher this year, as oil makes a comeback in 2021 following a difficult year of pandemic restrictions and low demand. This has, of course, been aided by the OPEC+ curbs on production that restricted oil output across member states for the first half of 2021. And while production levels are slowly rising, some countries are finding it difficult to reach new OPEC targets as they revive their oil and gas industries, meaning the global shortage continues.
Looking at the price of gasoline over the last 20 years, you can see that the global average has doubled, from $0.60 a litre in 2001 to $1.20 a litre today. This year, in particular, the increase in demand as economies open back up following over a year of restrictions, added to a supply shortage across much of the world, means prices are nearing an all-time-high.
And it seems that the trend is not over yet, with experts suggesting that motorists across Europe and Asia can expect high petrol and diesel costs well into the winter months as the Brent benchmark stays around $85 a barrel; demand for fuel increases; and taxes on motor fuel in countries such as India, France and the U.K. continue to stay at around 60 percent of the retail price of petrol and diesel. But what does this trend mean for other industries? As well as rising fuel prices, we are seeing the cost of food and drink increase, with average food prices hitting a decade high and costing around one-third more this September than last. Fuel costs cannot be blamed as the sole catalyst in rising food prices, as harvests hit by hot weather and Covid restrictions, an increase in global demand – with a dramatically cold 2020 winter and hot 2021 summer, and disruptions in the supply chain, are also to blame. But if transport and farming costs continue to rise, our food bill is likely to keep climbing.
Kavita Chacko, a senior economist at CARE Ratings in India explains, “High fuel prices put pressure on overall price levels and poses a downside risk to the recovery in mobility and the economy in general.” Moreover, “The rise in transportation costs have been feeding into costs across segments and could be a dampener for consumer spending,” she stated.
With globalisation meaning our food no longer comes from the local farm but is mostly shipped across the globe, as well as the rising price of fertilisers, the food supply chain is finding it hard to maintain stable prices.
Abdolreza Abbassian, Senior Economist at the UN’s Food and Agriculture Organisation’s told Bloomberg, “It’s this combination of things that’s beginning to get very worrying,” “It’s not just the isolated food-price numbers, but all of them together. I don’t think anyone two or three months ago was expecting the energy prices to get this strong.”
But the food supply chain is not the only thing we have to worry about when it comes to the knock-on effect of high oil prices. Any industry that relies on oil for fuel, fertilizers, petrochemicals, or any number of other related products is going to feel the pinch in the coming months, if they don’t already. This means the cost of many of our household products and basic expenses could soon increase.
This ticking time bomb has led Tom Kloza, global head of energy analysis for OPIS by IHSMarkit, to state, “every nook and cranny of the economy” could be affected. “Everything that moves tends to move cross-country by truck or by train, so we’re looking at a more expensive year for that.”
Essentially, anything that is used on freight transportation and any industry that relies on fuel or petrochemicals will likely be affected by the ongoing hike in oil prices. And while consumers are worried about petrol and diesel prices at present, this is just the tip of the iceberg.
The hardest hit will, once again, be those living in developing economies that are still struggling to recover from the impact of the pandemic. With an uneven economic recovery, due to low vaccine rollout figures and Covid restrictions needing to continue across several low-income countries, high fuel prices and the spillover effect on other industries, particularly food, could see governments having to provide economic stimuli to the poorest populations, as well imposing price caps on fuel.
One thing’s for certain, it’s going to get worse before it gets better. Those working in agriculture and industry are already taking the hit and it’s only a matter of time until this price burden is shifted to the consumer, not only at the pump but across a multitude of areas of our daily lives.
Bradstock reports for Oilprice.com.
Kolomoni Microfinance Bank has awarded grants to five female entrepreneurs to boost their businesses as part of its commitment to promoting women in business.
The initiative, organized to mark International Women’s Day, was themed “Accelerate Her Growth.”
According to the bank, the decision to support women was inspired by World Bank data, which shows that 41 percent of Nigeria’s micro-businesses are owned by women.
Delivering the keynote address, business strategist, Ebun Akinwale, emphasized that entrepreneurship requires resilience, creativity, and passion.
She illustrated this by recounting her own business challenges and highlighting the critical role passion plays in overcoming obstacles.
The event underscored Kolomoni’s mission to empower women and support small businesses in Nigeria.
Other speakers at the occasion were Odunayo Oyebolu, a seasoned entrepreneur; Victori Ajiboye, a marketing strategist with global experience; and Simi Ojumu, a finance expert.
The beneficiaries said the financial support was a validation of their hard work and a boost of confidence towards scaling through in their businesses.
The winners were selected after sharing their entrepreneurial journeys and presenting business proposals for financial assistance from the bank.
The 8th edition of the Nigeria Small and Medium Enterprises (SMEs) Summit and Awards (Nigeria SMEAwards) is set to take place in Lagos for the first time in its history, marking a significant milestone for this prestigious event.
Endorsed by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the annual awards celebrate the entrepreneurial spirit driving Nigeria’s economy.
The visionary convener of NigeriaSMEAwards 2025, Adedayo Olalekan, said, “Governors from Zamfara, Sokoto, Ebonyi, Borno, Enugu, Ekiti, Benue, and Kaduna States have all implemented transformative initiatives that have greatly benefitted local enterprises.
“Their contributions will serve as a beacon of inspiration for the nation.”
Speaking at a recent press conference in Lagos, Olalekan emphasised that the event would introduce a fresh and unique approach, moving away from tradition.
“Despite economic challenges, Nigerians continue to show an unwavering commitment to progress”, he said.
He noted that the awards will not only honor outstanding individuals, but also recognise the critical role state governments play in nurturing vibrant SMEs.
“State governments have been instrumental in fostering a supportive environment for SMEs, which in turn benefits both the awardees and the larger economy.
“With major banks like Providus, Access, and First Banks competing for top honors, the 8th NigeriaSMEAwards promises to be a night of celebration, recognising exceptional contributions to Nigeria’s SME landscape”, Olalekan added.
Amid global challenges such as inflation, geopolitical instability, and the ongoing conflict in Ukraine, Nigerians continue to show remarkable resilience.
Their efforts, according to reports, have contributed to job creation, economic growth, and overall prosperity, with SMEs at the forefront of this success.
This year’s awards will recognise governors who have made significant strides in advancing the SME sector within their states.
Small and Medium Enterprises (SMEs) consultants in Rivers State have called on entrepreneurs to be focused and avoid distractions.
The experts, who were speaking on the recent developments about the change of leadership in the state, said entrepreneurs need to put more efforts in their businesses in order to break even in the present situation in Rivers State.
Speaking in a chat with The Tide, an international SMEs consultant, Amb. Larry Goodwill Ajiola, said the political moves is capable of distracting SMEs who are not grounded in their businesses, adding that “the serious minded business men and women would utilise the opportunity to increase their revenues”.
Amb Ajiola, who is the President and Chief Executive Officer (CEO) of Rumuomasi Co-operative and Credit Society Limited, Port Harcourt, said, “Rugged entrepreneurs look out for business opportunities in situations around them, whether good or bad”.
He reiterated that the loan facility given to 3,000 SMEs in the state revived and expanded businesses, adding that the empowered businesses should continue to push, no matter the situation.
“credit is a powerful tool for achieving financial security.
“We can only keep imagin the economic value that the over 3,000 MSMEs would add to the positive economic dynamics of Rivers State and the Local Government Areas in terms of Gross Domestic Prooduct (GDP), increased tax returns, employment creation, income distribution, and production of goods and services”, he said.
Another SMEs Expert, a business consultant and SMEs trainer, Mr. Chisom Sam-Orji, in his advice, noted that every SME in the state should realize that change is the only constant thing.
He said SMEs should also know that “tough times never last, but tough people do”, adding the need for every entrepreneur to stay focused on creating value and remain resilient.
“This is not the time to be distracted by every noise around your space, but to maximize every time you have to focus on the essentials and keep creating value.
“For some people, it may just be the time to diversify, create new products and services to serve a new or existing market. But this must be based on the facts available to you via research and market surveys”, he said.
The SMEs expert also said the present time in the life of an entrepreneur is a time to cut off unnecessary excesses that surround one’s business.
“Those extra costs that may hamper your growth in this season and beyond, and focus on just essentials.
“SMEs should find certain leverages that are available to aid their business growth. This could be in form of grants, knowledge, and other leverage tools.
“Collaboration is one big way to grow in this season. Finding ways to collaborate with like minds instead of competing could enable a product or service gain advantage in the market and beyond.
“They should also find ways to sustain and grow their customer relationship as this is key to sustaining business flow. They must seek new and efficient ways to serve their customers and gain their loyalty”, he stated.
He further called on every entrepreneur to keep building capacity and never take their eyes off their visions, adding the need to muster every courage it takes to keep building and moving forward.
Lilian Peters