Concerns over rising cost of living reinforce focus on food and energy security

Public dissatisfaction with the rising cost of living is beginning to surface in many parts of the world. Oil prices have soared 45% in less than four months this year, while gas prices have increased fivefold in regions like Europe and the UK. Meanwhile, with the Russian-Ukrainian war disrupting grain and vegetable oil supplies, food prices rose 34% in March alone to a record high, according to the World Food Price Index for United Nations.

In Indonesia, police fired tear gas and water cannons last week to disperse hundreds of university students in Jakarta who had taken to the streets to protest high cooking oil prices. This follows an earlier decision by the government to deploy police to monitor the production and distribution of cooking oil.

In Sri Lanka, protesters are calling on the government to resign from its handling of the economic crisis after a shortage of foreign currency halted the import of fuel and medicine and triggered hours of daily power cuts for many weeks.

Public discontent is also surfacing in developed countries as households grapple with inflation that is reaching multi-decade highs. US President Joe Biden’s approval rating fell to 41% last week, near its all-time low of 40% in March, due to rising consumer costs, according to a Reuters/Ipsos opinion poll. The poll showed a majority believed the president should prioritize America’s economic problems as inflation hit a 40-year high.

Over the weekend, French President Emmanuel Macron was re-elected. However, discontent over inflation has fueled support for his far-right opponent Marine Le Pen, opinion polls have shown. A University College London study has found Britons are more worried about the cost of living than catching COVID-19 after inflation hit a 30-year high and most household bills household energy increased by more than 50% in April.

Soaring costs of living can pose risks to a nation’s stability, economy and government, as a household’s ability to put food on the table and ensure a warm home in winter are basic necessities that most societies take for granted.

While the exploitation of reserves, as the United States has done with the release of its strategic petroleum reserves, or the provision of cash donations and subsidies as in the case of Australia and the Germany, may provide some short-term relief to consumers, many countries recognize that securing self-sufficiency and diversifying their sources of energy and food supply is the longer-term solution. UBS’s Chief Investment Office (CIO) has called this trend an era of security and recommends that investors invest in it for the long term.

Strengthening food security involves investing in local production, improving agricultural yield, reducing food waste, improving the supply chain and other solutions aimed at maximizing yield while reducing food waste. use of inputs such as seed technology and machinery.

Investing in renewables and the infrastructure behind these technologies has also become more urgent, especially with Europe’s goal of achieving energy independence from Russia by end of the decade. Green technologies, clean air and lower carbon emissions, and energy efficiency have all become even more crucial in the age of security.

The role of cybersecurity in personal, corporate and national security will also continue to grow as more data and information is created and stored in the digital world. Strengthening cybersecurity is also linked to food and energy security, as recent high-profile cyberattacks have targeted energy infrastructure, as well as food supply chains.

The food industry is affected by long-term trends, such as urbanization, stricter regulation and growing consumer awareness of product quality, data security, environmental protection and social responsibility. In the report Longer-term investments: safety and security, March 2, 2022, CIO examines the most important and, according to them, the most promising parts of the value chain of the theme: 1) cybersecurity; 2) testing, inspection and certification; 3) life science tools; and 4) the commercial and residential construction security sector.

Learn more about the CIO’s long-term investment theme The Food Revolution.

Main contributor: Editorial UBS

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