World commodity food prices rounded out 2022 at an all-time high despite some encouraging signs that costs are easing in the shorter term, according to the FAO Food Price Index.
The index, compiled by the Food and Agriculture Organization of the United Nations, ended the year at 143.7, up 14.3% from 2021’s average level of 125.7, the previous record.
Prices started to increase in 2020 as the global Covid-19 pandemic – first identified in China late in 2019 – wreaked havoc on supply chains as the world went into lockdown. And as food commodity and ingredients shortages continued into 2021, Russia invaded Ukraine in February of that year, cutting off supplies of essentials such as grains and sunflower oil just as inflation was taking hold.
Nevertheless, last year’s increase in the FAO Food Price Index was less pronounced than the 28.1% rise from 2020 into 2021. And on a further positive note, price gains eased in December for a ninth consecutive month, with the gauge declining 1.9% on a month-on-month basis from November.
The index, which measures a basket of five commodities, was down 1% from December last year.
“Calmer food commodity prices are welcome after two very volatile years,” Maximo Torero, the FAO’s chief economist, said in a report today (6 January). “It is important to remain vigilant and keep a strong focus on mitigating global food insecurity given that world food prices remain at elevated levels.”
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Vegetable oil led the December month-on-month decline in the index, which also includes cereals, meat, dairy and sugar.
The sub-vegetable oil gauge fell 6.7% to its lowest level since February 2021.
International quotations for palm, soy, rapeseed and sunflower seed oils all declined, “driven by subdued global import demand and prospects of seasonally rising soy oil production in South America, as well as declining crude oil prices”, the FAO said.
Cereals dropped 1.9%. “Ongoing harvests in the southern hemisphere boosted wheat exportable supplies, while strong competition from Brazil drove down world maize prices,” the organisation explained. However, prices of rice rose, it added.
Meat fell 1.2%. “International bovine meat prices were impacted by lacklustre global demand for medium-term supplies, while more-than-adequate export supplies pushed down poultry meat prices. Pig meat prices rose on the back of strong internal holiday demand, especially in Europe,” the FAO noted.
Dairy and sugar prices bucked the downward trend in December. The dairy sub-index halted a five-month run of declines, rising 1.2%.
“Higher international cheese prices, reflecting tightening market conditions, drove the monthly increase in the index, while international quotations for butter and milk powder declined,” the FAO said.
Sugar prices climbed 2.4% “due to concerns over the impact of adverse weather conditions on crop yields in India and sugarcane crushing delays in Thailand and Australia”.