Global food commodity prices dropped back in 2012, with dairy and sugar showing the sharpest declines, new figures from the United Nations’ Food & Agriculture Organisation show.

Despite ongoing concerns around rising food prices, the UN agency said, on average, global food commodity prices were 7% lower in 2012 versus 2011.

Over the 12 months, average dairy commodity prices fell by 14.5%, while average prices for sugar – a notoriously volatile commodity – sank by 17%. The was also a near-11% drop in the price of oils.

The FAO said its food prices index show more modest price falls for cereals and meat, which were down by 2.4% and 1.1% respectively, for the year on average.

However, the headline figures can often hide high levels of volatility within commodity sectors.

For example, the FAO noted: “After surging between July and September 2012, due to production uncertainties and tightening supplies, cereal export prices dropped because of weaker demand for feed and industrial uses.”

The agency also said the dairy sector is “increasingly susceptible to supply changes related to pasture conditions, and feed availability and affordability”.

Many observers in the processing end of the food supply chain would argue that food price volatility is proving a bigger problem for business planning than the spectre of straight price rises.

The FAO praised its recently-developed agricultural market information system (AMIS) for increasing transparency on commodity supplies during 2012.