Global Food Prices Decline by 1.5%– FAO

• Global Food Prices Decline by 1.5%

Prices of food around the world have declined by 1.5 per cent below 2015 levels, a monthly UN report has said.

According to a press statement issued on Thursday by the UN Food and Agriculture Organisation (FAO), data from 2016 revealed a declining trend for the fifth year in a row.

“Bumper harvests or harvests that have been remarkably plentiful, as well as promising prospects for staple cereals helped to offset pressure on tropical commodities like sugar and palm oil, whose production was adversely impacted by El Niño.”

The FAO’s Food Price Index measures the monthly change in international prices for five major food commodity groups of major cereals, vegetable oils, dairy, meat, and sugar.

The 2016 average was 161.6 points, according to the report.

Throughout 2016, cereal prices declined steadily, down by 39 per cent from their 2011 peak, it said.

The report, however, said economic uncertainties remained, stating that sugar rose by 34.2 per cent and vegetable oil prices saw an 11.4 per cent increase.

According to Abdolreza Abbassian, a FAO senior economist, “economic uncertainties, including movements in exchange rates, are likely to influence food markets even more so this year”.

FAO reported that vegetable oil prices rose by 4.2 per cent from November, in part due to low global inventory levels and tight supplies for palm oil and in the case of soy oil, due to the rising use of biodiesels in North and South America.

“Higher prices for butter, cheese, and whole milk powder, due to restraints in the EU and Oceania, drove dairy prices up by 3.3 per cent.

“Both sugar and meat indexes fell, the former due to a weakening Brazilian currency and the latter because of lower costs in bovine and poultry meats.”

The Index was introduced in 1996 in order to help the public monitor global agricultural commodity markets.

It gained prominence as an indicator of potential food security concerns for developing countries following significant price hikes in 2008.

Since then, with brief exceptions, agricultural commodity prices have remained relatively high.