Posted on September, 5, 2022 at 07:59 am
World food prices declined slightly in August, despite rising energy and transportation costs and disruptions to supply chains, the Rome-based United Nations (UN) Food and Agriculture Organization (FAO) reported on Fri
Meanwhile, long-term prospects for the global food situation remain negative due to a combination of cost, logistical, and environmental factors, FAO added. The overall FAO monthly index of food commodity prices fell 1.9 percent in August compared with July, which is a more modest decline than a month earlier when it dropped 8.6 percent. It was the fifth consecutive month the index contracted, though it still remained 7.9 percent above its levels a year ago, the report said. The declines come despite an overall increase in prices in several major economies.
Earlier this week, the European Union reported prices in August were 9.1 percent higher than a year earlier, a record for the euro currency zone. The United States has not yet released August inflation figures, but it reported last month that prices had climbed 8.5 percent over the year in July. The biggest component in the index, grains and cereals, saw a 1.4-percent decrease in prices, building on an 11.5-percent decline a month earlier after grain exports from Ukraine resumed. FAO said major factors in the decline in August were prospects for a strong harvest in Canada, Russia, and the United States, and continued but limited exports from Ukraine despite the ongoing conflict there.
Despite the consecutive decreases the Cereal Price Index was still 11.4 percent above its August 2021 value. The sub-index for vegetable oils was down 3.3 percent month-on-month, pushed in part by lower palm oil prices; dairy prices were 2.0 percent lower, as strong production from New Zealand helped keep inventories full. Meat prices were 1.5 percent lower due to lower domestic demand in some key producing countries, while sugar prices slipped 2.1 percent due largely to higher exports from India. However, the long-term prospects for food prices remain dim, due partly to high prices of fuel, transport, and fertilizer.
Heatwaves like the ones that gripped China, much of Europe, and the western United States are likely to become more intense and frequent in the coming years, according to climate experts. Growing levels of global food waste is another significant factor, according to the World Bank, while media speculations also point out that too much power in the hands of too few private food companies create inefficiencies in the global food system. According to the UN estimates, food prices could rise an additional 8.5 percent from current levels by 2027. FAO’s Food Price Index is based on worldwide prices for 23 food commodity categories covering prices for 73 different products compared to a baseline year.
Source: Capital FM