Consumers not yet feeling the benefits of decline in global food prices

September 6, 2022

The barometer for world food commodity prices declined for the fifth consecutive month in August, as quotations for most benchmark items dropped, according to a new report released today by the Food and Agriculture Organization of the United Nations (FAO).

The closely watched FAO Food Price Index averaged 138.0 points in August, down 1.9 percent from July although remaining 7.9 percent above its value a year before. The Index tracks monthly changes in the international prices of a basket of commonly traded food commodities.

The U.N. Food and Agriculture Organization says consumers are not yet feeling the benefits of declining food prices.  Lower world food prices generally reflect better availability at the global level. However, FAO says, this time, lower wholesale prices have not led to better food access or lower prices for consumers.

FAO Director of the Markets and Trade Division Boubaker Ben-Belhassen said availability has improved, while access to food commodities has not. This, despite declining prices five months in a row.

“This is due to several factors including the persistent high cost of processing and transportation, logistics, and the exchange rate also of currencies of countries as against the U.S. dollar,” he said. “Also, the cost-of-living crisis has affected access. So, that is why we have not seen this decline in prices at the world level translating into lower prices for consumers or at the retail level.”

Ben-Belhassen cautioned that a drop in world prices does not necessarily result in market stability. He said that is subject to the uncertainties and volatility surrounding developments in the energy market and the price of fertilizer.

He said continued high energy and gas prices reduce profitability and increase production costs for farmers. He added that will pose a serious challenge for farmers in the coming year.

The FAO Cereal Price Index decreased by 1.4 percent from the previous month, a drop driven by a 5.1 percent decline in international wheat prices that reflected improved production prospects in North America and the Russian Federation as well as the resumption of exports from the Black Sea ports in Ukraine. Rice prices on average held steady during the month, while quotations for coarse grains increased marginally, by 0.2 percent, as firmer world maize prices due to hot, dry growing conditions in the European Union and the United States of America were offset by lower barley and sorghum prices.

The FAO Vegetable Oil Price Index fell by 3.3 percent from July, reaching a level slightly below that of August 2021. World soy oil prices rose moderately due to concerns over the impact of unfavorable weather conditions on production in the United States of America, but the gain was more than offset by lower quotations for palm, sunflower and rapeseed oils, reflecting increased availabilities of palm oil from Indonesia, due to lower export taxes, and a gradual resumption of sunflower oil shipments from Ukraine’s ports.

The FAO Dairy Price Index decreased by 2.0 percent in August, while remaining 23.5 percent above its August 2021 value. World cheese prices increased for the tenth consecutive month, while those of milk eased amid expectations of increased supplies from New Zealand, even as production tracks lower in Western Europe and the United States of America.

The FAO Meat Price Index contracted by 1.5 percent from July, but it remained 8.2 percent higher its value a year ago. International quotations for poultry meat fell in August amid elevated global export availabilities, while world bovine meat prices declined on weak domestic demand in some leading exporting countries. Pig meat quotations rose.

The FAO Sugar Price Index decreased by 2.1 percent to its lowest level since July 2021, triggered mainly by high export caps in India and lower ethanol prices in Brazil.

 

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2022-09-06T12:23:20-05:00