FAO food price index hits record high in 2022 

By Onome Amuge

Despite a ninth consecutive decline, the FAO Food Price Index (FFPI) which is a measure of the monthly change in international prices of a basket of food commodities was notably higher in 2022, marked by supply disruptions exacerbated by Russia’s invasion of Ukraine and resultant concerns of a ‘’Food Shock Window’ globally.

The year under review also saw a significant rise in world prices of wheat and maize which reached record highs over the year, the average value of the FAO Vegetable Oil Price Index  also reached a new record, while the FAO dairy price index and meat price index marked their highest full-year levels since 1990.

“In 2022 as a whole, the FAO meat price index averaged 118.9 points, up 1.2 points from 2021, marking the highest annual average registered since 1990, the FAO stated in its World Food Situation report.

According to the Food and Agriculture Organization of the United Nations (FAO),world food commodity prices leapt to their highest levels ever in March 2022 as Russia’s invasion of Ukraine inflicted more shocks across markets for staple grains and vegetable oils.

The FAO food price index averaged 159.3 points in March, climbing 33.6 per cent year-on-year and 12.6 per cent above the 140.7 points recorded in February, its previous highest level since the inception of the FAO food price index in 1990.

However, world food prices eased in April and maintained a downward trend which led to a ninth consecutive decline in December 2022, as food valuations plunged by 1.9 per cent from the previous month of November, according to the latest FAO report.

In December 2022, the FAO food price index averaged 1.0 percent below its value a year earlier. However, for 2022 as a whole, the index, averaged 143.7 points, 14.3 percent higher than the average value over 2021.

Vegetable oil world quotations recorded the largest decline as the FAO vegetable oil price index fell 6.7 per cent from November to reach its lowest level since February 2021. Also, international quotations for palm, soy, rapeseed and sunflowerseed oils declined in December, pressured by subdued global import demand and prospects of seasonally rising soy oil production in South America as well as falling crude oil prices.

On a similar trend, the FAO Cereal Price Index was down 1.9 percent from November. According to the FAO,ongoing harvests in the southern hemisphere boosted wheat exportable supplies, while strong competition from Brazil drove down world maize prices.

On the other hand, international rice prices were higher, underpinned by Asian buying and currency appreciation against the U.S dollar for exporting countries.

The FAO Meat Price Index was down 1.2 percent from November, with lower world prices of bovine and poultry meats outweighing higher pig and ovine meat prices. The FAO report noted that 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. The rise in pig meat prices was attributed to  strong internal holiday demand, especially in Europe.

Contrary to the declines seen in other food prices on the FAO index, the FAO dairy price index rose 1.2 per cent in December, following five months of consecutive declines, but international quotations for butter and milk powder declined.

According to the FAO, higher international cheese prices, reflecting tightening market conditions, drove the monthly increase in the index,

The FAO sugar price index also rose, gaining 2.4 per cent from November. This was attributed to concerns over the impact of adverse weather conditions on crop yields in India and sugarcane crushing delays in Thailand and Australia.

Commenting on the recent food price index, Maximo Torero, FAO chief economist, noted that calmer food commodity prices are welcome after two very volatile years.

 “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, with many staples near record highs, and with prices of rice increasing, and still many risks associated with future supplies,” Torero said.