The U.N. Food and Agriculture Organization reported that despite falling for nine consecutive months, global prices for food commodities like grains and vegetable oils reached their highest levels ever last year as the Russian military conflict in Ukraine, a drought, and other factors increased inflation and exacerbated hunger around the world.
The FAO Food Price Index, which analyzes monthly changes in the prices of frequently traded food commodities on the worldwide market, fell by 1.9% in December compared to a month earlier, the Rome-based organization reported on Friday. Its annual average of 143.7 points was more than 14% higher than the average for 2021, which also experienced significant gains.
The price of vegetable oils fell in December, which contributed to the overall fall, along with reduced crude oil prices, projections of increasing soy oil supply in South America, and a decline in import demand. Additionally, grain and meat declined, but dairy and sugar saw a tiny increase.
After two years of extreme volatility, lower food commodity prices are welcome, said FAO Chief Economist Maximo Torero in a prepared statement. Given that food prices are still high globally, several staples are approaching record highs in price, rice prices are rising, and there are still numerous concerns associated with future supplies, it is crucial to maintain vigilance and maintain a strong focus on mitigating global food insecurity.
According to FAO data, the food price index for the U.N. agency reached its highest level last year since records first began in 1961.
Because Russia and Ukraine were the world’s top producers of wheat, barley, sunflower oil, and other products, particularly for countries in parts of Africa, the Middle East, and Asia that were already experiencing a food crisis, the two countries’ invasion of Ukraine in February exacerbated a food crisis.
Due to the disruption of crucial Black Sea supplies, food prices increased to all-time highs, causing inflation, poverty, and food insecurity in poor countries that depend on imports.
The supply of fertilizer and energy, both essential to food production, were severely shaken by the war. Along with other environmental shocks, such as those in the Horn of Africa, this contributed to the hunger there. The United Nations has issued a famine alert for sections of Somalia as Ethiopia, Somalia, and Kenya are all suffering from the worst drought in decades. There have already been thousands of deaths.
Although they decreased in December along with the price of other grains, the FAO reported that prices for wheat and corn last year hit record highs. It stated that exporters faced intense competition as a result of harvests in the Southern Hemisphere, which increased supplies.
Even though it fell in December to its lowest point since February 2021, the organization’s vegetable oil price index reached an all-time high last year. The FAO Meat Price Index and Dairy Price Index for the entire year 2022 were likewise the highest since 1990.