According to the United Nations Food Agency (UNFA) report, world food prices hit a new threshold in 2021, recording the highest level of price in a decade.
The data captured by United Nations Food Agency indicated that global food prices went up 28 percent in 2021, with hardly any prospect of recovery to more stable market circumstances in this year, 2022.
In the intervening time, the Food and Agriculture Organization’s (FAO) food price index, which analyses the most widely traded food items on a worldwide scale, averaged 125.7 points in 2021, the highest level attained since 131.9 points recorded in 2011.
Nonetheless, the report noted that the monthly index fell significantly in December, 2021, after rising for four months in a row.
The FAO Food Price Index (FFPI) in December 2021, declined by 1.2 points (0.9 percent) from November, but still up by 25.1 points (23.1 percent) from December 2020. Except for dairy, the values of all sub-indices encompassed by the FFPI, registered monthly declines, with international prices of vegetable oils and sugar falling significantly month-on-month. For 2021 as a whole, the data showed all sub-indices averaging sharply higher than in the previous year, indicating crop failures and robust demand during the year.
FAO Cautions
Higher food prices have led to a larger spike in inflation as economies are on the journey to recover from the impact of the COVID-19 crisis on agriculture products supply.
The FAO, however, cautioned that the higher costs of food prices are putting poorer populations in danger in import-dependent countries.
FAO senior economist, Abdolreza Abbassian, in a statement, was skeptical in his assessment of whether pricing pressures will ease this year 2022.
“While generally high prices are expected to lead to increased output, the high cost of inputs, continuing global pandemic, increasingly uncertain weather conditions leave some room for hopefulness about a come-back to a more stable market situation even in 2022.”
Abdolreza Abbassian
The Economist stated that the hike in fertilizer price, in turn, connected to spiraling energy prices, have raised the cost of “so-called inputs needed by farmers to grow crops, casting doubt on yield predictions for next year’s harvests.”
Cereal Price Index
The FAO Cereal Price Index averaged 140.5 points in December 2021, down 0.9 points (0.6 percent) from November. Wheat export prices fell in December, amid improved supplies following harvests in the southern hemisphere and slowing demand. However, maize prices were firmer, underpinned by strong demand and concerns over persistent dryness in Brazil. While sorghum prices also rose, partly influenced by maize markets, barley quotations eased slightly. International rice prices also softened in December, as demand relapsed, and currencies weakened against the US dollar in various major suppliers.
For 2021 as a whole, the FAO Cereal Price Index averaged 131.2 points, up 28.0 points (27.2 percent) from 2020 and the highest annual average registered since 2012. In 2021, maize and wheat prices were 44.1 and 31.3 percent higher than their respective 2020 averages.
The FAO Food Price Index (FFPI) measures the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices weighted by the average export shares of each of the groups.
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