The Food Price Index, which tracks international prices of a number of commodities such as vegetable oils and dairy products, averaged 140.7 points last month, or up nearly 4% from January.
This is also 24.1% higher than a year earlier and 3.1 points higher than in February 2011.
Factors behind food inflation
“Concerns about crop conditions and adequate export capacity only explain part of the current increase in global food prices. A larger impetus for food price inflation comes from outside food production, particularly in the energy, fertilizer and feed industries.” speak FAO economist Upali Galketi Aratchilage.
“All of these factors tend to reduce profit margins for food manufacturers, discouraging them from investing and expanding production.”
Since the Food Price Index measures average prices for the month, the February figures only partially incorporate market impacts stemming from the conflict in Ukraine.
Increased demand
The overall gain last month was due to the FAO Vegetable Oil Price Index rising 8.5%, a new record high.
This was mainly due to sustained global import demand, coupled with a number of supply-side factors, such as a lower outlook for soybean production in South America.
The average dairy price index in February was 6.4% higher than in January, supported by lower-than-expected milk supplies in Western Europe and Oceania, as well as persistent import demand. especially from North Asia and the Middle East.
Last month, the Grain Price Index rose 3.0% from January. Contributing factors include rising prices for corn and other coarse grains, caused by continued concerns about crop conditions in South America, uncertainty about corn exports from Ukraine and prices wheat exports increased.
Strong global import demand contributed to a 1.1% increase in the Meat Price Index. Other factors include a tight supply of ready-to-slaughter cattle in Brazil and a high need to rebuild herds in Australia.
The FAO Sugar Price Index fell nearly 2% amid favorable production prospects in India, Thailand and other major exporting countries, as well as improved growth conditions in Brazil.
Grain Forecast
FAO also published a rough forecast that suggests world cereal production is on track to rise to 790 million tonnes this year.
Anticipated high yields and widespread planting in North America and Asia, will offset potentially mild declines in the European Union and the negative impact of drought conditions on crops. in several North African countries.
The agency updated its forecast for world cereal production in 2021, currently pegged at 2.796 million tonnes, up 0.7 percent year-on-year.
The forecast for world grain trade was also raised to 484 million tonnes, up nearly 1% from 2020/2021 levels. The forecast does not assume potential impacts from the conflict in Ukraine, and FAO is closely monitoring developments and will assess impacts as appropriate.
Fear of food security
Concerned, the head of the International Fund for Agricultural Development (IFAD) highlighted how the crisis in Ukraine could affect global food security.
IFAD President Gilbert F. Houngbo said continued conflict, which is already a tragedy for those directly involved, would be catastrophic for the entire world, especially for those struggling to cope feed their families.
He warned that the fighting could limit supplies of the world’s staple crops such as wheat, corn and sunflower oil, leading to soaring food prices and famine. This could jeopardize global food security and increase geopolitical tensions.
This region of the Black Sea plays a vital role in the global food system, exporting at least 12 percent of the world’s traded food calories, said Houngbo.
“Forty percent of wheat and corn exports from Ukraine go to the Middle East and Africa, places already struggling with hunger problems, and where food shortages or continued price increases could cause social unrest.”
