Global Food Prices

Food prices are a critical aspect of the global food system, as they impact everyone from producers and distributors to consumers and policymakers. Fluctuations in food prices can have significant economic and social consequences, affecting the availability and affordability of food around the world.

The FAO Food Price Index, published by the Food and Agriculture Organization of the United Nations (FAO), is a key barometer of the world food market, tracking changes in global food prices over time. The index is set to 100 for the years 2014-2016, meaning that the average price level for the basket of food commodities in those three years is used as the reference point or base period. Subsequent values of the index represent the percentage change in the average price level compared to the base period. For example, if the index value is 120, it means that the average price level for the basket of food commodities in that year is 20% higher than the average price level in the base period (2014-2016).

In August 2023, the FAO Food Price Index stood at an average of 121.4 points. This represents a 2.1% decrease compared to July’s figures, negating the previous month’s slight uptick. This puts the index a significant 24.0% below its highest point in March 2022.

The FAO Food Price Index comprises five major commodity groups: cereals, vegetable oils, dairy, meat, and sugar. These commodity groups are tracked by their own sub-indices:

• FAO Cereal Price Index: This sub-index tracks changes in the prices of wheat, maize, rice, barley, and other cereal crops, which are some of the most important staple foods for people around the world.
• FAO Vegetable Oil Price Index: This sub-index monitors price trends for major vegetable oils, such as palm oil, soybean oil, and sunflower oil, which are widely used in food production and are important sources of fat and calories in many diets.
• FAO Dairy Price Index: This sub-index tracks changes in the prices of dairy products, including milk, cheese, and butter, which are important sources of protein, fat, and other nutrients in many diets.
• FAO Meat Price Index: This sub-index monitors price trends for different types of meat, including beef, pork, and poultry, which are important sources of protein in many diets and are widely consumed around the world.
• FAO Sugar Price Index: This sub-index tracks changes in the prices of raw sugar and white sugar, which are important sources of calories and sweetness in many diets.

A closer examination of the sub-indices reveals that the decrease in the FFPI in August can be attributed to drops in dairy, vegetable oils, meat, and cereals prices. Sugar prices registered a mild growth. Below are some of the key points on the different sub-indicies from FAO’s latest press release:

The FAO Cereal Price Index stood at 125.0 points, a marginal 0.7% dip from July. This was influenced by a combination of factors including increased availability of wheat due to ongoing harvests and a notable drop in maize prices, driven by a surge in global supplies.

The FAO Dairy Price Index continued its downward trend, marking its eighth consecutive monthly drop to stand at 111.3 points in August, a 4.0% reduction from July. Factors like abundant supplies, especially from regions like Oceania, and a reduced import pace by China played a role.

The FAO Meat Price Index stood at 114.6 points in August, a 3.0% reduction from the preceding month. The decrease was seen across all meat categories, with ovine meat witnessing the most significant drop.

The FAO Sugar Price Index rose by 1.3% to reach 148.2 points in August. Concerns related to the El Niño weather phenomenon’s impact on global production were a primary driving force behind this increase.

The FAO Vegetable Oil Price Index receded to 125.8 points in August, a 3.1% decline. This was majorly due to reduced global prices for prominent oils like palm, sunflower, soy, and rapeseed.