March 5, 2022: World food prices hit a record high in February, led by a surge in vegetable oils and dairy products, to reach a 24.1% year-on-year increase, according to the Food and Agriculture Organization (FAO), a UN agency in Rome.
The FAO’s food price index, which tracks the most globally traded food commodities, averaged 140.7 points last month, from a downwardly revised 135.4 in January. That figure was previously given as 135.7.
Higher food prices have contributed to a broader rise in inflation as economies recover from the coronavirus crisis, and the FAO has warned that higher costs endanger poorer populations in countries dependent on imports.
Since the FAO’s food price index measures average prices over the month, the agency said February’s reading only partially takes into account market effects from the conflict in Ukraine.
“Concerns about crop conditions and sufficient export opportunities explain only part of the current global food price increases. Much greater pressure on food price inflation comes from outside food production, especially the energy, fertilizer and feed sectors,” said FAO economist Upali Galketi Aratchilage in a statement.
“All of these factors tend to put pressure on food producers’ profit margins, discouraging them from investing and expanding production.”
Last month’s overall increase was due to an 8.5 percent increase in the FAO vegetable oil price index, a new all-time high.
This was mainly due to continued global import demand, which coincided with some supply-side factors, such as lower production outlook for soybeans in South America.
The dairy price index in February was on average 6.4 percent higher than in January, supported by lower-than-expected milk supplies in Western Europe and Oceania, as well as continued import demand, especially from North Asia and the Middle East.
Last month, the grain price index rose 3.0 percent compared to January. Contributing factors included rising quotes for maize and other coarse grains, driven by ongoing concerns about crop conditions in South America, uncertainty about maize exports from Ukraine and rising wheat export prices.
Strong global import demand contributed to the 1.1 percent increase in the Meat Price Index. Other factors included a tight supply of ready-to-slaughter livestock in Brazil and a high demand for herd rebuilding in Australia.
The FAO sugar price index fell by nearly two percent on the back of favorable manufacturing prospects in India, Thailand and other major exporters, as well as improved growing conditions in Brazil.
The FAO has also released a preliminary forecast showing that global grain production is expected to rise to 790 million tons this year.
Expected high yields and extensive planting in North America and Asia should offset a likely slight decline in the European Union and the negative impact of drought on crops in some of the North African countries.
The agency has updated its forecast for world grain production in 2021, which is now pegged at 2,796 million tons, up 0.7 percent from the previous year.
The forecast for world trade in grains was also raised to 484 million tons, almost one percent more than in 2020/2021. The forecast is not based on any potential impact of the conflict in Ukraine, and the FAO is closely monitoring developments and will assess the impact in due course.
In this regard, the head of the International Fund for Agricultural Development (IFAD) has emphasized how the crisis in Ukraine could affect global food security.
IFAD President Gilbert Houngbo said continuing the conflict, which is already a tragedy for those directly involved, will be catastrophic for the entire world, especially for those already struggling to feed their families.
He warned that the fighting could limit the world’s supplies of staple crops such as wheat, corn and sunflower oil, leading to skyrocketing food prices and starvation. This could endanger global food security and increase geopolitical tensions.
“This part of the Black Sea plays an important role in the global food system, exporting at least 12 percent of the food calories traded in the world,” said Mr Houngbo.
“Forty percent of Ukraine’s wheat and maize exports go to the Middle East and Africa, which already suffer from hunger problems and where further food shortages or price hikes could cause social unrest.”
Posted on: 2022-03-05T15:16:39+05:00
This post Global food prices hit an all-time high in February, fueled in part by the crisis in Ukraine: UN
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