News FAO Food Index
Higher food prices due to more expensive raw materials
World food prices rose further in May. This is evident from the index figures of the World Food Organization (FAO) that are published monthly. It is for the 12th month in a row that prices have shown an increase. The FAO Index also rose the fastest in at least 10 years.
The FAO's world food price index rose by no less than 5,8 points to a level of 127,1. The level is now 36,1 points higher than a year ago. In percentage terms, this means a 39,7% increase in world food prices. Nearly all components in the index favored the rise. For example, oils, sugar, grains, meat and dairy became more expensive in May. The FAO price indices indicate the level of food prices in relation to the average prices over the period 2014-2016 (=100).
Animal proteins gain weight
The FAO meat index is continuing the increase that started 8 months ago. The index rose 2,3 points to a level of 105,0. That is now 10% higher than during the dip that arose after the corona outbreak. The rise in the meat index prices in May was mainly caused by the further acceleration of meat imports by countries in Asia, especially China. According to the FAO, the demand for poultry and pork was also higher in the major producing countries worldwide. In addition to the stronger pre-corona demand, supply was under pressure because there were problems in a number of countries, especially in cattle slaughterhouses.
Dairy prices in May were only slightly higher than in April. The dairy index rose 1,7 points to a level of 120,8. This index rose by 26,4 points in one year. Strong Chinese demand kept an ample supply of dairy from New Zealand reasonably balanced.
Cereals also considerably more expensive
The FAO's grain index rose 7,6 points to a level of 133,1 and is now 35,7 points higher than a year ago. The major boost to the rising index was the sharp rise in maize prices. The corn index itself rose 12,9 points compared to May and is now 75,6 points higher than a year ago.
The main drivers for the rising maize prices were the downward adjustment of maize production in Brazil and strong international demand. Towards the end of the month, prices fell slightly due to higher production expectations in the United States. The wheat price level rose by 8 points during the month of May. Although here too, towards the end of the month, some price decreases had to be noted due to better production expectations in Europe and the United States.
Rising food prices are good news for food producers worldwide. However, it also raises concerns about the social consequences it may have. Last month Edin Mujagić talked to Food business on the possible social consequences who can have expensive food. He does not rule out social unrest in the coming months and years.
Steve Wissink
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