World food price index rises for seventh straight month in Dec.

World food prices

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World food prices

In News:

  • World food prices, as measured by the UN FAo’s Food Price Index, rose for a seventh consecutive month in December.

About: UN FAO Food Price Index

  • The Food and Agriculture Organization (FAO) was established in 1945 as a specialized agency of the United Nations that leads international efforts to defeat hunger.
  • The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities.
  • It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004. The Sub-Indices include:
    1. FAO Cereal Price Index
    2. FAO Vegetable Oil Price Index
    3. FAO Dairy Price Index
    4. FAO Meat Price Index
    5. FAO Sugar Price Index

News Summary:

  • The UN Food and Agriculture Organization (FAO) released the Food Price Index (FPI) for December.
  • According to the data, world food prices rose for a seventh consecutive month in December, with all the major categories, except sugar, seeing rise in prices.
    • The FPI averaged 107.5 points last month versus 105.2 in November.
  • The FPI measures monthly changes for a basket of cereals, oil seeds, dairy products, meat and sugar.
  • For the whole of 2020, the benchmark index averaged 97.9 points, a three-year high and a 3.1% increase from 2019.
  • Note: The information on the sub-indices below is just to show how varied factors, including weather, disease outbreaks, political protests, export duties etc., impact prices of various food groups in today’s globalized world.

  • Cereals:
    1. The cereal price index posted a more modest 1.1% rise in December from the month before. For all of 2020 the index averaged 6.6% above 2019 levels.
    2. Export prices for wheat, maize, sorghum and rice all rose in December, moving higher in part due to concerns over growing conditions and crop prospects in North and South America as well as Russia.
  • Vegetable Oils:
    1. Vegetable oil prices continued recent strong gains, jumping 4.7% month-on-month in December after surging more than 14.0% in November.
    2. Supply tightness in major palm oil producing countries had pushed prices up.
    3. Trade in vegetable oils was also impacted by a sharp hike in export duties in Indonesia.
    4. Prices for soy oil rose partly because of prolonged strikes in Argentina.
  • Dairy:
    1. The dairy index climbed 3.2% on the month.
    2. This was due to strong global import demand triggered by concerns over drier and warmer conditions on Oceania’s milk production as well as high internal demand in Western Europe.
  • Meat:
    1. The meat index pushed up 1.7% last month.
      • Poultry prices rose due to impact of avian influenza outbreaks in Europe.
      • Pig meat prices fell slightly, hit by the suspension of German exports to Asian markets following African Swine Fever outbreaks.
    2. However, its full-year average was 4.5% below that of 2019.
  • Sugar: 
    1. Average sugar prices dipped by 0.6% in December. 
      • This reflected a surge in imports by China and increased demand for refined sugar from Indonesia.
    2. However, for 2020 as a whole, the sub-index posted a most 1.1% gain on 2019 levels.  

About: FAO

  • The Food and Agricultural Organization (FAO) was established as a specialized agency of the United Nations in 1945.
  • One of FAO’s strategic objectives is to help eliminate hunger, food insecurity, and malnutrition.
  • Headquarters: Rome, Italy.
  • Its goal is to achieve food security for all and make sure that people have regular access to enough high-quality food to lead active, healthy lives.
  • It currently has 190+ member states, including one member organization, the European Union.
  • It maintains regional and field offices around the world, operating in over 130 countries.
  • Its Latin motto, fiat panis, translates to “let there be bread”.

  • FAO acts as a neutral forum where all nations meet as equals to negotiate arguments and debate policy.
  • FAO is also a source of knowledge and information, and helps developing countries in transition modernize and improve agriculture, forestry and fisheries practices, ensuring good nutrition and food security for all.

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