World Food Prices Increase 28% in 2021
By: Sydney Sheffield
The United Nations Food and Agriculture Organization (FAO) announced that world food prices increased 28% during 2021. The pricing system is based on five major commodities such as cereal grains, meat, and sugar. The increase has ended the streak of relative stability over the past five years and results in a record ten-year high.
“While normally high prices are expected to give way to increased production, the high cost of inputs, ongoing global pandemic and ever more uncertain climatic conditions leave little room for optimism about a return to more stable market conditions even in 2022, ” said FAO Senior Economist Abdolreza Abbassian.
2011 was the last time food pricing was so unstable. For 2021, averaging across the entire year, the FAO Food Price Index averaged 125.7 points, as much as 28.1 percent above the previous year. The largest increases were in vegetable oils used in cooking, dressings, and sauces. The sub-index for vegetable oils increased by nearly 68%, to its highest annual level ever recorded. Cereal grains, including wheat, rice, and corn, achieved the second-largest increase at 27%. Sugar prices rose nearly 30% during 2021, to their highest level since 2016. Meat prices rose nearly 13% for the year, and dairy prices were up 17%.
Food prices fell slightly in December 2021, apart from dairy, which increased 1.8% from the previous month. FAO noted that the international quotations for butter and milk powders increased amid lower milk production in Western Europe and Oceania. The decrease in the last month of the year is evidence of the panic surrounding the Omicron COVID-19 variant that caused concerns about supplies, specifically in the southern hemisphere wheat harvests. Even with the December 2021 decrease, the overall prices reflect the harvest setbacks and strong demand over the past year.
FAO has been vocal over the past year about how these increases in food prices affect the world’s poorest populations. "The problem is not the world facing higher prices," Josef Schmidhuber, deputy director of the FAO's trade and markets division, told Reuters. "The issue is vulnerable countries." Nations classed as Low-Income Food-Deficit Countries by the FAO were forecast to see food import costs jump 20% in 2021, with tourism-reliant economies in a particularly precarious position, the agency said.
Check out the full FAO report here.
