Food Price Index has hit record high
By: Sydney Sheffield
The Food and Agriculture Organization of the United Nations (FAO) released the FAO Food Price Index for February 2022, and if you’ve been to the grocery store lately, you will not be surprised to hear, food prices have reached a record high. The highest two categories were vegetable oils and dairy products. The Index tracks monthly changes in the international prices of commonly traded food commodities.
“Concerns over crop conditions and adequate export availabilities explain only a part of the current global food price increases. A much bigger push for food price inflation comes from outside food production, particularly the energy, fertilizer, and feed sectors,” said FAO economist Upali Galketi Aratchilage. “All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production.”
February 2022 averaged 140.7 points, up 3.9% from January 2022. Vegetable Oils Price Index led the increase, rising 8.5% from the previous month to reach a new record high, mostly driven by increased quotations for palm, soy, and sunflower oils. The sharp increase in the vegetable price index was principally driven by sustained global import demand, which coincided with a few supply-side factors, including reduced export availabilities of palm oil from Indonesia, the world’s leading exporter, lower soybean production prospects in South America, and concerns about lower sunflower oil exports due to disruptions in the Black Sea region.
“This area of the Black Sea plays a major role in the global food system, exporting at least 12 percent of the food calories traded in the world,” said International Fund for Agricultural Development President Gilbert F. Houngbo. “Forty percent of wheat and corn exports from Ukraine go to the Middle East and Africa, which are already grappling with hunger issues, and where further food shortages or price increases could stoke social unrest.”
The FAO Dairy Price Index averaged 6.4% higher in February than January, reinforced by lower-than-expected milk supplies in Western Europe and Oceania, as well as persistent import demand, especially from North Asia and the Middle East. Prices for cereal grains also are up, driven by uncertainties over wheat and corn supplies from Ukraine and Russia, major exporters of both commodities. Interestingly, sugar prices fell for the third month in a row.
In the United States, all items’ indexes rose 7.9% for the 12 months ending February. The 12-month increase has been steadily rising and is now the largest since the period ending January 1982.