Global food prices fell to a six-month low in July, according to the United Nations Food and Agriculture Organization.

The FAO’s Food Price Index – which measures price shifts according to the average price of a basket of over 50 food products – measured the average international price of food at 2.1 percent lower than in June. Current levels are the lowest they’ve been since January 2014 and 1.7 percent lower than in July 2013. While global meat prices rose due to higher demand in Asia, prices for grains, oil-seeds and dairy fell. The expected crop production of the United States and South American surpluses drove down the value of soy oil.

“The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons, especially for cereals and oils, a situation that is expected to facilitate rebuilding of world stocks,” says top FAO economist Concepcion Calpe.

The global average price of cereals has dropped 36.9 points since July 2013 while vegetable oils dropped 5.6 points and dairy 17.5 points during the same time period. Sugar and meat prices have risen, however, by 20.1 points and 25.4 points, respectively.

The release of this data comes as Russia has declared a year-long ban on Western food imports in retaliation for Western sanctions against Russia over the Ukrainian conflict. Russia imports 40 percent of its food, and prices within the Federation will likely rise without food imports from the U.S., the European Union and Norway.

Prices in the EU could lower as the ban will decrease overall demand.Yet Calpe does not believe the ban will significantly affect global food prices, saying, “The big losers in this case would be more the consumers in Russia themselves because it means they would pay higher prices. It would increase prices internally in the Russian Federation, but for the rest of the world it would tend to depress the quotations.”

The conflict in Ukraine brought a brief spike in global food prices in March, but experts remain skeptical that the fighting could affect food prices to the extent of the 2008 world food crisis. From 2005 to 2008, global food prices increased by 83 percent – a drastic change that rendered 40,000 million more people unable to afford food. Tens of thousands of citizens found themselves suddenly unable to afford the new prices, demonstrated throughout sub-Saharan Africa, Egypt and parts of Asia.

Economists have since blamed the crisis on decreased levels of production, higher demand from emerging economies, higher energy costs and a new demand for safer agricultural stocks in the wake of the housing bubble.

Still, the decrease in prices comes as good news to those in developing nations who spend a significant portion of their income on food. As the FAO points out, 842 million people worldwide still suffer from chronic hunger, but the organization continues to strive “…to make sure people have regular access to enough high-quality food to lead active, healthy lives.”

– Erica Lignell

Sources: UN 1, Bloomberg, FAO 1, UNCTAD, FAO 2, The Guardian, FAO 3
Photo: Business Insider