The most recent Food and Agricultural Organization (FAO) Price Index indicates that food prices such as dairy and oil have reached their lowest levels since 2009. This is part of a global, ongoing trend that the FAO predicts will continue for the coming decade.
The FAO Price Index is weighted by trade and looks at international market prices for foods such as cereals, dairy, meat, sugar and oil. The August 6 release of the FAO Price Index pegged the Index at 164.6 points, down 19.4 percent from what it had been in 2014. Dairy prices have dropped 7.2 percent and vegetable oil prices are the lowest they have been since June 2009. Meat prices are at levels similar to what they were last year, while cereal and sugar prices have increased. Cereal price increases are attributed to poor growing conditions in North America and Europe, and sugar prices are increasing due to poor harvesting conditions in Brazil.
The FAO Price Index is supported by other data from Reuters. This data indicated that soybean prices have gone down 13 percent since August 2014, while wheat prices have dropped 14 percent and corn prices have dropped eight percent. Generally, the decrease in prices is attributed to an increase in global supply in conjunction with a decrease in demand, particularly from China, North Africa and the Middle East.
Across western Europe, specifically the United Kingdom, France and Belgium, farmers are demonstrating against the falling price of milk. The 7.2 percent drop in dairy price from August 2014 includes a one percent drop in prices since June. As farmers protest, European governments are considering giving them millions of dollars in support as a result of their livelihood being less profitable. The decrease in demand makes the increase in production a burden rather than a profit for producers.
However, the drop in food prices indicates the increased affordability of foods worldwide, particularly for domestic products. This allows for a greater number of people to afford food, especially in countries whose populations are seeing rising incomes. Consequently, populations have greater access to different foods and can diversify their diets.
– Priscilla McCelvey
Sources: CNBC 1, CNBC 2, Food and Agricultural Organization of the UN, Reuters, United Nations
Photo: Ingredients Network