FAO Reports September’s Decline in Basic Food Prices
According to the United Nations’ Food and Agriculture Organization (FAO), global prices for essential food items decreased in September. This drop was primarily due to declines in sugar and dairy prices, which offset a new peak in meat prices.
FAO’s Food Price Index Drops to 128.8 Points
The FAO’s Food Price Index, which measures a basket of internationally traded food commodities, averaged 128.8 points in September, down from August’s 129.7 points.
The index increased by 3.4% compared to September of the previous year, but it remains nearly 20% below its record high in March 2022 following Russia’s large-scale invasion of Ukraine.
Sugar Prices Fall to March 2021 Levels
The index had reached a two-year high in July before stabilizing in August. However, it slowed down last month due to a 4.1% drop in the FAO’s sugar price index, which hit its lowest level since March 2021.
The sugar price decline reflected improved estimates of higher-than-expected production in Brazil and favorable harvest prospects in India and Thailand, according to the FAO.
Dairy Prices Also Decline
The FAO’s dairy price index fell by 2.6% month-on-month, driven by a significant drop in butter prices amid improved production outlooks in Oceania.
The FAO’s reference cereal price index decreased by 0.6% from August, as wheat prices fell for the third consecutive month due to large harvests and moderate international demand.
Corn prices also dropped, partly due to a temporary suspension of export taxes in Argentina.
The FAO’s rice price index also declined, attributed to reduced demand from buyers in the Philippines and Africa.
Beef Market in EU Drives Record-High Meat Prices
Vegetable oil prices fell by 0.7% as declines in palm oil and soybean quotations offset increases in sunflower oil and rapeseed prices.
Conversely, the FAO’s meat price index rose by 0.7%, reaching a new record high due to increased quotations for beef and mutton.
Beef prices reached another all-time high, supported by strong demand in the EU amid limited internal supply.
Key Questions and Answers
- What is the FAO? The Food and Agriculture Organization (FAO) is a specialized agency of the United Nations that leads international efforts to defeat hunger. It was founded in 1945.
- What does the FAO’s Food Price Index measure? The index measures monthly changes in international prices of a basket of food commodities. It covers various sectors, including cereals, dairy, meat, sugar, and vegetable oils.
- Why did food prices drop in September? The decline was primarily due to decreases in sugar and dairy prices, which counterbalanced the rise in meat prices.
- What factors contributed to the drop in sugar and dairy prices? Improved production estimates in Brazil, favorable harvest prospects in India and Thailand, and a temporary suspension of export taxes in Argentina all played roles.
- Why did meat prices still reach record highs? Strong demand for beef in the EU, amid limited internal supply, drove meat prices to new heights despite overall food price declines.
