World food prices decline for 5th consecutive year in 2016

The Dollar Business Bureau

World food prices decreased for the fifth consecutive year in 2016 due to the falling prices of cereal, meat and dairy markets that outweighed the price rise in sugar and vegetable oils, as per the UN Food and Agriculture Organisation (FAO).

In 2016, FAO’s global food price index averaged 161.6 points which is 1.5% below the level witnessed in 2015, and around 30% lower than the 229.9 points recorded in 2011.

The index keeps a track of changes in monthly and annual international prices for an array of commodities across five groups namely major cereals, vegetable oils, dairy, meat and sugar.

According to the organisation, cereal prices witnessed a decline of 9.6% in 2016 and decreased to 39% from its peak in 2011. On the other hand, sugar and vegetable oil prices rose 34.2% and 11.4%, respectively, over the year.

FAO also reported that the prospects for staple cereals and bumper harvests balance the pressure on the food price index from commodities such as sugar and palm oil, where production was impacted by the El Niño weather phenomenon.

According to FAO senior economist Abdolreza Abbassian, the food markets this year are expected to be affected by economic uncertainties, including movements in exchange rates.

It should be noted that prices of vegetable oil prices rose to its peak in December since July 2014 while the palm oil increased due to low global inventory levels and tight supplies.

Speaking about the Indian scenario, the decrease in global food prices have impacted the farmers dependent on export of farm produce in terms of getting lesser prices.