UNITED NATIONS: Global food prices experienced a notable decline in 2023, further easing concerns over food inflation worldwide.

The UN Food and Agriculture Organisation (FAO) reported on Friday that its Food Price Index (FFPI) concluded the year over 10 per cent below its December 2022 level.

The index fell to 118.5, the lowest since February 2021, down 1.5pc from November and 10.1pc from December 2022. The overall index for 2023 was 13.7pc lower than the average value for 2022.

Notably, the international sugar price index was the only one higher over the year, despite experiencing a significant drop of 16.6pc in December due to increased sugar production in Brazil and reduced use of sugarcane for ethanol production in India.

The Cereal Price Index saw a 1.5pc increase in December 2023, driven by rising prices of wheat, maize, rice, and barley, primarily due to shipment limitations faced by exporters. However, for the entire year, the cereal index was more than 15pc below the 2022 average, reflecting well-supplied global markets.

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The Vegetable Oil Price Index declined by 1.4pc in December, reflecting subdued purchases of palm, soy, rapeseed, and sunflower seed oil. For 2023, this index was 32.7pc below the previous year’s level, with soy oil particularly affected by reduced demand from the biodiesel sector and improved weather conditions in major growing areas of Brazil.

The FAO Sugar Price Index witnessed a substantial 16.6pc decline in December, reaching a nine-month low, although still up 14.9pc from December 2022. The drop was attributed to the brisk pace of sugar production in Brazil and reduced sugarcane use for ethanol in India.

The Meat Price Index dipped 1pc in December, driven by weak import demand from Asia. Despite ample exportable supplies, regional buying interest slowed for bovine (beef) and poultry meat. In contrast, ovine (sheep) meat prices rose ahead of holidays.

The Dairy Price Index, however, increased by 1.6pc in December, standing 16.1pc below its December 2022 value. The rise was led by higher price quotations for butter and cheese, driven by strong internal sales in Western Europe before the holiday season.

Despite the decline in global food commodity prices, the real-world impact remains challenging for many. More than 333 million people faced acute levels of food insecurity in 2023, according to the World Food Programme.

Climate effects, conflicts like the war in Ukraine, trade bans contributing to food inflation, and weaker currencies have disproportionately affected developing nations.

The FAO’s grain index, except for rice, was 15.4pc below the 2022 average, indicating well-supplied global markets. Despite Russia exiting a wartime deal that facilitated grain flow from Ukraine, countries seeking wheat found alternative supplies, notably from Russia, with prices lower than pre-war levels.

In conclusion, while the FAO Food Price Index signals a welcome decline in global food prices, the challenges of translating this relief to tangible improvements in food security persist. The complex interplay of climate effects, conflicts, and trade dynamics underscores the need for sustained global efforts to address the root causes of food insecurity.

Published in Dawn, January 7th, 2024