Food Prices in 2011 Hit Record High

United Nations Food and Agriculture Organization (FAO) reported today reported that overall annual average of global food price in 2011 was the highest ever on record.

According to FAO, the agency’s Food Price Index level was 211 points – 27 points below its peak in February. The decline was driven by sharp falls in the international prices of cereals, sugar and oils due to a productive harvest coupled with a slowing demand and a stronger United States dollar.

However, despite the steady decline in prices during the second half of the year, the Index overall averaged 228 points in 2011 – the highest average since FAO started measuring international food prices in 1990. The second highest average occurred in 2008 at 200 points.

The FAO said its food price index, a basket tracking the wholesale cost of commodities such as wheat, corn, rice, oilseeds, dairy products, sugar and meats, jumped last month of 214.7 points – up almost 4.2 per cent from November.

“International prices of many food commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead.” – FAO Senior Grains Economist Abdolreza Abbassian

Cereal prices registered the biggest fall due to record crops and an improved supply outlook, with the FAO cereal price index dropping 4.8 per cent last month. The oils and fats price index also dropped, with a three per cent decline from November due to the unexpected surge in supplies of vegetable oil.

Meat prices were slightly down from November, mainly due to the 2.2 per cent drop in pig meat prices, but as with other commodities, its annual price was 16 per cent higher than in 2010.

Dairy prices remained almost unchanged, and the sugar price index declined for the fifth consecutive month, reflecting expectations of a large sugar world production surplus over the new season due to good harvests in India, the European Union, Thailand and Russia.

There were an estimated 925 million hungry people in the world in 2010, as compared to 850 during the period from 2006-2008, according to FAO. No estimates have been produced for 2011 since the agency is currently revising the methodology it uses for calculating the prevalence of hunger.