Global Food Prices Decline

Food and Agriculture Organisation (FAO)

Food prices at the international level, as measured by the Food and Agriculture Organisation (FAO) Food Price Index (FFPI) declined in the month of December 2014, compared with November 2014.

The FFPI averaged 188.6 points, 1.7 per cent lower than the revised value in November 2014 and 8.5 per cent lower than the December 2013 figure.
According to the FAO, the fall in the value of the Index in December was mainly attributable to the sharp decline in all food prices except cereals which appreciated marginally.

The FAO Cereal Price Index increased by 0.4 per cent from the previous month, due to the rise in the prices of wheat brought about by concerns over Russia’s possible export restrictions, although the strengthening of the dollar limited this increase.

Rice prices however fell as a result of abundant supply, due to the harvest season, coupled with weak import demand.

The FAO Vegetable Oil Price Index was down by 2.4 per cent in December 2014, driven by the fall in palm oil prices, as declining crude oil prices crippled demand for palm oil as a biodiesel feed stock.

“Prices only recovered towards the end of the year as the harvest season in Malaysia was foiled by heavy rainfall. The FAO Dairy Index declined by 2.3 per cent in December 2014 majorly due to the increased export availability in the face of the weakening import demand for dairy products by major importers namely China and Russia.

“The FAO Sugar Index decreased by 4.8 per cent in December from November 2014, due to ample supply from sugar exporting countries especially Brazil. This fall was also exacerbated by the drop in crude oil prices as less ethanol was converted from sugar crops,” it explained.

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