Save
Food prices reached an all-time high in February this year according to the Food and Agriculture Organization of the United Nations (FAO).
The FAO Food Price Index rose to an average of 140.7 points in February, up 3.9% from January and up 20.7% from the same time in 2021. The rise was led by the higher cost of vegetable oils and dairy products, the organisation said.
The foods whose prices have risen the most
The vegetable oil increase has come about by a sharp increase in demand, coupled with a restriction on supply leading to increased quotations for palm, soy and sunflower oils. Indonesia, the world’s largest exporter of palm oil, has reduced supply, while soybean production has been hit in South American regions. The price of sunflower oil has been affected by disruptions in the Black Sea region. Dairy has been affected by decreased production in Western Europe and Oceania and persistent import demand, especially from North Asia and the Middle East.
Cereals also increased by as much as 3% compared to the previous month, with the FAO citing environmental conditions in South America and uncertainty in Ukraine as the cause for a 5.1% increase in the price of maize. Meat increased at a slower rate, just 1.1% in January, with pig meat showing the biggest increase. Beef and poultry actually decreased on the previous month.
“Concerns over crop conditions and adequate export availabilities explain only a part of the current global food price increases. A much bigger push for food price inflation comes from outside food production, particularly the energy, fertilizer and feed sectors,” said FAO economist Upali Galketi Aratchilage. “All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production.”
What is causing high food prices globally?
Restaurants and the hospitality industry are already dealing with increased energy and labour costs, as well as the drying up of various government supports, making tentative returns to profitability challenging at best. It seems unavoidable that the cost will in some ways have to be passed on to the customer both in the near and the long term.
The report did predict increased production in cereals throughout the year 2022, which could positively affect food prices. However, the organisation did state that the forecast does not assume potential impacts from the situation in Ukraine.
