High cost of inputs, uncertain climatic conditions dim hopes for lower food prices in 2022

GLOBAL – Consumers are expected to continue to pay more for food items in 2022 as the high cost of inputs, uncertain climatic conditions, and an ongoing pandemic leaves little room for optimism about a return to more stable market conditions in 2022.  

This was revealed by the United Nation’s Food and Agriculture Organization (FAO) in its most recent report on world food prices.  

According to the UN food agency, the FAO food price index, which tracks the most globally traded food commodities, averaged 125.7 points in 2021. 

This was a 28% jump compared to the 2020 index and the highest since 131.9 that was recorded in 2011. 

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Despite the overall rise, the FAO noted that the monthly index eased slightly in December with only the dairy sub-index posting a monthly rise.  

The FAO Cereal Price Index decreased 0.6 percent from November, as falling wheat export quotations amid improved supplies following southern hemisphere harvests more than offset firmer maize prices underpinned by strong demand and concerns over persistent dryness in Brazil.  

For the full year, however, the FAO Cereal Price Index reached its highest annual level since 2012 and averaged 27.2 percent higher than in 2020.  

The FAO Vegetable Oil Price Index declined 3.3 percent in December, with weaker quotations for palm oil and sunflower oil reflecting subdued global import demand that may be linked to concerns over the impact of rising COVID-19 cases.  

For 2021 as a whole, the FAO Vegetable Oil Price Index reached an all-time high, increasing 65.8 percent from 2020. 

The FAO Sugar Price Index decreased by 3.1 percent from November, reaching a five-month low, reflecting concerns over the possible impact of the Omicron COVID-19 variant on global demand as well as a weaker Brazilian Real and lower ethanol prices.  

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For 2021 as a whole, the FAO Sugar Price Index rose 29.8 percent from the previous year to its highest level since 2016. 

The FAO Meat Price Index was broadly stable in December but over 2021 as a whole, the FAO Meat Price Index was 12.7 percent higher than in 2020. 

The FAO Dairy Price Index rose 1.8 percent from the previous month, as international quotations for butter and milk powders increased amid lower milk production in Western Europe and Oceania. 

Overall, the FAO Food Price Index averaged 133.7 points in December, a 0.9 percent decline from November but still up 23.1 percent from December 2020. 

Higher food prices have contributed to a broader surge in inflation as economies recover from the coronavirus crisis. 

The UN food agency has now warned that the higher costs are putting poorer populations at risk in countries reliant on imports. 

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