global food prices decline by 13.7% in 2023, says FAO
Published on: January 10, 2024.
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World food prices experienced a significant decline in 2023, particularly for grains and oils, as the supply concerns eased, according to the UN’s Food and Agriculture Organization (FAO). The FAO stated that overall, global food commodity prices fell by 13.7 percent in 2023 compared to the previous year.
The cereals price index, as reported by the FAO, fell by 15.4 percent, indicating well-supplied global markets in comparison to 2022. While the supply concerns for wheat and maize improved, the same cannot be said for rice due to the impact of the El Nino weather phenomenon and India restricted exports. As a result, rice prices increased by 21 percent last year.
Furthermore, the vegetable oil price index recorded the most significant decline, dropping by 32.7 percent. This drop can be attributed to improved supplies and reduced use for biofuel production. However, sugar prices increased by 26.7 percent overall, although they decreased from their December highs due to increased exports from Brazil and reduced usage in biofuels.
Despite the decline in the FAO’s overall index, consumer food prices are rising in many countries, often at a faster rate than the overall inflation rate. It’s important to note that a drop in food commodity prices does not necessarily translate to a drop in food prices for consumers.
Economist and food industry specialist Bruno Parmentier emphasized that the FAO index measures commodity market prices, which may take some time to impact supermarket shelves. Additionally, these prices only represent a fraction of the cost of the final processed products. Parmentier highlighted that factors such as labor costs, energy, water, and rent contribute significantly to the price of food products.
Overall, the decline in world food prices in 2023, particularly for grains and oils, is a positive development. However, it’s essential to consider the various factors that contribute to final food prices and to recognize that consumer prices may not reflect the decline seen in commodity markets.
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