World food prices drop in April due to Pandemic -U.N

World food prices drop in April due to Pandemic -U.N

The Food and Agriculture Organization (FAO) food priceindex, which measures monthly changes for consumer foods, averaged 165.5 points last month, down 3.4% on March.

The FAO sugar price index fell to a 13-year low, plunging 14.6% from March, with the coronavirus crisis hitting demand and tumbling crude oil prices also reducing the need for sugarcane to produce ethanol, the Rome-based agency said.

The vegetable oil price index fell 5.2%, hit by falling palm, soy and rapeseed oil values, while the dairy index dropped 3.6%, with butter and milk powder prices posting double-digit declines.

The meat index shed 2.7%, with a partial recovery in import demand from China failing to balance a slump in imports elsewhere. FAO also said major producing countries suffered logistical bottlenecks, while coronavirus lockdowns in many nations had caused a sharp fall in sales.

By contrast with the other indices, FAO’s cereal price index declined only slightly, as international prices of wheat and rice rose significantly while those of maize dropped sharply.

Rice prices rose 7.2% from March, due in large part to temporary export restrictions by Vietnam that were subsequently repealed, FAO said. Wheat prices rose 2.5% amid reports of a quick fulfilment of the export quota from Russia.

However, prices of coarse grains, including maize, fell 10%, hit by reduced demand for both animal feed and biofuel production.

FAO held its forecast for cereal production largely steady at 2.720 billion tonnes in 2019, but reduced its forecast for cereal utilisation in 2019/20 by 24.7 million tonnes, mainly because of the impact of the coronavirus on the economy.

FAO also unveiled its first forecasts for global wheat supply and demand in the 2020/21 marketing season, predicting world production at 762.6 million tonnes, broadly in line with the 2019 level.

It said it expected smaller harvests in the European Union, north Africa, Ukraine and the United States. This would be largely offset by larger harvests in Australia, Kazakhstan, Russian and India.

Global wheat utilisation in 2020/21 was expected to be stable, with anticipated increases in food consumption outweighing reductions in feed and industrial uses.

Will there be an impending Food Crisis?

Given the status of global food supplies, export restrictions are unwarranted and could hurt food security in importing countries. 

However, as the coronavirus crisis unfolds, disruptions in domestic food supply chains and other shocks affecting food production, and loss of incomes and remittances are creating strong tensions and food security risks in many countries.

Labor shortages (due to morbidity, movement restrictions, social distancing rules) are starting to impact producers, processors, traders and trucking/logistics companies in food supply chains – particularly for food products that require workers to be in close proximity. At the same time, loss of income and remittances is reducing people’s ability to buy food and compensate farmers for their production.

The United Nations World Food Programme has warned that an estimated 265 million people could face acute food insecurity by the end of 2020, up from 135 million people before the crisis.