Looming food access crisis remains, despite lower commodity price levels in July

At a press briefing today from New York, journalists heard from Máximo Torero, FAO Chief Economist, who spoke on the Food Price Index update for July and its implications for world food commodity markets ahead.

The FAO Food Price Index, the benchmark for world food commodity prices, saw a strong decline in July vis-à-vis the previous month, with major cereal and vegetable oil prices recording double-digit percentage declines. This decline was the steepest monthly fall in the index since October 2008. 

While the vegetable oil index registered the sharpest decline, dropping by 19.2 percent, followed by the cereal price index by 11.5% percent, all other three categories in the index (sugar, dairy and meat) also declined, but to a lesser extent.

Briefing on these latest trends and price fluctuations was the FAO Chief Economist, Máximo Torero, who connected virtually from Rome to brief journalists at the United Nations in New York. 

At today’s press briefing, organized by the Office of the Spokesperson of the Secretary-General, Torero warned that despite these observed declines, the overall Food Price Index was down by only 12 percent from its peak reached in March this year, and it exceeded its value in July 2021 by 13 percent. As such, overall prices remain high.

Cereal prices see downward pressure on the heels of the Black Sea Grain Initiative

Prices of all the cereals represented in the index fell, led by wheat, for which world prices declined by as much as 14.5 percent, partly in reaction to the agreement reached between Ukraine and the Russian Federation to unblock exports from key Black Sea ports. 

Against this backdrop, increases in shipping volumes are welcome news for Ukrainian farmers, as well as for global markets by improving the availability of grains and oilseeds, Torero outlined.

Despite a welcome decline in commodity prices, global food access challenges loom

The decline in food commodity prices from very high levels is welcome, the Chief Economist said, especially when seen from a food access point of view.

Nonetheless, he added, many market uncertainties and supply worries remain, such as high fertilizer prices that can directly impact production prospects for many farmers, and therefore, threaten farmer and rural livelihoods at large during the upcoming seasons. 

“The decline from very high food commodity prices is welcome, but many uncertainties remain, including the still-high fertilizer prices that impact farmer livelihoods and future production prospects for next year,” Torero warned of the combination of factors posing a threat to global food security efforts far and wide.

With world food prices remaining elevated, many countries are suffering from the cost of living crisis, stemming from inflation levels at often high levels, constraining the purchasing capacity of the most vulnerable.

On the heels of austere economic outlooks and currency fluctuations, we may see a further strain on global food security moving forward, despite July’s downward commodity price trends, Torero explained.

Navigating a food access crisis, preventing food unavailability ahead

For the 62 most vulnerable countries, which are net food importers and have balance of payments problems, the food import bill has increased by USD 24.5 billion amid the current global food security crisis. 

FAO therefore proposes a Food Import Financing Facility to ensure their food access, a call that the FAO Director-General recently shared with G20 Finance Ministers and Central Bank Governors to ensure these countries enjoy access to their food needs ahead. 

Related links

• Did you miss the press briefing? Watch the recording.
• Read more about the FAO Food Prince Index here, access the full updates for the individual cereal, sugar, vegetable oil, meat, and dairy price indexes here, and follow latest related updates from the Agricultural Market Information Systems (AMIS).
• Read more about FAO’s proposal for a Food Import Financing Facility here.