International food prices remain largely steady, yet access and affordability remain a concern

The FAO Food Price Index, the gauge for world food commodity prices, remained largely steady during November, with declines in the prices of cereals, meat, and dairy products offsetting increasing quotations for vegetable oils and sugar. 

The Index, which tracks monthly changes in world prices of five major food commodity groups – cereals, vegetable oils, meat, dairy products and sugar, averaged 135.7 points in November, a fraction below the 136.3 points seen in October. This means that compared to this time last year, the Food Price Index now stands only 0.3 percent higher, and is down 15.1 percent from its peak reached in March this year.

Connecting virtually at a press briefing in the United Nations in New York, organized by the Office of the Spokesperson of the Secretary-General, FAO Chief Economist Máximo Torero briefed on these latest trends and price fluctuations.

A food accessibility crisis in 2023 remains likely

FAO has been sounding the alarm bells of a food access crises this year and on the risks of a food availability and accessibility crisis up ahead, as the poorest and most vulnerable countries remain unable to afford their basic food needs and face challenges with higher input costs, especially fertilizers. While lower world food commodity prices generally reflects improved access at the global level, this has not led to improved food access for low-income countries, Torero warned.

Already some 45 countries are in need of external food assistance, as a compounding result of conflict, extreme weather events, and soaring inflation rates. This is according to the latest Crop Prospects and Food Situation report, a quarterly publication by FAO’s Global Information and Early Warning System (GIEWS).

“Consumers have not seen the decline in global international food prices translate into lower prices at country level and therefore lower food inflation rates,” Torero explained, pointing to a mix of high energy, transportation, and processing costs, in addition to logistical disruptions in certain agrifood supply chains and the depreciation of currencies against the US Dollar. 

“As a result of high prices, he added, “the global food import bill is expected to reach a record USD 2 trillion, and for the 62 most vulnerable countries, has increased around 39 percent since 2020."

This increase in the cost of food imports is already placing fiscal pressures on government budgets and causing balance-of-payments concerns, an issue that the International Monetary Fund’s food shock window response instrument is working to alleviate, and which builds on FAO’s proposal for a Food Import Financing Facility to support the most vulnerable countries facing rising food import bills. Expanding this response instrument is key, Torero said, in order to help smooth food affordability over at least the coming two years.

Stabilizing and diversifying food, feed, and fertilizer markets

High food prices and the overall cost-of-living crisis can have serious implications for food security and nutrition, particularly for the vulnerable countries and populations who spend a large share of their income on food, Torero said. World prices of energy and gas remain high, in turn reducing fertilizer affordability and increasing production costs and adding a serious challenge to production in 2022/23. More on fertilizer trade markets here.

Across key commodity groups, FAO sees highly concentrated markets, where only a few major exporting countries dominate the global markets for these essential goods. This means that any vulnerability – conflict, weather, or economically-related – automatically places upward pressure on prices. 

Against this backdrop, the Chief Economist called for increasing market resilience by increasing the number of cereal exporting countries. With poverty also on the rise, he shed light on the decreased household purchasing power for food worldwide, a situation that a concentrated, volatile market can only make worse. This, together with exchange rate devaluations – linked to interest rate increases by developed countries to reduce their own inflation rates – is also causing the global food import bill to increase.

The Black Sea Grain Initiative, moreover, has contributed to lower wheat and corn prices this month, seeing a 2.8 and 1.7 percent decrease, respectively, compared to last month. Latest FAO updates on shipments through the Black Sea Grain Initiative are available here.

“The Black Sea Grain Initiative has contributed to improving global food supplies and lowering global prices,” the FAO Chief Economist remarked, adding that FAO welcomes the recent extension of the agreement and the 12 million metric tonnes of grain exported through it thus far. 

Related links

• Did you miss the press briefing? Watch the recording and read more here.
• Find out more about the FAO Food Prince Index here.
• Follow latest related updates from the Agricultural Market Information Systems (AMIS).