ROME: World food prices hit a record high in February, led by a surge in vegetable oils and dairy products, to post a 20.7 per cent increase year-on-year, the UN food agency said on Friday.

The Food and Agriculture Organisation’s (FAO) food price index, which tracks the most globally traded food commodities, averaged 140.7 points last month against a downwardly revised 135.4 in January. That figure was previously given as 135.7.

Higher food prices have contributed to a broader surge in inflation as economies recover from the coronavirus crisis and the FAO has warned that the higher costs are putting poorer populations at risk in countries reliant on imports.

FAO economist Upali Galketi Aratchilage said concerns over crop conditions and export availabilities provided only a partial explanation to the increase in global food prices.

“A much bigger push for food price inflation comes from outside food production, particularly the energy, fertiliser and feed sectors,” he said.

“All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production.”

Data for the February report was mostly compiled before the Russian invasion of Ukraine.

Concerns over tensions in the Black Sea area were already weighing on agricultural markets even before the violence flared, but analysts warn a prolonged conflict could have a major impact on grain exports.

FAO said its vegetable oils index rose 8.5pc month-on-month in February to chalk up another record high, propelled by rising palm, soy, and sunflower oil prices. Ukraine and Russia account for about 80pc of global exports of sunflower oil.

The cereal price index rose 3pc on the month, with maize prices up 5.1pc and wheat prices increasing 2.1pc, largely reflecting uncertainty about global supply flows from Black Sea ports.

FAO’s dairy price index increased 6.4pc, its sixth consecutive monthly rise, underpinned by tight global supplies, while meat prices rose 1.1pc in February.

By contrast, sugar was the sole index to post a decrease, shedding 1.9pc from the previous month due partly to favourable production prospects in major exporters India and Thailand.

FAO also issued its first projections for cereal output in 2022, seeing global wheat production rising to 790 million tonnes from 775.4 million in 2021, thanks in part to hopes of high yields and extensive planting in Canada, the United States and Asia.

The UN agency cautioned however that its projections did not take into account the possible impact of the conflict between Russia and Ukraine.

FAO said maize outputs in Argentina and Brazil in 2022 were forecast at well above-average levels, notably in Brazil where the maize crop was seen reaching a record high 112 million tonnes.

World cereal utilisation in 2021-22 was forecast to rise 1.5pc above the 2020-21 level, hitting 2.802 billion tonnes. FAO’s forecast for world cereal stocks by the close of seasons in 2022 stood at 836 million tonnes.

Published in Dawn, March 6th, 2022

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Wheat price crash
Updated 20 May, 2024

Wheat price crash

What the government has done to Punjab’s smallholder wheat growers by staying out of the market amid crashing prices is deplorable.
Afghan corruption
20 May, 2024

Afghan corruption

AMONGST the reasons that the Afghan Taliban marched into Kabul in August 2021 without any resistance to speak of ...
Volleyball triumph
20 May, 2024

Volleyball triumph

IN the last week, while Pakistan’s cricket team savoured a come-from-behind T20 series victory against Ireland,...
Border clashes
19 May, 2024

Border clashes

THE Pakistan-Afghanistan frontier has witnessed another series of flare-ups, this time in the Kurram tribal district...
Penalising the dutiful
19 May, 2024

Penalising the dutiful

DOES the government feel no remorse in burdening honest citizens with the cost of its own ineptitude? With the ...
Students in Kyrgyzstan
Updated 19 May, 2024

Students in Kyrgyzstan

The govt ought to take a direct approach comprising convincing communication with the students and Kyrgyz authorities.