By Adedapo Adesanya
The Food and Agricultural Organisation (FAO) has disclosed that prices of food worldwide dropped by 3.4 percent for the third consecutive month in April as the coronavirus pandemic took a hit on demand.
In a report released on Thursday and sighted by Business Post, the United Nations food agency said that food price index, which measures monthly changes for a basket of cereals, oil seeds, dairy products, meat and sugar, averaged 165.5 points last month compared with 171.1 points published in March.
According to FAO’s Senior Economist, Mr Upali Galketi Aratchilage, COVID-19, which has grounded many to the comfort of their homes, has also slowed down economic activities, taking a toll of incomes leading to lower consumption.
“The pandemic is hitting both the demand and supply sides for meat, as restaurant closures and reduced household incomes lead to lower consumption and labour shortages on the processing side are impacting just-in-time production systems,” he said.
According to the FAO, Sugar Price Index hit a 13-year low, declining 14.6 percent from March, when it posted an even larger monthly drop.
According to the agency, “Collapsing international crude oil prices reduced demand for sugarcane to produce ethanol, diverting output to producing sugar and hence expanding export availabilities.”
“Meanwhile, confinement measures in a number of countries spawned additional downward pressure on demand,” it stated further.
The FAO Vegetable Oil Price Index declined 5.2 percent in April, driven lower by falling palm, soy and rapeseed oil values. Reduced bio-fuel demand played a role, as did declining demand from the food sector along with higher-than-previously expected palm oil output in Malaysia and soy crushings in the United States of America.
The FAO Dairy Price Index fell by 3.6 percent, with butter and milk powder prices posting double-digit drops amid increased export availabilities, mounting inventories, weak import demand and diminished restaurant sales in the northern hemisphere.
The FAO Meat Price index declined 2.7 percent. A partial recovery in import demand from China was insufficient to balance a slump in imports elsewhere, while major producing countries suffered logistical bottlenecks and a steep fall in demand from the food services sector due to shelter-at-home measures.
The FAO Cereal Price Index declined only marginally, as international prices of wheat and rice rose significantly while those of maize dropped sharply. International rice prices rose by 7.2 percent from March, due in large part to temporary export restrictions by Vietnam that were subsequently revoked.
FAO also noted that wheat prices rose by 2.5 percent amid reports of a quick fulfillment of the export quota from the Russian Federation. Prices of coarse grains, including maize, by contrast fell by 10 percent, driven down by reduced demand for its use for both animal feed and biofuel production.
Giving a forecast, FAO held it 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.
