Concerns Over Rising Table Food Prices Persist... Global Food Price Index Rises for 9 Consecutive Months

Corn, Rice, Oils, Sugar, Dairy, and Meat All Increase
Ministry of Agriculture, Food and Rural Affairs: "Interdepartmental Consultation on Domestic Customs, Tariffs, and Interest Rate Adjustments"

[Sejong=Asia Economy Reporter Moon Chaeseok] The United Nations Food and Agriculture Organization (FAO) Food Price Index has risen for nine consecutive months. The upward trend in 'table prices' shows little sign of slowing down.

According to the Ministry of Agriculture, Food and Rural Affairs on the 7th, the FAO Food Price Index recorded 116 points last month, up 2.4% from the previous month. It has increased by more than 20 points over nine months from 91.0 in May last year.

Since 1990, the FAO has monitored international price trends for 24 items and compiles an index monthly for five commodity groups: cereals, oils, meat, dairy products, and sugar.

Looking at the price indices by item, cereals rose 1.2% from the previous month to 125.7 points. Corn prices increased due to a decrease in global export volumes and expanded import demand. Wheat prices showed little change. Rice prices also rose due to increased demand for Indica and Japonica varieties.

Oils rose 6.2% from the previous month to 147.4 points. Palm oil and rapeseed oil prices increased as production forecasts in major exporting countries such as Southeast Asia and the European Union (EU) were lower than expected. Sunflower oil prices rose due to a shortage of export volumes from the Black Sea region, and soybean oil prices increased due to an international supply shortage.

Sugar recorded 100.2 points, up 6.4% from the previous month. This was largely due to predictions of reduced supply from Brazil, the world's largest exporter. Concerns were raised that Brazil would switch from sugar to ethanol production due to rising crude oil prices. Other countries also reduced production, but prices surged as demand in Asia rapidly increased.

Dairy products rose 1.7% from the previous month to 113.0 points. Prices increased due to expanded demand in major exporting countries such as Western Europe and China.

Meat was recorded at 96.4 points, up 0.6% from the previous month. The reduction in beef and lamb supply by Oceania for supply-demand adjustment had a significant impact.

The FAO forecasted that global cereal production for 2020 and 2021 would reach 2.7613 billion tons, an increase of 1.9% (52.5 million tons) compared to 2019 and 2020. Cereal consumption is also expected to rise by 2% (53.9 million tons) to 2.7657 billion tons. However, cereal stocks are predicted to decrease by 0.9% (7.6 million tons) to 811.1 million tons.

An official from the Ministry of Agriculture, Food and Rural Affairs said, "To minimize the domestic impact of rising international grain prices, we plan to consult with related ministries on measures to reduce industry burdens such as domestic customs clearance, tariffs, and interest rate adjustments."

World Food Price Index by Item for February. (Source: Ministry of Agriculture, Food and Rural Affairs)

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