FAO Food Price Index Falls for Fifth Straight Year
Updated at 1484329990
Photo Credit: Katrin Park / IFPRI

The FAO Food Price Index fell for the fifth consecutive year in 2016, according to the most recently released report. For 2016 overall, the Index averaged 161.6 points, which is down 1.5 percent from its 2015 average. Cereal, meat, and dairy prices all declined in 2016, more than making up for rises in sugar and vegetable oil prices.

In December, the Cereal Price Index remained stable, rising only 0.5 percent from November. Measures to support domestic prices in Thailand and strong demand from Pakistan drove rice prices up somewhat in December. Wheat prices, on the other hand, weakened somewhat due to strong production prospects in Australia, Canada, the Russian Federation, and Argentina. Overall in 2016, the Cereal Price Index was down 9.6 percent from 2015 and as much as 39 percent down from its peak in 2011.

The Vegetable Oil Price Index gained 7.4 points from November, driven mostly by increased palm and soy oil prices. This was the highest level seen since July 2014. Concerns about weather in Argentina and forecast increases in use from the biodiesel sector in the US, Brazil, and Argentina were behind rising soy oil prices. The Vegetable Oil Price Index as a whole in 2016 was up 11.4 percent from 2015, but remains well below the highs seen five years ago.

The Dairy Price Index rose 3.3 percent in December based on strong international demand and limited production in the EU and Oceania. Dairy prices in 2016 were 4 percent lower than the previous year, but international dairy prices did see substantial growth in 2016. The Meat Price Index fell 1.1 percent in December, and remained 7 percent below its 2015 levels in 2016.

Finally, the Sugar Price Index fell 8.6 percent in December, driven largely by the continued weakening of the Brazilian Real and higher-than-expected production from Brazil’s main producing region. In 2016 overall, sugar prices rose by 34.2 percent from 2015, the first annual increase since prices peaked in 2011.

By: Sara Gustafson, IFPRI