July FPMA Report

The FAO’s monthly report on food price trends was released on July 10, 2017. The bulletin reports on recent food price developments over the past month at the global, regional, and country levels, with a focus on developing countries, and provides early warnings for high country-level food prices that may negatively affect food security.

Overall international wheat prices increased in June because of quality concerns stemming from unfavorable growing conditions. These conditions have led to reports of reduced availability of premium grade milling wheat in some key producing countries in the Northern Hemisphere and parts of Australia.

International maize prices remained stable in June, down almost 13 percent from June 2016 on account of improved weather. In East Africa, cereal prices remained stable or declined in June with the start of the new 2017 harvests. Over the last few months, prices in this region had increased sharply because of drought in 2016, which reduced the second season crop, and concerns over the overall performance of the 2017 harvest due to drought and crop pests .

The All Rice Price Index rose for the seventh consecutive month in June. Export prices registered further increases in all the major Asian origins, due to the need to meet rush orders stemming largely from Ramadan celebrations. In Asia, the demand for rice underpinned domestic prices.

Rice prices reached record highs in Bangladesh due to losses in the 2017 main crop coupled with reduced production and imports in 2016. In response, the government of Bangladesh has purchased rice from neighboring countries and announced a reduction of the import duty on rice to 10 percent, down from 25 percent.

In Burundi, the price of maize has been stable at about twice its year-earlier levels. This is due to an overall tight supply stemming from a reduced harvest earlier this year combined with lower imports from neighboring Tanzania and Rwanda. Weak currency and fuel shortages leading to higher transport costs have also impacted the price of this important staple crop.

Maize prices in Ethiopia continue to increase due to seasonal dryness and Fall armyworm infestation, both of which are affecting yield potential. The price of wheat also increased in June in the capital, Addis Ababa, but remains around the same price as June 2016 due to adequate imports and crop yields.

In Kenya, the price of maize fell a little from May to June as a result of imports from Uganda and Tanzania. However, overall maize prices are up to 80 percent higher than just a year ago, due to drought and Fall armyworm infestation. The government of Kenya has taken measures to curb prices, including providing subsidies for maize imports and the sale of maize flour.

In Niger, the price of coarse grain rose in most markets in June. Seasonal trends were exacerbated by sustained demand during Ramadan. Other contributions to the higher prices came from 2016 production shortfalls, large institutional purchases in recent months, and lower imports from Nigeria. However, the sustained flow of imports kept the prices of rice stable, below their values from last June.

In Nigeria, the prices of coarse grains and white gari reached record highs in June. As in Niger, seasonal trends and higher demand during Ramadan were the main reasons for the increase. In general, Nigeria’s high food prices are due to civil unrest, depreciation of the local currency, tight market supplies, and high transportation costs. Despite higher food prices, however, inflation in Nigeria fell for the fourth consecutive month. In early July, the government of Nigeria announced its intention to curb food prices over the following few weeks.

The East African Community (EAC) has removed or reduced the Common External Tariff (CET) on some imported food products to Rwanda in an effort to ease supply pressure and curb food inflation there. The price of maize in the capital city of Kigali is still at near record levels, 40 percent above the values from last year, mostly due to local production shortfalls and highly priced imports from Uganda and Tanzania.

In Somalia, the price of coarse grains remains at high levels, up to double the levels seen in June 2016. These prices are due to reduced supply from the drought-affected 2016 cereal output and unfavorable prospects for 2017 in the face of drought, which has led to reduced plantings and pest damage on germinated crops.

South Sudan is still seeing high food prices, despite some declines in important staples like wheat flour and cassava. In June, food prices were 3-5 times higher than the same period last year, despite the import duty on basic commodities being lifted. The depreciation of the local currency, tight domestic supplies, and marketing disruptions due to insecurity are behind the continued high prices.

In Sri Lanka, the price of rice rose 17 percent above its year-earlier levels. Tight water supplies and a shortage of seeds, combined with seasonal trends, exacerbated the situation. High rice prices also reflect anticipations of a significant decline in the 2017 rice output, which is forecast to be almost 40 percent less than last year’s production due to drought. In an effort to boost market supplies, the government or Sri Lanka has increased imports and extended tax concessions on imported rice through August 2017.

Uganda continues to see maize prices on the rise, about 50 percent higher than last year. This is due to tight supplies from the reduced 2016 cereal output and concerns of shortfalls in the ongoing harvest. Fall armyworm infestation was reported in 60 of the country’s 111 districts, further threatening 2017 production.

In Tanzania, the price of maize declined for the second consecutive month due to increased harvest supplies. However, maize prices are still higher than June last year due to Fall armyworm infestations and a drought-reduced second harvest in 2016.

By: Jenn Campus