Tag Archives: FAO Food Price Index

Chart of the Day, 6 March 2015: Global Food Prices and Production

Yesterday, I highlighted the tail risk of climate change; that is, low probability but high impact outcomes that could devastate the planet.

Nonetheless, while climate change is already showing up as biodiversity stress, it is not yet appearing as an aggregated agricultural impact across the globe. True, we can produce regional examples of likely climate change-induced distress. For example, climate change probably (but not certainly) helped tip the odds toward the strong western United States drought that we have been witnessing. This, in turn, has affected certain types of crop. But climate change has yet to have a material impact on global food production in its entirety.

Below is the composite Food Price Index from the Food and Agriculture Organisation (FAO). Data source here (click for larger image).

FAO Food Price Index jpeg

Real inflation-adjusted food prices are currently not far off their 1960s/70s levels. True, they are up about 40% from 20 years of so ago, but the world has got a lot richer since then. Indeed, Chinese real GDP per capita has more than doubled over the last 10 years and India’s same statistic is up about 60%. Continue reading

Data Watch: Food Price Indices for November 2013

I haven’t looked at food prices for a number of months, so thought it time to revisit the benchmark indices.

The Food and Agriculture Organisation of the United Nations (FAO) releases a series of monthly price indices for a variety of food commodities (here) at the beginning of each month. The headline FAO Food Price Index is a composite of five food groupings: meat, dairy, cereals, oils and fats and sugar. The base 100 is the indexed averaged price for the 2002-2004 period. The November 2013 index number was released on December 5th. Key points are as follows:

  • The FAO Food Price Index averaged 2o6.3 for November 2013, almost flat since the summer but down 7.0 points from January.
  • The index was down 9.5 points from the 215.8 recorded in November 2012, or 4.4 percent
  • In inflation adjusted terms, the Food Price Index stood at 160.2 for November 2013 against the 2002-2004 base of 100

FAO Index Nov 2013 jpeg

Given the new land that has been coming into production and a general lack of adverse weather, I am quite surprised that the index has stayed so high. However, this is mostly due to strength in meat and dairy prices, both near their all-time records. By contrast, cereals are down 24% from their recent high in November 2012.

The FAO’s food price index is non-weighted, and so is a rather simplistic measure of food price inflation. By contrast, the World Bank issues a trade-weighted index of food prices which can be found in the quarterly Food Price Watch. Nonetheless, the broad story is similar, with food prices off their highs but showing no signs of returning to the levels seen a decade ago.

World Bank Food Price Index Nov 13 jpeg

Reuters reports that Macquarie has launched an even more useful index of agricultural futures prices whose weights are based on global consumption of each commodity. I expect that such a time series will only be open to those with a Bloomberg or Reuters terminal but will confirm this going forward. As reported by The Financial Times, the Macquarie analysts behind the index expect bumper harvests to weigh on food prices for the next year or so before a modest rebound takes place. A similar view comes out of the Economist Intelligence Unit.

While high prices have been encouraging more agricultural investment (buttressing the old saw that the cure for high food prices is high food prices), the  joker in the pack remains extreme weather.

Agriculture will always be cyclical since high prices beget supply, which brings down prices, which in turn reduces supply and so on and so on. With climate change, however, weather will be far more volatile, so making the timing of the agricultural investment cycle much more difficult. The net effect will be to keep long-term average prices higher than they otherwise would have been (as farmers need a greater return for greater risk).

With this in mind, plus the fact that the prices of fossil-fuel related inputs into agriculture also remain elevated, I see no likelihood that food prices will return to their 1990s inflation-adjusted levels. We are more likely to witness new food price index records as the decade progresses, but perhaps not just yet.

Data Watch: FAO Food Price Index for June 2013

At the beginning of each month, the Food and Agriculture Organisation of the United Nations (FAO) releases a series of price indices for a variety of food commodities (here). The headline FAO Food Price Index is a composite of five food groupings: meat, dairy, cereals, oils and fats and sugar. The base 100 is the indexed averaged price for the 2002-2004 period. The June 2013 index number was released on July 4th. Key points are as follows:

  • The FAO Food Price Index averaged 211.3 for June 2013, down 1.9 points from the revised value of 213.2 for May
  • The index was up 10.8 points from the 200.5 recorded in June 2012, or 5.4 percent
  • In inflation adjusted terms, the Food Price Index stood at 140.3 for June 2013 against the 2002-2004 base of 100

The nominal and real price indices have followed a trajectory not dissimilar to the global oil price (click chart for larger image). Here is food:

FAO Food Price Index June 2013 jpeg

And here is oil (click for larger image):

Spot Oil Prices June 2013 jpeg

The drought in New Zealand has now broken, allowing the dairy component of the index to fall significantly from the April peak. Sugar prices also fell over the month. The sub-indices can be found here.

Data Watch: FAO Food Price Index for April 2013

At the beginning of each month, the Food and Agriculture Organisation of the United Nations (FAO) releases a series of price indices for a variety of food commodities (here). The headline FAO Food Price Index is a composite of five food groupings: meat, dairy, cereals, oils and fats and sugar. The base 100 is the indexed averaged price for the 2002-2004 period. The April 2013 index number was released on May 9th. Key points are as follows:

  • The FAO Food Price Index averaged 215.5 for April 2013, up from 213.2 the previous month
  • The index was up 2.4 points from the 213.1 recorded in April 2012, or 1.1 in percentage terms
  • In inflation adjusted terms, the Food Price Index stood at 143.1 for April 2013 against the 2002-2004 base of 100

The nominal and real price indices have followed a trajectory not dissimilar to the global oil price (click chart for larger image). Here is food:

FAO Food Price Index April jpeg

And here is oil:

Spot Oil Prices jpg

As in March, the main driver behind the upward movement in the overall index is the Dairy component. The Dairy Price Index rose 14.9% in April over the previous month and is up 39.4% from April 2012. The principal cause for this surge has been the drought in New Zealand; NASA has two images comparing April 2013 with April 2009, a normal year, here. The drought has now broken, but the after-effects are still being felt. The sub-indices are available from the FAO here.

Data Watch: FAO Food Price Index for February 2013

At the beginning of each month, the Food and Agriculture Organisation of the United Nations (FAO) releases a series of price indices for a variety of food commodities (here). The headline FAO Food Price Index is a composite of five food groupings: meat, dairy, cereals, oils and fats and sugar. The base 100 is the indexed averaged price for the 2002-2004 period. The February 2013 index number was released on March 7th. Key points are as follows:

  • The FAO Food Price Index averaged 210.2 for February 2013
  • The index was down 5.4 from 2015.6 for February 2012
  • In inflation adjusted terms, the Food Price Index stood at 139.6 for February 2013 against the 2002-2004 base of 100

The nominal and real price indices have followed a trajectory not dissimilar to the global oil price (click chart for larger image). Here is food:

FAO Food Price Index jpeg

And here is oil:

Spot Oil Prices jpg

Finally, price developments within the five main components of the Food Price Index can be seen below:

FAO Food Price Index Components jpeg