Global food prices have risen every month for the last year to their highest point since September 2011, with the Food and Agriculture Organization (FAO) pointing out that in May 2021 food prices was 39.7% higher than they were in May 2020.
There has been a significant spike in cereal prices, vegetable oil has increased 124% over the last year, dairy products have become 28% more expensive, meat prices have increased by 10% since May 2020 and sugar prices have been up by 57%.
FAO’s Food Price Index reported earlier this month that the cost of its basket of agricultural commodities was up by 40% on the year. Shirley Mustafa, FAO’s rice economist, said rice’s current position was very unusual, but that it had been a peculiar period in general for agricultural commodities. Mustafa explained that the fast recovery in China’s pig herd in the last year following an African swine fever outbreak had led to a surge in feed demand, primarily corn and soybeans. “Another factor is the impact the La Nina weather even had had on vegetable oil production, especially for palm oil following excess rain in Malaysia and Indonesia. Labor shortages affecting Malaysia’s palm sector had also contributed to price strength in that market.”
Mustafa highlighted that there was no single factor to explain the recent sharp agricultural price increases. “It was a real mix of things, also pointing to demand shocks in the second half of 2020 and the first half of 2021 as pandemic lockdown measures in various areas of the globe were erased, while the overarching influence of the US dollar trends since the start of the COVID-19 pandemic cannot be overstated.” The report stated that rice is certainly bucking the trend of rising prices for other agricultural commodities at the moment. But with reduced production in some regions, a mixed demand and stocks outlook and ongoing logistical issues, it is unclear if rice will continue to be the beacon of stability in the agricultural commodity markets.