ABU DHABI, U.A.E. (Reuters) — World food prices are expected to fall further this year, says Graziano da Silva, director general of the United Nations’ Food and Agriculture Organization.
Prices are already near their lowest level in seven years because of slowing economic growth.
The FAO’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, has fallen in each of the last four years.
It stabilized last month near a seven-year low as increases in vegetable oil and meat offset declining cereal, sugar and dairy prices.
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“The slowdown of the growth of the world economy, especially China, is putting a lot of (downward) pressure on commodities,” da Silva said.
“We expect the price to continue to fall in real terms, not necessarily nominal terms, so it will depend a lot for each country on the ex-change rate.”
Producers in countries such as Brazil have been shielded to some extent from the overall weakness in global prices by the weakness of their local currency.
“In the short run, this (weak food prices) will be a kind of compensation for the poorest that are buyers of food … but in the long run we would like to see prices recover again,” da Silva said.
“From experience, we see long-term trends of falling prices of commodities mean also a reduction in the supply side.”
The FAO recently said world cereal production and demand should be balanced in 2015-16 with both totalling 2.52 billion tonnes.
This would leave ending stocks virtually unchanged from a year earlier.
