Food became more affordable last year.
This wouldn’t be a big surprise for grain and oilseed producers, other than to know that the decline in value for their products was felt in the world’s kitchens.
Measuring food affordability is one of the jobs that the United Nation’s Food and Agriculture Organization does.
Until December, the FAO Food Price Index had stabilized for three months after a rapid decline for most of the year.
Of the five commodities in the FAO grocery basket — cereals, sugar, vegetable oil, dairy and meat — only meat increased last year. Prices for meat were up 8.1 percent over the previous year.
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European pork and Australia and New Zealand sheep and goat meat cooled off at the end of the year. Beef demand has been stronger than supplies, and a rising U.S. dollar played into the higher prices.
Since September, the overall value of the basket has fallen to the lowest it has been since 2010.
Other than in 2010, prices in the past five years have tended to rise slightly in the first quarter and then decline after April.
Dairy was the biggest loser, down 7.7 percent for the year, as large supplies of milk hit the export markets while at the same time major importers China and Russia backed away from the order table.
Cereal prices were flat to increasing toward the end of the year as wheat rose slightly because of worries about a Russian export ban and a rising U.S. dollar.
This offset a serious decline in rice prices because of large supplies. Despite the increase, cereals were off 12.5 percent last year.
Sugar wasn’t that sweet for markets, which preferred the taste of petroleum. Ethanol failed to take up surplus sugar in the markets because it had to keep pace with other fuels. It was off 3.8 percent.
Vegetable oil too felt the weight of oil barrels, off six percent for the year. Palm oil has reached a five-year low.
However, the world wanted more vegetable oil for food, and 2014 ended with a slight bump upward for December.
The FAO index is at 202, the lowest since 2010, when it was 188. Compared to 2002’s 89 score, food is still too expensive for some and not enough for others.
michael.raine@producer.com
