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World food prices declined by as much 11.3 per cent in December 2011 from its peak registered in February.
The downtrend was driven by a sharp fall in international prices of cereals, sugar and oils due to bumper crops, coupled with slowing demand and a strong dollar, according to the Food and Agriculture Organisation (FAO).
Despite a steady drop in prices during the second half of 2011, the FAO Food Price Index averaged 228 points during the year, which was the highest average since the organisation started measuring international prices in 1990. The previous high was in 2008 at 200 points, says a FAO report. The FAO Senior Grains Economist was quoted as saying that the ‘international prices of many commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead'.
Biggest fall
Commodity-wise, cereal prices recorded the biggest fall, with the FAO index dropping by 4.8 per cent in December. This has been attributed to record crops and an improved supply outlook. Among the cereals, maize prices declined by six per cent, wheat by four per cent and rice by three per cent.
The oils and fats index stood at 227 points in December, which was well below the level of 264 points a year ago. Larger than expected overall supplies of vegetable oils, especially palm and sunflower oils, combined with poor global demand for soybeans, pulled down prices, says FAO.
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