Highest In More Than A Decade
The UN Food and Agriculture Organisation (FAO) released data announcing its world Food Price Index (FPI) averaging 133.2 points in October, the highest since July 2011 driven by robust demand and lackluster harvests. The index highlighted the soaring cost of cereals and vegetable oils around the world, while noting that global food prices have increased 30% in the last year. These developments starkly contrast the FAO's overview published last August, which outlined a consecutive downward trend in global food commodity prices.
One reason why petroleum and agri-commodity prices move in tenden is the bio-fuels link. The same happens to sugar, as mills step up the proportion of cane crushed for formatting into alcohol. But it is not the bio-fuels effect alone. International coffee prices also strengthened along with crude oil. Food supplies and prices are under pressure from extreme weather, snarled supply chains, worker shortages and rising costs. Supermarkets in some major economies have struggled to keep their shelves fully stocked at points during the pandemic. The revival of economic activity worldwide and liquidity unleashed by the US Federal Reserve and other global Central banks are prominent cause for the surge.
There is a time to have an action plan to emphasize the goal of reducing prices comparatively. However, the publications comes forward with some recommendations, including better data collection to guide renewable energy investments, improved access to finance and a greater focus on raising awareness and building capacity.
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