FAO Food Price Index

The FAO Food Price Index (FFPI) averaged 211 points in December 2011, marking a 2.4 percent (5-point) decline from November and an 11.3 percent (27-point) drop from its February 2011 peak. This decline was attributed to sharp reductions in international cereals, sugar, and oil prices, driven by bumper crops, slowing demand, and a stronger US dollar. Despite this drop, the FFPI averaged 228 points in 2011, 23 percent (42 points) higher than 2010, exceeding the previous record of 200 points in 2008. This is the highest level recorded since the FAO began monitoring international food prices in 1990.

Cereal Price Trends

The FAO Cereal Price Index averaged 218 points in December, reflecting a 4.8 percent (11-point) drop from November. Improved supply conditions and record harvests led to significant price decreases for major cereals:

• Maize: Prices dropped by 6 percent.
• Wheat: Prices fell by 4 percent.
• Rice: Prices declined by 3 percent.

The index averaged 247 points for the entire year, a substantial 35 percent increase from 2010 and the highest level since the 1970s.

Oils and Fats Price Trends

The FAO Oils/Fats Price Index stood at 227 points in December, a 3 percent (7-point) drop from November and a sharp decline from the December 2010 value of 264 points. The decrease was attributed to:

• Larger-than-expected supplies of vegetable oils, mainly palm and sunflower oil.
• Weak global demand for soybeans.

Meat Price Trends

The FAO Meat Price Index averaged 179 points in December, slightly declining from November. Key trends included:

• Pig Meat: Prices dropped by 2.2 percent.
• Sheep Meat: Prices fell modestly.
• Poultry and Bovine Meat: Prices recorded slight gains.

In 2011, annual meat prices were 16 percent higher than in 2010, with notable increases across all categories, especially ovine meat.

Dairy Price Trends

The FAO Dairy Price Index averaged 202 points in December, remaining almost unchanged from November. Most dairy products experienced slight increases, except for butter, which saw a 1 percent drop. Over the year, dairy prices were 10 percent higher than in 2010, with significant gains in:

• Skim Milk Powder and Casein: Prices increased by 17 percent.
• Butter and Whole Milk Powder: Prices rose by 11 percent.
• Cheese: Prices increased by 8 percent.

Sugar Price Trends

The FAO Sugar Price Index declined for the fifth consecutive month, averaging 327 points in December. This is a 4 percent (13-point) decrease from November and an 18 percent (73.5-point) drop from its July 2011 peak. The decline reflected expectations of a large global production surplus, driven by favorable harvests in key regions such as India, the EU, Thailand, and the Russian Federation.

Conclusion

The FAO food price indices reveal significant fluctuations across various commodities in 2011, reflecting changes in supply conditions, global demand, and economic factors such as currency strength. While prices declined in the latter half of the year, the annual averages reached record highs, underlining the dynamic nature of global food markets. For more details on domestic food price developments, refer to the Global Food Price Monitor.