Meat prices 'unchanged' while other food costs soar

by Bryan Salvage
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ROME – In January, world food prices reached a new historic high for the seventh consecutive month, according to the updated Food and Agriculture Organization of the United Nations (FAO) Food Price Index, a commodity basket that regularly tracks monthly changes in global food prices. Prices of all monitored commodity groups registered strong gains in January, except for meat, which remained unchanged.

Last month, the Index averaged 231 points and was up 3.4% from December 2010. This is the highest level (both in real and nominal terms) since FAO began measuring food prices in 1990.

"The new figures clearly show the upward pressure on world food prices is not abating," said Abdolreza Abbassian, FAO economist and grains expert. "These high prices are likely to persist in the months to come. High food prices are of major concern especially for low-income, food-deficit countries that may face problems in financing food imports and for poor households which spend a large share of their income on food."

However, the good news for a number of countries is good harvests caused domestic prices of some of the food staples to remain low compared to global prices, Abbassian said.

The Food Price Index has been revised largely reflecting adjustments to its meat-price index, FAO emphasized,. The revision, which is retroactive, has produced new figures for all the indices. But the overall trends measured since 1990 remain unchanged.

In January, the FAO Cereal Price Index averaged 245 points, up 3% from December and the highest since July 2008, but still 11% below its peak in April 2008. The increase in January mostly reflected continuing increases in international prices of wheat and maize, amid tightening supplies, while rice prices fell slightly, as the timing coincides with the harvesting of main crops in major exporting countries.

The Oils/Fats Price Index increased by 5.6% to 278 points, nearing the June 2008 record level, reflecting an increasingly tight supply and demand balance across the oilseeds complex.

The Dairy Price Index averaged 221 points in January, up 6.2% from December, but still 17% below its peak in November 2007. A firm global demand for dairy products, against the backdrop of a normal seasonal decline of production in the southern hemisphere, continued to underpin dairy prices.

The Sugar Price Index averaged 420 points in January, up 5.4% from December. International sugar prices remain high, driven by tight global supplies.

The FAO Meat Price Index, however, was steady at around 166 points. Declining meat prices in Europe were caused by a fall in consumer confidence following a feed contamination scandal—but this was compensated for by a slight increase in export prices from Brazil and the United States.
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