Food Prices Stuck Near Record Highs as Supply Woes Continue: UN Agency

People shop for groceries at a supermarket in Glendale, Calif., on Jan. 12, 2022. Robyn Beck/AFP/Getty Images

Food prices remained elevated in April, barely easing from March’s record highs and posing challenges to food security amid ongoing market tightness, according to a UN agency.

The Food and Agriculture Organization of the United Nations (FAO) said that its food price index, which tracks the most globally traded commodities, retreated by 1.2 points over the month in April, after making a “giant leap” of 18.6 points in March to hit an all-time high of 159.7 points.

“The small decrease in the index is a welcome relief, particularly for low-income food-deficit countries, but still food prices remain close to their recent highs, reflecting persistent market tightness and posing a challenge to global food security for the most vulnerable,” FAO Chief Economist Máximo Torero Cullen said in a statement.

The slight decline in the food index was led by a significant drop in the price of vegetable oils and a modest fall in the price of cereals.

The FAO’s vegetable oil price index shed 14.3 points, or 5.7 percent, from its March record high. The drop was driven by lower prices of palm, sunflower, and soy oils.

Dairy, meat, and sugar prices all rose from March to April, according to FAO.

Food supply shortages, meanwhile, hit a record high in April, according to data from S&P Global.

People shop for groceries at a supermarket in Glendale, Calif., on Jan. 12, 2022. Robyn Beck/AFP/Getty Images

Deteriorating Food Security

Continued blockages of ports in Ukraine were a factor in keeping cereal prices elevated, the FAO said, but larger-than-expected exports from Russia and India, combined with a drop in demand, helped push down the index by 0.7 points in April.

In March, the cereal price index spiked 17.1 percent in March, hitting 170.1 points, its highest level on record, with the FAO attributing part of the blame to the Russia-Ukraine conflict.

The war in Ukraine has disrupted trade flows in the Black Sea region, with a significant impact on food supplies as Russia and Ukraine are both net exporters of several leading cereal crops: wheat, corn, and barley.

Even before the outbreak of war, food prices were at a record high due to factors like pandemic-related supply chain disruptions and a post-lockdown pick-up in demand.

The Russia-Ukraine conflict has made those inflationary pressures worse.

“The current conflict between Ukraine and the Russian Federation is increasing the risk of a further deterioration of the food insecurity situation at global level,” the FAO said in a recent food insecurity assessment (pdf).

Russia and Ukraine are major food exporters, with the two countries jointly accounting for around 30 percent of wheat exports and around 80 percent of sunflower seed products trade, according to the AMIS Market Monitor (pdf).

Aid agencies have warned that disruptions to Ukraine’s food exports mean that countries that rely on them heavily—including China, Egypt, Turkey, and Indonesia—will have to find alternate supplies or face food shortages.