Global Food Prices Hit a 10-year Peak in 2021, Says Food and Agriculture Organization

World food prices went up 28% in 2021 to their highest level in a decade, with hardly any prospect of recovery to more stable market circumstances this year, according to the United Nations Food Agency. The Food and Agriculture Organization's (FAO) food price index, which analyses the most widely traded food items on a worldwide scale, averaged 125.7 points in 2021, the highest level since 131.9 in 2011. 

The monthly index fell significantly in December after rising for four months in a row, indicating crop failures and robust demand during the previous year. Higher food prices have led to a larger spike in inflation as economies recover from the impact of the Covid crisis on agriculture products supply, and the FAO has cautioned that the higher costs are putting poorer populations in danger in import-dependent countries. 

The food agency was skeptical in its recent assessment regarding whether pricing pressures will ease this year. 

"While generally high prices are expected to lead to increased output, the high cost of inputs, continuing global pandemic, increasingly uncertain weather conditions leave some room for hopefulness about a come back to a more stable market situation even in 2022," said FAO senior economist Abdolreza Abbassian in a statement. 

Fertilizer price increases, in turn, connected to spiraling energy prices, have raised the cost of so-called inputs needed by farmers to grow crops, casting doubt on yield predictions for next year's harvests. Pricing for all categories in the food price index except dairy goods declined in December, with vegetable oils and sugar decreasing considerably, according to the agency's monthly bulletin. 

However, all index categories increased sharply in 2021, and the FAO's vegetable oil price index reached a new high. 

Crop futures have witnessed erratic trading at the start of 2022, with oilseed markets roiled by drought in South America and flooding in Malaysia. 

Dairy prices continued their recent rise in December, aided by decreased milk output in Western Europe and Oceania, according to the FAO.