Food Prices a Fifth Lower Than Peak After Ukraine War Started

Global food prices fell again in March and are more than a fifth lower than the peak a year ago, the United Nations Agriculture Organization (FAO) calculated.

However, shortly after the Russian invasion of Ukraine in February 2022, prices for essential food and drink commodities rose to record highs. Both countries are major grain exporters, and the war raised fears of wheat or corn shortages.

The indicator used by the FAO to measure price developments for grain, meat and vegetable oils, for example, fell by 2.1 percent to 126.9 points between February and March. Compared to March last year, this is a decline of 20.5 percent.

This decrease was partly due to cheaper grain. According to the FAO, Russia and Ukraine remain well supplied to the world market with grain, thanks to the extension of their agreement reached last year that allowed exports from Ukrainian ports on the Black Sea. In addition, Australia had a good wheat harvest, and it looks like grain is growing well in Europe. Oils such as sunflower or rapeseed oil became cheaper thanks to an ample supply and relatively low demand.

Chief Economist Máximo Torero of the FAO warns against too much optimism about falling prices. For example, food is still relatively expensive, and some countries face rising costs for the most basic necessities.

“This is especially the case in developing countries that import a lot of food, where their situation has worsened due to the depreciation of their currencies against the US dollar or the euro,” he says. In addition, Torero points out that several poorer countries are also struggling with high debts, which weakens their position on the world market.

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