World food commodity prices plunge to lowest level in seven years

PARIS - Agence France-Presse

The price of international food commodities registered their largest monthly drop in seven years in August, the U.N. food agency said on Sept. 10, a slide likely to further hurt the struggling farming sector.

The Food and Agriculture Organization (FAO) said the prices of almost all commodities measured in its Food Price Index dropped, including milk, vegetable oils, sugar and cereals.

“Ample supplies, a slump in energy prices and concerns over China’s economic slowdown all contributed to the sharpest fall of the FAO Food Price Index in almost seven years,” it said in a statement.

The index averaged 155.7 points in August, down 5.2 percent from July, “the steepest monthly drop since December 2008, with virtually all major food commodities registering marked dips”, it said.

The index is now at its lowest since June 2010, the FAO said.

In contrast, meat prices remained virtually unchanged from July, although overall they are still down 18 percent from the peak of August 2014.

The UN agency is forecasting increased production of cereal, coarse grains, wheat and rice for 2015, which is likely to further push down prices.

Low commodity prices have a direct effect on farmers, shrinking margins and raising ire in an industry that has also been hit by China’s struggling economy and a Russian food embargo.

September has seen thousands of farmers atop hundreds of tractors take to the streets in protest outside the European Union headquarters in Brussels and in Paris.

A combination of factors, including changing dietary habits, slowing Chinese demand and a Russian embargo on Western products in response to sanctions over the Ukraine conflict, has pushed down prices for beef, pork and milk.