In 2007, the FAO Food Price Index averaged 157, up 23 percent from 2006 and 34 percent from 2005. Except for sugar, prices of which declined sharply, international prices of other major food commodities rose significantly in 2007. Dairy, cereals and vegetable oils made the strongest gains, supported by tight supply and demand situation. In December, the food index averaged 184, the highest recorded monthly average since the start of the index in 1990.
Dwindling cereal supplies amid rising demand pushed up prices of most cereals, wheat and maize in particular, during 2007. In December 2007, the FAO cereal price index averaged 210, up 41 percent from December 2006. The cereal index in 2007 averaged 172; also well above the 2006 annual average of 126.
Tight supplies from traditional exporters, strong import demand, and the exhaustion of public stocks caused an unprecedented eruption of dairy product export prices in late 2006 and through 2007. While December 2007 marked the first easing of prices since mid 2006, the FAO Dairy Product Price Index averaged 295, up 83 percent from December 2006. On an annual basis, the index averaged 247 in 2007 compared with and average of 138 in 2006.
The FAO meat price index averaged 121.5 in 2007, more then 5 percent above the 2006 annual average of 115.5. The increase mainly reflected the surge in feed prices. While poultry meat prices gained the most, the extent of price increases varied significantly depending on feed conversion efficiencies, biological lags in production responses as well as the role played by contract prices.
A recovery in sugar production in traditional importing countries led to weaker sugar prices in 2007, when the FAO sugar price index averaged 129, a 32 percent drop over 2006. In December 2007, the FAO sugar price index averaged 137.5, which was 7 percent lower than in December 2006, but 6 percent higher than in November 2007.
Constant expansion in the demand for vegetable oils and fats - for food uses but also as biofuel feedstock - combined with a slowdown in production growth has resulted in a gradual tightening of global supplies, leading to a surge in prices. In December 2007, the FAO oils/fats price index reached 226, compared to 136 in December 2006; and over the year 2007 the index averaged 174, also well above the 2006 annual average of 117.
FAO Food Price Indices
