World Food Prices Drop Amid COVID-19 Pandemic; Demand Decreases

The ongoing COVID-19 pandemic has led to a sharp decline in global food prices in March as every sub-index saw prices decrease as demand fell. as per a study eleased by the UN Food and Agriculture Organization (FAO).

The overall index witnessed a downfall of 4.3 per cent, the second consecutive decrease and the highest one-month decline in nearly 2 years. Although March saw a decline in food process, the overall index was still 2.7 per cent higher than the same point last year, Xinhua reported citing the study released on Thursday.

The biggest drop in the index came from the prices for vegetable oil and sugars.

As compared to prices in February, vegetable oil prices fell by 12 per cent, pushed by less demand for fuel tied to the deadly pandemic, according to FAO. Prices for soy and rapeseed oil declined or biodiesel in the European Union declined markedly.

In March, sugar prices fell further by 19.1 per cent, pushed lower as bars and restaurants around the world closed after several countries announced complete or partial lockdowns in a bid to contain the novel virus.

Prices for basic commodities like cereals and grains also witnessed a fall by 1.9 per cent as export prices of all cereals except rice fell amid reduced levels of trade combined with robust harvests. Rice prices, on the other hand, surged slightly due to the increased demand from India and China.

Apart from these, dairy prices fell 3 per cent, the first decline after four months of increases, based mostly on lower demand amid the novel coronavirus pandemic.

Meat prices also faced a slight decline, falling just 0.6 per cent as lower beef prices were offset by rising prices for pork as transport issues limited supply in some markets. Prices for poultry remained stable, FAO said.

The monthly FAO Food Price Index is based on worldwide prices for 23 food commodity categories covering prices for 73 different products compared to a baseline year. The next index is scheduled for release on May 7, 2020.