The dwindling demand for and subsequent fall in the prices of crude oil due to the global upsurge of the coronavirus pandemic drove down international prices for major food commodities, a recent report by the Food and Agriculture Organisation Food Price Index (FFPI) of the United Nations, has said.
The index measures, monitors and tracks monthly changes in the international prices of commonly traded food commodities.
Details
The report, released April 2, has shown that the FFPI averaged 172.2 points in March, down by 7.8 points, or 4.3 per cent from February, although still 4.6 points (2.7 percent) higher than March last year.
However, the sharp decline in March was said to mark the second month-on-month drop in the value of the FFPI, largely driven by COVID-19 pandemic– demand contractions.
According to the report, the recent fall in prices was not pronounced for vegetable oils and sugar, while other sub-indices were said to have registered lower values in March.
“World food prices declined sharply in March, driven mostly by demand-side contractions linked to the effects of the COVID-19 pandemic and the drop in global oil prices due mostly to expectations of economic slowdown as governments roll out restrictions designed to respond to the health crisis,” the report reads.
According to Abdolreza Abbassian, the FAO senior economist, the price drops are largely driven by demand factors, not supply, and the demand factors are influenced by ever-more deteriorating economic prospects.
The report also said the sugar price index recorded the biggest drop, falling 19.1 per cent from the previous month.
It said the fall was caused by lower demand from out-of-home consumption tied to the confinement measures imposed by many countries, as well as lower demand from ethanol producers due to the high fall in crude oil prices.
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