Food Price Increases Slowing Worldwide

With the exception of meat-based proteins, prices for many foods and feedstuffs fell across the world during the second half of 2014, according to data from the United Nation’s Food & Agriculture Organization. Both the FAO’s global food consumption price index, based on a market basket of foods at the consumer level, and its food price index, calculated from commodities price trends, fell sharply in the second half of 2014. The reason: better harvests for most agricultural products in 2013 and 2014.

The way these global price changes played out in individual markets varied last year. In the U.S., average wholesale food prices rose 5.5% during 2014, driven higher by double-digit increases for beef, pork, and dairy products. Vegetable and fruit prices also rose sharply as a severe drought in California reduced yields. It was the strongest gain in wholesale food prices in three years and the fifth consecutive year of higher food prices in the U.S. But as in the rest of the world, the gains moderated about mid-year and began falling in the last quarter of 2014.

In the United Kingdom, on the other hand, food prices fell for the first time since 2000, according to data compiled by procurement specialist Prestige Purchasing. Prices fell about 1.5% during 2014, according to a report in The Caterer.

Overall, most forecasts have food prices rising only moderately in 2015. In the U.S., farmers harvested record maize corn and soybean crops last fall. Good cereal harvests continue in most of the rest of the world. The one exception remains livestock-based proteins. Ever-increasing worldwide demand for meats and herd culling that resulted from severe droughts in several areas of the world in 2012-2013 will likely keep prices for beef and other meats elevated through 2016.