Global food prices in 2022 hit record high amid drought, Russia-Ukraine war

Global prices for food commodities like grain and vegetable oils were the highest on record last year even after falling for nine months in a row, the U.N. Food and Agriculture Organization said, as Russia's war in Ukraine, drought and other factors drove up inflation and worsened hunger worldwide.

The FAO Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, dipped by 1.9% in December from a month earlier, the Rome-based organisation said Friday. For the whole year, it averaged 143.7 points, more than 14% above the 2021 average, which also saw large increases.

The December decline was led by a drop in the price of vegetable oils amid shrinking import demand, expectations of increased soy oil production in South America and lower crude oil prices. Grain and meat were also down, while dairy and sugar rose slightly.

Calmer food commodity prices are welcome after two very volatile years, FAO chief economist Maximo Torero said in a prepared statement. It is important to remain vigilant and keep a strong focus on mitigating global food insecurity given that world food prices remain at elevated levels, with many staples near record highs, and with prices of rice increasing, and still many risks associated with future supplies.

Last year, the U.N. organization's Food Price Index hit the highest level since its records began in 1961, according to FAO data.

Russia's invasion of Ukraine in February exacerbated a food crisis because the two countries were leading global suppliers of wheat, barley, sunflower oil and other products, especially to nations in parts of Africa, the Middle East and Asia that were already struggling with hunger.

With critical Black Sea supplies disrupted, food prices rose to record highs, increasing inflation, poverty and food insecurity in developing nations that rely on imports.

The war also jolted energy markets and fertilizer supplies, both key to food production. That was on top of climate shocks that have fueled starvation in places like the Horn of Africa. Ethiopia, Somalia and Kenya are badly affected by the worst drought in decades, with the U.N. warning that parts of Somalia are facing famine. Thousands of people have already died.

Prices for wheat and corn reached a record high last year, though they fell in December along with the costs of other grains, the FAO said. It said harvests in the Southern Hemisphere boosted supplies and there was strong competition among exporters.

The organisation's Vegetable Oil Price Index hit an all-time high last year, even as it tumbled in December to its lowest level since February 2021. For all of 2022, the FAO Dairy Price Index and Meat Price Index also were the highest since 1990.