World food prices rebound from three-year low, says UN agency

World food prices rebounded in March from a three-year low, boosted by increases in vegetable oils, meat and dairy products, according to the United Nations food agency’s latest price index.

The Food and Agriculture Organization’s (FAO) index, which tracks the most globally traded food commodities, averaged 118.3 points in March, up from a revised 117.0 points the previous month, the agency said.

The February reading was the lowest for the index since February 2021 and marked a seventh consecutive monthly decline.

International food prices have fallen sharply from a record peak in March 2022 at the start of Russia’s full-scale invasion of fellow crop exporter Ukraine.

The FAO’s latest monthly reading was 7.7 per cent below the year-earlier level, it said.

In March, the agency’s vegetable oil price index led gains, jumping 8 per cent month on month, with all major oils registering increases.

The dairy index gained 2.9 per cent for a sixth straight monthly rise, driven by cheese and butter prices, while the FAO’s meat index added 1.7 per cent, reflecting higher poultry, pig and beef prices.

Those gains outweighed declines for cereals, which shed 2.6 per cent from February, and for sugar, which fell 5.4 per cent.

Wheat led the decline in cereals amid strong export competition and cancelled purchases by China, offsetting a slight rise for maize (corn) prices partly due to logistical difficulties in Ukraine, the FAO said.

Weaker sugar prices mainly reflected an upward revision to expected production in India and an improved harvest pace in Thailand, it said.

In separate cereal supply and demand data, the FAO nudged up its forecast for world cereal production in 2023/24 to 2.841 billion metric tons from 2.840 million projected last month, up 1.1 per cent from the previous season.

For upcoming crops, the agency trimmed its forecast for 2024 global wheat output to 796 million tons, from 797 million last month, due to reduced expectations for European Union and UK crops following rain-hit sowing and dry conditions in some areas.

For maize, a fall in world production was anticipated but the volume would remain above the average of the past five years, the FAO said, without giving a precise forecast.

Meanwhile the european policymakers have scaled back rules to protect nature, drawn up limits on the import of tariff-free Ukrainian grains and scrapped new legislation limiting pesticide use as farmers’ protests resonate with voters ahead of elections.

From Poland to Portugal, farmers have won remarkable concessions in response to waves of street action, reshaping the European Union’s green politics months ahead of European Parliament elections.

Environmental activists and analysts say the policy backsliding illustrates the considerable political influence of farmers as mainstream parties seek to impede the far right and nationalist parties’ hunt for votes in rural areas.

Farmers again blockaded streets surrounding the European Union headquarters in Brussels last week, spraying manure to protest low incomes, cheap food imports and burdensome red tape. As they did so, the bloc’s farming ministers backed a new set of changes to weaken green rules linked to the disbursement of tens of billions of euros in farming subsidies.

When the last European elections were held in 2019, the Greens made strong gains and climate activist Greta Thunberg was voted Time Magazine’s Person of the Year.

“The elections in 2024 will be elections in the year of angry farmers,” said Franc Bogovic, a Slovenian lawmaker in the European Parliament and himself a farmer.

The scramble to placate farmers has impacted key pillars of EU policy, pressuring the bloc over its Green Deal and free trade accords.

EU environment commissioner Virginijus Sinkevicius warned of a “disastrous” blow to the bloc’s credibility last week, when EU countries declined to approve a landmark law to safeguard nature, leaving it unclear if the policy will be passed.

Other green measures are hanging in the balance ahead of the election. EU countries asked Brussels last week to scale back and possibly delay a new anti-deforestation policy, which they said could harm local farmers.

In France, senators in March voted against ratification of an EU-Canada free trade deal, targeting a symbol of the EU’s willingness to open up markets and boost competition.

And while the EU has extended tariff-free access for Ukrainian food producers, it agreed last month to impose duties if imports exceed a certain level, in response to farmers’ protests.

Some farming groups acknowledge the response by policymakers to the protests is likely linked to June’s elections - but say the weakening of green rules is not what they want.