Food Prices Rise in March on West Asia Conflict

Chennai: World food commodity prices rose in March for the second month in a row, largely due to higher energy prices linked to the conflict in West Asia, finds the Food and Agriculture Organization of the United Nations (FAO). While wheat production in major producing countries are anticipated to fall, India will have a record harvest.

The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, averaged 128.5 points in March, up 2.4 percent from February and 1.0 percent above its level a year ago.

"Price rises since the conflict began have been modest, driven mainly by higher oil prices and cushioned by ample global cereal supplies," said FAO Chief Economist Máximo Torero. "But if the conflict stretches beyond 40 days with high input costs with current low margins, farmers will have to choose: farm the same with fewer inputs, plant less, or switch to less intensive fertilizer crops. Those choices will hit future yields and shape our food supply and commodity prices for the rest of this year and all of the next."

The FAO Vegetable Oil Price Index increased by 5.1 percent from February to stand 13.2 percent higher than its year-earlier level. International quotations for palm, soy, sunflower and rapeseed oil all rose, reflecting spillover effects from the sharp increases in crude oil prices, which catalyzed expectations of stronger demand for biofuels.

Bovine and poultry meat prices declined, partly due to logistical constraints limiting access to markets in West Asia.

The FAO Sugar Price Index increased by 7.2 percent in March. Rising expectations that Brazil, the main sugar exporter, would use more sugarcane to produce ethanol to counter higher international crude oil prices over-weighed a generally favourable global supply outlook for the current season, supported by good harvest progress in India and Thailand.

With most of the world’s wheat crop already planted, FAO forecasts worldwide harvests of 820 million tonnes, a 1.7 percent drop from the previous year. Lower prices and adverse weather conditions are anticipated to curb wheat output in the European Union, the Russian Federation, and the United States of America, while production in India is expected to hit a record high.