The Food and Agriculture Organization of the United Nations (FAO) Food Price Index fell 1% in October, and for the first ten months of the year food prices were on average 8% lower than in the same period in 2011. The decline was largely due to lower international prices of cereals and oils and fats, which more than offset increases in dairy and sugar prices.
Meanwhile the FAO Food Outlook noted that lower international prices and freight rates, together with lower cereal purchases, could push down the world food import bill in 2012. Global expenditure on food imports was forecast at $1.14 trillion in 2012, 10% lower than last year's record level.
"Despite tight markets, a set of conditions and measures have so far stopped international food prices from spiralling up as they did in 2007-08 and 2009-10. Chief among those are the improved international coordination and market transparency brought about by the G20's Agricultural Market Information System (AMIS) which has helped to prevent panic and to stop the worst drought in decades turning into a food price crisis as has happened in the past," said the FAO Director-General José Graziano da Silva. AMIS has its Secretariat at FAO.
""Droughts or floods are not what causes crises, it's lack of governance. In a globalized world, we cannot have food security in only one country or in one region. We need to strengthen the global governance of food security," added Graziano DA Silva.
However, FAO expects the global cereal stocks situation to tighten considerably in 2012-13, due mainly to likely declines in wheat and corn outputs. World cereal production is forecast to fall by 2.7% from previous year's record crop, leading to a 25 MMT contraction in world stocks.
FAO lowered its projection of the 2012-13 global wheat crop by 2.8 MMT from last month to 661.2 MMT, down from 699.4 MMT the previous season.