FAO: Low Fuel Prices Help Decrease Food Costs

TEMPO.CO, Jakarta - The sharp decline in global crude oil prices has not only helped people fill up their petrol tanks, it also brought down food prices across the globe, according to a United Nations (UN) press release issued on Thursday, February 5, 2015.

The Food and Agriculture Organization (FAO) said the price index for food had decreased by 1.9 percent in January to 182.7 points—driven by adequate supplies, appreciating United States (US) dollar, and low oil prices.

The release stated that food prices had dropped to a level last seen five years ago—although in practice, prices are still about 20 percent higher compared to those in early 2000s.

It is known that crude oil has lost around half of its value since June 2014, resulting in lower costs of food production and the transportation of processed food products.

FAO said the lower prices in January reflected the high production expectations among food producers, which prompted it to revise its projection of grain production to a record-high of 2,534 million tons, and that there were profits to be made for agricultural produces in 2015.

The UN-affiliated organization noted that the stock ratio for grains was expected to increase by 25 percent—a sharp jump in production that had been absent in over a decade, and far above its lowest projection of 18.7 percent, which was recorded between 2007-2008 when grain prices fluctuated wildly.

Thus, despite the increases predicted for grains and maize, rice stocks are expected to decline, according to FAO, as quoted by AFP on Friday.

ANTARA