Global Food Prices Set For Decline On Prospect Of Bumper Harvest

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The United Nations Food Agency has announced on Thursday, the trend of the drop in food prices around the world due to the prospect of bumper harvests.

World food prices reportedly fell in August from the month before but despite the drop, food on international markets remained 6% more expensive than a year earlier. Food commodities have emerged from an era of intense volatility and Agriculture Organisation (FAO) expects them to remain stable over the next decade.

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The FAO’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat, and sugar, averaged 176.6points in August, down 1.3% from July. The cereals sub-index fell 5.4% due to expectations of higher production, especially in the Black Sea region.

Meat and sugar prices also declined due to high supply forecasts. Global cereals output is expected to hit an all-time high of 2.611billion tons in the 2017-18 season, up 18.4million tons on the previous month’s forecast, the FAO said, and worldwide stocks are also set to hit a new record.

It is noted that food prices rose steadily in the three months to August. According to FOA chief economist Abdolreza Abbassian, ample supply looks unlikely to leave room for price increases in the near future, Reuters reports.

The FAO food price index is a measure of the monthly change in international prices of a market basket of food commodities. It consists of the average of five commodity group price indices, weighted with the average export shares of each of the groups for 2002-2004.

In Nigeria, a wave of relief swept across the nation as it emerges from recession.

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A statement by Dr. Adeyemi Dipeolu, economic adviser to the president noted that the figures released by the National Bureau of Statistics for the second quarter of this year (Q2 2017) show that the economy grew in Q2 2017 by 0.55% from -0.91% in Q1 2017 and -1.49% in Q2 2016.

The economic adviser attributed the positive growth to both the oil and non-oil sectors which have been negative since Q4 2015, as well as in the Agricultural sector.

Excerpt of his statement reads:

This improvement is partly due to the fact that oil prices which have improved slightly from the lows of last year have been relatively steady as well as the fact that production levels were being restored.

“The non-oil sector grew by 0.45% in Q2 2017, a second successive quarterly growth after growing 0.72% in Q1 2017. This increase which was not quite as strong as it was in Q2 2016 reflects continuing fragility of economic conditions.

“The positive growth seen in agriculture when the rest of the economy was contracting was maintained at 3.01% which is encouraging especially if seasonal factors are taken into account.

“Manufacturing growth was also positive at 0.64% and although lower than the previous quarter’s growth of 1.36%, it was a noticeable improvement over the -3.36% experienced in Q2 2016 and a continuation of the turnaround of the sector.

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Other sectors that affected GDP growth include:

  • Solid minerals –  by 2.24% in Q2 2016
  • Industry – by 1.45% in Q2 2017
  • Electricity, gas and financial institutions – by 35.5% and 11.78% respectively in Q2 2017

Besides reduction of food prices, Dr. Adeyemi noted that unemployment has remained relatively high but that job creation is expected to improve as businesses and employers increasingly respond more positively to the significantly improving business environment and favorable economic outlook.