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Stability uncertain after global food prices surge 28% in 2021

World food prices soared by 28% during 2021, according to an index based on five major commodities, including cereal grains, meat, and sugar, said the UN Food and Agriculture Organization on Thursday. The abrupt increase, as the world recovered from the economic collapse that accompanied the pandemic, ended five years of relative stability in the Food Price Index.

The largest increases were in vegetable oils used in cooking, dressings, and sauces. The sub-index for vegetable oils skyrocketed by nearly 68%, to its highest annual level ever. Cereal grains, including wheat, rice, and corn, notched the second-largest increase, 27%.

Overall, the food index was at its highest level since 2011, the last year there was a big spike in food prices.

“While normally high prices are expected to give way to increased production, the high cost of inputs, ongoing global pandemic, and ever more uncertain climatic conditions leave little room for optimism about a return to more stable market conditions even in 2022,” said Abdolreza Abbassian, FAO senior economist.

In the United States, food prices rose 6.1% in the past year, led by persistently high meat prices, the Labor Department said last month. Beef prices were up 21%. The Biden administration blamed big meat processors for “using their market power to increase (consumer) prices and underpay farmers.” Early this week, President Biden announced a four-point plan for increased competition in the meat industry, including vigorous enforcement of antitrust law.

The FAO said sugar prices rose nearly 30% during 2021, to their highest level since 2016. Meat prices surged nearly 13% for the year, and dairy prices were up 17%.

While the economic recovery has boosted prices for soybeans and other oilseeds that are used to make vegetable oils, a boom in renewable diesel is creating a new market for vegetable oils. The American Bakers Association asked the EPA this week to scale back, rather than increase, its quotas for advanced biofuels, such as renewable diesel, for this year.

“The EPA’s proposed increase … could jeopardize the ability of our members to meet the constant demand of providing millions of baked goods to grocery stores, restaurants, and federal feeding programs,” said Lee Sanders, ABA senior vice president. “That’s because soybean oil, a critical ingredient for bakers, has been increasingly diverted away from the food supply chain and toward the production of advanced biofuels.”

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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