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FAO Food Price Stable as Nigeria Experiences Hike

12 Feb 2013

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Food products

Crusoe Osagie  

The Nigerian food commodities’ markets has recorded significant hike in prices even as the Food and Agriculture Organisation (FAO) Food Price Index showed that average global prices held steady.

FAO announced that global food price held steady at 210 points in January 2013 after three straight months of decline. Increases in oil and fats prices offset lower cereals and sugar quotations while dairy and meat values remained substantially unchanged.

However a market survey in Nigeria revealed that commodities like garri, plantain, palm oil, meat and sea food recorded notable increase in price.

A full 50 kg jute bag of garri, which sold for about N3,000 last year, rose to over N3,500 per bag; representing about 16.6 per cent increase.

The pause in the Index's decline tallies with a significant upward revision in FAO's latest forecast for 2012 world cereal production. This is now estimated at 2,302 million tonnes; 20 million tonnes up on December's forecast.

According to the National President, Nigeria Cassava Growers Association, Segun Adewumi,   other commodities with heightened prices include plantain, palm oil, among others.

But FAO's monthly Cereals Supply and Demand brief noted that the revision mostly reflects adjustments to maize production estimates in China, North America and the European CIS countries. But even at the new level, global cereal output would still be 2 per cent down on the 2011 record crop.

Early prospects for 2013 cereal production point to increased world wheat output. Contributing largely to this prospect is an estimated 4 to 5 per cent increase in the area under wheat in the European Union, where weather conditions have also been generally favourable so far.

But in the United States, the outlook is less favourable. Despite an estimated 1 per cent increase in winter wheat plantings and prospects for spring wheat areas to expand, severe drought conditions continue to plague the southern Plains, where the condition of crops is reported to be very poor.

"Given the tight supply situation, weather remains an important determinant of prices. For several cereals, production needs to increase significantly this year in order to avoid unexpected price surges," said FAO Senior Grains Economist Abdolreza Abbassian.

World cereal stocks at the close of the crop seasons ending in 2013 are put at around 495 million tonnes, giving a global cereal stock-to-use ratio of 20.6 per cent, down from 22 per cent in 2011/12 but above the low of 18.7 per cent in 2007/2008.

World trade in cereals in 2012/13 is forecast to fall to 297.5 million tonnes, down 6 per cent from the previous season but nearly 2 million tonnes higher than the December forecast. Among the emerging features of the world grain market in 2013 is the resumption of large wheat exports from India of 6.5 million tonnes and record maize shipments from Brazil of 22 million tonnes, easing the global grain supply/demand situation.

Regarding current international prices, the FAO Cereal Price Index dropped 1.1 per cent, or nearly three points, to 247 points in January. The Cereal Index has been falling since October, mostly reflecting improved crop conditions.

The FAO Oils/Fats Price Index averaged 205 in January, up 4.4 per cent, or 9 points, from December, reversing declines in the last four months. The rebound was mainly driven by palm oil on account of fresh import demand.

The FAO Dairy Price Index averaged 198 in January, slightly higher than in December. The FAO Meat Price Index averaged 176 in January, down marginally from December. Quotations of all meat categories were generally stable, although a slight weakening in poultry and pig meat prices was evident.

The FAO Sugar Price Index averaged 268 in January, down 2.2 per cent, or 6 points, from December. Prices declined for the third consecutive month on expectations of a large global production surplus and hefty export availabilities in 2012/13, notably in Brazil and Thailand.
The FAO Food Price Index is a measure of the monthly change in the international prices of a basket of food commodities.

Tags: Business, Nigeria, Featured, FAO Food Price

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