FAO Food Price Index Dips

Rome, 3 July 2014 - Decline is mainly due to drop in cereal and vegetable oil prices amid improved global supplies- conflicts and adverse weather continue to threaten food security in many countries.

The FAO Food Price Index was down for a third consecutive month in June, a decline mostly influenced by lower wheat, maize and palm oil prices that reflected ample supplies and improved global production prospects for these commodities.

According to the latest FAO Crop Prospects and Food Situation report, the outlook for global production of cereals - a staple food in many countries - improved further with upward revisions to coarse grains and wheat supply forecasts for 2014/15.

FAO's latest forecast for world cereal production in 2014 now stands at 2 498 million tonnes (including rice in milled terms), 18 million tonnes up from the previous figure in June, although still 1 percent (23 million tonnes) below last year's record output. The recent upward revision reflects improved production prospects for coarse grains and wheat crops, particularly in the United States, the EU and India.

However, despite increased supplies and lower average prices, many people in conflict and drought stricken areas require external assistance for food, said the report which has a special focus on developing countries and is published by FAO four times a year.

The Food Price Index, based on the prices of a basket of internationally-traded food commodities, averaged 206.0 points in June 2014, down 3.8 points (1.8 percent) from May and nearly 6 points (2.8 percent) below the June 2013 level.

The index had risen to a ten-month high of 213 points in March 2014, but fell in April, May and June, mainly as a result of lower cereal, vegetable oil and dairy prices. Sugar prices also declined in June from May, but remained up from last year, while in contrast, meat prices on average increased from May.

Supply and Demand

The FAO Cereal Price Index averaged 196.2 points in June, down 10.9 points (5.2 percent) from a revised value in May and 36.1 points (15.6 percent) below last year. The slide was mainly caused by lower wheat and maize prices, both of which fell by close to 7 percent amid further improved crop prospects and diminishing concerns over possible disruption of shipments from Ukraine. 

Vegetable oils averaged 188.9 points in June, down 6.4 points (3.3 percent) from May, in part reflecting a 9-month low in the price of palm oil - the most widely traded edible oil.

Meanwhile dairy prices averaged 236.5 points in June, down 2.5 points (1.0 percent) over May, a less substantial decline than the previous three months.

Meat prices however edged up, averaging 194.2 points in June on the FAO Index and 1.4 points (0.7 percent) more than in May, a reflection of constrained world supplies.

Conflict and adverse weather exacerbate food insecurity 

While confirming the generally favourable crop production and supply outlook for 2014/15, the FAO Crop Prospects and Food Situation report warned that many people around the world face a situation of food insecurity.

FAO estimates that globally 33 countries, including 26 in Africa are in need of external assistance due to a combination of conflict, crop failures and high domestic food prices. 

Strife in the Central African Republic has jeopardized crop production which in 2013 declined by 34 percent from the previous year. The number of people in need of food assistance was estimated in April 2014 at about 1.7 million, out of a total population of 4.6 million. The number of internally displaced persons as of late June, was estimated at 536 500 persons.

Continued and escalating conflicts in parts of Eastern Africa are threatening local people's access to food, while drier-than-normal weather conditions could threaten crops and livestock. 

In Somalia about 870 000 people are estimated to be in need of emergency assistance, mainly internally displaced persons and poor households in some pastoral central and northwestern areas.

In South Sudan, since the conflict started in mid-December 2013, the number of severely food insecure people increased dramatically to about 3.5 million, including 1.1 million internally displaced persons.

The number of people estimated to be in need of humanitarian assistance in Sudan, mainly internally displaced persons in conflict-affected areas, has increased to 5 million.

Adverse weather conditions and an escalation of conflicts in Syria and Iraq have negatively impacted on crop production and food security in those countries. In Syria, forecasts of about 2 million tonnes of wheat indicate a severe reduction in cereal crop production while in Iraq where there are reports of deteriorating access to drinking water, food security conditions are likely to deteriorate.

 Republished from FAO.

Climate Change Affecting Policymakers

With food and climate change, policymakers risk betting on the wrong horse 

Governments are ignoring a vast store of knowledge -- generated over thousands of years -- that could protect food supplies and make agriculture more resilient to climate change, says a briefing published today by the International Institute for Environment and Development. [paper attached here] 

It urges negotiators at the UN climate change conference in Durban later this month to give stronger support to traditional knowledge and address the threats posed by commercial agriculture and intellectual property rights. 

The paper includes case studies from Bolivia, China and Kenya that show traditional knowledge and local farming systems have proved vital in adapting to the climatic changes that farmers there face. 

This includes using local plants to control pests, choosing traditional crop varieties that tolerate extreme conditions such as droughts and floods, planting a diversity of crops to hedge bets against uncertain futures, breeding new varieties based on quality traits, and having systems in place to protect biological diversity and share seeds within and between communities. 

But the paper warns that government policies tend to overlook such knowledge and fail to protect farmers’ rights to grow traditional crops, benefit from their use and access markets.

“Policies, subsidies, research and intellectual property rights promote a few modern commercial varieties and intensive agriculture at the expense of traditional crops and practices,” says the paper’s lead author Krystyna Swiderska, a senior researcher at the International Institute for Environment and Development.

“This is perverse as it forces countries and communities to depend on an ever decreasing variety of crops and threatens with extinction the knowledge and biological diversity that form the foundations of resilience.”

The paper says that while modern agriculture and varieties may increase productivity, environmental stress and climatic variability mean the survival of poor farmers depends on more resilient and readily available traditional varieties.

“It is because of famers’ intimate knowledge of nature that traditional farming practices have persisted for thousands of years and overcome climatic threats,” adds Swiderska. 

“To sweep away all of that knowledge and the biological diversity it relates to in favour of a limited set of modern seed varieties means putting the private interests of commercial seed corporations ahead of the public interest of sustaining food and agriculture.” 

The paper says traditional seed varieties that have been developed locally are better suited to the prevailing local conditions – such as soils and pests -- even with climatic changes like drought. They are also cheaper.

“In Guangxi, Southwest China, most farmer-improved varieties survived the big spring drought in 2010, while most of the modern hybrids were lost”, says Dr. Yiching Song from the Centre for Chinese Agricultural Policy, Chinese Academy of Science. 

Similarly, in coastal Kenya farmers have gone back to using traditional varieties to cope with changes in climate. “Traditional knowledge, crops and resource management practices are an essential element of local adaptive capacity, ”says Doris Mutta, senior researcher at the Kenya Forestry Research Institute.

More important, with traditional varieties farmers can select and save seed themselves for the next crop season, and this is a more self-reliant and sustainable farming system for adaptation.

Modern varieties on the other hand have to be bought each season, depend on market availability, and are often protected by intellectual property rights which can restrict their use. They also require costly inputs such as fertilisers and pesticides, which many indigenous farmers cannot afford.

“In the last few decades, there has been a rapid spread of hybrids at the expense of local landraces for most staple food crops in China,” says Dr Yiching Song, of the Centre for Chinese Agricultural Policy. “In fact, modern agriculture, like hybrid seeds, has made poor farmers in remote areas more vulnerable by increasing their reliance on external resources.” 

The paper adds: “The capacity of the world’s poorest and most affected communities to adapt to climate change ultimately depends not only on traditional knowledge or on individual ecosystems, but on both — on the interlinked bio-cultural systems from which new innovations can develop and spread, and on the landscapes, cultural and spiritual values and customary laws that sustain them.”

Source- By IIED