The Food and Agriculture Organisation (FAO) of the United Nations (UN) posted a further increase in its global food price index for May (Figure 1).
The increase of 5.8 points to 127.1 is the largest single monthly increase in the past year, which has posted month-on-month increases and means the index is now at its highest point since 2011.
The index is calculated on the performance of individual categories: meat including beef, pigmeat, sheepmeat and poultry meat; dairy; cereals; vegetable oils; and sugar.
All categories posted an increase in May. Meat has showed a 10-point increase from 95.4 to 105 during the past year, with most of the growth taking place since January 2021.
Dairy has performed particularly well, increasing from 94.4 points in May 2020 to 120.8 points in May 2021, though the pace of growth has slowed down over the past three months.
There has been an even stronger performance from the cereals sector, with the index increasing from 97.5 points in May last year to 133.1 points in May 2021.
Vegetable oils have surged from 77.8 to 174.7 over the past year, while sugar increased from 67.8 to 106.7.
Food price index is based on a basket of 95 price quotations judged by FAO as representative of international food prices.
It is clear that prices have surged over the past year, despite the impact of a global pandemic.
The demand side is almost single-handedly driven by China across all categories, with particular impact on dairy and cereals.
On the production side, most major producing countries are close to capacity, with only Brazil having significant potential to expand.
Australia, on the other hand, has been rebuilding stock and, as a result, exports of beef and sheepmeat are at 20-year lows.
More recently, Argentina has suspended beef exports, which will further tighten global supply.
The FAO now sits at its highest point since 2011 and if present trends continue, that will be passed in the coming months.
All this means that the market for Irish dairy, livestock and tillage farmers should continue strong for the immediate future.