Global food prices rose 1.3% in October, their first increase since April as the U.N. Food and Agriculture Organization’s (FAO) Food Price Index* hit 205.8. The big question now is whether that rise will continue into 2014 and beyond. In its biannual Food Outlook published Nov. 7, the FAO concluded that food prices are becoming less volatile thanks to greater supplies and a recovery in inventories.
The U.N. agency raised its forecast for global wheat production in 2013. It now expects the annual harvest to grow by 7.4% to a new record of 708.5 million tonnes (up from its previous outlook of 704.6 million tonnes). Prices are consequently expected to stabilize. “I do not see such sharp declines in prices in coming months as we have seen in the first half of the year,” FAO senior economist Abdolreza Abbassian told the Reuters news agency.
The graph above shows how global food prices have risen since the turn of the century. The peak in 2011 was a new historic peak (the Food Price Index averaged 230.1 that year), exceeding the prices reached during the food crisis of 2007-08 (201.4, marking the first time the global food prices passed the 200 barrier). High food prices were one of the influences behind the Arab Spring that year and could easily ignite future protest movements and demonstrations around the world.
Many factors condition global food prices from the global economy to weather, with climate change increasingly significant. A report by the UN’s Intergovernmental Panel on Climate Change, due to be released next March but a draft of which has been leaked, highlights a correlation between climate change and food scarcity. The draft cites a forecast decrease of up to 2% each decade in yields of staple crops like maize, wheat, and rice. As a reduction in global food supply will have an effect on their prices, these are likely to continue to rise over the long-term even if their volatility decreases in the short-term.
*The FAO Food Price Index consists of the average of five commodity group price indices (a basket of cereals, vegetable oils, dairy, meat and sugar), weighted with the average export shares of each of the groups from 2002-2004.
Read more: Rising temperatures, rising food prices