Global food prices on the uptrend

Global food prices went up for the third month in a row, reversing a four-year decline, according to the Food and Agriculture Organization (FAO).

In its monthly Food Price Index, the FAO said the increase was driven mainly by rising prices of palm oil as well as cereals.

The United Nations agency said, however, the outlook for world output for cereal, including rice, was slightly better for 2016. It said the output would go up to 2.53 billion tons from the original forecast of 2.52 billion tons.

The latest forecast was “virtually the same as in 2015 and potentially on course to be the second largest global harvest ever,” the FAO said.

FAO observed prices declining marginally for rice, as the forecast for worldwide production was almost unchanged at 495 million tons or one percent higher than the 2015 output.

Still, the FAO warned the full impact of the El Niño weather phenomenon was not yet clear.

In April, the FAO’s Food Price Index averaged at 151.8 points, rising by 0.7 percent from the 150.6 points recorded in March.

The index is trade-weighted and tracks prices of five major food commodity groups in international markets—meat, dairy, cereals, vegetable oils and sugar.

“That (April index) is about 10 percent below its level of a year ago (168.4 points in April 2015) and more than a third off its 2011 highs,” the FAO said.

In the Philippines, the National Economic and Development Authority (Neda) said last Thursday domestic prices of rice were on a downward trajectory, partly due to the timely arrival of additional rice importation.

“This ensured sufficient supply during the start of the year,” Economic Planning Secretary Emmanuel F. Esguerra said in a statement.

With the El Niño phenomenon likely to last until July, Esguerra said appropriate timing of rice importation remained critical to avoid supply disruptions, which could result in unstable rice prices.

He said the possible onset of La Niña in the second half of the year could also provide upside pressures on the prices of agricultural commodities and utilities.

“To help mitigate the impact of El Niño and prepare for the highly likely occurrence of La Niña, government agencies should coordinate and study various response measures on their possible effect towards agricultural production,” Esguerra said.