The United Nations, revealing a second successive annual decline
in world food prices, highlighted the role in the market of China, which had
fuelled a fall in sugar values besides rises in dairy and meat prices to record
World food prices, on a year-average basis, dropped by 1.6% in
2013, taking them 8.8% below their 2011 peak, the UN food agency, the Food and
Agriculture Organization, said.
The fall reflected largely a drop in grain prices, which
ended the year at their lowest since August 2010, depressed by record
production of corn and wheat, with strong output of oilseeds and sugar weighing
on values too.
"Large supplies pushed down international prices of cereals,
with the exception of rice, oils and sugar," the FAO said.
Dairy, meat price
However, the decline in food prices would have been more marked
were it not for a late-year uptick in dairy and meat prices.
"Last month, [food prices] remained elevated as strong
demand for certain high-protein foods continued to drive up prices overall,
countering falling prices of major food crops after last year's abundant
harvests," FAO economist Abdolreza Abbassian said.
Over the year as a whole, both set record highs – by a
margin in the case of dairy prices, which were 25% up on the 2012 average,
lifted by a drought-hit start to 2013 for output from New Zealand, the top milk
exporter, and strong demand from many developing countries.
Indeed, the FAO highlighted the role in boosting dairy
prices of China, whose demand for milk powder is being boosted by a clamour for
infant formula, as mothers take a growing place in the work force, while
efforts at boosting domestic production lag.
"Demand for milk powder, especially from China, remains
strong," the FAO said.
The agency noted that this demand had meant that "processors
in the southern hemisphere are focusing on this product rather than on butter
Ironically, this has meant that "in context of light trading
and most supplies being already committed, prices of the latter products
[butter and cheese] have risen more than those of milk powder" – reversing the
pricing trend which Fonterra blamed last month for a warning that its earnings
will halve in 2013-14.
At Tuesday's GlobalDairyTrade auction, run by New
Zealand-based Fonterra, cheese prices rose by 1.9% and butter by 5.1%, on
contrast to declines in milk powder values.
Beef price boost
The FAO also singled out the roles of China and Japan in raising
meat prices, which were 1.1% higher in 2013, and have near-double in a decade.
"Demand from China and Japan has resulted in beef prices
showing consistent growth since the middle of the year," the agency said.
While pork is China's staple meat, a growing taste for beef,
of which the country is a small producer itself, drove domestic prices 24%
higher in the year to November.
Imports have in the first 10 months of 2013 were, at 236,645
tonnes, up sevenfold year on year, growth termed "astonishing" by Rabobank,
which forecasts the value of the Chinese beef market growing 10% a year over
the next three years.
China had, thanks to "good harvests", also played a leading
role in depressing sugar prices, which fell 17.9% over 2013 to their cheapest,
on a year average basis, since 2008, the FAO said.