Moving into 2013, the Food Price Index, published by the UN Food and Agriculture Organisation, dropped for the third consecutive month between November and December 2012, with global food prices easing by 1.1 percent as a whole.

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Drops in the price of oils and cereals, the latter of which reached record highs midway through the year, led to the overall drop in the Food Price Index. The index measures the price of a basket of staple foods across the world. FAO said global food prices are at their lowest level since June 2012.

For 2012 as a whole, the Index showed food prices were 7.0 percent below 2011 levels, with the sharpest falls year-on-year registered by sugar (17.1 percent), dairy products (14.5 percent) and oils (10.7 percent). Although prices did decline slightly for cereals (2.4 percent) and meat (1.1 percent), high volatility meant these declines were much more modest overall.

Jomo Sundaram, spokesperson for FAO's Economic and Social Development Department, commented, "The result marks a reversal from the situation last July, when sharply rising prices prompted fears of a new food crisis, but international coordination, including through the Agricultural Market Information System (AMIS), as well as flagging demand in a stagnant international economy, helped ensure the price spike was short-lived and calmed markets so that 2012 prices ended up below the previous year's levels."

Month on month falls

In December, cereal Prices were down 2.3 percent from November; in 2012 as a whole prices fell by 2.4 percent from 2011 levels. FAO said, "After surging between July and September 2012 due to production uncertainties and tightening supplies, cereal export prices dropped because of weaker demand for feed and industrial uses."

The fall was largely due to a sharp drop in maize and rice prices, as abundant supplies and low industrial demand for maize relieved pressure. 

Oils fell by 1.9 percent in December to their lowest level since 2010, largely due to increased palm oil production. Overall, oil prices fell 11 percent in 2012. Sugar fell by 17 percent over the year; prices are currently at their lowest since August 2012 on high levels of production, notably from Brazil, despite prolonged drought in the North-East of the country.  

Meat prices also fell, but only by a negligible amount. Prices over 2012 were only just below record highs seen in 2011, falling by one percent year on year. Although dairy prices recorded only a marginal fall in December 2012, over the year as a whole prices fell by 14 percent.