Global Food Commodity Prices Have Returned to 2021 Levels

After global food prices had climbed to unprecedented highs in 2022, as lurking effects of the Covid-19 pandemic were exacerbated by Russia's invasion of Ukraine and the subsequent blockage of the country's vital grain exports, food commodity prices have fallen back to 2021 levels in 2023. According to the Food and Agriculture Organization of the United Nations (FAO), the FAO Food Price Index stood at 120.8 points in July 2024, indicating a 21-percent increase in global food commodity prices compared to the 2014-2016 base period. That is down from a peak of 160 in March 2022, shortly after Russia's invasion of Ukraine. Even before that, food prices had surged throughout 2021, as supply chain disruptions affected many goods during the pandemic and harvest setbacks also added to the development.

The war in Ukraine has had a particularly large impact on the subindices for cereal and oil, two of five indices that make up the FAO Food Price Index. After all, the region is often referred to as the world's breadbasket due to its major role in global grain supplies with vegetable oils another one of Ukraine's main export goods. Both indices jumped in the immediate wake of Russia's attack but have fallen back back to levels last seen in late 2020 since. Following the initial disruption of food exports from Ukraine, the Black Sea Grain Initiative and, after its end, alternative shipping routes have enabled the country to resume these vital exports, both for Ukraine's economy and global food security.