— through support for farmers, cash grants, removal of burdensome taxes amid increasing global food prices

The benchmark gauge for world food prices went up in February, reaching an all-time high, led by vegetable oils and dairy products, the Food and Agriculture Organisation of the United Nations (FAO) has reported.

The FAO Food Price Index averaged 140.7 points in February, up 3.9 per cent from January, 20.7 per cent above its level a year earlier, and 3.1 points higher than reached in February 2011. The Index tracks monthly changes in the international prices of commonly-traded food commodities.

The FAO Vegetable Oils Price Index led the increase, rising 8.5 per cent from the previous month to reach a new record high, mostly driven by increased quotations for palm, soy and sunflower oils. The sharp increase in the vegetable price index was principally driven by sustained global import demand, which coincided with a few supply-side factors, including reduced export availabilities of palm oil from Indonesia, the world’s leading exporter, lower soybean production prospects in South America, and concerns about lower sunflower oil exports due to disruptions in the Black Sea region.

The FAO Dairy Price Index averaged 6.4 per cent higher in February than January, underpinned by lower-than-expected milk supplies in Western Europe and Oceania, as well as persistent import demand, especially from North Asia and the Middle East.

The FAO Cereal Price Index increased 3.0 per cent from the previous month, led by rising quotations for coarse grains, with international maize prices up 5.1 per cent, due to a combination of continued concerns over crop conditions in South America, uncertainty about maize exports from Ukraine, and rising wheat export prices. World wheat prices increased by 2.1 per cent, largely reflecting uncertainty about global supply flows from Black Sea ports. International rice prices increased by 1.1 per cent, sustained by strong demand for fragrant rice from Near East Asian buyers and the appreciation of the currencies of some exporters against the US dollar.

The FAO Meat Price Index rose 1.1 per cent from January, with international bovine meat quotations reaching a new record high amid strong global import demand and tight supplies of slaughter-ready cattle in Brazil and high demand for herd rebuilding in Australia. While pig meat prices edged up, those of ovine and poultry meat declined, in part due, respectively, to high exportable supplies in Oceania and reduced imports by China following the end of the Spring Festival.

The FAO Sugar Price Index declined 1.9 per cent amid favourable production prospects in major exporting countries such as India and Thailand, as well as improved growing conditions in Brazil.

“Concerns over crop conditions and adequate export availabilities explain only a part of the current global food price increases. A much bigger push for food price inflation comes from outside food production, particularly the energy, fertiliser and feed sectors,” said FAO economist Upali Galketi Aratchilage. “All these factors tend to squeeze profit margins of food producers, discouraging them from investing and expanding production.”

The FAO Food Price Index measures average prices over the month, so the February reading only partly incorporates market effects stemming from the conflict in Ukraine.

WORLD WHEAT AND MAIZE PRODUCTION
FAO also released its latest Cereal Supply and Demand Brief, with preliminary forecast for worldwide cereal output in 2022. Global wheat production is seen on course to increase to 790 million tonnes, with anticipated high yields and extensive planting in North America and Asia, offsetting a likely slight decrease in the European Union and the adverse impact of drought conditions on crops in some of the North African countries.

Maize harvesting will begin soon in the Southern Hemisphere, with Brazil’s output foreseen reaching a record high and production in Argentina and South Africa above their average levels.

FAO has also updated its forecast for world cereal production in 2021, now pegged at 2,796 million tonnes, a 0.7 per cent increase from the year before.

Global cereal utilisation in 2021/2022 is now seen at 2 802 million tonnes, a 1.5 per cent annual increase. Global cereal stocks ending in 2022 are forecast to grow slightly over the year to 836 million tonnes. On those estimates, the worldwide cereals stocks-to-use ratio would stand at 29.1 per cent, “marking an eight-year low, but still indicating an overall comfortable supply level,” according to FAO.

FAO also raised its forecast for world trade in cereals to 484 million tonnes, up 0.9 per cent from the 2020/2021 level. This forecast does not assume potential impacts from the conflict in Ukraine. FAO is closely monitoring the developments and will assess those impacts in due course.

The quarterly report includes updates on the situation in the 44 countries currently identified as in need of external assistance for food as well as more granular updates to regional cereal production trends around the world, while also noting the risks to production and exports as well as to livelihoods related to the escalation of the conflict in Ukraine.

GUYANA’S INTERVENTION
At home, President, Dr Irfaan Ali noted that it is necessary to have more “local consumption”.

He said that his government will continue to give incentives to those investing in agriculture, given the nature of the global situation and the fact that Guyanese are also feeling the effects of the price increases.

Along with supporting farmers and cushioning the net effect of the increased cost of freights, the President said that the range of tax benefits that his government has instituted since returning to office, has helped offset the full brunt of the problem.

He reminded of the removal of VAT on electricity and water, the five percent reduction—across the board—on water tariff, the zero-rated status on essential items and household items, the removal of VAT on data, the reduction of the excise tax rate on fuel (first in February and then in October) and the reduction of licence fee.

Additionally, he made mention of the many non-tax measures that directly impacted Guyanese, including the one-off $25,000 relief grant, the re-introduction of educational grants (benefited both public and private school students), a one-off 25,000 cash grant for pensioners and a range of other incentives.

“All of these measures were to remove more tax burden from the population and give them an opportunity to have those resources as disposable income. And the measures that we have implemented are praised by many international agencies and organisations.  They are actually used as good practices in combatting the challenges we are facing globally.”

The President noted that his government would continue to help alleviate the pressure of the cost of living on the general population and committed to transparency.

“We recognised that this is a continuous problem and that the Government has to be proactive in addressing these issues.  I want you to know, just as we have done over the year plus; we will continue to pursue measures that minimise the effect on the people of our country, that minimise the effect on your pockets—you can rest assured.”

The President said that at the international level, his government does not intend to sit down and wait for the situation to correct itself.  He used the rising cost of fertilisers as an example and said that over the last four weeks, discussions were held with many bilateral partners to remedy this.

“We are doing this so that the farmers, the sugar industry, the rice producers—they can all benefit. Because if we don’t bring down the cost, we know too that the cost of rice will increase.”

MORAL RESPONSIBILITY
Guyanese, especially those who are benefitting the most from the government programmes and incentives, need to have a moral responsibility, according to the Head of State, in ensuring that the benefits reach the ordinary man.

“In all of this that the government is doing, the measures that we are implementing to help the importers, to help the farmers, to help the producers, we expect them to act in a way that befits their moral responsibility to the consumer, to minimise the impact of the consumers.”

The President spoke highly of the poultry sector and said that his government expects all other sectors to play their part.

“This is a global challenge that requires us to act collectively, that requires us to support each other.  You have a greater responsibility to society, and you should not look at profiteering—we are in this together.   You Government would confront these challenges with strong, workable measures, but we also need the support of all the stakeholders.” (FAO and DPI)