Why in news?
The Food and Agriculture Organization’s (FAO) monthly Food Price Index has shown mixed trends, prompting questions about global food security. Understanding the index is important for policymakers and consumers.
What is the FAO Food Price Index?
- The index measures the monthly change in international prices of a basket of food commodities, including cereals, vegetable oils, dairy, meat and sugar.
- It is calculated by averaging price indices of each group, weighted by their share in global trade.
- The index provides early signals of supply‑demand imbalances and helps monitor the impact of events like droughts, wars or trade restrictions on food prices.
Recent trends
- After reaching record highs in 2022 due to the Russia–Ukraine conflict and supply chain disruptions, the index has moderated but remains volatile.
- Prices of rice and sugar have risen sharply, while those of vegetable oils and cereals have stabilised or declined because of improved harvests.
- Climate‑induced extreme weather and geopolitical tensions continue to pose risks to food supplies.
Significance for India
- India is both a major producer and consumer of food grains. Monitoring global prices helps the government plan procurement, subsidies and export policies.
- Rising international prices can influence domestic inflation and affect household budgets.
- Understanding commodity price trends assists farmers in deciding which crops to plant.