THE PRICE OF FEEDING THE WORLD IS FALLING, WILL IT CONTINUE?

Feeding the Planet, Energy for Life is the central theme of Expo Milano 2015, a universal exposition underway in Milan, Italy. Guaranteeing healthy, safe and sufficient food for everyone, while respecting the equilibrium between resource availability and usage is the paramount challenge the exposition advocates. Understanding food price movements helps us address this challenge, as decisions on what, how, and how much to produce depend on price signals. The (nominal) FAO Food Price Index (FPI) has fallen, almost uninterruptedly, for the past 18 months, with the pace of decline gathering momentum. For instance, the FPI lost around 50 points in the past 12 months alone and recently slumped to a 6-year low of 155 points in August 2015. In early 2011, the FPI had risen to a historic high of some 240 points, meaning that the cost of the (traded) food basket was 1.4 times higher than during the base 2002-04 period. Today, food is certainly cheaper than in the recent past.