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FAO and WTO: Food safety and trade should improve nutrition and boost development

November 7th, 2015
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Small-scale producers in developing countries must access world markets says WTO’s Azevêdo

FAO and the World Trade Organization (WTO) agreed today to strengthen their cooperation to promote international food trade and safety in ways that improve peoples’ nutrition and allow small-scale producers to have better access to international agriculture markets.

“We look forward to ensuring fair trade of agricultural and food products through this stronger (FAO-WTO) cooperation,” FAO Director-General José Graziano da Silva said in remarks made to his WTO counterpart, Roberto Azevêdo during an event at the UN food agency’s headquarters.

“On the one hand trade is likely to play an increasing role in meeting the growing demand from food-deficit countries. On the other hand, greater trade openness may undermine the capacity of local people to produce their own food,” the FAO Director-General added.

Graziano da Silva warned that failure to reach a balanced solution on issues relating to production and trade of agricultural products could derail the international community’s recently agreed sustainable development goal to eradicate world hunger.

For his part Azevêdo stressed that at the WTO, “we seek to ensure that the global trading system works for all, that it is fair and balanced,” in a way “which supports growth and development and allows people to access the goods and services that they need” including food.

“When I visit developing countries, especially in Africa…business people tell me about the difficulties they face in meeting the required standards,” the WTO Director-General said, adding that it is essential to provide capacity building for producers in developing countries, an area of work where his Organization and FAO are seeking to deepen their collaboration.

Azevêdo referred to the 10th WTO Ministerial Conference in Nairobi on 15-18 December 2015, where the role of agriculture – especially in development and in improving the lives of people in least developed countries – is high on the agenda.

Issues for discussion include addressing trade restrictions that bear on imports, such as the lowering of tariffs, the need to minimize domestic agricultural subsidies and, the “distortions these programs produce,” Azevêdo said, as well as the need to eliminate export subsidies.

The WTO Director-General expressed hope that some agreement would be reached in Nairobi on the issue of export subsidies. This would mark “an extremely significant breakthrough,” and would be especially important for developing and least developed countries.

Strengthened cooperation, new report planned

Graziano da Silva and Azevêdo both underscored the increase in cooperation between FAO and the WTO. This includes deepening their collaboration on trade and food safety, including a joint publication in 2016 which would deal with sanitary and phyto-sanitary (SPS) measures that curb the spread of plant and animal diseases during the transport for trade of agricultural products.

“Our [WTO] agreement on the Application of Sanitary and Phytosanitary Measures names the FAO/WHO Codex Alimentarius and the FAO International Plant Protection Convention as standard-setting organizations in these matters” underlined Azevêdo.

Other areas where the two organizations are seeking to reinforce their joint efforts include the Standards and Trade Development Facility (STDF), capacity development initiatives to assist countries in the implementation of the Codex Alimentarius or “Food Code”which develops harmonized international food standards that protect consumer health and promote fair practices in food trade, and country level assistance to facilitate trade in safe and nutritious food.

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The FAO Food Price Index fall to its lowest level since September 2010

September 13th, 2014
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fao·The FAO Food Price Index averaged 196.6 points in August 2014, its lowest level since September 2010. In August, the index registered its fifth consecutive monthly decline, down 7.3 points (3.6 percent) from July and 7.9 points (3.9 percent) from August 2013.  Except for meat, all the other food sub-indices dipped markedly in August, with dairy values falling most, followed by oils and sugar.

·The FAO Cereal Price Index averaged 182.5 points in August, down 2.8 points (1.5 percent) from July and 24.2 points (11.7 percent) from August 2013. The Index has been falling continuously since May, largely on excellent crop prospects and abundant supplies of wheat and coarse grains.  Another record world production this year weighs on international wheat prices which slid in August to their lowest value since July 2010. Similarly, maize prices have fallen to a 4-year low, amid almost ideal growing conditions while stocks are already at very high level.  However, rice prices remained on the rise reflecting the return of several traditional importers to the market and the failure by Thailand to offload large volumes from public stocks starting in August, as originally announced.

·The FAO Vegetable Oil Price Index averaged 166.6 points in August,  14.5 points (8 percent) less than the previous month and the lowest level since November 2009. It would also be the fifth month of consecutive drops in the index. Much of the August decline reflects the pattern of palm oil prices, which have weakened under the combined effect of improved production prospects in South East Asia and lower than anticipated import demand, primarily from China and India. The other major oils (soy, rape and sunflower) also remained on a downward trend, reflecting prospective ample supplies in 2014/15.

·The FAO Dairy Price Index averaged 200.8 points in August, down 25.3 points (11.2 percent) over July and 46.8 points (18.9 percent) less year-on-year. Quotations for all dairy products covered in the Index fell.  The decline reflected both abundant export availability and reduced import demand. Export supplies have increased in the EU and conditions are favourable for a strong start to the new season in Oceania.  The prevailing tendency for prices to decline was further exacerbated by the Russian Federation prohibition, at the beginning of the month, on imports of dairy products from several countries.  More generally, slackening importation of whole milk powder by China (the largest importer) has also contributed to market uncertainty concerning demand over the coming months.

·The FAO Meat Price Index averaged 207.3 points in August, 2.5 points (1.2 percent) more than its revised value for July and 25 points (14 percent) above last year. The increase principally reflected a strong rise of bovine meat prices in Australia, where herd rebuilding has reduced export supplies, and continued strong import demand in Asia, particularly China. Average quotations for poultry were little changed, while those for porcine and ovine meat fell back somewhat.

·The FAO Sugar Price Index averaged 244.3 points in August, down by 14.8 points (5.7 percent) from July, but still 2.2 points (1 percent) higher than in August 2013. The significant drop in prices was triggered by improved production prospects in India, the world’s second largest sugar producer, as well as the European Union and the Russian Federation. In addition, reports of lower than expected import demand by China weighed negatively on international prices. The downgrading of production in Brazil, the world largest sugar producer, was not sufficient to offset the downward price pressure.

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FAO Food Price Index hits a six-month low in July

August 8th, 2014
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faoFalling grain, oilseed and dairy prices push index to lowest level since January 2014

The FAO Food Price Index decreased for a fourth consecutive month in July mainly due to a sharp decline in international prices for maize, wheat and certain oilseeds,  reflecting ample supplies for these commodities.

Based on the prices of a basket of internationally-traded food commodities, the FAO Food Price Index averaged 203.9 points in July 2014, down 4.4 points (or 2.1 percent) from a revised value in June and 3.5 points (or 1.7 percent) below the July 2013 level.

“The lingering decline of food prices since March reflects much better expectations over supplies in the current and forthcoming seasons, especially for cereals and oils, a situation that is expected to facilitate  rebuilding of world stocks,” said FAO senior economist  Concepción Calpe.

In contrast, meat prices rose for the fifth consecutive month in July, and those for sugar remained firm.  The fall in quotations for grains, oilseeds, as well as dairy products pushed down the FAO Food Price Index to its lowest level since January 2014.

“Livestock product markets have their own dynamics: in the case of meat, beef in particular, many exporting countries are in a herd rebuilding phase, which is limiting availability for exports and sustaining prices,”  Calpe said. “As for dairy products, supplies available for trade appear to be abundant, which, along with a faltering import demand, has weighted on July’s quotations,” she added.

Sharp slide in cereal and oilseed prices

The FAO Cereal Price Index averaged 185.4 points in July, down 10.7 points or5.5 percent from June and as much as 36.9 points or 16.6 percent below the level one year ago.

In particular the fall in international prices for maize (down 9.2 percent from June) and wheat (down 5.8 percent) reflected excellent production prospects as well as expected abundant exportable supplies in the 2014/15 marketing season.

In contrast, rice prices edged marginally higher, on renewed import demand, especially as Thailand’s sales from public reserves remained suspended.

The FAO Vegetable Oil Price Index averaged 181.1 points in July, down 7.7 points or 4.1 percent from June. The decline continued to be primarily driven by falling soy and palm oil prices.

Soy oil values fell mainly in response to record crop prospects for the United States as well as abundant supply in South America while palm oil quotations eased on persisting strength in Malaysia’s currency and slow global import demand. Prices for rape and sunflowerseed oil also weakened, reflecting ample crop prospects for 2014/15.

The FAO Dairy Price Index averaged 226.1 points in July, down 10.3 points (4.4 percent) over June and 17.5 points (7.2 percent) less than the same period last year. Reduced import demand – including a decline in purchases of butter by Islamic countries during Ramadan –  contributed to the downward trend in dairy prices.

Meat prices rise while sugar remains volatile

A continued strong demand for meat in Asia and particularly China, helped to edge up the FAO Meat Price Index which averaged 204.8 points in July, 3.7 points (1.8 percent) higher  than its revised value in June and 25.4 points (14.1 percent) above the same period last year. Average prices for poultry and ovine meat also rose, while those for pig meat fell back somewhat from the all-time high registered in June.

The FAO Sugar Price Index averaged 259.1 points in July, marginally up by 1.1 points (0.4 percent) from June, and 20.2 points (8.4 percent) higher than in July 2013. International sugar prices have been relatively volatile over the last three months, amid uncertainty over the impact of a drought on sugarcane in Brazil, the world’s largest producer and exporter and indications of below average monsoon rains in India, the second largest world sugar producer.

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FAO Food Price Index drops for 2nd consecutive month

June 6th, 2014
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The FAO Food Price Index was down for the second consecutive month in May, continuing its retreat from the 10-month high it experienced in March. Prices fell as generally ample supplies weighed on international prices for most commodities included in the Index.

Meanwhile, a companion monthly report, the FAO Cereal Supply and Demand Brief, shows the outlook for the global cereal supply in the 2014-15 marketing season has improved considerably since the previous report in May.

The Food Price Index, based on the prices of a basket of internationally-traded food commodities, averaged 207.8 points in May 2014, down 2.5 points (or 1.2%) from April, and nearly 7 points, or 3.2%, below the May 2013 level.

The Index had risen to a 10-month high of 213 points in March, but fell in April and May amid lower dairy, cereal and vegetable oil prices. Sugar prices went against the trend, making strong gains in May, while meat remained firm.

The FAO Cereal Price Index averaged 204.4 points in May, down 2.4 points (or 1.2%) from April and 30 points (or 13%) below last year. The decline in May was mostly triggered by maize prices, which fell in response to favorable growing conditions and good supply prospects in 2014-15. Wheat prices, which had contributed to price increases in previous months, partly amid fears of disruptions to trade flows from Ukraine, also fell, while rice prices saw little change.

“We went into May with concerns over unfavorable weather conditions, especially in the U.S., and geopolitical tensions in the Black Sea region, but towards the second half of May, we began to see lower wheat prices following improved weather conditions and the continuation of regular shipping patterns from the Ukraine,” said FAO Senior Economist Abdolreza Abbassian.

FAO’s monthly update on the world cereal market, the Cereal Supply and Demand Brief, puts world cereal production in 2014 at nearly 2.48 billion tonnes (including rice in milled terms), almost 1% (21.5 million tonnes) higher than was reported in May, though still 1.4% down from 2013.

Global production of coarse grains stands at 1.274 billion tonnes, 18.6 million tonnes higher than reported in May, with most of the upward adjustment reflecting improved outlook for maize crops in the United States and bigger than earlier anticipated maize harvests in Argentina and Brazil.

World wheat production in 2014 is forecast at nearly 703 million tonnes, up marginally from the May forecast, though down from the previous year. Rice production in 2014 is expected to reach about 503 million tonnes (milled basis), 1.9 million more than foreseen last month, and 1.2% more than in 2013.

Source: World Grain

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FAO Food Price Index sees sharp increase

April 4th, 2014
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faoThe United Nation’s Food and Agriculture Organization’s (FAO) Food Price Index rose sharply in March, up 4.8 points, or 2.3%, to an average of 212.8, the highest level since May 2013.

“The Index was influenced, as expected, by unfavorable weather conditions in the US and Brazil and geopolitical tensions in the Black Sea region,” said Abdolreza Abbassian, FAO senior economist.

These and other influences are reviewed in greater detail in the AMIS Market Monitor report, the monthly synopsis of the major food crops prepared by the G-20 Agricultural Market Information System (AMIS), which is hosted at FAO headquarters in Rome, Italy.

“The Food Price Index looks at March trends. Since then, the initial fear over disruptions in grain shipments from Ukraine has subsided. Also, markets have started to discard any negative impacts that the current difficult domestic economic conditions may bear on plantings or harvests in 2014,” Abbassian said.

Abbassian pointed out that AMIS has an important role to play in reassuring international markets, by promoting close dialogue among its participating countries.

The Index, based on the prices of a basket of internationally-traded food commodities, saw prices increase in all groups except dairy, which fell for the first time in four months (-2.5%). The greatest gains were seen in sugar (7.9%) and cereals (5.2%).

The FAO Cereal Price Index averaged 205.8 points in March, up as much as 10 points from February. Wheat and maize prices surged and imports were strong amid concerns over the effects of dry weather conditions on winter wheat in the U.S., unfavorable weather in Brazil, and tensions in the Black Sea region.

While in March the Index rose to its highest value since August 2013, it remained well below (34.6 points or 14.4%) its value in March 2013. Rice prices were generally stable.

The FAO Vegetable Oil Price Index averaged 204.8 points in March, up another 7 points from February and the highest level seen in 18 months. The rise in the index mainly reflected a surge in palm oil, on continued concerns over the impact of protracted dry weather in Southeast Asia.

FAO also released its Cereal Supply and Demand Brief, with improved outlooks for global cereal supplies and expectations of record trade in the 2013-14 marketing season.

The brief also reported a higher estimate for world cereal production in 2013, which has been raised by 6 million tonnes to 2.521 billion tonnes. The latest adjustments reflect higher estimates for production of coarse grains and rice in several countries.

The FAO’s forecast for ending stocks has also been raised and world trade is set to increase by significantly more than earlier expected.

“It is still too early to make accurate production forecasts for cereals, as many crops have yet to be planted and weather remains the key factor influencing harvests,” said FAO’s Abbassian.

World wheat production in 2014 is forecast at 702 million tonnes, down 2 million tonnes from FAO’s first forecast published in March. This would be 2% lower than last year’s record harvest.

FAO’s first forecast for global rice production in 2014, published in the report, points to a modest 0.8% increase, to 500.7 million tonnes (milled basis), as growth is likely to be dampened by falling world prices and fears of a recurring El Niño event.

Even though the outlook for rice is up slightly, increases might not be sufficient to match population growth. As a result, inventories in the next season could see a decline, albeit from very high levels.

Source: World Grain

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World food prices stay high, but steady

January 17th, 2014
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faoThe FAO Food Price Index averaged 206.7 points in December, nearly unchanged from the previous month, with a sharp increase in dairy prices and high meat values balancing out a steep decline in sugar quotations and lower cereal and oil prices.

For 2013 as a whole, the index averaged 209.9 points – down 1.6% from 2012, and well below 2011’s peak of 230.1, but still the third highest annual value on record.

Large supplies pushed down international prices of cereals (with the exception of rice), oils and sugar. However, dairy values peaked in 2013, and meat also hit a record.

“Last month, the FAO Food Price Index remained elevated as strong demand for certain high-protein foods continued to drive up prices overall, countering falling prices of major food crops after last year’s abundant harvests,” said FAO economist Abdolreza Abbassian.

FAO’s FPI is a trade-weighted index that measures prices of five major food commodities on international markets: cereals, dairy products, meat, sugar, and vegetable oils.

Good harvests nudge cereal and sugar prices down

The FAO Cereal Price Index averaged 191.5 points in December, down 2.8 points from November, and the lowest monthly value since August 2010. Large global supplies, following record harvests in 2013, continued to exert downward pressure on international prices of wheat and maize in particular. By contrast, rice prices were up slightly in December.

For all of 2013, the Cereal Price Index averaged 219.2 points, down as much as 17 points, or 7.2%, from 2012.

FAO’s Sugar Price Index averaged 234.9 points in December, a sharp slide of 15.8 points from November. This was the third consecutive monthly decline, with the sugarcane harvest in Brazil – the world’s largest sugar producer and exporter – exceeding expectations. Adding to the downward pressure on international prices were reports of record production in Thailand, the world’s second biggest sugar exporter, as well as good harvests in China.

Overall, in 2013, sugar prices were 18% lower than in 2012.

Dairy and meat hit record high

Dairy prices, on the other hand, were up for both December and for 2013 as a whole.

The FAO Dairy Price Index averaged 264.6 points in December, a rise of 13.2 points over November. Demand for milk powder, especially from China, remains strong, and processors in the southern hemisphere are focusing on this product rather than on butter and cheese.

During 2013, the dairy index averaged 243 points – its highest annual value since its inception.

The FAO Meat Price Index averaged 188.1 points in December, just slightly above its November level. Prices for bovine and pig meat moved higher: demand from China and Japan have resulted in beef prices showing consistent growth since last June. Prices for poultry were stable, while those for sheep meat moved lower. Still, in 2013, the index remained historically high, well above pre-2011 levels.

Drop in vegetable oil prices

FAO’s Vegetable Oil Price Index averaged 196 points in December, a decrease of 2.5 points from November.

For 2013 as a whole, the index averaged 193 points – well below 2012’s average of 224 points – with palm oil falling to a 4-year low.

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FAO Food Price Index nearly unchanged in November

December 7th, 2013
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  • The FAO Food Price Index averaged 206.3 points in November 2013, almost unchanged from the revised value of 206.6 points in October, but 9.5 points (4.4 percent) below its November 2012 value. A sharp decline in sugar prices last month nearly offset the rise in oils. Cereals averaged slightly lower but meat and dairy values were stable.
  • The FAO Cereal Price Index averaged 194.2 points in November, down 2 points (1 percent) from October, and as much as 61 points (or 24 percent) below its November  2012 level. A record cereal crop this year has helped to improve the global supply situation, weighing on the international prices of all cereals, including wheat, maize and rice.
  • The FAO Vegetable Oil Price Index averaged 198.5 points in November, up 11 points (or 5.6 percent) from October. The rise in the index has been driven mainly by palm oil:  the concurrence of strong global import demand, including for biodiesel production, and below-expectation output in Southeast Asia (following excessive rainfall) have pushed palm oil prices to a 13-month high. International prices for soy, sunflower and rapeseed oil also firmed on sustained demand, further contributing to the rise in the index.
  •  The FAO Dairy Price Index averaged 251.4 points in November, practically the same as in October. Demand for milk powder, especially from China, remained strong and processors in the southern-hemisphere focused on this product rather than on butter and cheese.  Southern-hemisphere milk production has passed its seasonal peak; however, supplies are adequate to meet current demand.   Overall, the index stands 23 percent above its level in November 2012.
  • The FAO Meat Price Index averaged nearly 187.1 points in November, unchanged from October and similar to its level one year ago.  Regarding the different categories of meat, prices for bovine and ovine meat increased further, while those for pig meat moved lower and poultry was stable.   In the case of bovine and ovine meat, limited export supplies lent support to prices, while pig meat and poultry benefited from the reduced cost of feed.
  • The FAO Sugar Price Index averaged 250.6 points in November, down 14.2 points (5.3 percent) from October. The decline was mainly attributable to improved harvesting operations in Brazil, the world’s largest sugar producer and exporter. Speculations of a possible surge of exports from Brazil and India, owing to the weakening of currencies against the US dollar in November exacerbated the price slide. Overall, sugar prices were particularly volatile amid continued uncertainties on the extent of the anticipated production surplus for the new 2013/14 season.

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FAO and Plan International join forces to support food security for vulnerable children

November 1st, 2013
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faoFAO and Plan International will collaborate in the promotion of food secure environments in poor households and communities, with a strong focus on vulnerable children and their families.

The agreement signed today by Marcela Villareal, Director of FAO’s Office for Partnerships, Advocacy and Capacity Development (OCP), and Rosemary McCarney, President and CEO of Plan Canada, covers responses to critical needs as well as long-term initiatives to tackle systemic impediments to stable, sustainable and resilient food security environments.

“FAO is proud of this partnership with Plan International. We come together at a time when we realize how similar our efforts are and we are confident that this step will not only add to them but multiply them,” said Villareal.

“We have done good work together in a number of countries, from Sudan to Peru to Paraguay and now it is time to take our collaboration further,” she added referring to past successful collaboration with Plan Regional Offices in Africa and Latin America.

The new partnership involves coordination at country level for timely response to emergencies; combating malnutrition mainly in women and children through agriculture-based approaches and contributing to global initiatives to address malnutrition.

“We feel very privileged for this agreement as it takes our previous ad-hoc arrangements further and  provides with the framework for joint initiatives to achieve common goals,” said McCarney.

FAO and Plan International will also explore potential opportunities for joint research on food security and nutrition and initiatives to increase efficiency of agricultural and livestock production systems for smallholder farmers through cooperatives, provision of quality inputs and capacity building. The agreement involves youth in agricultural value chains.

Founded in 1937, Plan International programmes seek to improve food security and nutrition through activities such as school feeding; responding to emergencies; innovating to improve crop yields; giving people  – particularly women and youth – access to training, tools, livestock and seeds, and offering loans to start small agri-businesses.

Plan’s initiatives are community-based, implemented in partnership with approximately 66 000 volunteers and over 23 000 organizations – including national and local government institutions, international, national and local NGOs, community-based organizations and United Nations agencies.

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New UN food safety and nutrition standards will benefit consumers

July 19th, 2013
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codex_alimentariusThe UN food standards body Codex Alimentarius has agreed on new standards to protect the health of consumers worldwide. These include standards on fruit, vegetables, fish and fishery products and animal feed.

Codex also adopted codes on the prevention and reduction of ochratoxin A, a carcinogenic contaminant, in cocoa, guidance on how to avoid microbiological contamination of berries and on use of claims for food that is labeled “non-addition of sodium salts” including “no added salt” on food packages, to assist consumers in choosing a healthy diet.

The Codex Alimentarius Commission, jointly run by the UN Food and Agriculture Organization (FAO) and the World Health Organization (WHO), sets international food safety and quality standards to promote safer and more nutritious food for consumers worldwide. Codex standards serve in many cases as a basis for national legislation, and provide the food safety benchmarks for international food trade.

At its annual meeting last week, Codex celebrated its 50th anniversary. The session was attended by 620 delegates from 128 member countries and one member organization, one observer country and 41 international governmental and non-governmental organizations, including UN agencies.

Safe limits on contamination

One of the important work areas for Codex is setting safe limits and giving guidance along the food chain on prevention or reduction of contamination. Food can become contaminated by heavy metals, fungal toxins or bacteria and viruses.

The Commission adopted two important codes: prevention and reduction of ochratoxin A (a carcinogenic contaminant) in cocoa and of hydrocyanic acid in cassava, both important products for developing countries.

Fresh berries can be a healthy part of the diet but are also prone to microbiological contamination and have been associated with several foodborne illness outbreaks caused by viruses (Hepatitis A, Norovirus), bacteria (E.coli) and protozoa. The new Codex text gives advice to producers and consumers on how to prevent this contamination.

Fair practice in food trade and protecting consumers’ health

The Commission adopted a number of commodity standards that will protect consumers from fraud and ensure fair practices in the food trade: fresh and processed fruit and vegetables (e.g. avocados, chanterelles, pomegranates, table olives, date paste, and tempe) and fish and fishery products (smoked fish, abalone). The standards help buyers and sellers establish contracts based on Codex specifications and make sure that the consumers get from the products what they expect.

The Commission also adopted the nutrient reference values on sodium and saturated fatty acids, which are nutrients associated with noncommunicable diseases (NCDs), to be included in the Guidelines on Nutrition Labelling.  This is part of Codex’s on-going efforts to promote healthy dietary practices and address the increasing public health problem of diet-related NCDs.

The Commission also adopted the revised and updated guidelines on formulated supplementary foods for older infants and young children to ensure the health and nutrition of the vulnerable population group. Furthermore, the Commission adopted hundreds of safe maximum limits for pesticide residues and veterinary drugs and provisions for food additives.

Guidance on control for food and animal feed

As animal feed can cause contamination in eggs, meat and milk products, the Commission adopted guidance to countries on how to control animal feed and assess the risk of contamination. The Commission also adopted guidelines for National Food Control Systems to assist countries in implementing food control.

Into the future

Because of the volume of trade  and need to harmonize national standards, the Commission agreed to create a new Codex Committee on Spices and Culinary Herbs, which will be hosted and chaired by India.

The Commission approved its Strategic Plan 2014-2019, which will guide the work on protecting consumers’ health and ensure fair practices in the food trade over the next six years.

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FAO Food Price Index

July 12th, 2013
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The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices (representing 55 quotations), weighted with the average export shares of each of the groups for 2002-2004.

Monthly release dates for 2013: 10 January, 07 February, 07 March, 11 April, 09 May, 06 June, 04 July, 08 August, 05 September, 03 October, 07 November, 05 December.

The FAO Food Price Index fell in June

fao-food-price-2013-july

The FAO Food Price Index averaged 211.3 points in June 2013, almost 2 points (one percent) below its revised value for May, but still nearly 11 points higher than in June 2012. Last month’s decline reflects a drop in sugar and, especially, dairy prices, with more contained slides affecting cereals and oils. By contrast, latest estimates suggest international meat prices gained 2 percent in June.

The FAO Cereal Price Index averaged 236.5 points in June, down 2.5 points (one percent) from May but still 14 points above June last year. Expectation of bumper crops this year is the main reason for the decline in international cereal prices. Wheat prices retreated most, because of seasonal harvesting pressure from the northern hemisphere crops. However, tight supplies are likely to continue supporting major coarse grains until the start of this year’s harvests in October. Rice prices changed little in June.

The FAO Oils/Fats Price Index averaged 198 points in June, marginally below May and the lowest level in six months. The decrease was driven by soy oil, mostly reflecting a rise in export availabilities in South America, where subdued consumption coincided with high soy oil production. Meanwhile, palm oil prices remained firm, due to slow production growth and falling inventory levels in Southeast Asia.

The FAO Dairy Price Index averaged 239 points in June, a fall of 10.8 points (4.3 percent) – declining prices need to be seen in the context of the exceptionally high levels recorded in April and May. Prices for all the products that make up the dairy index were lower although milk powder and butter fell most. Calm is returning to the market, after an abrupt fall in New Zealand’s end of season output, as dairy supplies are being sourced elsewhere, including Europe and the United States. Consequently prices are moving lower.

The FAO Meat Price Index* averaged 177 points in June, a rise of 3.4 points (2.0 percent) over the revised May level, which was reduced as a result of a fall in pork prices. Despite the rise in the June index, there are signs that international prices for meat are beginning to lose strength in the face of reduced import demand – especially from Asian countries where, in a number of cases and in particular Japan and the Republic of Korea, domestic production has increased and stocks have accumulated.

The FAO Sugar Price Index averaged 242.6 points in June, down 7.5 points (3.0 percent) from May. Sugar prices declined for the third consecutive month, on the back of anticipated large surplus production in major producing areas, notably in Brazil, the world’s largest sugar producer and exporter. This is in spite of heavy rains slowing harvesting in the Centre South region, the main producing area in Brazil.

*The FAO Meat Price Index is based on average meat export prices from a range of countries. As not all data were available at the time of its calculation, the latest value of the meat price index contains estimates and therefore is subject to revision.

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