Global food prices have risen to their highest level since June 2011. Price rises are being driven by poor growing conditions in some production regions. Steep increases in logistics and fertiliser costs worldwide are also leading to higher prices.
Favourable seasonal conditions have returned to much of Australia in 2020–21. This means Australian agricultural exporters are well placed to benefit from high international prices and tight global supply.
Several countries have, or are considering, reducing tariffs or imposing export restrictions. This move aims to protect local consumers from rising and volatile food prices. Reduced tariffs make imported products, including products from Australia, more competitive. Export restrictions could further increase global food prices by reducing food supplies available for trade.
Australian exporters should monitor announcements from trading partner governments to capitalise on emerging opportunities.
The Food and Agriculture Organization of the United Nations (FAO) Food Price Index tracks the international prices of basket food commodities. Between January 2020 and November 2021, the index rose from 102.5 to 134.4 (+31.1%).
Figure 1: Annual FAO Food Price Indices – Nominal (January 2000 to November 2021)
Since January 2020, the price of every commodity in the FAO Food Price Index has increased. Poor seasonal conditions in several major production regions were behind this trend. Steep increases in freight and fertiliser costs have compounded production-related price rises.
Figure 2: Monthly FAO Food Price Indices – Nominal (January 2020 to November 2021)
The combination of high prices and favourable seasonal conditions is good news for Australian producers and exporters. This combination of factors is expected to push the value of Australian agricultural exports to over $61 billion in 2021–22 (ABARES 2021).
For consumers, high food prices increase the proportion of the household budget spent on food. This can have negative impacts in emerging and developing countries, where food comprises a larger share of household spending.
Some governments are changing import and export policies in an attempt to reduce food prices. Policy changes may present opportunities for Australian exporters. They will make Australian products more competitive or further inflate global food prices.
Exporters should monitor policy announcements in the coming weeks as more governments address rising food prices.
The Manual of Importing Country Requirements for agricultural commodities.