The FAO Food Price Index (FFPI) rose for the seventh consecutive month in January 2011, up 3.4 percent from December 2010 and the highest (in both real and nominal terms) since the index has been backtracked in 1990. Prices of all the commodity groups monitored registered strong gains in January compared to December, except for meat, which remained unchanged.
The FAO Dairy Price Index averaged 221 points in January, up 6.2 percent from December, but still 17 percent below its peak in November 2007. The FAO said the sudden surge in dairy prices was caused by the normal seasonal reduction in southern hemisphere production, in the context of continued firm demand for dairy products.
But the January dairy price increase is not just a question of supply. Demand remains strong, particularly from China, where imports have increased significantly in the last two years following the Melamine scandal and subsequent decline in local production.