Food import costs across the world are projected to reach nearly two trillion dollar this year, the UN Food and Agriculture Organization (FAO) said in a report published on November 11, 2022.
In the latest Food Outlook report, the FAO said that the new forecast of 1.94 trillion dollar represented an all-time high and a ten per cent increase over the record level of 2021.
DESPITE HIGHER FORECAST, SLOW DOWN ALSO EXPECTED
Though the latest forecasts point to easing of market conditions for basic foodstuffs, it also said that increased climate variability, conflicts and geopolitical tensions, bleak economic prospects, soaring agricultural input costs and export restrictions continue to pose challenges to global food commodity market stability.
Food prices rose worldwide following Russia’s invasion of Ukraine but have somewhat decreased. Together, these countries produce around 30 per cent of all wheat exports, in addition to other grains and related foodstuffs.
PRICE FOR LOW INCOME COUNTRIES
Although the bulk of the increase in the global food import bill will be accounted for by richer countries, the report said that rising food costs disproportionately affected poorer nations.
The aggregate costs for food imports for low-income countries is expected to remain almost unchanged, even though it is predicted to shrink by 10 percent in volume terms, pointing to growing accessibility issues for these countries.
“These are alarming signs from a food security perspective, indicating importers are finding it difficult to finance rising international costs, potentially heralding an end of their resilience to higher international prices”, FAO said.
DEEPENING DIFFERENCES
The Food Outlook report warns that existing differences are likely to become more pronounced. It said that high-income countries would continue to import from the entire spectrum of food products, while their developing world counterparts will increasingly focus on staple items.
AGRICULTURE-RELATED IMPORTS
The report also assesses expenditures on imported agricultural inputs.
This year, the global bill is expected to jump by nearly 50 per cent to $424 billion, or some 112 per cent over 2020, driven largely by higher costs for imported energy and fertilizers.
“Negative repercussions for global agricultural output and food security” are likely to extend into 2023, said FAO.
COMMODITIES CONUNDRUM
The agency’s Markets and Trade Division publish the Food Outlook report twice a year.
It also contains market supply and utilization trends for commodities such as cereals, oils, sugar, meat, dairy and fish.
Currently, supplies are at close to record levels, though multiple factors indicate tighter markets ahead.
RICE; Although inclement weather and sharp hikes in input costs are forecast to lower global production and tighten exportable availabilities, a still overall adequate global harvest and large carryins are anticipated to keep rice supplies abundant in 2022/23.
WHEAT: With expectations of a record wheat production and slower utilization growth, global wheat inventories are set to rise in 2022/23. However, most of the increase in stocks is anticipated to be concentrated in a few countries. Export disruptions and reduced import demand are seen reducing world wheat trade below the 2021/22 level.
COARSE GRAINS: A forecast fall in production is seen tightening the global coarse grain markets in 2022/23, driving an expected contraction in global utilization and stocks. World trade in coarse grains is predicted to decline slightly, mostly reflecting expectations of weaker import demand and tighter export supplies.
MEAT: World meat production in 2022 is forecast to expand, albeit moderately, with expected production growth slowdowns in the pig and poultry meat sectors, reflecting animal disease prevalence and producer margin erosion. Meanwhile, an anticipated reduction in import demand, notably for pig meat, coupled with high prices and economic downturns, may lead to a slight decline in global meat trade.
SUGAR: An anticipated increase in world sugar production, amid a likely slow rise in utilization, is set to push the global sugar surplus to 4.9 million tonnes in 2022/23. Global trade in sugar is predicted to expand moderately, largely spurred by larger export availabilities compared to the previous season
OILCROPS: FAO’s preliminary forecasts for the 2022/23 (October/September) season point to a somewhat easing market situation for oilseeds and derived products from the previous season, mainly on account of expectations of production recoveries. However, the outlook remains relatively tight and is subject to numerous uncertainties.
DAIRY: World milk production is forecast to expand in 2022, albeit slowly, impacted by extreme weather events, labour shortages and high input costs. Following two decades of uninterrupted increases, global dairy trade could contract, principally caused by likely lower purchases by China amid rising domestic production and elsewhere due to high prices and economic downturns. FISHERIES: Total fisheries and aquaculture production is expected to increase globally by 1.2 percent in 2022 (+2.6 percent for aquaculture and -0.2 percent for capture fisheries). Continued supply limitations and high inflation could cause prices to strengthen, but a slowing global economy will likely increase price sensitivity.
