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Cost of importing food poised to rise by 6% to $1.413 trillion in 2017
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Saturday, 11 November, 2017, 08 : 00 AM [IST]
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Rome
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While food commodity prices have been generally stable, the cost of importing food is set to rise in 2017 to $1.413 trillion, a six per cent increase from the previous year and the second-highest tally on record. This was stated by the Food and Agriculture Organisation (FAO) in its latest Food Outlook report, which was published recently.
The higher import bill was driven by the increased international demand for most foodstuffs as well as the higher freight rates. Of particular concern were the economic and social implications of the double-digit increases in the food import bills for least-developed countries (LDCs) and low-income food-deficit countries (LIFDCS).
“Higher bills do not necessarily translate into more food being bought by them, as the cost of importing has greatly escalated,” said Adam Prakash, economist, FAO.
The higher import costs come at a time when inventories are robust, the harvest forecasts are strong and the food commodity markets remain well supplied.
The food commodity outlook, issued twice a year, takes a close look at the markets of key food categories, including cassava, the livestock and dairy sectors, fish, vegetable oils and the main cereal grains.
While production trends are broadly strong across the board, average prices in international transactions can mask more specific trends.
For example, while international wheat prices have been flat, US Hard Red Spring wheat, a popular high-quality variety with enough protein content to make noodles and pasta, was 40 per cent higher in July 2017 than it was a year ago.
Aromatic rice varieties have risen eight times faster than the FAO All Rice Index, which is up four per cent on the year.
Likewise, the FAO Butter Price Index has risen 41 per cent so far in 2017, more than three times as much as the Dairy Price Index, of which it is a component.
The livestock and dairy sectors are particularly dynamic. The meat import bill is set to reach an all-time high of $176 billion this year, up 22 per cent from 2016.
World milk production is predicted to grow by 1.4 per cent, led by a robust four per cent expansion in India, even as more stringent environmental regulations and quality controls in China may lead to a contraction there.
The world output of oilseeds oils - vegetable oils and animal fats are the largest items in the LIFDC import bills - is expected to increase slightly this year after last year’s strong season.
But global soybean production, despite a planting boom in the Northern Hemisphere, is set to decline as yields return to normal levels after last year’s nearly optimal weather.
Opportunities loom for tropical fruits
“Tropical fruits are increasingly stars in global trade, with export volumes of mangoes, pineapple, avocado and papayas on course to achieve a total combined value of $10 billion this year,” according to the Food Outlook.
Their popularity is promising for poverty relief and rural development as almost all production takes place in developing countries, usually through smallholder farmers with fewer than five hectares.
FAO estimated that the total production of the four fruits could reach 92 million tonne this year, compared to 69 million tonne in 2008.
Currently 95 per cent of that output is consumed locally, but the rising incomes and the changing consumer preferences will likely boost the export volumes, especially if freer trade and better market access stimulate further technological gains in distribution.
Major producers of tropical fruits include India (home to about 40 per cent of the global mango production), Costa Rica (which supplies a large share of the world's pineapples), China and Brazil, besides Mexico, which is the largest exporter.
Africa may set record for cassava output
As well as providing detailed analyses of the production, trade and demand for major cereal and oil crops, the Food Outlook updates trends for cassava, which has been one of the fastest-expanding staple crops at the global level, and is the third most important source of calories in the tropics, after rice and maize.
Production in sub-Saharan Africa may reach a record high this year of 156 million tonne, buoyed by various commercial expansion programmes aimed at curbing the reliance on food imports in the region.
“Still, global production of this root will likely contract slightly in 2017 - to 278 million tonne - after two decades of uninterrupted growth, due to a combination of drought conditions, depressed prices and policy changes,” said FAO.
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