While global food trade has shown “remarkable resilience to disruptions throughout the COVID-19 pandemic”, rapidly rising prices of food commodities and energy pose significant challenges for poorer countries and consumers, who spend large shares of their incomes on these basic necessities, FAO highlighted in its new Food Outlook.
FAO expects the global food import bill to reach an all-time high in 2021 and surpass US$1.75 trillion, marking a 14 percent increase from the previous year and 12 percent higher than earlier forecast in June 2021. The increase is driven by higher price levels of internationally traded food commodities and a threefold increase in freight costs.
Rise in food prices in developing countries
Developing regions account for 40 percent of the total and their aggregate food import bill is expected to rise by 20 percent compared to 2020, the FAO stated. Per the report, an even faster growth is expected for Low-Income Food Deficit Countries, due to higher costs compared to food import volumes.
The FAO underscored that developing regions are facing sharp increases in the prices of basic staples such as cereals, animal fats, vegetable oils and oilseeds. On the flip side, high-value foods, such as fruits and vegetables, fishery products and beverages are driving the bulk of the increases for developed regions.
Issued twice a year, Food Outlook offers FAO’s reviews market supply and demand trends for the world’s major foodstuffs, including cereals, vegetable oils, sugar, meat and dairy and fish. It also looks at trends in futures markets and shipping costs for food commodities.
Outlook for 2022
The FAO disclosed that World output prospects for major cereals remain robust, with record harvests expected in 2021 for maize and rice, although cereals utilization for human consumption and animal feed is forecast to grow faster.
Following a tight balance in 2020/21, preliminary forecasts for the 2021/22 season point to some improvements in the overall supply situation for oilseeds and derived products, but their respective end-season stocks could remain below average.
World sugar output in 2021/22 is forecast to rebound after three years of contraction but still fall short of global consumption. World sugar trade is foreseen to decline slightly because of reduced availabilities in key exporting countries and rising prices. Production of meat, milk, Fisheries and aquaculture output are all expected to improve next year.
Financial instruments such as futures and options related to major agri-food commodities have failed “to attract the speculative fervour marked by other high-priced years”, the report observed.
Agricultural input prices
FAO experts constructed a Global Input Price Index (GIPI) to help examine the impacts of rapidly rising input prices, especially those of energy derived from fossil fuels, on food prices, future price developments and their likely consequences for global food security.
FAO stated that the GPI and the FAO Food Price Index have moved in a synchronous manner since 2005, indicating that higher input costs readily translate into higher food prices. The FAO Food Price Index (FFPI) tracks the internationally traded prices of major agricultural food commodities and it reached a 10-year high in August 2021.
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