The world food import bill is predicted to hit a new record this year, but is expected to grow much slower than last year. According to a report by the Food and Agriculture Organization of the United Nations (FAO), it reduces demand, especially in the most economically vulnerable countries.
FAO’s Food Outlook estimates that the global food bill will rise to $1.98 trillion in 2023, up 1.5 percent from2022. It rose by 11 percent in 2022 and 18 percent in 2021.
While food imports by advanced economies continue to expand, the import bill for the group of Least Developed Countries (LDCs) is predicted to decline by 1.5 percent this year and that for net food-importing developing countries (NFIDCs) to decline by 4.9 percent, according to FAO.
“It can undermine efforts to tackle poverty and food insecurity”
“The decline in food import volumes is a concerning development in both groups, suggesting a decline in purchasing capacity,” the biannual report from FAO’s Markets and Trade Division warns. “These concerns are amplified by the fact that lower international prices for a number of primary food items have not, or at least not fully, translated into lower prices at the domestic retail level, suggesting that cost-of-living pressures could persist in 2023.”
The new edition of Food Outlook has a special chapter examining recent changes in the food component of the consumer price index for NFIDCs, and how currency movements, especially in relation to the US dollar in which most agrifood trade is invoiced, impact food price inflation in these countries.
While the US dollar’s depreciation during the 2007-08 global food crisis helped food importers offset the increase in food prices, the reverse effect has marked recent years. For example, world maize prices declined by 10.2 percent between April 2022 and September 2022, but by only 4.8 percent on average when calculated in real local currencies of NFIDCs.
That underscores the importance of well-tailored interventions to combat inflation, said FAO Senior Economist El Mamoun Amrouk, author of the chapter. Otherwise, he warned, “rising food prices can lead to social unrest and increased financial challenges, undermining efforts to fight poverty and food insecurity and wiping out any progress achieved so far.”
Commodity trends
FAO’s latest release of the Food Outlook, containing forecasts of the production, trade, utilization and stock levels across the world’s major basic foodstuffs, point to likely increases in production across most categories, including rice, coarse grains, oilcrops, milk, sugar, meat and fish and fishery products. However, global wheat output could fall from last season’s all-time high.
Notwithstanding this generally positive outlook, the global agrifood production systems remain vulnerable to shocks, stemming from extreme weather events, geopolitical tensions, policy changes and developments in other commodity markets, with the potential to tip the delicate demand-supply balances and impacting prices and world food security.
Source: FAO
