Global food import bills are increasing, partly due to soaring
demand for biofuels, according to FAO’s latest Food
Outlook report. Global expenditures on imported foodstuffs look set to
surpass US$400 billion in 2007, almost 5 percent above the record
of the previous year.
Rising prices of imported coarse grains and vegetable oils – the
commodity groups that feature most heavily in biofuel production – account
for the bulk of the increase. Import bills for these commodities
are forecast to rise by as much as 13 percent from 2006, the report
More expensive feed ingredients will lead to higher prices for
meat and dairy products, raising expenditures on imports of those
commodities. In several cases, such as for meat and rice, larger
world purchases are likely to drive import bills up.
In the case of sugar, generally high and volatile prices could
lead to smaller import volumes, which is likely to result in a
drop in the cost of global sugar imports, the report said.
Record-high international freight rates have also affected the
import value of all commodities, putting additional pressure on
countries’ abilities to cover their food import bills.
Poor pay more
Developing countries as a whole are anticipated to face a 9 percent
increase in overall food import expenditures in 2007. The more
economically vulnerable countries are forecast to be most affected,
with total expenditures by low-income food-deficit (LIFDC) and
least developed countries (LDCs) expected to rise by 10 percent
from last year.
“The food import basket for the least developed countries
in 2007 is expected to cost roughly 90 percent more than it did
in 2000,” said FAO economist Adam Prakash. “This is
in stark contrast to the 22 percent growth in developed country
import bills over the same period.”
Production up, but so is demand
World cereal production in 2007 is forecast to reach 2 125 million
tonnes, up 6 percent from the reduced level in 2006 and higher
than FAO’s previous forecast in May.
“The prospect of a strong recovery in global cereal production
in 2007 is a positive development, but total supplies will still
be barely adequate to meet the expected rise in demand, not only
from the traditional food and feed sectors but in particular from
the fast-growing biofuels industry,” said Abdolreza Abbassian,
one of the authors of the report. “This means prices for
most cereals are likely to remain high in the coming year.”
FAO’s tentative forecast for rice production this year stands
at around 633 million tonnes, matching last year’s record
level, but with production still running short of consumption.
Global rice reserves are forecast to shrink and higher price levels
Global cassava production in 2007 could surpass last year’s
record level, due largely to measures to increase utilization of
the crop in the larger producing countries, especially for industrial
usage, including ethanol production.
Oilseeds and meal prices have continued to rise, largely due to
surging feed grain prices. Unusually high maize prices are dragging
up soybean prices as the two commodities are competing in both
the feed and energy markets. First forecasts for the 2007/08 marketing
season suggest that the steady growth in global oilseed production
could come to a halt, however, as maize cultivation is likely to
expand at the expense of soybeans.
Meat and dairy
Increased consumer confidence, following a reduced incidence of
animal disease outbreaks in the past year, should result in a recovery
in meat demand in developing countries in 2007, the report said.
Global meat exports are anticipated to increase by 3.8 percent
as trade bans are gradually lifted and markets return to more normal
Poultry prices have recovered after declining by 18 percent in
early 2006, mainly because of outbreaks of avian influenza. By
March 2007, export prices in the United States and Brazil, which
together supply 70 percent of global trade, increased by 20 percent
and 14 percent, respectively, from their 2006 annual averages.
FAO’s meat price index has significantly recovered from
a low in 2006 and, in March 2007, stood 7.6 percent higher than
in March 2006. Moreover, rising feed prices are putting further
upward pressure on meat prices, according to the report.
Prices of dairy products are currently at historically high levels.
The FAO price index of traded dairy products has risen by 46 percent
since November 2006. International prices for milk powders have
increased most, as stocks in the European Union have disappeared.
The outlook for 2007 is for stronger growth in global milk supply,
which may increase by 2.7 percent, sustained largely by expansion
in those countries more responsive to international prices. Drought
in Australia, suspension of milk powder exports by India, and Argentina’s
export taxes are restraining export supply in the short term. However,
EU dairy policy reform is changing the structure of international
markets as its export market share declines, creating opportunities
for emerging exporters, the report said.
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