The global food import bill is on course to hit a new record of US$1.8 trillion this year, but higher prices and transport costs rather than volumes account for the bulk of the expected increase, according to a new report released by the Food and Agriculture Organisation of the United Nations (FAO).
“Worryingly, many vulnerable countries are paying more but receiving less food,” FAO said in its latest Food Outlook.
It noted that the global food import bill is projected to rise by $51 billion from 2021, of which $49 billion reflects higher prices.
According to the report Least Developed Countries (LDCs) are anticipated to undergo a five per cent contraction in their food import bill this year, while sub-Saharan Africa and the group of net food-importing developing countries are both expected to register an increase in total costs, despite a reduction in imported volumes.
“These are alarming signs from a food security perspective, indicating that importers will find it difficult to finance rising international costs, potentially heralding an end of their resilience to higher prices,” the report noted.
FAO has therefore, proposed a food import financing facility to provide balance-of-payment support to the low-income countries most reliant on food imports as a strategy to safeguard their food security.
It said animal fats and vegetable oils are the single biggest contributor to the higher import bills expected to be reached in 2022, although cereals are not far behind for developed countries.
“Developing countries, as a whole, are reducing imports of cereals, oilseeds and meat, which reflects their incapacity to cover the increase in prices,” it also noted.
According to the report, after starting the 2021/22 season 33 per cent higher than their previous year’s values, international wheat prices increased further in 2021/22 to levels not reached since 2008.
It said world wheat prices rose by 23 per cent in the first half of 2021/22 as global supplies tightened, especially of high-quality wheat, following reduced harvests in several major exporting countries in 2021.
With markets already tight, the abrupt suspension of exports from Ukraine – a major wheat exporter – when it was invaded by Russia Federation exacerbated global supply concerns, sending prices sharply upwards in March 2022.
The report said prices surged further in May, when India, which had increased shipments significantly in 2021/22 helping to compensate for lost exports from Ukraine, announced a ban on exports of wheat.
By May 2022, world wheat prices were 55 per cent above their May 2021 values and only 12 per cent below the record high reached in February 2008, the report added.