Global food imports on track to hit almost $2tn this year amid soaring prices, FAO says
Food import costs globally are projected to reach $1.94 trillion this year and will affect some of the most economically vulnerable countries, according to the UN Food and Agriculture Organisation.
The new forecast represents an all-time high and a 10 per cent increase over 2021 levels, the UN body said in its Food Outlook report on Friday.
However, the pace of increase is expected to slow down as high food prices and depreciation of currencies weigh on the purchasing power of importers.
“Worryingly, many economically vulnerable countries are paying more while receiving less food,” said the FAO.
Food prices soared worldwide following Russia’s military offensive in Ukraine. Both together account for roughly a third of all wheat exports, in addition to other grains and related foodstuffs.
The FAO Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, averaged 135.9 points in October, virtually unchanged from September, with the price indices of all the covered commodity groups, except cereals, down month-on-month.
Existing differences across importing regions are likely to become more “pronounced” in 2022, said the FAO.
“While high-income countries continue purchasing across the entire spectrum of food products, the expenditures of developing regions will be increasingly concentrated on importing staple foods,” it added.
Meanwhile, the cost to import agricultural inputs will surge by nearly 50 per cent this year.
The global input import bill is expected to rise to $424 billion in 2022, up 48 per cent from the year before and as much as 112 per cent from 2020, said the FAO.
“These two inputs accounted for well over 75 per cent of the overall world bill in the past and are likely to reach a new record of 86 per cent in 2022."
Production of nitrogen fertiliser products in the EU has been curtailed due to a steep drop in Russian natural gas imports.
Earlier this month, CF Industries Holdings, the world’s largest nitrogen fertiliser producer, reported a third-quarter profit, compared with a loss a year ago.
“The conditions that have supported nitrogen prices for the past year … show no signs of abating,” CF Industries Holdings chief executive Tony Will said.
“As a result, we expect the global nitrogen supply-demand balance to remain tight, with attractive margin opportunities for low-cost producers further into the future.”
Oil and gas prices have soared since the Russian invasion of Ukraine in February.
Brent crude, the benchmark under which two-thirds of the world's crude is traded, closed in on an all-time high of $147 a barrel in March and is now hovering at about $95 a barrel.
European natural gas prices have declined in recent weeks due to high storage levels and a warm winter.
However, analysts have raised concerns about the continent’s ability to meet its energy demand next year when Russian natural gas supplies are expected to come to a complete halt.
“With high and inelastic demand for natural gas and little prospects for abating supply shortages, high world fertiliser prices are likely to extend into 2023,” said the FAO.
This will have “negative repercussions for global agricultural output and food security”, it said.
The FAO sees global wheat production rising 0.6 per cent to a “record” 784 million tonnes in the 2022-2023 period.
The higher output will be driven by “significant” harvest recoveries in Canada and Russia, offsetting production declines foreseen in several countries, including Argentina, Australia, the EU and India, the UN body said.