The Food and Agricultural Organisation (FAO) revealed that the global food trade is set to hit an all-time record in both volume and value terms in 2021.
FAO disclosed in its latest food outlook report that showed the reviews of market supply and demand trends for the world’s most traded food commodities, namely, cereals, oil crops, meat, dairy, fish and sugar. The report also looks at trends in futures markets and shipping costs for food commodities.
FAO, in the report, predicted that the global food import bill could reach an all-time high in 2021 and surpass $1.75 trillion, marking a 14 percent increase from the year 2020 and 12 percent higher than the earlier forecast in June 2021.
“Higher international prices and freight rates combine to propel the cost of importing food to USD 1.75 trillion in 2021,” the report reads.
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The report noted that while the 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 necessities.
“Developing regions account for 40 per cent of the total and their aggregate food import bill is expected to rise by 20 percent compared to 2020,” the report adds.
“Even faster growth is expected for Low-Income Food Deficit Countries, due to higher costs more than higher food import volumes.
“Developing regions are facing sharp increases in the prices of basic staples such as cereals, animal fats, vegetable oils and oilseeds, while high-value foods, such as fruits and vegetables, fishery products and beverages are driving the bulk of the increases for developed regions.”
According to the report, world output prospects for major cereals remain robust, with record harvests expected for maize and rice.
It added that cereals for consumption, and animal feed, should grow even faster.
To examine the impacts of rising input costs on food prices, FAO said its experts constructed a new tool called Global Input Price Index (GIPI).
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.
The exercise reveals that the GIPI – comprising energy, fertilizers, pesticides, feed and seed prices – and the FAO Food Price Index (FFPI) – which tracks the internationally traded prices of major agricultural food commodities and reached a 10-year high in August 2021 – have moved in a synchronous manner since 2005, indicating that higher input costs readily translate into higher food prices.
The report noted that in 53 countries, households spent more than 60 percent of their income on necessities such as food, fuel, water and housing.
FAO warned that rising food and fuel prices can have a highly regressive impact on poor consumers and urges particular “vigilance” in this regard.
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