food outlook No.4, December 2005 
global information and early warning system on food and agriculture(GIEWS)

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Other relevant agricultural commodities

Ocean freight rates


Special features

Statistical appendix


Other relevant agricultural commodities



Banana markets were characterized by high prices in the last quarter of 2005, in particular in the United States and the EU. This situation resulted from the combination of firm demand and reduced supply. Banana production was affected by adverse weather in Latin America. In particular, a series of hurricane and tropical storms damaged plantations in Guatemala, Mexico and Honduras, while intense rains hit Panama. High oil prices also contributed to the increase in import prices. In the EU, this rise was further fuelled by reduced domestic production and a shortage of import licenses. Import prices were at their highest level since the 1990s. The outlook for the beginning of 2006 is for a continuation of the current situation of tight supply and high prices.

After the WTO arbitration panel ruled in August 2005 that the EU’s envisaged tariff of 230 euro per tonne for banana imports from most favoured nations (MFN) would not result in at least maintaining their market access, the European Commission (EC) proposed a tariff of 187 euro per tonne which Latin American countries considered too high. As negotiations failed, the EC requested in September a second WTO arbitration to determine whether its new proposal complied with the terms of the Doha Waiver. The arbitration ruled against the proposal. Following this ruling, the EC engaged again in negotiations with the above countries but no agreement could be found. On 29 November 2005, the EU adopted a tariff-only system with an unbound tariff of 176 euro per tonne and a duty-free quota of 775 000 tonnes for ACP bananas. The new system is due to enter into force on 1 January 2006.

food outlook




Coffee markets recovered considerably in October, after falling from May to September, which was mostly attributed to seasonal factors such as a slowdown of roasting activities and latterly also selling activity by investment funds. The October average price was 82.5 US cents per pound, 35 percent up compared to a year earlier, and took the average price for the first 10 months of the calendar year to 90 US cents per pound; 50 percent above the corresponding period in 2004. The coffee market remains underpinned by a tighter supply and demand balance: output is forecast to decrease in 2005/06 while consumption is expected to grow and global inventories of green coffee will fall. World coffee production in 2005/06 (October/September) is expected to reach 6.3 million tonnes, unchanged from previous forecast, which corresponds to a 6.2 percent decline over 2004/05 level. Coffee production in Brazil is expected to decline by 15 percent to reach 1.9 million tonnes in 2005/06, mainly because the Arabica trees need to recover after providing an abundant crop in 2004/05, while output in Viet Nam, the second largest producer, is forecast to decrease by 25 percent from 750 000 tonnes in 2004/05, as a result of drought.

food outlook




International cocoa prices rose to 67.22 US cent per pound in September 2005, 3 percent up from August, but slipped back down in October to 65.9 US cents per pound in the light of estimates indicating higher cocoa exports from Côte d’Ivoire. Between January and October 2005, prices averaged 70 US cents per pound, just marginally up compared to the same period in 2004. Three major movements characterized the evolution of prices so far during 2005. From January to March, prises rose 13.5 percent to 79.7 US cent per pound due to speculation over a possible supply shortage in 2005/06, then between March and May prices trended downward and settled at 68.5 US cents per pound in May. Prices remained relatively stable at about 67.8 US cents per pound between May and October, which is 3.5 percent down from the price at the start of the year. In addition to the effect of a stronger US dollar, the overall decline in prices since the start of the year reflects concerns over an estimated global production surplus in the 2005/06 season as major consuming countries are seen to increase consumption only moderately. Latest estimates indicate a global surplus for the 2005/06 season of 70 000 tonnes, which compares to the revised estimate of a deficit of about 42 000 tonnes in 2004/05.



The FAO Tea Composite Price stood at US$1.68 per Kg in September 2005, 1.5 percent up from August, as seasonal demand boosted prices in most tea auction markets. Auction prices in Colombo were quoted 8 percent higher in September, while in Mombasa and Cochin prices rose by 2 percent, and 4.7 percent, respectively. The only significant decline occurred in Kolkata where prices averaged 7.5 percent lower coinciding with the peak harvesting period. An analysis of past trends of the Kolkata Auction indicates a general decline of 9.5 percent, on average, between August and September.

food outlook


Between January and September 2005, the FAO Tea Composite Price increased slightly by about 0.3 percent compared to the same period in 2004, despite a reported rise in output in major producing countries. World tea production in 2005 is set to reach yet another all time high. India reported a 40 percent increase in production for the first 8 months (January-August) of 2005. Higher output was also reported in Sri Lanka (+13 percent), Kenya (+6 percent), Indonesia (+3 percent), and Bangladesh (+2 percent), but for the period of January to September 2005. Slightly higher world tea prices to date, as compared to 2004, are due to steady demand in major importing countries. Imports by Pakistan and the Russian Federation are up by 14 percent, and 8 percent, for the first 8 and 9 months of 2005 respectively, while growth in imports was also experienced in the Ukraine (19.5 percent), South Africa (21.7 percent), and Turkey (40 percent), between January and July 2005.

In order to address the challenges arising from recent changes in MRL regulations in major importing countries, and following the recommendations made by the Intergovernmental Group (IGG) on Tea at its 16th Session in Bali, Indonesia, in July 2005, an informal Consultation will be held in FAO headquarters on 6 and 7 December 2005. The purpose of the meeting is to bring together producer and consumer countries, as well as JMPR, Codex Alimentarius, and other standards-setting bodies to enhance cooperation between stakeholders and harmonize the approaches to legislate on tea MRLs. This event follows a similar meeting held by tea producing countries in Kolkata, on 30 September and 1 October, 2005.

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