|Global Market Analysis|
Market indicators and food import bills
At US$745 billion, the global cost of imported foodstuffs would be some 21 percent more than the previous year and the highest level on record. Much of the anticipated growth would be fuelled by higher expenditures on grain based products, which could rise by 37 percent to the tune of US$230 billion, or around one-third of global food import expenditures. This is in spite of expected net reductions in imported volumes of these food products. Soaring grain prices are to blame, especially for wheat, but also freight costs, which have doubled since the last year, putting additional pressure on countries’ ability to cover their import expenditures.
The combination of rapidly rising prices and record freight rates are also behind much higher global bills for imported dairy products and vegetable oils. Bills for dairy foodstuffs are forecast to climb as much as 65 percent from 2006, while an anticipated 35 percent increase in vegetable oil import costs would see this product group emerge as the second most costly item in the global annual food import basket.
The forecast rise in import bills for rice and meat is less dramatic. In both cases, higher traded quantities offset the effect of higher prices, in spite of greater feed costs for meat. The global food import bill is expected to be moderated to some degree by a decline in sugar import costs. International quotations for sugar in 2007 so far have fallen to two-thirds of their average value in 2006 and is the driving factor behind an anticipated 34 percent drop in sugar import expenditures in 2007.
Among economic regions, developing countries as a whole could face a year of increase of 25 percent in aggregate food import bills. Among them, the most economically vulnerable countries are set to bear the highest burden in the cost of importing food, with total expenditures by LDCs and LIFDCs anticipated to climb respectively, by 20 and 24 percent, from last year’s level, after each rising in the order of 10 percent from the year before that. The sustained rise in imported food expenditures for both vulnerable country groups is alarming. Today, their annual food import basket could cost well over twice more than what it did in 2000.
Rising import bills do not necessarily imply more imported foodstuffs. This is especially true for grains, both wheat and maize, where high and volatile international prices could curtail procurement in many countries, a response not always in consideration of improved domestic supply prospects. Indeed, given the firmness of food prices in the international markets, the situation could deteriorate further in the coming months leading to reduction in imports and consumption in many LIFDCs, especially in those countries where food inventories are already very low.
Forecast import bills of total food and major foodstuffs (US$ million)
1. The methodology behind calculating food import bills has undergone revision since the previous edition of Food Outlook. The current methodology expresses food imports using actual market values of raw and processed goods as opposed to values expressed in primary equivalents.
|GIEWS||global information and early warning system on food and agriculture|