THE FOOD SITUATION IN THE LEAST DEVELOPED AND NET FOOD-IMPORTING
This brief presents developments in the food security situation in the Least Developed Countries (LDCs) and the Net Food-Importing Developing Countries (NFIDCs), the countries which are eligible for assistance under the Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Process on the Net Food Importing Developing Countries.
THE SOCIO-ECONOMIC PROFILE OF THE DECISION COUNTRIES
The combined total population of the 48 LDCs and 19 NFIDCs was 995 million in 1997, about 22 percent of all population of the developing countries. On average, these countries are below rest of the developing countries as regards most indicators of social development. For example, per caput income of the LDCs is 17 percent of that of the rest, and 70 percent for the NFIDCs. The percentage of undernourished population in the LDCs, at about 38 percent, has barely changed since the early 1970s. For the NFIDCs, the incidence although lower at 17 percent has not changed much over time.
THE PERFORMANCE OF DOMESTIC FOOD PRODUCTION
Cereals provide roughly 52 percent of the total energy supplies for the LDCs and 45 percent for the NFIDCs. But per caput cereal production in both the LDCs and the NFIDCs, at 130-160 kg per annum is less by 80-90 kg than the rest of the developing countries (Figure 1). Per caput cereal production had a declining trend in the LDCs. For NFIDCs, the trend is marginally positive but much slower than in the rest of the developing countries.
Figure 1: Per caput cereal production
Figure 2: Ratio of food imports to merchandise exports
DEPENDENCE ON FOOD IMPORTS AND IMPORT CAPACITY
The total value of imports of all food items increased by almost 50 percent for the LDCs from US$3.9 billion in the early 1980s to US$6 billion in 1997. For the NFIDCs, the corresponding import bills were US$9.4 billion and US$13 billion, an increase of roughly 40 percent. As regards food import capacity, the ratio of the value of total food imports to total merchandise exports is very high for the LDCs, at 0.27. For the NFIDCs, the ratio is lower at 0.17, but almost three times as high as for the rest of the developing countries. Moreover, the situation has not changed much over time (Figure 2).
THE EXPERIENCE DURING THE PRICE SPIKES OF 1995/96 AND THEREAFTER
Of particular importance is the experience during the last few years and especially during 1995-96, the period of high world market prices of basic foodstuffs. Taking the two years prior to 1995 as a benchmark, the increase in the cereal import bills in 1995/96-1996/97 amounted to 49 percent for the two groups of countries taken together. Nearly all of this increase (47 percent) was due to increases in the per unit cost of imported cereals as volumes changed only marginally.
As the world price has returned to more normal levels since the 1997/98 marketing year, have the cereal import bills also improved since then? The answer to this question is yes but only moderately (Figure 3). What is worrisome is that, although lower than the 1995/96 peak, cereal import bills are now at a much higher plateau than they were prior to 1995.
Figure 3: Evolution of cereal import bills
Further analysis of the data comparing the most recent marketing years with the pre-Uruguay Round situation, it shows that that cereal imports in volume terms increased by 17 percent only. During the same period, the cost of the imported cereals increased by some 36 percent. In other words, out of the total increase of the cereal import bill of the LDCs and NFIDCs between these two periods, about half is due to volume increase and the other half is due to an increase in the per unit cost of cereal imports. In fact, the per unit cost of cereal imports has increased between 1993/94-94/95 to 1996/97-97/98 from $143/tonne to $166/tonne, despite the decline in world market prices of basic foodstuffs. Further factoring the per unit cost component, it is found that the increase in the cost of the cereal import bills of LDCs and NFIDCs during this period is party due to volume increases (roughly 23 percent) and partly due to nominal price increases (roughly 18 percent), leaving close to 60 percent of the total increase due to the drastic change in the financial terms of imports (Figure 4).
One of the main reasons for the continued higher food import bill is that the contribution of concessional imports which played a major role in the past in meeting the cereal import needs of these countries has substantially diminished in recent years.
The implications of both of these trends, although largely anticipated in the context of the new policy environment under the Uruguay Round, is that a much greater volume of cereals is now imported under commercial terms.