UN Report: Global Food Import Costs Rising; Biofuels Partly to Blame
7 June 2007
|FAO food price indices for 2006/2007. Click to enlarge.|
Global food import bills are increasing, partly due to the soaring demand for biofuels, according to the United Nation’s Food and Agriculture Organization’s latest Food Outlook report. Global expenditures on imported foodstuffs looks set to surpass US$400 billion in 2007, almost 5% above the record of the previous year.
Rising prices of imported coarse grains and vegetable oils—the commodity groups that feature most heavily in biofuel production—account for the bulk of the increase. Import bills for these commodities are forecast to rise by as much as 13% from 2006, according to the report.
More expensive feed ingredients will lead to higher prices for meat and dairy products, raising expenditures on imports of those commodities. In several cases, such as for meat and rice, larger world purchases are likely to drive import bills up.
In the case of sugar, generally high and volatile prices could lead to smaller import volumes, which is likely to result in a drop in the cost of global sugar imports, the report said.
Record-high international freight rates have also affected the import value of all commodities, putting additional pressure on countries’ abilities to cover their food import bills.
Developing countries as a whole are anticipated to face a 9% increase in overall food import expenditures in 2007. The more economically vulnerable countries are forecast to be most affected, with total expenditures by low-income food-deficit (LIFDC) and least developed countries (LDCs) expected to rise by 10% from last year.
The food import basket for the least developed countries in 2007 is expected to cost roughly 90 percent more than it did in 2000. This is in stark contrast to the 22 percent growth in developed country import bills over the same period.—Adam Prakash, FAO economist
World cereal production in 2007 is forecast to reach 2,125 million tonnes, up 6% from the reduced level in 2006 and higher than FAO’s previous forecast in May.
The prospect of a strong recovery in global cereal production in 2007 is a positive development, but total supplies will still be barely adequate to meet the expected rise in demand, not only from the traditional food and feed sectors but in particular from the fast-growing biofuels industry. This means prices for most cereals are likely to remain high in the coming year.—Abdolreza Abbassian, one of the authors of the report
FAO’s tentative forecast for rice production this year stands at around 633 million tonnes, matching last year’s record level, but with production still running short of consumption. Global rice reserves are forecast to shrink and higher price levels are anticipated.
Global cassava production in 2007 could surpass last year’s record level, due largely to measures to increase utilization of the crop in the larger producing countries, especially for industrial usage, including ethanol production.
Oilseeds and meal prices have continued to rise, largely due to surging feed grain prices. Unusually high maize prices are dragging up soybean prices as the two commodities are competing in both the feed and energy markets. First forecasts for the 2007/08 marketing season suggest that the steady growth in global oilseed production could come to a halt, however, as maize cultivation is likely to expand at the expense of soybeans.
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