Tatsat Chronicle Magazine

Rising Food, Agri Input Prices Threaten Food Security: FAO

FAO has proposed a Food Import Financing Facility to provide balance-of-payment support to the low-income countries most reliant on food imports as a strategy to safeguard their food security.
June 10, 2022
food security

“Given soaring input prices, weather concerns and increasing market instability due to the war in Ukraine, FAO’s latest forecast points to tighter food markets and unprecedented amounts for food import bills,” said Upali Galketi Aratchilage, the FAO economist who coordinated this edition of the report, in a statement. The situation is more worrying for developing countries.

According to forecasts by the Rome-based UN agency, the least developed countries (LDCs) will suffer a 5 percent contraction in their food import bill this year. At the same time, sub-Saharan Africa and the group of net food-importing developing countries will see the total rise despite a decline in import volumes.

“These are alarming signs from a food security perspective, as they indicate that importers are struggling to finance these ever-increasing international costs, possibly signaling the end of their resilience in the face of rising prices,” underlines the report.

In general, the bill for food imports in the world could well this year reach the record sum of $1.800 billion, but this expected increase is explained primarily by the surge in prices and transport costs rather only by increasing volumes, according to the FAO. Global spending on food imports is expected to increase by $51 billion compared to 2021, of which $49 billion is due to higher prices alone.

Animal fats and vegetable oils are the single largest item of expenditure on the rising import bills expected in 2022, followed closely by cereals for developed countries. On the whole, developing countries are reducing imports of cereals, oilseeds and meat, indicating their inability to cope with rising prices.

“The finding is cause for concern: many vulnerable countries are spending more without, however, receiving more food,” says the FAO in the latest edition of Food Outlook.

Elsewhere, other highlights of the report focused on global wheat supplies, which could grow slightly during the year. According to the FAO, this growth is mainly due to the expected accumulation of stocks in China, the Russian Federation and Ukraine. Maize production and use are forecast to reach unprecedented levels worldwide, accompanied by a rebound in ethanol production in Brazil and the United States, as well as industrial production of starch in China.

Global consumption of vegetable oils is expected to grow faster than production, although demand is likely to decline. As for global sugar production, it is also expected to increase after three years of decline, boosted by a rebound in India, Thailand and the European Union.

The FAO predicts a slowdown in meat production in Argentina, European Union countries and the United States of America, but global production is expected to increase by 1.4 percent, driven by an 8 percent growth in pork production in China. With regard to world milk production, despite a slow increase, the FAO expects a contraction in trade in dairy products compared to the high level reached in 2021.