Page 146 - Food Outlook

Food import bills
World food import bill in 2017 second highest on record
The cost of importing food globally in 2017 could reach USD 1.413 trillion, which would represent a 6 percent, or USD 86 billion, increase from last year, while down some USD 30 billion from the record bill of 2014. The higher bill is driven by not only more expensive freight rates but also generally greater international demand for most foodstuffs.
Rising and volatile freight rates were a prominent feature in 2016 and also have been a characteristic
over much of 2017, as evidenced by movements in the Baltic Dry Index that show average shipping charges in the ten months to October 2017 almost twice as high as in the corresponding period of last year. Taking wheat originating from the US Gulf ports as an example, major Asian buyers have now to pay as much as USD 45 per tonne to take delivery of the grain, which is USD 12 or 36 percent more than what they paid last year.
Turning to developments at the product level, the import bills to undergo the largest absolute year-on-year increase are those for livestock commodities and for cereals. At the forefront, the expected rise in global dairy import bill from last year amounts to some USD 38 billion, or 51 percent, on the back of record global demand and considerably higher unit costs. The world dairy bill could approach USD 112 billion in 2017. For similar reasons,
the meat import bill looks set to reach an all-time high of USD 176 billion, up 22 percent from 2016.
Stronger international demand in 2017 for maize
is expected to drive up global expenditures on cereal imports by USD 25 billion to nearly USD 180 billion. The combination of higher volumes, higher benchmark prices and higher freights is also generally behind greater year- on-year bills for all other imported food categories, except for sugar. International purchases of the commodity are expected to decline this year and sugar prices to remain below the level of 2016, but the hike in shipping costs is likely to have an offsetting effect, with the overall sugar bill rising from last year, albeit modestly.
Of concern are the higher-than-average increases in the food import bills of many economically vulnerable nations. Expenditures by least-developed countries (LDCs), low-income food deficit countries (LIFDCs) and those geographically situated in sub-Saharan Africa (SSA) are set to climb considerably more than the global increase
in 2017. For instance, the projected year-on-year rise of 12 percent in the aggregate bill for LIFDCs is twice the
Forecast changes in global food import bills by type (2017 over 2016)
Dairy
Vegetable Oils and Animal Fats
Meat
Vegetables and Fruits
Fish Oilseeds Sugar Coarse Grains Wheat Rice
Tropical Beverages
0 10 20 30 40 50 60
percent
world average, while for LDCs, the most vulnerable country group, the food import bill could soar by 10 percent from 2016.
Cereal staples dominate imported foodstuffs for economically vulnerable countries. Improved domestic cereal production prospects, leading to lower purchases on the international marketplace, have not been sufficient to curb the strong growth in cereal import bills in 2017, as higher unit costs have driven up expenditures. However, the US dollar – the currency in which most transactions are priced – has weakened considerably in 2017. This ought to have given some respite to the cost of procuring from international markets for those countries that saw their currency appreciate; but, this has not been the case for several large LIFDCs, as shown overleaf.
Contact:
Adam.Prakash@fao.org
140 FOOD OUTLOOK NOVEMBER 2017
Market indicators