Global food trade has accelerated and is poised to hit an all-time record in both volume and value terms, according to a new report released by the Food and Agriculture Organization (FAO) of the UN.
While global food trade has shown “remarkable resilience to disruptions throughout the Covid-19 pandemic”, rapidly rising prices of food commodities and energy pose significant challenges for poorer countries and consumers, who spend large shares of their incomes on these basic necessities, the FAO said in its new food outlook.
The FAO expects the global food import bill to reach an all-time high in 2021 and surpass $1.75 trillion, marking a 14% increase from the previous year and 12% higher than earlier forecast in June 2021.
The increase is driven by higher price levels of internationally-traded food commodities and a threefold increase in freight costs.
Developing regions account for 40% of the total and their aggregate food import bill is expected to rise by 20% compared to 2020.
Even faster growth is expected for low-income food deficit countries, due to higher costs more than higher food import volumes.
Developing regions are facing sharp increases in the prices of basic staples such as cereals, animal fats, vegetable oils and oilseeds, while high-value foods, such as fruits and vegetables, fishery products and beverages are driving the bulk of the increases for developed regions.
Global food trade
World meat production in 2021 is forecast to expand, principally triggered by a swift output rebound in China, especially pig meat.
Notable demand-led output expansions are expected in all major producing regions, except Oceania. A growth slowdown in global meat trade is likely due to anticipated declines in imports by leading importing regions, especially Asia and Europe.
Global milk production in 2021 is forecast to expand, with anticipated increases in all major producing regions, led by Asia and North America.
Global trade in dairy products is also forecast to expand, amid the ongoing economic recovery from Covid-19 market disruptions. However, in recent months, the import growth rate has slowed down due to rising domestic production and sluggish consumer demand.
World output prospects for major cereals remain robust, with record harvests expected in 2021 for maize and rice, although cereals utilisation for human consumption and animal feed is forecast to grow faster.
Global Input Price Index
The FAO constructed a Global Input Price Index (GIPI) to examine the impacts of rapidly rising input prices, especially those of energy derived from fossil fuels, on food prices, future price developments and their likely consequences for global food security.
The exercise reveals that the GIPI – comprising energy, fertilisers, pesticides, feed and seed prices – and the FAO Food Price Index (FFPI) have moved in a synchronous manner since 2005, indicating that higher input costs readily translate into higher food prices.
In the year to August 2021, the FFPI rose by 34% and the GIPI increased overall by 25%, compared to the same period in 2020.