'World food import to rise 26% in 2008'

Written by Commodities Bureau | Mumbai, Oct 10 | Updated: Oct 11 2008, 08:16am hrs
Global food import expenditure, in value terms, are forecast to reach $1,035 billion in 2008, 26% higher than the previous peak in 2007, according to the Food and Agriculture Organisation of the United Nations (FAO).

This figure is still provisional, because FAOs food import bill forecasts are conditional on developments in international prices and freight rates, which remain highly uncertain for the remainder of the year, states the FAOs latest report titled World Food and Agriculture 2008. The bulk of the anticipated growth in the world food import bill would come from higher expenditure on rice (77%), wheat (60%) and vegetable oils (60%). Import bills for livestock products are expected to register smaller increases, owing to moderate rises in global prices together with subdued trade.Higher international commodity prices are responsible for most of the increase, but freight costs, which have almost doubled for many routes, also contribute, the report said.

Imports of these major crops are less concentrated than exports. Only China and the European Union (EU) account for more than 10% of global imports each. The volume of major crop-exports increased by 9% (55 billion tonne in wheat equivalent) from 2003-05 to 2007 and is forecast to continue growing almost as rapidly to 2010.Reflecting the strong growth in income , imports of many countries have increased in volume terms during the past three years despite higher world prices, a development that puts additional upward pressure on prices, the report added. Some countries whose currencies have appreciated relative to the US dollar have been able to sustain imports, despite rising US dollar-denominated prices. Among economic groups, the most economically vulnerable countries are set to bear the highest burden in the cost of importing food, with the total expenditure by least-developed countries and low-income food-deficit countries expected to climb 37% and 40%, respectively, from 2007, after having risen almost as much in the previous year.

The international community needs to act urgently to strengthen the credibility and resilience of the international trade system. International trade can be an important source of market stabilisation, allowing countries to meet local production shortfalls through the market. But short term measures, such as export bans aimed at protecting domestic consumers, can further destabilise markets and punish countries that depend on imports for their food security, the report pointed out.

More stable and transparent trade rules can support the resilience of food systems and promote durable food security. The sustained rise in imported food expenditure for these vulnerable country-groups is such that, on current expectations, by the end of 2008, their annual food import basket could cost four times as much as it did in 2000.

This is in stark contrast to the trend prevailing for the overall developed country group, where import costs have risen far less.