THE WORLD’S food import bill will fall more than 20 per cent this year as agricultural commodities trade well below last year’s all-time highs, the UN’s Food and Agriculture Organisation (FAO)said yesterday.
But the impact of the economic crisis on people’s purchasingpower is set to offset much of the benefit of lower agricultural commodities prices, the FAO noted in its biannual Food Outlook report. In its first forecast about this year’s food import bill, the FAO said the cost of importing agricultural commodities will fall to $790 billion (€555 billion), down 22 per cent from last year’s record of $1,015 billion.
But it warned that the “deteriorating economic environment in which the falls are taking place could offset much of the benefit.Eroding purchasing power through a combination of falling incomes and real exchange rates afflicts the affordability of food, however cheap it has become on the international market place”, the FAO said.
The warning comes as some food commodities prices, including soyabean and corn, surge back to the levels last seen at the beginning of the 2007-2008 food crisis, up 50 per cent from their December low. Meat and milk prices remain depressed.
The FAO, however, minimised the impact of the recent price surge, saying “in spite of strong gains in recent weeks, international prices of most agricultural commodities have fallen in 2009 from their 2008 heights”.
It added: “Barring major crop setbacks . . . the food economy looks less vulnerable” this year to a price spike.”
Private sector analysts are less optimistic, pointing to falling supplies of soyabean – a key commodity to feed livestock and a drop in the expected harvest of corn and wheat. With stocks still low by historic standards, any weather disruption could boost prices, analysts said. Rice supplies are, however, plentiful.
The combination of worries has boosted prices. Soyabean and corn are now trading at the same level they did in January 2008, at the start of the food crisis – about $12.00 and $4.50 a bushel, respectively, but still well below last year’s records of $16.50 and $7.50. Wheat is lagging behind, trading at the level of October 2007 – about $6.50 a bushel, far below the 2008 peak of $13.
Bill Lapp, president of Advanced Economic Solutions, a US-based consultancy, said labelling the recent rise as a new food crisis would be “too strong”. But Mr Lapp, a former chief economist at ConAgra Food, added: “There are risks lying out there that make me concerned about where the market is heading.”
He said the world would emerge from the economic crisis with historically low stocks of agricultural commodities. At the same time, the economic recovery would see the same biofuel mandates and strong consumption from emerging countries that were partly behind the 2007-08 crisis.
The crisis saw prices for agricultural commodities soar, triggering food riots in at least 25 countries, from Mexico and Bangladesh to Senegal and Egypt. The crisis was behind the collapse of Haiti’s government, as people protested over rice prices.
