Food import bills reach a record high at hard hit

New Delhi, June 7: Global expenditures on imported foodstuffs looks set to surpass 400 billion dollars this year, almost five per cent above the previous year's record, partly due to soaring demand for biofuels, according to FAO's latest Food Outlook report.

Rising prices of imported coarse grains and vegetable oils the commodity groups that feature most heavily in biofuel production account for the bulk of the increase. Import bills for these commodities are forecast to rise by as much as 13 per cent from 2006, the report said.

More expensive feed ingredients will lead to higher prices for meat and dairy products, raising expenditures on imports of those commodities. In several cases, such as for meat and rice, larger world purchases are likely to drive import bills up.

In the case of sugar, generally high and volatile prices could lead to smaller import volumes, which is likely to result in a drop in the cost of global sugar imports, the report added.

Record-high international freight rates have also affected the import value of all commodities, putting additional pressure on countries' abilities to cover their food import bills.

Developing countries as a whole are anticipated to face a 9 per cent increase in overall food import expenditures in 2007.

The more economically vulnerable countries are forecast to be most affected, with total expenditures by low-income food-deficit (LIFDC) and least developed countries (LDCs) expected to rise by 10 per cent from last year.

''The food import basket for the least developed countries in 2007 is expected to cost roughly 90 per cent more than it did in 2000,'' said FAO economist Adam Prakash adding that ''this is in stark contrast to the 22 per cent growth in developed country import bills over the same period.'' The outlook for 2007 is for stronger growth in global milk supply, which may increase by 2.7 per cent, sustained largely by expansion in those countries more responsive to international prices. Drought in Australia, suspension of milk powder exports by India, and Argentina's export taxes are restraining export supply in the short term.

However, the EU dairy policy reform is changing the structure of international markets as its export market share declines, creating opportunities for emerging exporters, the report said.

World cereal production in 2007 is forecast to reach 2,125 million tonnes, up 6 per cent from the reduced level in 2006 and higher than FAO's previous forecast in May.

''The prospect of a strong recovery in global cereal production in 2007 is a positive development, but total supplies will still be barely adequate to meet the expected rise in demand, not only from the traditional food and feed sectors but in particular from the fast-growing biofuels industry,'' said Abdolreza Abbassian, one of the authors of the report. ''This means prices for most cereals are likely to remain high in the coming year.'' FAO's tentative forecast for rice production this year stands at around 633 million tonnes, matching last year's record level, but with production still running short of consumption. Global rice reserves are forecast to shrink and higher price levels are anticipated.

Global cassava production in 2007 could surpass last year's record level, largely due to measures to increase utilisation of the crop in the larger producing countries, especially for industrial usage, including ethanol production.

Oilseeds and meal prices have continued to rise, largely due to surging feed grain prices. Unusually high maize prices are dragging up soybean prices as the two commodities are competing in both the feed and energy markets. First forecast for the 2007-08 marketing season suggest that the steady growth in global oilseed production could come to a halt, however, as maize cultivation is likely to expand at the expense of soybeans, the report added.

UNI