World food import bill to be at record high of $1.94 trillion in 2022: FAO

The world food import bill is estimated to rise to $1.94 trillion in 2022, higher than previously expected, according to the latest Food Outlook forecast released by the Food and Agriculture Organization of the United Nations (FAO).

“The anticipated slowdown in growth in 2022 reflects higher world food prices and depreciating currencies against the United States dollar, all of which are expected to weigh on the purchasing power of importers and subsequently on the quantity of imported foods,” the report said.

This “all-time high”, can be attributed to the depreciating values of currencies against the US dollar and the ongoing Russia-Ukraine war. Both Ukraine and Russia are agricultural superpowers, with more than 30 nations dependent on them for wheat and sunflower oil exports.

According to the report, overall, in 2022, high-income countries (HICs) and upper-middle-income countries (UMICs) are expected to account for 85 per cent of world expenditures on imported food and over 80 per cent of the growth in these expenditures. The bulk of the increase in the food import bill is expected to be cost-driven, reflecting record international food prices that come on the back of surging input prices as well as disrupted food supply chains.

The Food Outlook report, warns that existing differences are likely to become more pronounced, as high-income countries continue to import across the entire spectrum of food products while developing regions are increasingly focused on staple foods.

The imports by low-income countries (LICs) are expected to become increasingly responsive to higher prices, and their volumes are forecasted to come to a standstill in 2022 the report said.

“Decomposing food import bills to ascertain the extent to which changes in prices and volumes drive changes in expenditures at the global level, the anticipated increase in the 2022 import bill is almost entirely on account of higher prices, with $157 billion due to higher international prices and merely $27 billion reflect higher volumes.”

The report explains that higher import bills mainly reflect higher unit costs rather than higher volumes, with many regions or country groups set to face higher bills in return for lower or the same volumes.

“Worryingly, this development is much more pronounced for some economically vulnerable country groups.”

Sub-Saharan Africa is expected to spend $4.8 billion more on food imports but to see a decline in volumes worth $0.7 billion. Similarly, least developed countries (LDCs) are expected to see an expansion in their food import bill by $4.9 billion fully on account of higher prices, the report says.

The net food-importing developing countries (NFIDCs), are expected to face $21.7 billion in extra costs for merely $4 billion of extra imported food volumes. “The aggregate food import bill for LICs is expected to remain unchanged in value terms but could shrink by as much as 10 per cent in volume terms, highlighting growing accessibility issues for such countries.”

Calling them “alarming signs” from a food security perspective, the report says that importers are finding it difficult to finance rising international costs, potentially heralding an end of their resilience to higher international prices.

“High-income regions account for most of the growth in the world import bill for all foodstuffs, while low-income countries focus on imports of staple food items “

The FAO Outlook for 2022 warns that “this may usher in an era of less resilience to higher food prices, notably in poorer regions.”

The report emphasises the need for a Food Import Financing Facility (FIFF) to provide balance-of-payments support to low-income, highly food import-dependent countries to ease their access to international food markets.

“The approval of a “Food Shock Window” by the International Monetary Fund (IMF) presents an important and welcome step towards easing the burden of higher imported food expenditures among LICs.” the report said.

Issued twice a year, FAO’s ‘Food Outlook’ offers reviews of market supply and utilization trends for the world’s major foodstuffs, including cereals, oil crops, sugar, meat, dairy, and fish.