Food import bill to hit record high

Nov 16, 2021 News

– FAO warns as Guyana battles rising cost of living

Kaieteur News – 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 last week by the Food and Agriculture Organization of the United Nations (FAO).

Guyanese have been crying out about the high cost of living

hile 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, FAO says in its new Food Outlook.
Back in September last year, Agriculture Minister, Zulfikar Mustapha told a forum that Guyana produces 59% of the food for consumption, which means that food import dependence is at 41%. He further explained that Food Import Bill stood at GUY$45Billion.
Last Friday President Dr. Irfaan Ali warned citizens to brace for an increase in cost of living as a result of the global supply chain crisis. The President said, “What are we doing today is presenting you with the facts, with reality, with what the government is doing to address issues that are global in nature, how we are defining policies to address these issues, the impact global challenges is having on our economy, and the way in which the government is addressing those challenges.”
To this end, he added that he believes that it is very important for all Guyanese to understand that “We do not live in an isolated environment and we are part of the global community.” The President said that Guyanese are part of the process of globalisation and what occurs globally; while highlighting that the country is also affected by global challenges.
Pointing to the impact of the pandemic, which caused tremendous increases in cost of living, the President noted that the closure of major players in international markets, factories, terminals, and port facilities has created severe backlogs for shipping.
According to President Ali, the delay costs are then translated into new prices that consumers are facing globally. He said, “So the net effect of all of this is increased costs at the production level and increased costs at a logistics level and that combined increase is what is driving up prices globally, and Guyana is not excluded from this phenomenon.” “This situation, as I speak to you, is compounded and the forecast suggests that the supply chain prices” are underpinning “the widespread hype and freight increase is expected to last a bit longer.”
Meanwhile, the FAO said in the report that the global food import bill will reach an all-time high in 2021 and surpass US$1.75 trillion, marking a 14 percent increase from the previous year and 12 percent 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 percent of the total and their aggregate food import bill is expected to rise by 20 percent 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.
Issued twice a year, Food Outlook offers FAO’s reviews market supply and demand trends for the world’s major foodstuffs, including cereals, vegetable oils, sugar, meat and dairy and fish. It also looks at trends in future markets and shipping costs for food commodities.
Takeaways
World output prospects for major cereals remain robust, with record harvests expected in 2021 for maize and rice, although cereals utilization for human consumption and animal feed is forecast to grow faster. Following a tight balance in 2020/21, preliminary forecasts for the 2021/22 season point to some improvements in the overall supply situation for oilseeds and derived products, but their respective end-season stocks could remain below average.
World sugar output in 2021/22 is forecast to rebound after three years of contraction but still fall short of global consumption. World sugar trade is foreseen to decline slightly because of reduced availabilities in key exporting countries and rising prices. 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.
Fisheries and aquaculture output in 2021 is forecast to grow by 2.0 percent from the 2020 level, signalling that new market dynamics resulting from the pandemic – which exacted a heavy toll on this sector – appear likely to endure in the long term. Fish trade is bouncing back despite high freight costs and logistical delays. Financial instruments such as futures and options related to major agri-food commodities have failed “to attract the speculative fervour marked by other high-priced years”, the report observes.