The global food import bill for this year is expected to remain close to last year’s level, and may even exceed it slightly due to higher prices of most food commodities in wake of the pandemic, the Food and Agriculture Organisation (FAO) said in a report.
World food markets are showing surprisingly strong resilience despite initial fears following the covid-19 outbreak that the food security of countries highly dependent on global trade would be impacted due to supply-chain disruptions, the report said, based on data for the year’s first half.
The world food import bill expanded by 0.5% in the first half of this year compared with the same period a year ago, but contracted by 1.1% when compared with the second half of last year. Purchases of staple foodstuffs –cereals, oilseeds and vegetable oils, sugar, and fruits and vegetables –recorded an increase in both value and volume terms.
“These traded commodities could conceivably have been substituted with domestic products. COVID-19 has had an unarguable and profoundly negative impact on gross domestic product (GDP) in countries integrated with global markets,” FAO said.
The commodities for which global trade underwent the highest contraction year-on-year during the comparative period can be regarded as highly income elastic, consisting of beverages , fish products, and to some extent livestock products.
While international prices have so far fallen this year for all these high-value foodstuffs, lower incomes have rendered these particular products less affordable, offsetting the price effects and resulting in lower volumes transacted, the report added.
Among the different economic groups presented, developing countries have by far shown the greatest resilience to Covid-19 in sustaining trade inflows.
For 7 of 11 food groups, import volumes increased in the first half compared with the same period for last year.
Higher demand from developing countries
Higher import demand by developing countries compared to the rest of the world is a reflection that their GDP is forecast to decline at a much lower rate compared to the projected global contraction, as well as food demand is generally less income elastic.
The trade resilience of developing countries to COVID-19 shocks – where volumes of many imported foodstuffs have increased considerably– have helped offset the contractions registered in developed countries, and thereby stabilise changes in the global food import bill.
China maintained its role as the world’s largest net importer of agricultural products — thereby shaping many of the food commodity trade flows.
The world’s second-largest economy’s demand for grains and oilseeds led the country to source imports from other destinations, especially from South America.
This demand was reinforced by an outbreak of African swine fever in the country, FAO said.