FAO predicts record global food import prices

The volume of global food imports will reach a record high in 2021 at $1.75 trillion. This is 14% more than in 2020 and 12% higher than the June forecast. This is stated in the report of the Food and Agriculture Organization of the United Nations (FAO). Experts attribute this growth to an increase in the cost of food products on the international market and a threefold increase in transport costs. The report notes that developing regions account for 40% of all imports.

According to the organization's forecasts, the total value of food imports will increase by 20% compared to last year. At the same time, in low-income and food-deficit countries, the increase will be even more rapid, experts say. “Developing regions are facing sharp increases in prices for basic food items such as cereals, animal fats, vegetable oils and oilseeds, while in developed regions, price increases are mainly seen in high value-added product categories such as fruits and vegetables, fish products and drinks,” the report says.

For over a year, the FAO Food Price Index has been on the rise. In June and July of this year, for the first time in 12 months, a decline was recorded, but in August the growth continued. Prices are formed from the ratio of supply and demand, which began to increase after a reduction with the onset of the pandemic.

The report also says the world is set to see record corn and rice harvests in 2021, although FAO predicts that grain consumption for human consumption and animal feed will increase even more. Global sugar production is projected to start recovering in 2021-22 after three years of decline, but will still lag behind global consumption. Analysts estimated global production at 173.3 million tons, which is 2.2% more than in 2020. Global sugar trade is projected to decline slightly as a result of reduced supply in major exporting countries and rising prices.

World meat production, according to FAO, will also grow and amount to 352 million tons, which is 4.2% more than last year. This will mainly be affected by the rapid recovery of output in China, primarily pork. Milk production in the world in 2021 will also increase and reach 928 million tons, which is 1.5% higher than last year. Moreover, growth is expected in all major producing regions, primarily in Asia and North America. Also, as the economy continues to recover from market disruptions due to the COVID-19 pandemic, global dairy trade is forecast to expand. However, import growth has slowed in recent months due to increased domestic production and sluggish consumer demand, experts say.

Director of the RANEPA Center for Agricultural Policy Natalia Shagaida said that Russian food imports are approximately equal to exports. “Now the import structure has been normalized - there are no groups for which we are critically dependent on foreign supplies. The main import group is fruits and nuts. This will continue if we do not give up nuts, citrus fruits and bananas,” the expert commented. - The next most important group is dairy products. Here the main supplier is Belarus. Within the framework of the EAEU, everything is also predictable, it is hardly necessary to consider the issue of reducing trade with our partner, whose dairy industry was modernized with Russia in mind.” As the experience of last year showed, prices are rising for those products that Russiaprovides for itself, Shagaida noted. “And some of them are not even exported. So the problem of rising prices is not in imports, ”she is sure.

According to the vice-president of the Russian Grain Union (RGU) Alexander Korbut, this year Russia will increase the import of bananas, coffee, tea, apples, early vegetables and many other products. “From my point of view, this is quite natural, imports are not a factor that displaces Russian products and undermines our food security. Imports ensure market saturation,” he said.

According to him, the record value of world imports, which FAO predicts, is mainly due to a significant increase in world prices. Korbut believes that next year the upward trend will continue against the background of the post-pandemic effect. “There were huge investments by developed countries in the economy, a logistical crisis, a crisis in nitrogen fertilizers. Next year, the cost of producing most of the field crops will increase, as will the cost of petrochemicals,” he predicts.

Weekly inflation in Russia slowed to 0.09% - Rosstat 

The volume of Russian imports this year depends on what will happen to the incomes of the population: if they grow, then imports will also increase. The situation with the ruble will also affect. Now it is strengthening, which becomes an incentive for importers who can buy more products in rubles, Korbut notes. “This can also lead to an increase in imports. On the whole, Russian food exports and imports will, I hope, be fairly balanced. Most likely, imports will slightly exceed exports,” he predicts. According to Korbut, by the end of 2021, food imports to Russia could reach $33-35 billion.