Food prices have been on the rise in the past few months, as the global food import bill is on track to hit a new record of $1.8 trillion this year, according to a new report from the United Nations Food and Agriculture Organization (FAO).
The global food import bill is expected to rise by $51 billion compared to 2021, of which $49 billion reflects price increases. The least developed countries are also expected to see a 5 percent contraction in their food import bill this year.
The least developed countries are also expected to see a 5 percent contraction in their food import bill this year. While Sub-Saharan Africa and the group of net food-importing developing countries are expected to record an increase in total costs, despite a decrease in import volumes, according to the “FAO”.
According to a report issued by Citigroup, the shock of rising global commodity prices has caused additional costs to buyers by $5.2 trillion this year compared to the figures recorded in 2019. This increase is equivalent to 5% of global GDP.
Citigroup said that if prices continue to rise during the second half of this year, buyers will pay an additional $6.3 trillion compared to 2019 levels.
According to the bank, the impact of the high commodity price shock that the world is currently witnessing may be similar to that caused by the global oil crisis in the early seventies.
Rice
Many foods have risen in price, from wheat and other grains to meat and oils. This was driven by a number of factors, including the high cost of fertilizers and energy in the past year as well as the Russo-Ukrainian war.
Both countries are major wheat exporters, and the war disrupted agriculture and prevented the export of grain from Ukraine. Wheat prices have risen more than 50 percent since a year ago.
Rice, a staple food in most parts of Asia, could be next due to the above factors, in addition to rising inflation.
The FAO Food Price Index showed international rice prices rose for the fifth consecutive month, reaching a 12-month high, according to the latest May data published last week.
To be sure, rice production is still plentiful, experts say. But higher wheat prices, and higher farming costs in general, will make rice prices worth watching.
Four sources told Reuters that rice traders had bought more Indian rice in the past two weeks.
India and China are the world’s largest rice producers, accounting for more than half of the global total, according to the World Economic Forum. Vietnam is the fifth largest, while Thailand is in sixth place.
Analysts say they are looking at India in the coming weeks and the possibility of imposing a ban on rice exports – they were thinking of that following a similar action on wheat and sugar.
India imposed a ban on wheat exports in May, citing the need to “manage the country’s overall food security”. It also imposed restrictions on sugar just days after banning wheat.
International Monetary Fund
A few days ago, a research paper was released by the International Monetary Fund on the issue of rising global food prices. In countries where food security is a concern, the paper says, “Governments can consider temporary steps such as price support or import taxes…Governments should also try to increase food supplies by subsidizing production, avoiding storage, and using food reserves when available.”
It believes that governments should focus on investing in social safety nets and reforming existing subsidies because these reforms will help countries improve their resilience and boost more productive spending to support inclusive growth.
“The situation does not bode well for a market-led supply response that could curb further increases in food prices for the 2022/2023 season, based on current conditions,” the FAO concluded.
