The world’s food-import bill is set to tumble to a seven-year low in 2016 as a decline in grain prices and lower freight rates more than compensate for increased imports, according to the United Nations.
Countries around the globe will probably spend $986 million importing food this year, the first drop below $1 trillion since 2009, the UN’s Food & Agriculture Organization said in a report on its website Thursday. That’s 8.9 percent less than last year.
"Almost all commodity import bills are set to fall this year," the Rome-based FAO said in the report. "The overall decrease in unit costs is set to offset the impact of rising import volumes of foodstuffs in 2016."
This year’s import cost will be 27 percent lower than a record $1.346 trillion in 2014, FAO data showed. A gauge of agricultural commodities tracked by Bloomberg has dropped more than 40 percent since a peak in 2008 amid bumper harvests from Australia to Brazil. Global grain stockpiles at the end of next season are now seen 4.4 percent higher than the FAO forecast in May.
The biggest declines will be in livestock products and grains-based foodstuffs, where the bill could fall by about $30 billion and $19 billion, respectively, the report showed. Spending on fruit and vegetables will drop $18 billion.
"Considerably lower quotations compared to last year, especially in the case of meat, are driving bills of these food groups down, even though import volumes are forecast to remain large, with trade in dairy products expected to reach a record high in 2016," the FAO said.
Not all nations will benefit from lower costs. The reduction will be smaller than the global average for a some low-income, food-deficit countries and for sub-Saharan Africa, the FAO said. Costs will be "virtually unchanged" for a number of least-developed nations. A stronger dollar may also affect nations whose currencies have weakened, making imports more expensive.
"For all of these economically disadvantaged countries, higher import volumes of commodities in the oilseed complex, as well as sugar and cereals, particularly maize, are seen to offset the gains from lower import bills of other product groups," the FAO said. "Despite the general decline of the U.S. dollar-denominated food bills in 2016, a different picture may emerge when estimated in local currencies.”
Import costs should increase $5 billion for vegetable oils and $2 billion for sugar, the FAO estimates. Supply of those two commodities have been hit by the El Nino weather pattern that ended last month.