FAO’s Food Outlook: Developing countries buoy global food trade

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Global trade in food products has proven remarkably resilient during the pandemic, with developing countries even managing to increase export revenues, according to a new report published today by the Food and Agriculture Organization of the United Nations (FAO).

FAO's Food Outlook: Developing countries buoy global food trade
FAO’s Food Outlook: Developing countries buoy global food trade – www.brandspurng.com

Data available through June “suggest strong, albeit not complete, resilience of the global food markets to COVID-19 shocks”, the semi-annual Food Outlook says in a special feature on recent trends in food imports bills and export earnings.

“The global food import bill for the whole of 2020 may even exceed that of 2019,” says Josef Schmidhuber, co-author with Bing Qiao – both FAO economists – of the chapter. “There is, however, a noticeable shift away from high value food items to staples.”

Developing countries have demonstrated notable “vivacity” in buoying global food trade flows, the analysis shows. Their export earnings in the first half of 2020 rose by 4.6 per cent compared to the same period of the previous year, while those of developed countries declined. That is partly explained by the sharpest drops occurring for beverages, fish and meat, the demand for which is more responsive to the declines in household incomes triggered by the contracting global economy.

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Over the same period, world imports of beverages fell by more than 12 per cent and fish products declined by more than 10 per cent, while the value of trade in animal and vegetable oils and oilseeds both increased by almost 10 per cent. The report offers a rich series of graphics, data and analyses of trends by food group and region.

Commodity market trends

Cereal markets in 2020/21 are well supplied, with prices affected by tightening markets for wheat and robust international demand for coarse grains and rice, the report notes. FAO updated its supply-and-demand forecasts for cereals last week.

Global production of oilseeds and derived products in 2020/21 is expected to reach a new record over the 2020/21 seasons while growing demand points to tightening markets.

World sugar production in 2020 is seen rebounding, although below the pace of growing consumption, which will depend on whether further COVID-19-related lockdown measures are imposed.

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Global meat production in 2020 is forecast to decline for the second year in a row, amid subdued trade and demand prospects.

World milk production in 2020 is also predicted to expand, buoyed by favourable monsoons and the resilience of village cooperatives’ networks in collecting milk amidst logistic hurdles in India, along with government stabilization assistance in the European Union and the United States of America.

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For the fisheries sector, which as noted above suffered a large drop in trade flows, production is expected to decline in 2020 due to the pandemic’s impact on demand, logistics, prices, labour and business planning. Capture fishery output will likely decline slightly, while aquaculture production is expected to decline for the first time in many years.

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The report notes that the pandemic’s impact on the market for fish – notably a drop in demand for fresh fish due to aversion to going to markets and restaurants – has triggered “far-reaching changes” likely to persist in the long term and support product innovation, shorter value chains and new distribution channels.

Tropical fruits
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The COVID-19 pandemic has rattled the value chain for tropical fruits, especially the most perishable items, which require labour-intensive handling and rapid and often airborne transport and have relatively high costs.

Global trade in pineapples, mangos and papaya have declined, sometimes at a double-digit pace.

Tropical fruit producer margins are under pressure from pandemic disruptions as well as highly competitive value chains, the intensifying market power of downstream actors, the occurrence of plant diseases, and adverse weather events.

“It will be critical to develop policies aimed at providing financial support to producers so that they can remain operational, while protecting the health and safety of workers and minimizing disruptions to national and international transport routes,” says Sabine Altendorf, FAO economist and author of this chapter.

Bananas and avocados, by contrast, have shown some resilience, with both fruits posting export growth, but critical strains have affected their value chains, especially for smaller producers, who face elevated prices of fertilizer and pesticides and have suffered from cancelled orders.

Demand for bananas has benefited from their perceived sanitary safety, convenience and record supplies from Ecuador, as well as an output recovery in Costa Rica.

Avocado imports have also grown on a global basis, as seasonally lower supplies from Mexico and an outright drop in purchases in the U.S. are more than offset by robust demand in the European Union and significantly higher supplies from Colombia, Kenya and Peru.

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FAO's Food Outlook: Developing countries buoy global food trade - Brand SpurFAO's Food Outlook: Developing countries buoy global food trade - Brand Spur

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FAO's Food Outlook: Developing countries buoy global food trade - Brand SpurFAO's Food Outlook: Developing countries buoy global food trade - Brand Spur

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