The global food import bill is forecasted to surpass $2 trillion in 2024, driven by soaring costs of staple hot beverages like coffee, tea, and cocoa, according to the latest Food Outlook report by the Food and Agriculture Organization (FAO).
Key Drivers of Rising Costs
The biannual FAO report reveals that cocoa prices have quadrupled compared to their 10-year average, coffee prices have nearly doubled, and tea prices have risen by 15% above long-term levels. These three commodities alone account for over half of the projected increase in global food import expenditures, which are expected to rise by 23% in 2024.
Disparities in National Import Bills
High-income countries, which represent two-thirds of the global food import bill, will see a moderate 4.4% increase in expenditures. However, middle- and low-income countries are expected to experience a decline in import bills, primarily due to lower costs for cereals and oilseeds.
Despite this, FAO warns that per capita consumption of wheat and coarse grains is expected to decline in lower-income regions, although rice consumption is anticipated to rise by 1.5%.
The report underscores the importance of food exports in balancing import costs for some economies. For example:
- Coffee exports cover nearly 40% of food import costs in Burundi and Ethiopia.
- Côte d’Ivoire’s cocoa exports fully offset its food import bill.
- Tea exports account for more than half of Sri Lanka’s import expenditures.
A Mixed Outlook for Global Food Production
FAO forecasts reveal contrasting trends in global food production and trade for 2024:
- Wheat and Coarse Grains: Production is expected to decline but remain above consumption levels.
- Rice: A record-breaking harvest is anticipated, enabling increased consumption, reserves, and trade.
- Meat and Dairy: Moderate growth is forecasted.
- Fisheries: Output is set to grow by 2.2%, driven by aquaculture.
- Vegetable Oils: Consumption may outpace production for a second consecutive season, leading to stock drawdowns.
The report warns that extreme weather, geopolitical tensions, and policy shifts could disrupt production systems and exacerbate food security challenges.
Spotlight on Olive Oil Prices
The report also highlights a dramatic increase in olive oil prices due to climate-related production declines. In Spain, wholesale prices for cold-pressed extra virgin olive oil nearly tripled, reaching $10,000 per tonne in early 2024.
High temperatures have reduced olive yields for two consecutive years, cutting production by nearly 50%. While Spain’s next harvest is expected to exceed the 10-year average, high prices may continue to suppress global consumption.
FAO urges governments to support olive growers through sustainable water and soil management practices, insurance schemes, and disease control measures to capitalize on export potential.
Fertilizer Prices Decline, with Exceptions
The report notes a 50% drop in fertilizer prices since their 2022 peak, attributed to lower natural gas prices and reduced trade barriers. However, phosphate fertilizers remain expensive due to ongoing trade restrictions and geopolitical tensions, especially in Latin America and Asia.
FAO highlights low-carbon ammonia as a sustainable alternative for nitrogen-based fertilizers, though scaling up production will require financial incentives to offset higher costs and encourage adoption by farmers.
Conclusion
FAO’s Food Outlook paints a complex picture of global food markets, underscoring the critical need for sustainable practices, policy support, and international cooperation to address rising costs and ensure food security for all.
This comprehensive report provides vital insights into the economic pressures and opportunities shaping the future of global food systems.