Poor nations have to spend more on food imports: FAO

Poor countries, relying on food imports, are expected to spend 40 per cent more this year than the last year, the UN Food and Agriculture Organisation has said.

According to the latest Food Outlook, a biannual publication by the FAO focusing on developments affecting global food and feed markets, this year's food import bill for the Low Income Food Deficit Countries is forecast to reach $ 169 billion.

Characterising this as a 'worrying development' the FAO noted that by the end of this year imports could cost four times as much as they did in 2000.

"Food is no longer the cheap commodity that it once was," said the agency's Assistant Director-General Hafez Ghanem, stressing that soaring food prices are likely exacerbate the food deprivation suffered by 854 million people.

"We are facing the risk that the number of hungry will increase by many more millions of people," Ghanem said.

Although the global production outlook is favourable, this is unlikely to translate into the decline of many agriculture commodities because of the need to replenish stocks and rising utilization.

It predicts record cereal production this year but says tight markets will result in continued price volatility.

International prices of most agricultural commodities, the Food Outlook report says, have started to decline, but they are unlikely to return to the low price levels of previous years.

The food price index has remained stable since February 2008, but the average of the first four months of 2008 is still 53 per cent higher when compared to the same period a year ago.

Despite a favourable global production, the expected price decline in many basic agricultural commodities during the new 2008-09 season is likely to be limited, because of the need to replenish stocks and an increase in utilisation. Due to rising utilisation, more than one good season is required to replenish stocks and reduce price volatility, report adds.

The FAO's latest forecast for world cereal production in 2008 points to a record output, now at nearly 2192 million tonnes, including milled rice, up 3.8 per cent from 2007.

Among major cereals, the tight wheat supply is likely to improve most, given the prospects for better harvests in 2008.

Despite record production levels in several crops, tight markets will probably lead to continued price volatility during the season.

Heads of state and government will address the problem of high food prices and the challenges of climate change, bio-energy and food security at the upcoming three-day summit in Rome beginning on June 3.

The rise in international prices of oilseeds and oilseed products, it says, has accelerated in 2007-08, with values climbing to new record levels in March 2008.

World markets have tightened considerably as reduced supply growth for oils and a drop in meal supplies are coinciding with further expansion in demand.

First forecasts for the 2008-09 season point towards a strong recovery in global oilseed production, and the resulting oil and meal output should be sufficient to meet global demand, the FAO report adds.

Regarding sugar, it says, generally favourable growing conditions led to a record world production in 2007-08 and although world sugar consumption is foreseen to increase at a sustained rate, it will not be enough to absorb an expected second consecutive global supply surplus.

International sugar prices are likely to remain under downward pressure, it predicts.

Global meat output, the agency says, is expected to grow in 2008 despite high feed prices. Strong economic growth is expected to sustain steadfast consumption in many developing countries.

Global milk production, which is responding to the past year's high milk product prices, is forecast to grow strongly in 2008. However, it says there is uncertainty as to where dairy markets will head.

Global trade in milk products is anticipated to fall again in 2008 mainly because of reduced exportable supplies.

Food Outlook forecasts that aquaculture production growth will continue this year with the historic milestone of reaching the same level as the expected capture fisheries in 2008. Prices for wild species from capture fisheries are moving upwards strongly but the price increase for farmed species are expected to be more moderate.

Worldwide potato production could expand over the next decade between 2 and 3 per cent annually with developing countries, especially those situated in Sub-Saharan Africa, being the main engine of growth.

China, the world's biggest potato producer, is reviewing proposals for the potato to become one of the country's major food crops, while India plans to double its output in the next five to 10 years, it adds.