Record-breaking world food trade forecast

Robust supplies and resilient demand characterise outlook

By Carly Fields

Global food trade looks set for a resilient year ahead despite supply and demand uncertainties, according to a report from the Food and Agriculture Organization of the United Nations (FAO).

Trade flows for agricultural, and particularly less-perishable, foods have reached record highs during the Covid-19 pandemic, leading the FAO to predict that the world food import bill in 2021 will be $1.72 trillion, 12% up on the previous high of $1.53 trillion in 2020.

But the optimism comes with some caveats: rising food prices are leading to concerns that 'higher outlays may still mask deteriorating quantitative and qualitative dietary trends in vulnerable countries', said the FAO.

In its forecast, the UN agency expects world output of the major food commodities to increase in the year ahead, with the exception of sugar, which is forecast to decline for the third consecutive year and fall short of global consumption.

For oilseeds and their derived products, the market outlook is viewed as tight, and the FAO warns that resumed production growth could well be insufficient to satisfy world demand.

World supplies of wheat and rice, meanwhile, are noted as 'robust'. Early indicators for 2021/22 point to global rice production and utilisation 'reaching new peaks', while stocks remain ample leading the FAO to predict that international rice trade will expand in 2021, although smaller Asian imports may stall trade growth in 2022. Continued strong global demand for wheat is expected to counter large carryover stocks and forecast record production in 2021.

Stocks of coarse grains are expected to fall despite an anticipated record 2021 global production. World production of sugar in 2020/21 is also forecast to decline for the third consecutive year, while world trade in sugar is expected to contract slightly because of reduced availabilities in key exporters.

In its forecast, the UN agency expects world output of the major food commodities to increase in the year ahead

Meat growth

World meat output looks set to expand by 2.2% in 2021, to 346 million tonnes. This growth reflects 'an anticipated rebound in meat production in China, where expansions are expected across all meat types, especially pig meat, facilitated by high investments in the value chain and efforts to control the spread of African swine fever'. However, global meat trade is seen as 'heading towards a stagnation', with higher trade in bovine and poultry meat offsetting a contraction in trade of pig and ovine meat.

Fish output is also expected to rebound with the FAO noting that pandemic-related restrictions catalysed a shift in sales trends benefiting small pelagics, such as sardines, anchovies and mackerel, as well as tuna.

The FAO calculates that the data reported so far for 2021 puts the value of global agricultural trade (measured by exports) 'firmly on an upward trajectory, reaffirming the resilience of this sector to Covid-19 impacts'.

The annual increase in world exports from 2020 is projected at $137 billion or 8%. This is more than double the percentage increase of 2020 over 2019.

Looking at the geographic spread of global food trade growth, developing countries account for 40% of the almost $52 billion value of growth in 2020, which is already up 3.2% from the year before. For 2021, the value of global agricultural trade, measured by exports, is expected to increase by 8%, or $137 billion and much of that is accounted for by rising demand from East Asia. 'While absolute growth in food inflows to East Asia is expected to match the growth observed in 2020, changes in the composition of food imports is projected to change significantly in 2021,' the FAO said. 'Underpinning this development would be the recovery of China's livestock sector from African swine fever, to the extent that meat imports could amount to a small increase of just $4 billion in 2021, compared with a more noticeable surge of $15 billion in 2020.'

The FAO calculates that the data reported so far for 2021 puts the value of global agricultural trade (measured by exports) 'firmly on an upward trajectory, reaffirming the resilience of this sector to Covid-19 impacts'

Developed dominance

It is developed countries that are again expected to meet the rise in world food demand in 2021, more dominantly than was the case in 2020. The FAO notes that developed countries share of the global export expansion in 2021 amounts to 57%, compared with a 59% share in the expansion last year. 'Notable changes among developing regions concern Latin American exporters, who in 2020 were instrumental in meeting international demand for oilseeds, as well as for sugar,' said the FAO.

More generally, the FAO expects global demand for commodities that tend to be more 'income-elastic' to significantly rebound, especially beverages and fish. 'Last year's sharp decline of $20 billion in import expenditures registered for both product groups combined could turn into positive territory in 2021, with an increase of $21 billion foreseen,' said the FAO. However, it cautions that growth in export revenues and import expenditures must be put in the context of sharply rising prices and as such may not reflect actual increases in demand, measured by import volumes.

The full report is available here: http://www.fao.org/giews/reports/food-outlook/en/.

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