The biannual report, which focuses on developments affecting global food and animal feed markets, highlights that the increase in global food import expenditures is driven by higher costs for cocoa, coffee, and tea, while disparities in import bills persist across income levels.
Cocoa prices have skyrocketed to almost four times their ten-year average earlier this year, coffee prices have nearly doubled, and tea prices are 15 per cent higher than their long-term levels.
Together, these commodities account for more than half of the projected increase in global food import expenditures, which FAO economists predict will rise by almost 23 per cent in 2024.
While high-income countries, which make up two-thirds of the global food import bill, will see a 4.4 per cent increase, import expenditures for middle and low-income countries are expected to decrease.
Lower-income countries may see some relief in reduced cereal and oilseed costs, although their per capita food intake for wheat and coarse grains is projected to decline. In contrast, rice consumption is expected to increase by 1.5 per cent.
FAO emphasizes the crucial role that food exports play in supporting many economies.
For example, in Burundi and Ethiopia, coffee export earnings cover almost 40 per cent of food import costs, while Côte d’Ivoire’s cocoa exports fully offset its food import bill. Similarly, tea exports make up more than half of Sri Lanka’s import costs.
FAO’s forecasts reveal a mixed outlook for global food production and trade.
While wheat and coarse grain output is expected to decrease, it will still be above consumption levels. Rice production is set to reach a record-breaking harvest in 2024/25, which could lead to an increase in global rice consumption, reserves, and international trade.
Meat and dairy production is expected to grow modestly, while global fisheries output is anticipated to expand by 2.2 per cent, driven by aquaculture.
Meanwhile, the consumption of vegetable oils may surpass production for the second consecutive season, resulting in stock drawdowns.
The report cautions that extreme weather, geopolitical tensions, and policy changes could destabilize production systems, further straining global food security.
A special focus on olive oil details price spikes caused by climate-related production declines.
In Spain, wholesale prices for cold-pressed extra virgin olive oil reached nearly $10,000 per tonne in January 2024, almost triple their 2022 levels.
High temperatures, which force olive trees to conserve water for core functions instead of producing fruit, led to a nearly 50 per cent reduction in production for two consecutive years. Although Spain’s next harvest is expected to exceed the 10-year average, high prices may limit global consumption.
The report suggests that producers should consider more sustainable water and soil management practices. It also notes that governments may offer support to olive growers, such as insurance schemes and measures to control the spread of diseases, according to FAO Economist Di Yang.
The report also highlights a 50 per cent decrease in fertilizer prices since their peak in 2022, thanks to falling natural gas prices and reduced trade barriers.
However, FAO Economist Maria Antip noted that phosphate fertilizers have not followed this trend, and ongoing trade barriers and geopolitical tensions pose risks to future supplies, particularly in Latin America and Asia.
The report also emphasizes the potential of low-carbon ammonia, a key component of nitrogen-based fertilizers, as a sustainable alternative.
However, while using renewable energy instead of natural gas is feasible and investments are being made, scaling up production will require targeted incentives to offset higher manufacturing costs and encourage adoption among farmers.