Even higher global food prices expected in 2011

Worldwide food import bill could top $1 trillion in 2010 — Food and Agriculture Organisation (FAO).

KARACHI: Restricted global food supplies may further threaten food security in developing countries including Pakistan. A report entitled “Food Outlook-Global Market Analysis”, published by the Food and Agriculture Organisation (FAO) on November 17, has said that international food prices of most agricultural commodities have increased sharply in recent months and warned that this trend will likely continue in coming months. “With price increases largely reflecting scarcity in export supply, global competition for securing foodstuffs is set to intensify,” said the FAO report. The United Nations’ arm, mandated with monitoring global food supplies, has also asserted that sugar was an important reason for the rise in global food prices as prices of sugar “recently surpassed 30-year highs”. It highlighted that the production of oilseeds has remained sluggish, “failing to keep pace with fast expanding demand”.

The document listed the expected changes in global imports of various food categories. Global imports of dairy products are expected to grow by more than 45 per cent when compared to the tally for 2009. The import of oil seeds is forecast to expand by about 12 per cent to reach $58.5 billion, while sugar imports are expected to grow from $38.6 billion in 2009 to $41.6 billion in 2010. Out of the ten types of food considered in the report, only rice imports are expected to fall, dropping 12 per cent in the outgoing year when compared to 2009.

“Prospects for rice production in 2010/11 have deteriorated since the start of the season, following weather-related setbacks including severe flood damage to crops in Asia, especially in Pakistan,” said the report. However, the FAO has predicted a “record level” rice production for the outgoing year that would be “sufficient to cover world consumption without the need to draw down reserves”. The document also stated that although floods “wiped out large tracts of maturing crops in Pakistan in August”, production will exceed expectations in other countries such as Vietnam, Indonesia, Malaysia and Thailand.

Economists have warned that Pakistan may face a peculiar difficulty due to the current trends in food commodity prices. Rice is the only major food crop that is exported by Pakistan while the country relies heavily on imports of oilseeds and sugar.

“The rice crop and other grains that will be harvested next year will also be limited as thousands of acres of land that was devastated by floods is yet to be rehabilitated,” said economist AB Shahid. He explained that irrigation streams and canals have been destroyed in many areas and toxins and debris has also littered much of the cultivable land, rendering it useless.

“The government has not made any organized effort to rehabilitate this land and even the State Bank of Pakistan has only issued vague directions to banks to disburse credit to the agriculture sector without devising a concrete framework,” said Shahid adding that, “if this situation persists, then expect the country to be importing many of the crops that we have traditionally been self-sufficient in.”

Published in The Express Tribune, November 20^th, 2010.