In tandem with this rise, it is anticipated that the worldwide import bill for agricultural inputs, most notably fertilizers, will rise by 48% in comparison to 2021.
The Food and Agriculture Organization of the United Nations (FAO) issued a warning on Friday that growing prices are likely to drive up global spending on food imports to reach $1.94 trillion in 2022, which is a 10% increase from the previous year. Alongside this increase in food spending, the global import bill for agricultural inputs, which includes fertilizers, is expected to increase by 48% compared to 2021, warns the Food and Agriculture Organization of the United Nations (FAO), which is concerned with fragile countries that are already plagued by food insecurity.
In its semi-annual report on the “Food Outlook,” the FAO issues a warning that the repercussions will be severe for developing nations that import food since these nations will have to pay more for less. Because if “The majority of the increase in the bill can be attributed to high-income countries; these countries would also experience an increase in the number of goods purchased, in contrast to economically precarious nations like Madagascar, Liberia, or Lebanon. “According to the FAO, it is anticipated that the overall food import bill for the group of low-income countries would remain almost unchanged, even though it is anticipated that the volume will decrease by 10%.
Even though less food is being imported into the region, it is anticipated that Sub-Saharan Africa would spend an additional $4.8 billion on food imports. “The FAO has issued a warning that the growing problem of accessibility for these countries could declare “the end of their resistance to the rise in international pricing.”
reducing the “burden” of imports on the economy
After an initial period of rise that can be attributed to the post-Covid economic recovery, there has been a general increase in the cost of food, which has been made worse for countries that import food by the depreciation of their currencies against the dollar, which is the primary currency of exchange on international markets. This has been directly linked to the conflict in Ukraine. The crisis, which involves two agricultural superpowers who were responsible for thirty percent of the world's wheat trade and seventy-eight percent of sunflower oil exports before Russia invaded Ukraine, has caused cereals to reach prices that have never been seen before. However, more than thirty countries that are net importers of wheat are dependent on the two countries (Russia and Ukraine) for at least thirty percent of their imports. These countries supply wheat.
Since the beginning of August, the creation of a safe maritime corridor has allowed more than 10 million tonnes of agricultural products to leave Ukraine. This has resulted in a gradual drop in the prices of agricultural items on the markets. Another reason that contributed to the reduction in tension was the increased global output of wheat “led in large part by the harvests in Russia and Canada, which is forecasted to hit a new all-time high of 784 million tonnes in the fiscal year 2022/23. The FAO predicts that the world's bill for imports of agricultural inputs, particularly fertilizers, might reach this year “$424 billion, up 48% from 2021.” However, there are additional factors that have a significant impact on the economies of impoverished nations that are importers. The issue at hand is the skyrocketing cost of gas and nitrogen fertilizers, both of which saw their prices triple in just one year. Russia is the biggest exporter of both of these commodities around the world.
“According to the Food and Agriculture Organization (FAO), “as a consequence of this, some nations may be forced to cut input applications, which would virtually certainly lead to lower agricultural output and national food supply.” The organization of the United Nations, which views the “negative impacts on global agricultural production and food security extend into 2023», has been pleading for several months for the establishment of a financing facility mechanism that would be available to countries that are highly dependent on imports. The report praises the announcement made at the end of September by the International Monetary Fund (IMF) of the launch of a food shock», open for one year for low-income countries, providing rapid access to emergency financing or in the event of a sudden rise in prices. It calls this “an important and welcome step to alleviate the burden of imported food expenses.”
