Global food bill set for five-year low

The world's food import bill is forecast to reach a five-year low in 2015 as plentiful supplies, lower freight rates and subdued demand due to weak emerging market currencies continue to weigh on agricultural prices.

"International food prices are likely to stay under downward pressure," said the UN Food and Agriculture Organisation's twice yearly outlook on food production and prices, adding that "low income countries are also expected to benefit from lower import bills".

Production of cereals, including corn, rice and wheat, are expected to fall from the record levels in 2014, but the impact will be cushioned by "exceptionally high" inventory levels.

The FAO also said its monthly food price index had fallen 1.2 per cent in April from March to its lowest level since June 2010, and was down 19.2 per cent over 12 months.

The price declines and rising inventories have started to affect government support policies in some agricultural sectors such as rice, according to the report.

International rice prices have been falling steadily since September last year, pushing the FAO's rice price index in April to the lowest level since August 2010.

Prices have been hit by growing exporter competition for markets, as several of the leading producing countries move to reduce their "mountains of rice". Weakening currencies in big rice importers such as Nigeria and Brazil have affected their ability to buy the grain, hence depressing demand.

However, "a prolonged period of low international rice prices is prompting governments, especially in exporting countries, to shift to less supportive rice production policies", said the FAO in its report. It predicts that this will damp global production growth in 2015 to just 1 per cent while inventories are forecast to fall 4.6 per cent.

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Sugar, cereals and vegetable oil prices also declined. However, meat prices rose in April - the first increase since August 2014 - on concerns about limited growth capacity in beef production.

Fish prices have also fallen in the past four months due to plentiful farmed fish. Aquaculture, or farmed fish, volumes rose 5 per cent in 2014 to 74.3m tonnes, while wild fish fell 2 per cent to 90m tonnes. Wild catches are expected to rebound slightly this year and overall fish production is expected to rise 2.6 per cent to 168.6m tonnes.

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