Good news for the world’s poorest countries: Importing food will be cheaper this year as prices for certain items are falling. But for many farmers in those countries, their livelihoods could be in jeopardy.
The latest report by the UN’s Food and Agriculture Organizations (FAO) estimates that the global cost of importing food this year will hit $1.5 trillion. That’s about 3 percent more than last year.
But for the world’s poorest countries and those the FAO classifies as “low-income food-deficit,” it will drop from last year. The report says the lower bill is mostly due to a sharp plunge in the price of imported sugar, which helped offset increases in the prices of imported vegetables and cereals. This can be hugely important for poor countries with growing populations and insufficient natural resources. In July, the FAO said those types of countries will likely become “increasingly dependent” on imports to feed their people.
Disruptions to those imports can be deadly. Yemen, for example, imported 80 to 90 percent of its food prior to the civil war that has embroiled the country in what the UN calls the “world’s worst humanitarian crisis.” The conflict has so disrupted Yemen’s food market – among other systems – that in the coming months the UN estimates 14 million people could face pre-famine conditions. That means they would be entirely reliant on external aid just to survive.
All that to say, for low-income food-deficit countries, lower costs for importing food is very good news.
Overall, the FAO says that global food production has been sufficient – even “abundant” – and the supply levels have “tamed” prices. Besides sugar, coffee, tea and cocoa have also become cheaper. The report estimates that food production in 2019 will also be “robust.”
However, high production and low prices may not be good news for everyone – like coffee farmers.
According to the FAO, coffee is “the most widely traded tropical product.” But since 2011, prices have dropped 45 percent in real terms (accounting for inflation and deflation). That sharp drop is not as largely reflected in the prices paid by consumers, who are mostly in developed countries. But it directly impacts the earnings and living standards of 25 million smallholder farmers who are responsible for 80 percent of the world’s coffee production. Without sufficient livelihoods, many of those farmers may feel compelled to leave their homes in search of better employment.
In Burundi, coffee makes up more than two-thirds of the country’s agricultural exports. In Colombia, Ethiopia, Honduras, Rwanda and Uganda, it accounts for nearly, or more than, a third of agricultural exports. With the exception of Colombia and Honduras, all of those countries are low-income food-deficit countries.
The report attributes the price drop to several factors, but mostly to oversupply. Already, global inventories are at an all-time high, it says, but this year’s production is expected to add another record-breaking 170 million bags. Much of that will be from exceptionally large crops from Brazil and Vietnam this year. Still, the report says, coffee production has consistently exceeded consumption by 6 million bags over the last decade.
In a press release, FAO economist El-Mamoun Amrouk suggested that creating more value-added coffee products in producing countries could curb the downward trend. But to make it work, major coffee-importing countries would have to reduce tariffs on processed coffee products, he said.
For countries that are dependent on imports for food security, lower prices are a welcome – if temporary – relief. But in the long-run, the pressure is ramping up on the global food market to ensure producers are earning enough to achieve their own food security.