(Bloomberg) – Hefty supplies and cheaper shipping costs mean countries will pay less to import food than anytime in the past five years, the United Nations predicted.
Food prices globally have fallen for most of the past year given an oversupply in everything from wheat to sugar and dairy, according to a report released Thursday by the UN’s Food & Agriculture Organization. The group said the world food import bill may drop $153 billion, or 12 percent, to $1.13 trillion this year.
While poorer countries, such as those in sub-Saharan Africa, will be able to get cheaper food in the international market, in some cases the benefit is diminished because their currencies have weakened relative to the dollar, the FAO said. Among all foods, the cost to import cereal-based products, fruits and vegetables will fall the most, according to the report.
“The major driver of the lower bill in 2015 is on account of lower commodity prices,” Adam Prakash, an FAO economist, said by phone. “Cautiously, you can say that perhaps things may be a bit better for importing countries down the road.”
A measure of shipping commodities including grains, coal and iron known as the Baltic Dry Index dropped 44 percent in the past 12 months. Rates have fallen as the supply of new vessels outpaced demolition, the FAO said.
The FAO’s index of 73 food prices from around the world declined for a sixth month in April, slipping 1.2 percent to 171, the lowest since June 2010. The gauge dropped 29 percent from its record in February 2011.
The index of grain costs fell 1.3 percent in April to the lowest since July 2010, the FAO said. Global grain inventories are forecast to climb 5.9 percent to 645.6 million tons by the end of the season that began in 2014, the UN agency wrote in a separate report.
World grain production may slip 1.5 percent in 2015 to 2.51 billion tons, mainly on a drop in corn planting, the FAO said. That would still be about 5 percent above the five-year average production, it said.
