   
  
G/AG/GEN/156  
 
23 October 2019  
(19-6988) Page: 1/4 
Committee on Agriculture  Original: English  
 
FAO REPORT TO THE CO MMITTEE ON AGRICULTU RE 2019  
SUBMISSION BY THE FA O 
The following submission, dated 23 October 2019 , is being circulated at the request of the  Food and 
Agriculture Organization (FAO).  
 
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This report provides the FAO contribution to the annual monitoring exercise of the WTO Committee 
on Agriculture (CoA). It draws in large measure on the latest editions of FAO 's Cereal Supply and 
Demand Brief (October 2019) and the FAO Food Outlook (May 2019). It highlights the develop ments 
in the food import bills of Least Developed and Net Food -Importing Developing Countries (the LDCs 
and NFIDCs, respectively), as well as other relevant developments in global food markets.  
1  FOOD IMPORT BILLS  
1.1.  The value of food imports globally is foreca st to reach USD 1.472 trillion in 2019, representing 
a decline of 2.5 % from the previous year. The decrease in the global food import bill reflects a 
decline in international prices for many commodities, and to a larger extent, a reduction in freight 
rates. In essence, the lower unit costs of imported food helped offset the growing import volumes, 
suggesting that relatively more food could be purchased for the same or lower monetary 
expenditures in 2019.  
1.2.  Large swings in freight rates have been a defining fe ature of the global food markets for the 
last decade. By mid -February 2019, the Baltic Dry Index (BDI), a key indicator for dry bulk freight 
rates, had reached its lowest level in around two and a half years, to then soar to a near nine -year 
high in Septem ber 2019, reflecting, inter alia, robust import demand.  
1.3.  At the commodity level, the food import bill for tropical beverages, i.e. for coffee, tea and 
cocoa, is expected to see its largest absolute decrease in 2019, reflecting a significant decline in the 
international prices of these products compared to 2018. Import bills for products in the oilseed 
complex (vegetable oils and oilseeds), beverages, as well as fruits and vegetables are also expected 
to fall substantially in 2019. The aggregate import bill f or cereals is expected at the level of 2018, 
whereby lower prices helped offset higher import quantities.  
1.4.  Turning to developments for specific country groups, the food import bill for the LDCs is 
expected to remain virtually unchanged from 2018. A 2.6 % decline is anticipated in the food import 
bill of Low-Income Food -Deficit Countries (LIFDCs ), while a 3.8 % increase is expected in that of sub -
Saharan Africa (SSA). LDCs, LIFDCs and SSA countries are expected to benefit from lower prices of 
vegetable oils, wh ich are usually the second largest contributor to their import bills.  
1.5.  Cereals often dominate food imports of economically vulnerable countries. Due to poor cereal 
production prospects for LDCs, LIFDCs and SSA in 2019, the cereal import volumes of these co untries 
are anticipated to increase. While lower prices are expected to offset the foreseen increase in 
imported volumes, the share of imports in domestic supplies will rise further, increasing their import 
dependency. In 2019, cereal imports are expected to reach a level of nearly 35 % in the overall food 
import bill for LDCs and SSA.  G/AG/GEN/156  
 
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  Table 1: Forecast of import bills by food group (USD Billion)  
 World  Developed  Developing  LDC LIFDC  Sub Saharan 
Africa   
2018  2019  
f'cast  2018  2019  
f'cast  2018  2019  
f'cast  2018  2019  
f'cast  2018  2019  
f'cast  2018  2019  
f'cast  
TOTAL  FOOD  1,510.1  1,472.4  896.7  877.6  613.4  594.8  41.0 40.6 80.4 78.3 46.9 48.7 
Meat  169.0  168.6  103.2  102.3  65.7 66.2 2.6 2.5 2.3 2.3 3.6 3.4 
Dairy  92.4 91.9 57.8 57.6 34.6 34.4 1.9 1.9 2.8 2.8 2.1 2.0 
Fish 156.8  156.5  108.4  107.3  48.5 49.2 1.2 1.3 3.3 3.2 4.4 4.8 
Cereals  268.5  268.2  126.7  129.8  141.8  138.4  13.8 14.2 20.6 21.3 15.1 17.5 
Vegetables & 
Fruits  277.9  274.7  194.1  190.9  83.8 83.9 3.8 3.9 10.3 10.4 3.3 3.3 
Sugar  46.0 46.0 22.5 22.4 23.5 23.6 3.7 3.7 5.7 5.5 3.8 3.8 
Coffee, tea and 
cocoa  111.2  100.7  80.9 73.3 30.3 27.4 1.6 1.5 4.7 4.3 1.8 1.6 
Beverages  116.7  112.6  26.8 26.0 30.8 29.7 1.9 1.8 2.2 2.1 2.7 2.6 
Vegetables oils 
and animal fats  90.8 82.8 40.6 37.1 50.2 45.7 6.6 6.1 21.1 19.4 6.2 5.9 
Oilseeds  91.7 84.4 26.8 26.0 64.9 58.4 0.9 0.9 2.7 2.7 0.2 0.2 
Miscellaneous 
edible products 
and preparations  89.2 86.1 49.8 48.1 39.4 38.0 3.0 2.9 4.5 4.4 3.7 3.6 
Source: FAO (2019a)  
2  MARKET TRENDS FOR KE Y CEREALS  
2.1.  According to the latest FAO Cereal Supply and Demand Brief (October 2019), world cereal 
output is forecast to reach 2 ,706 million tonnes (with rice in milled equivalent) in 2019, which is 
53 million tonnes (2.0 %) above its 2018 level. Based on current fore casts, world cereal utilization is 
expected to increase by 34 million tonnes (1.3 %) to 2 ,714 million tonnes in  2019/ 2020, marking a 
new record high. The latest forecasts suggest that world cereal stocks will reach 850 million tonnes 
by the close of the 2020 season, down 17 million tonnes (2.0 %) from their opening levels. 
International trade in cereals is forecast at 415 million tonnes in 2019/ 2020, up just 0.7 % (almost 
3.0 million tonnes) from the 2018/ 2019 level.  
2.2.  Wheat : FAO expects wheat production to r each 766 million tonnes in 2019, up by almost 5.0 % 
relative to 2018. This rise reflects anticipated production increases in the European Union and 
the Russian Federation. With total wheat utilization seen expanding by 2.0 % to 761.5  million tonnes, 
global c arryover stocks for wheat are expected to reach 273 million tonnes by 2020, an increase of 
1.6% from their opening levels, but still below the record level of 284  million tonnes registered 
in 2017/18. World wheat trade could grow to 173.5 million tonnes in  2019/ 2020 (July/June), some 
3.4% above the previous season. The rebound mainly stems from expectations of larger wheat 
purchases by several Asian countries as well as Morocco. Higher imports are likely to be met by 
larger exports from Argentina, the EU an d Ukraine.  
2.3.  Coarse grains : FAO 's latest estimates peg world production of coarse grains at 1 ,427 million 
tonnes in 2019, up 1.6 % from 2018. The increase mostly reflects higher production of maize and, 
to a lesser extent, barley. World utilization of coarse grains is expected to reach a new record of 
1,436 million tonnes, a 1.0 % increase from 2018/ 2019. Based on the latest forecasts for global 
production and utilization, world stocks of coarse grains are anticipated to decline by 4.2 % to 
397.6  million tonnes.  International trade in coarse grains is likely to contract by 2.2 % in 2019/ 2020 
(July/June), reaching nearly 194.3 million tonnes, largely on account of decreased import demand 
for maize by the EU, China and Canada.  
2.4.  Rice: Based on the preliminary forecast s, world rice production in 2019/ 2020 is set to reach 
to 513.5 million tonnes, just 0.8 % below the 2018 all -time high level. Taking into consideration the 
current expectations of stagnating global production and another food -driven expansion in total use, 
global rice stocks are forecast to fall by 1.9 % in 2019/ 2020 (July/June), which is below 
the 2018/ 2019 level. International trade in rice in 2020 (January -December) is forecast at G/AG/GEN/156  
 
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  47.5 million tonnes, up 3.5 % from the 2019 level, with much of the expected recovery attributable 
to strong import demand from Africa.  
3  FOOD PRICES  
3.1.  For 2018 as a whole, the FAO Food Price Index (FFPI), which is a measure of changes in 
international prices of a basket of food commodities, averaged at 168.4 points, down 3.6 % 
from 2017 and 27 % below the 2011 peak, when the indicator reached nearly 230 points. The FFPI 
experienced a moderate increase between January and May 2019 followed by a slight decrease until 
August 2019, before reaching nearly 170 points in September 2019, still 3 .3% higher than its value 
in the corresponding period of last year (Figure 1  and Figure 2).  
4  PRICE VOLATILITY  
4.1.  High international food prices can take a heavy toll on LDCs and NFIDCs who depend on food 
imports to meet their domestic needs. Unexpected spikes  in import prices can deteriorate their 
balance of payments, weigh on national budget and hurt poor consumers who spend a large portion 
of their income on food. The international food price developments of 2019 should help soothe such 
concerns. Prices of w heat, maize, and soybeans remained largely unchanged with limited further 
strength in recent months. According to the latest AMIS Market Monitor (October 2019), futures 
prices of maize were 3.8 % lower month -on-month, while those of wheat, rice and soybeans  were, 
respectively, 2.4 %, 5.7% and 2.5 % higher.  
4.2.  Implied volatility, which measures the level of future volatility, decreased for wheat, maize and 
soybeans month -on-month, while historical volatility fell for wheat and soybeans but rose slightly 
for maize month -on-month. Maize registered sharp increases for both implied and historical volatility 
measures year -on-year, while wheat and soybeans levels showed a decline (Figure 3).  
Figure 1: FAO Food Price Index  
(2016 -2019)  Figure 2: Food Commodity Price  Indices  
(2018 -2019)  
  
Source: FAO (2019d)  
G/AG/GEN/156  
 
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  Figure 3: Historical and Implied Volatilities (2018 -2019)  
 
Source: FAO (2019c)  
References  
FAO. 2019a. Food Outlook, May 2019.  
Also available at http://www.fao.org/3/ca4526en/ca4526en.pdf   
FAO. 2019b. World Food Situation - Cereal Supply and Demand Brief, 3 October 2019.  
In: Food and Agriculture Organization [online]. [Cited 18 October 2019]  
http://www.fao.org/worldfoodsituation/csdb/en/   
FAO. 2019c. AMIS Market Monitor. No. 72 - October 2019.  
Also available at http://www.amis -outlook.org/amis -monitoring/monthly -report/en/   
FAO. 2019d. World Food Situation - FAO Food Price Index.  
In: Food and Agriculture Organization [Online]. [cited 18 October 2019]  
http://www.fao.org/worldfoodsituation/foodpricesindex/en/  
 
 
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