Report assesses output & market trends for major commodities during the COVID-19 pandemic, highlighting overall resilience but hard times for fish & fruit value chains
12 November 2020, Rome – Global trade in food products has proven remarkably resilient during the pandemic, with developing countries even managing to increase export revenues, according to a new report published today by the Food & Agriculture Organization of the United Nations (FAO).
Data available through June “suggest strong, albeit not complete, resilience of the global food markets to COVID-19 shocks”, the semi-annual Food Outlook says in a special feature on recent trends in food imports bills & export earnings.
“The global food import bill for the whole of 2020 may even exceed that of 2019,” says Josef Schmidhuber, co-author with Bing Qiao – both FAO economists – of the chapter. “There is, however, a noticeable shift away from high value food items to staples.”
Developing countries have demonstrated notable “vivacity” in buoying global food trade flows, the analysis shows. Their export earnings in the first half of 2020 rose by 4.6 percent compared to the same period of the previous year, while those of developed countries declined. That is partly explained by the sharpest drops occurring for beverages, fish & meat, the demand for which is more responsive to the declines in household incomes triggered by the contracting global economy.
Over the same period, world imports of beverages fell by more than 12 percent & fish products declined by more than 10 percent, while the value of trade in animal & vegetable oils & oilseeds both increased by almost 10 percent. The report offers a rich series of graphics, data & analyses of trends by food group & region.
Commodity market trends
Cereal markets in 2020/21 are well supplied, with prices affected by tightening markets for wheat & robust international demand for coarse grains & rice, the report notes. FAO updated its supply-&-demand forecasts for cereals last week.
Global production of oilseeds & derived products in 2020/21 is expected to reach a new record over the 2020/21 seasons, while growing demand points to tightening markets.
World sugar production in 2020 is seen rebounding, although below the pace of growing consumption, which will depend on whether further COVID-19-related lockdown measures are imposed.
Global meat production in 2020 is forecast to decline for the second year in a row, amid subdued trade & demand prospects.
World milk production in 2020 is also predicted to expand, buoyed by favorable monsoons & the resilience of village cooperatives’ networks in collecting milk amidst logistic hurdles in India, along with government stabilization assistance in the European Union & the United States of America.
For the fisheries sector, which as noted above suffered a large drop in trade flows, production is expected to decline in 2020 due to the pandemic’s impact on demand, logistics, prices, labour & business planning. Capture fishery output will likely decline slightly, while aquaculture production is expected to decline for the first time in many years.
The report notes that the pandemic’s impact on the market for fish – notably a drop in demand for fresh fish due to aversion to going to markets & restaurants – has triggered “far-reaching changes” likely to persist in the long term & support product innovation, shorter value chains & new distribution channels.
The COVID-19 pandemic has rattled the value chain for tropical fruits, especially the most perishable items, which require labor-intensive handling & rapid & often airborne transport & have relatively high costs.
Global trade in pineapples, mangos & papaya has declined, sometimes at a double-digit pace.
Tropical fruit producer margins are under pressure from pandemic disruptions as well as highly competitive value chains, the intensifying market power of downstream actors, the occurrence of plant diseases, & adverse weather events.
“It will be critical to develop policies aimed at providing financial support to producers so that they can remain operational, while protecting the health & safety of workers & minimizing disruptions to national & international transport routes,” says Sabine Altendorf, FAO economist & author of this chapter.
Bananas & avocados, by contrast, have showed some resilience, with both fruits posting export growth, but critical strains have affected their value chains, especially for smaller producers, who face elevated prices of fertilizer & pesticides & have suffered from cancelled orders.
Demand for bananas has benefited from their perceived sanitary safety, convenience & record supplies from Ecuador, as well as an output recovery in Costa Rica.
Avocado imports have also grown on a global basis, as seasonally lower supplies from Mexico & an outright drop in purchases in the U.S. are more than offset by robust demand in the European Union & significantly higher supplies from Colombia, Kenya & Peru.