The global bill for imports of farm inputs such as fuel and nutrients will soar by twice as much as had been expected this year, the United Nations said, warning of “negative repercussions” for food production.
The UN food agency, the Food and Agriculture Organization, lifted to $424bn its estimate for world spending on imports of agricultural inputs in 2022, up from a June forecast of $348.1bn.
That upgrade increased to more than $137bn the increase in the tally from last year, from a June forecast of $61bn, and means that bill has more than doubled in two years.
In 2020, the total came in at $199.7bn, the FAO said, although underlining that this number had been constrained by the knock-on effects of the Covid pandemic.
“Higher costs for imported energy and fertilizer are the main drivers behind the soaring global [import bill],” the FAO said, lifting its forecast for the cost of energy imports for agriculture by $51.7bn to $197.5bn.
For fertilizers – which for nitrogen nutrients in particular are energy intensive to make – import costs were pegged at $168bn, an upgrade of 14.4bn from the June estimate.
The pesticides bill, at $50.4bn, was $4.7bn higher than previously estimated, with the forecast for spending on seed imports, at $9.1bn, upgraded by $800m.
The FAO underlined the role of price hikes in driving the rise in import bills, with many importers receiving lower quantities of inputs, despite the raised spending.
Rationing was particularly evident in fertilizers, in which import volumes were estimated lower by the equivalent to $9.8bn, of which $7.3bn applied to high income countries – of which many are leading ag exporters.
Indeed, the FAO underlined the threat into next year to food supplies from the high nutrient prices, in potentially constraining yields.
“With high and inelastic demand for natural gas, and little prospects for abating supply shortages, high world fertilizer prices are likely to extend into 2023,” the agency said.
This threatens “negative repercussions for global agricultural output and food security”.
The agency warned in June that high input costs may hamper the ability of high agricultural commodity prices to encourage farmers to boost production – and so ease the supply squeeze at the heart of the jump in food prices.
Although high food values usually encourage extra production, this time “the spike in the price of inputs raises questions about whether the world’s farmers can afford to buy them”, the FAO said.
Such a squeeze would mean “that productivity and hence global food supply could be adversely affected in the 2022-23 season and beyond”.
The growth in production costs and their constraints on farm output “limit the prospects for a substantial downturn in prices of internationally-traded foodstuffs,” the FAO said.
Food prices as measured by the FAO’s monthly price index, while down 14.9% from April’s record high, remained in October 24% above the trailing five-year average, the FAO reported last week – as it warned of the limit from high costs to winter grain sowings ahead of the 2023 harvest.