Chapter I: FOOD IMPORTS OF NET FOOD-IMPORTING DEVELOPING COUNTRIES

A. The importance of food imports

The group of 49 LDCs and 23 other NFIDCs merit special attention in the process of world food trade liberalization, because the markets for the food crops that are typically imported by these countries are likely to be affected much more strongly than the markets for the commodities they export.

These concerns were recognized at a political level by the Marrakesh Ministerial Decision which stated that:

during the reform programme leading to greater liberalization of trade in agriculture least-developed countries and net food-importing developing countries may experience negative effects in terms of the availability of adequate supplies of basic foodstuffs from external sources on reasonable terms and conditions, including short-term difficulties in financing normal levels of commercial imports of basic foodstuffs. (The full text of the decision can be found in Annex 1.)

Table 1 shows the importance of food imports for many of these countries. Of the 58 countries in this group for which data are available:

• 36 spent, in 1995-1998, more than 10 percent of their available hard currency (revenue from the exports of goods and services, minus debt service) on food imports;

• of these, 23 countries (19 in Africa) spent more than 20 percent;

• of these 23, 8 spent more than 40 percent: Cape Verde, Comoros, Guinea-Bissau, Haiti, Mauritania, Mozambique, Rwanda and Sierra Leone.

Table 1: The importance of food imports in the Least-Developed and Net-Food-Importing Developing Countries, 1995-1998 average*

* or the latest four years available.

Source: based on FAO. Towards improving the operational effectiveness of the Marrakesh Decision on the possible negative effects of the reform programme on Least-Developed and Net Food-Importing Developing Countries (mimeo), 21 March 2001.

Most of the food imports of these countries consist of bulk foods: wheat, maize, rice, vegetable oils (mainly palm oil and soybean oil), and sugar. Imports of dairy products, fruits and vegetables and meat are also important. Tables 2 and 3 show the import values for LDCs and NFIDCs, for 1997 to 2001, indicating the considerable fluctuations from year to year in imports to these countries.

Cereal imports account for more than half of the total food imports of LDCs, and for slightly less than half of the food imports of NFIDCs. Vegetable oils, including soybeans which are imported and then processed locally into oil and meal, account for one sixth of food imports of LDCs, and around one tenth of food imports in NFIDCs.^[2] Annex 2 gives details of import tonnage by region.

Table 2: The major food imports of Least-Developed Countries, 1997-2001 (US$000)

Source: figures drawn from the FAOSTAT Agriculture & Food Trade database.

Table 3: The major food imports of Net Food-Importing Developing Countries, 1997-2001 (US$000)

Source: figures drawn from the FAOSTAT Agriculture & Food Trade database.

Financing of food imports into developing countries consists, in general, of a mix of food aid grants, food trade on concessionary terms (e.g. sales under the US Government’s PL480 title I programme, which have repayment terms up to 30 years), and commercial imports.^[3] This report is principally concerned with commercial imports and the conditions for their finance, but it is worth noting that, assuming a fixed volume of food imports required by the country, increased food trade financing needs can be the result of a reduction in food aid grants and concessionary sales, and of increased world food prices. Indeed, the two often go together: both the US and the EU have budget allocations for their major food aid programmes, so if prices increase, less food can be donated.

B. Major food trade flows^[4]

World cereals trade fluctuates between 200 and 270 million tonnes a year, out of a total production of about 2 billion tonnes.^[5] This represents, depending on price levels, US$25 to 40 billion. The main cereals are wheat, maize and rice. World cereals production is geographically very much concentrated, with Asia representing about half of world production (of which China and India produce about 65 percent). This is followed by the United States with a world production share of 16 percent, the EU with 10 percent and Latin America with 7 percent.

Production volumes of wheat, maize and rice are similar, at around 600 million tonnes for each. But the situation is different when it comes to international cereals trade, where wheat dominates (with a share of 42-43 percent in volume terms) and maize (30-31 percent). Over the period 1995-2001, on average 18.5 percent of wheat production was internationally traded, 13 percent of maize, and only 5 percent of rice.

The United States is the principal exporter of cereals, accounting for one third of world exports. Asia constitutes the second exporting zone, followed by the EU, Latin America and Oceania, all with relatively similar market shares. Seven countries account for 80 to 83 percent of world exports: United States, EU, Australia, Argentina, Canada, China and Thailand. Imports are also concentrated: Asia is the principal zone of cereals imports, followed by Latin America and Africa.^[6]

With respect to oilseeds and vegetable oils, international trade has grown rapidly at an annual rate 3 - 4 percent over the past decade. It has reached a volume of 60 million tonnes, with soybeans and soybean oils accounting for almost three quarters. The major suppliers are the United States, Brazil and Argentina, which account for roughly 80 percent of worldwide exports.

Further statistics on production and trade of cereals and vegetable oils by LDCs and NFIDCs are provided in Annex 2, while Annex 3 describes the major food trade flows towards LDCs and NFIDCs. Details on the food import profiles of LDCs and NFIDCs, taken as groups and also for each country individually, are given in Annex 8.