G/AG/GEN/144  
 
9 February 2018  
(18-0895) Page: 1/6 
Committee on Agriculture  Original: English  
 
FAO REPORT TO THE WT O COMMITTEE ON AGRIC ULTURE  2018  
SUBMISSION BY THE FAO 
The following submission, dated 8 February 2018 , is being circulated at the request of the  Food 
and Agriculture Organization (FAO).  
 
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This report is the contribution of FAO to the annual monitoring exercise of the WTO Committee on 
Agriculture (CoA). The report draws in large part from the latest issues of the FAO Cereal Supply 
and Demand Brief (February 2018), the Agricultural Market Inf ormation System (AMIS) Market 
Monitor  (February 2018) and the FAO Food Outlook (November 2017) . As in previous years, the 
focus of FAO 's report to the CoA is on developments in the cost of imports of basic foodstuffs, 
highlighting in particular trends in f ood import bills of the Least Developed and Net Food -Importing 
Developing Countries (the LDCs and NFIDCs, respectively). In addition, the report covers 
developments in global markets for basic foodstuffs, food price volatility and of the activities of 
AMIS during 2017.  
 
1  FOOD IMPORT BILLS  
1.1.  The global value of food imports is estimated at USD 1.413 trillion in 2017, which represents 
a 6%, or USD 86 billion, increase from last year. However, this is still almost USD 30 billion lower 
than the record food impor t bill of 2014. This increase in 2017 was driven by greater international 
demand for most foodstuffs  as well as higher freight rates.  
1.2.  Rising and volatile freight rates that were a prominent feature of the markets in 2016 
continued over much of 2017. This i s evidenced by movements in the Baltic Dry Index, which was 
almost twice as high in the first ten months of 2017 as in the corresponding period of the year 
before. Taking wheat originating from the US Gulf ports as an example, major Asian buyers paid 
as mu ch as USD 45 per tonne for delivery of the grain, which is USD 12 or 36 % more than what 
they paid last year.  
1.3.  Turning to developments at the commodity level, the largest year -on-year increase in the 
value of imports is registered for livestock commodities and cereals. At the forefront, the expected 
rise in the global value of dairy imports from 2016 amounted to some USD 38 billion, or 51 %, due 
to record demand and considerably higher prices. The world dairy bill in 2017 is put at 
USD 112 billion. For simila r reasons, the meat import bill in 2017 soared to an all -time high of 
USD 152 billion, up 22 % from 2016.  
1.4.  Stronger international demand in 2017 for maize was largely responsible for driving up global 
expenditures on cereal imports by USD  25 billion to a tot al of USD 180 billion. The combination of 
higher volumes, higher benchmark prices and higher freights also lifted bills for all other imported 
food categories. For sugar, the volume of imports fell in 2017 while prices remained well below 
their 2016 levels ; but the hike in shipping costs still pushed up the overall sugar import bill, albeit 
modestly.  
1.5.  Turning to developments at the country group level, expenditures by least -developed 
countries (LDCs), low -income food deficit countries (LIFDCs) and countries  in sub -Saharan Africa 
(SSA) were set to climb considerably more than the global increase. For instance, the projected G/AG/GEN/144  
 
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  year-on-year (2017 over 2016) rise of 12 % in the aggregate food import bill for LIFDCs is twice 
the increase at the global level, while f or LDCs the value of imports soared by 10 % from 2016.  
1.6.  Cereal staples dominate food imports in economically vulnerable countries. Improved 
domestic cereal production outcomes which resulted in lower purchases in the international 
market, were not sufficien t to curb the strong growth in cereal import bills in 2017, as higher 
prices drove up expenditures. However, the US dollar – the currency in which most transactions 
are priced –weakened considerably in 2017. This gave some respite to the cost of procuring from 
international markets for those countries that saw their currency appreciate. Nevertheless, this has 
not been the case for several large LIFDCs.  
Table 1: Forecast import bills of total food and major f oodstuffs (US D Billion)  
 World  Developed  Developing  LDC LIFDC  Sub Saharan 
Africa  
 2016  2017  2016  2017  2016  2017  2016  2017  2016  2017  2016  2017  
TOTAL  FOOD  1,326.7  1,412.7  802.6  830.5  524.1  582.2  38.3 42.0 75.2 84.3 42.6 45.9 
Vegetables & 
Fruits  244.7  246.8  172.9  175.0  71.8 71.8 3.6 3.4 12.3 12.1 3.2 3.2 
Cereals  154.2  179.7  69.5 81.9 84.7 97.8 10.3 11.6 15.4 17.1 12.0 13.0 
Fish 130.0  140.4  93.4 100.8  36.7 39.6 1.2 1.3 3.3 3.6 4.2 4.6 
Meat  143.9  176.1  93.1 114.0  50.7 62.1 2.4 3.0 1.8 2.2 3.4 4.1 
Dairy  74.5 112.4  45.8 69.2 28.6 43.1 1.9 2.9 2.5 3.8 1.9 2.9 
Vegetable Oils & 
Animal Fats  94.5 119.3  41.4 51.6 53.2 67.7 7.0 9.0 20.3 25.7 4.7 6.2 
Oilseeds  78.2 96.7 22.9 27.3 55.3 69.4 0.7 0.8 1.9 2.4 0.6 0.9 
Sugar  48.9 49.9 23.2 25.1 25.7 24.9 4.2 4.1 6.0 6.4 3.8 4.1 
Tropical 
beverages  103.0  109.7  78.3 83.3 24.7 26.3 1.5 1.6 3.5 3.8 1.5 1.6 
Source:  FAO (201 7). 
 
2  THE AGRICULTURAL MAR KET INFORMATION SYST EM (AMIS)  
2.1.  The Agricultural Market Information System (AMIS), a G20 initiative that aims to enhance 
food market transparency, reduce price volatility and encourage coordination of policy action in 
response to market disruptions, was launched in September 2011. Hosted  by FAO, the AMIS 
Secretariat is currently composed of eleven international organizations and entities: FAO, 
GEOGLAM, IFPRI, IFAD, IGC, OECD, UNCTAD, the UN High Level Task Force, WFP, the World Bank 
Group and WTO.  
2.2.  After successfully completing its first five-year work programme in 2016, which had mostly 
focused on establishing the information system and better understanding countries ' knowledge 
gaps and technical needs, AMIS shifted into a new phase of enhanced collaboration among 
participating countries.  To this end, the Secretariat organized monthly webinars with country focal 
points to discuss the current market situation and outlook ahead of the release of the initiative 's 
main information outlet, the AMIS Market Monitor. The Secretariat also intensifi ed collaboration 
with focal points concerning their submissions of market information, for example by releasing a 
manual for the compilation of AMIS commodity balances and finalizing a web -based data input 
tool. Other materials released in 2017 to support national data providers include guidelines on 
measuring grain reserves; building market information systems; applying computer assisted 
personal interviewing for data collection; and crop forecasting techniques. Finally, the Secretariat 
produced new resear ch, for example on assessing volatility patterns and on measuring market 
sentiment, the latter of which was also discussed in an AMIS research seminar at WTO in 
November 2017.  
2.3.  On policy monitoring, an activity that has greatly benefitted from inputs provid ed by WTO 
and the Organisation for Economic Co -operation and Development (OECD), AMIS continued to 
report on current agricultural policy changes in the Market Monitor. With the AMIS Policy G/AG/GEN/144  
 
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  Database, which was further expanded and updated in 2017, AMIS also  offers a comprehensive 
collection of past policy developments related to food and agriculture.  
2.4.  In 2017, AMIS received again considerable recognition for providing a valuable platform for 
market information and policy dialogue, most notably at the Leader 's Summit of the G20 heads of 
state of government in July  2017. With regard to the work of the Secretariat, an independent 
evaluation of AMIS activities between 2012 and 2016 concluded that the initiative "delivered 
considerable achievements with […] limited  resources ". The growing relevance of AMIS as an 
authoritative source of information can also be demonstrated by the active participation of AMIS 
stakeholders, both from the Secretariat and from participating countries, at Global Grain Geneva. 
It is an ann ual conference that reaches out to the global grains and oilseeds trading industry and 
provided significant visibility to AMIS outputs and enhanced outreach to a private -sector audience.  
3  MARKET TRENDS FOR KE Y CEREALS  
3.1.  According to the latest AMIS Market Mon itor (No. 55, February 2018) and Food Outlook 
(November 2017), world cereal production in 2017 stood at a record high 2,640 million tonnes, 
around 1.3 % above the 2016 level. Wheat production reached 757.6 million tonnes in 2017, 
3.7 million tonnes below th e 2016 record harvest, while coarse grain production rose by 35 million 
tonnes to 1,381 million  tonnes in 2017. Global rice production in 2017 was put at 501.9 million 
tonnes, up 1.2 million tonnes above the record level reached in 2016. Based on the lates t data for 
production and utilization, world cereal stocks are projected to reach 739 million tonnes by the end 
of 2017/18 crop season, 36 million tonnes (5 %) above the already elevated opening level. Wheat 
will account for the largest share of the increas e, followed by maize, while rice stocks are forecast 
to increase marginally. International trade in all cereals is projected at 404 million tonnes in 
2017/18, only 1.8 million tonnes (0.4 %) below the previous season 's record volume. Trade in all 
the major cereals, except for maize, is seen to contract in 2017/18.  
3.2.  Wheat : FAO 's latest forecast for wheat production in 2017 (757.6 million tonnes) is slightly 
lower (3.7 million) than the previous year. The production decrease is associated with significant 
production cuts in the United States and Australia. World wheat trade in 2017/18 (July/June) is set 
to contract to 175 million tonnes, 1.4 % below the 2016/17 level. This reduction in world trade is 
largely the result of lower import demand in Asia, which is of fsetting higher expected imports by 
Europe and North Africa. World wheat inventories are forecast to reach an all -time high of 
270 million tonnes in 2018. The global stocks have increased continuously since 2013/14, as 
growth in global production exceeded the expansion in world consumption.  
3.3.  Coarse Grains : FAO 's latest forecast for world producti on of coarse grains stands at 
1,381 million tonnes in 2017/18, about 35 million tonnes or 2.6 % above last year. Maize 
production  is estimated to reach around 1, 083 m illion tonnes, about a 4.1 % increase from the 
previous year. By contrast, world barley production is estimated at 142.7 million tonnes, down 
slightly from 2016. World trade in coarse grains in 2017/18 (July/June) is projected to raise to 
183 million tonnes  largely due to larger trade in maize. Based on the latest projections for global 
production and utilization, world stocks of coarse grains are expected to rise to 299 million tonnes 
by the close of the 2017/18 crop season, 4.4 % above their opening levels.   
3.4.  Rice: World rice production in 2017 is estimated at 501.9 million tonnes, nearly 1.2 million 
tonnes above the record level of 2016. Trade in rice in 2018 (January/December) is predicted to 
decline by 2 % to 46 million tonnes. Rice inventories ending in 20 18 are forecast to exceed the 
previous year 's level by 1 %, largely due to higher than anticipated inventories in China.   
4  FOOD PRICES  
4.1.  For the whole of 2017, the FAO Food Price Index ( FFPI) averaged 174.6 points, up 8.2 % from 
2016 and representing the highe st annual average since 2014, although still 24 % below the 2011 
high of almost 230  points. While sugar values plummeted in 2017, dairy and meat prices 
registered sharp year -on-year increases and those of cereals and oils rose too, albeit more 
modestly. In January, the first month of the current year, the FFPI averaged 169.5 points in 
January 2018, down almost 3 % from the corresponding period last year (Figure 1). The prices of 
sugar, oils and dairy decreased, while for cereals and meat , these increased in comparison to 
January 2017. The FFPI fell by 3 % in real terms compared to 2017 (Figure 3).  G/AG/GEN/144  
 
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  4.2.  The FAO Global Food Consumption Price Index (Figure 4) tracks changes in the cost of a 
global food basket established on the basis of the latest FAO world food balance sheet. 
Representative international prices for each of the commodities or commodity groups that appear 
in the balance sheet are weighted by their contribution to total calorie intake. After a sustained 
increase throughout much of 201 6, the Index has become more variable in 2017. The index has 
also shown greater concordance with the trade -weighted FAO Food Price Index (FPI) in recent 
months. This is because international prices of foodstuffs that carry a large weight in each index – 
meat and dairy products in the FPI, and wheat and rice in the case of the FAO Global Food 
Consumption Price Index – have exhibited similar trends.  
5  PRICE VOLATILITY  
5.1.  International price volatility can have serious implications for LDCs and NFIDCs that depend 
on imports to meet their domestic food needs, through a deterioration in their balance of 
payments, public finance and harming consumers who spend a large portion of their income on 
food purchases. However, historical and implied price volatilities of majo r crops traded in the 
futures exchanges (wheat, maize, and soybeans)  indicate that the overall levels were mostly lower 
than the previous two years and disassociated from other commodity markets, such as cattle or 
cocoa futures which exhibited dramatic pri ce swings and bouts of high volatility.  
5.2.  In 2017, historical price volatility of wheat, maize and soybeans peaked during the summer 
months, but ultimately decreased by the end of the year and was lower year -on-year for all three  
commodities (Figure 5, upper  panel). Implied volatility, which measures the level of expected 
future volatility, exhibited a similar pattern in the summer months, but since then is hovering close 
to all-time low levels (Figure 5, lower panel).  
6  FOOD AID  
6.1.  As decided during the 71st Session of the Committee on Commodity Problems in 2016, FAO 
will assume the monitoring of and reporting on food aid shipments. This will complement the 
reporting undertaken by the World Food Programme (WFP) on shipments through the WFP. FAO is 
developing the relevant mechanism.  
Figure 1 : FAO Food Price Index  
(2015 -2018)  
 Figure 2 : Food Commodity Price Indices 
(2017 -2018)  
 
Source:  FAO (2018).  
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  Figure 3 : FAO Food Price Index (1961 -2018)  
 
Source:  FAO (2018).  
 
Figure 4:  FAO Global Food Consumption and Food Price Indices (2014 -2017)  
 
Source:  FAO (2017).  
 
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  Figure 5 : Historica l and Implied Volatilities (2013 -2017 ) 
 
 
 
Source: FAO (2017).  
 
References  
AMIS. 2018. AMIS Market Monitor, No. 55, February 2018. http://www.amis -outlook.org . 
FAO. 2017. Food Outlook, November, 2017.  
FAO. 2018. Cereal Supply and Demand Brief, February 2018. 
http://www.fao.org/worldfoodsituation . 
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