WORLD TRADE  
ORGANIZATION   
G/AG/GEN/106 
12 November 2012 
 (12-6251) 
Committee on Agriculture Original:   English 
  
 
FAO REPORT TO THE WTO COMMITTEE ON AGRICULTURE 2012 
 
 1. This is the contribution of FAO to the annua l monitoring exercise of the WTO Committee on 
Agriculture.  This Report draws in large part on the November 2012 issues of the FAO Food Outlook  
and the Agricultural Market Information System (AMIS) Market Monitor.   As in previous years, the 
focus of FAO’s Report is on developm ents in the cost of imports of basic foodstuffs, highlighting in 
particular trends in food import bills of the L east Developed and Net F ood-Importing Developing 
Countries (the LDCs and NFIDCs, respectively).  In  addition, FAO reports on developments in food 
price volatility and on market trends in basic foodstu ffs, as well as on the first year of operation of 
AMIS. 
I. FOOD IMPORT BILLS  
2. Relatively lower international prices and freight costs, together with lower volumes of cereal 
purchases are predicted to reduce global expendi tures on imported foodstuffs in 2012.  The 
2012 forecast for global food import bills is set at US $ 1.14 trillion, 10 per cent lower than the record 
level of last year (Table 1).  The global food impor t bill is likely to be marked by strong to moderate 
falls in the cost of most foodstuffs compared with 20 11.  In absolute terms, the largest declines are in 
vegetables and fruit (US$ 27 billion reduction) and cereals (US$ 24 billion redu ction), with important 
reductions in the value of imports also forese en for dairy products (US$ 14 billion), sugar 
(US$ 12 billion) and vegetable oils (US$ 11 billio n).  The only foodstuffs not expected to have 
decreasing import costs are oilseeds, which are set to  rise by 10 per cent (or US$ 7 billion), and fish 
which will increase by 3 per cent (or US$ 3 billion).  
3. Much of the reduction in the food import bill in 2012 has stemmed from lower international 
quotations.  The extent of price declines is expected to  be more than sufficient to offset the impact of 
a foreseen expansion in the quantity of trade fo r most commodities, the notable exception being 
cereals, for which there could be a 5 per cent contrac tion in the volume of trade.  In 2012, wheat and 
maize trade volumes are expected to be down sharply from 2011 levels.  
4. The decline in the import bills of developing coun tries is expected to be driven mostly by 
higher cereal production (reducing de pendence on high-priced grains in world markets).  This 
situation differs from the two recent price-surge periods (2007/2008 and 20 10/2011) when the cereal 
bills of developing countries spiked due to a comb ination of higher import volumes and international 
prices.  Many of the most economically vulnerable na tions are likely to face reduced import bills, with 
annual falls of the order of 12 per cent foreseen for the LDC group as a whole.  With improved 
production, particularly for cereals, and sustained import volumes at lower costs, many countries should experience an increase in food availability in 2012.  However, with lower international prices 
for key export commodities, such as sugar and trop ical beverages, the terms of trade in food and 
agriculture for some commodity dependent developing countries may deteriorate. 
5. On the other hand, looking forward, the cereal import bills for the two groups of countries 
(the LDCs and NFIDCs) that are the target of the Marrakesh Ministerial  Decision on Measures 
Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net G/AG/GEN/106 
Page 2  
 
  Food-Importing Developing Countries,  are expected to amount to approximately US$ 10.5 billion and 
US$ 20.5 billion respectively in 2012/2013 period ( see Annex Table), which are slightly higher than 
in previous 2011/2012 period.  
6. Food aid represents a small proportion of total cer eal imports at 8 and 0.6 per cent for LDCs 
and NFDICs respectively, continuing a downward trend from the early 2000s when food aid 
represented 24.4 and 3.7 per cent of total cereal expor ts respectively.  The per unit import costs are 
forecast to be higher at US$ 416 per tonne on average, in 2012/2013 period. 
Table 1:  Forecast of food import bills, US$ billion 
 World Developed Developing LDC LIFDC Sub-Saharan 
Africa 
 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 
TOTAL FOOD 1257.5 1135.7 784.8 709.1 472. 7 426.7 34.2 30.2 215.2 200.6 43.9 38.7 
Vegetable and 
Fruits 217.4 190.4 165.1 144.6 52.3 45.8 2.9 2. 6 20.3 17.8 3.1 2.7 
Cereals 180.4 156.6 80.1 70.7 100.4 86.4 10.7 9.8 44.3 38.0 14.8 13.4 
Meat 118.8 128.7 89.3 92.1 29.5 36.6 1.8 1.8 6.9 9.2 2.4 2.6 
Fish 127.1 130.5 96.6 103.7 30.6 26.8 0.7 0.6 8.9 7.8 3.3 3.1 
Dairy 87.9 73.9 56.6 47.3 31.4 26.7 2.0 1.6 10.7 9.3 2.8 2.3 
Vegetable Oils 
and Animal Fats 112.3 100.5 50.7 44.9 61.6 55.6 6.5 5.7 38.5 34.8 5.5 4.8 
Oilseeds 73.4 80.5 26.3 26.8 47.1 53.7 0.4 0.6 38.9 45.3 0.3 0.4 
Sugar 60.7 48.3 32.1 24.8 28.6 23.6 4.3 3.4 14.1 11.8 4.2 3.3 
Source:   FAO, 2012 
 
II. AGRICULTURAL MARKET INFORMATION SYSTEM (AMIS) – ONE YEAR ON 
7. The Agricultural Market Information System  (AMIS), a G20 initiative to enhance food 
market transparency and to encourage coordination of policy action in response to market uncertainty 
has been operational since September 2011.  Hosted by FAO, the AMIS Secr etariat has ten member 
organizations, with, FAO, IFPRI, IFAD, OECD, UNCTAD, the UN High Level Task Force, the World Bank, WFP and WTO and most recently, the International Grains Council, as members. 
8. AMIS has succeeded in delivering several important results in its first year of operation and 
has gradually assumed a key role as a provider of in dependent market analysis and outlook as well as 
being a platform for effective policy dialogue.  Th e contribution of AMIS in providing information 
and in facilitating exchange among representatives of key producing countries helped in ensuring an 
appropriate response to the implications of the US  drought during the summer of 2012, indicating that 
the AMIS initiative can play an important  role in promoting market stability.  
9. AMIS’s Global Food Market Information Group, which met in February and October 2012, 
brings together technical experts from participati ng countries to promote an exchange on the current 
market situation and outlook and is set to become the primary source of regular, reliable, accurate and 
timely information on supply and demand of individual countries, as well as prices of the AMIS 
crops
1.  Furthermore, the Information Group will fac ilitate the timely collection of national policy 
developments that could impact on the market situ ation and outlook. Regular exchange with countries 
has also helped in identifying capacity build ing needs and areas for better collaboration.  
                                                      
1 AMIS brings together all the major producer countries  of agricultural commodities and currently covers four 
crops: wheat, maize, rice and soybeans.   G/AG/GEN/106 
 Page 3 
 
 
  10. Apart from serving participating countries, AMIS  also reached out to the broader public to 
promote a better understanding of international grai ns markets.  In its first 12 months, AMIS 
introduced several information pro ducts to provide comprehensive ove rviews and in-depth analyses of 
relevant market developments a nd trends.  The launch of the AMIS database was a particularly 
important milestone.  Based on agricultural statis tics provided by participating countries, the AMIS 
Market Monitor, first released in August 2012, revi ews the global market situation on a monthly basis 
and informs of any developments that could result in market disturbances.  
III. MARKET TRENDS FOR KEY CEREALS 
11. According to the latest Food Outlook report (published on 8 November), world wheat 
production is estimated to fall below the 2011 record le vel, trade in wheat in 2012/2013 is expected to 
decline because of lower feed use and high internationa l prices, and world stocks are expected to stay 
at stable levels. World maize production is expected to decline significantly because of a poor crop in 
the United States, while trade in 2012/2013 is expected  to decline because of higher world prices.  
World rice production is expected to remain the same as last year, and trade to remain stable.  World 
soybean production is set to rebound in 2012/2013 and trade is expected to expand.  The detailed 
annual developments are below:  
(a) Wheat:  FAO’s latest forecast for wheat production in 2012/2013 season is 
661 million tonnes, which is 5.5 per cent lower than last year’s level.  This low level 
reflects in large part, the impact of seve re drought in Eastern Europe and Central 
Asia.  This situation has led to higher international prices since the beginning of 
2012/2013 marketing season in July.  Although in October weaker trade activity 
combined with generally favourable winter wheat planting conditions in the Northern 
Hemisphere countries alleviated the pressu re on prices, the expectation of export 
restrictions being imposed in Ukraine has caused upward pressure.  The benchmark US wheat values averaged US$ 373 per tonne in October, 6 per cent up from July and 
almost 24 per cent higher than in the same period last year.  World wheat trade in 
2012/2013 is forecast to reach 135 million tonnes, 8 per cent lower than the previous 
period.  Global consumption of wheat is expected to reach 479 million tonnes, 1.1 per cent higher than previous year.  World wheat stocks are forecast to fall to 167 million 
tonnes by the close of crop season in 2013, 12 per cent lower than the opening level.  
Based on the ending stocks and global utiliza tion, the world wheat stock to use ratio 
could drop to 24 per cent from 27.5 per cent  in previous period, which is second 
lowest level since 1980.  
(b) Coarse grains:  FAO’s latest forecast  for world production of coarse grains is 
1.13 billion tonnes, 2.5 per cent lower than the previous year.  This decrease is 
attributed to the severe drought in the Unite d States and Europe.  In spite of some 
declines in recent weeks, international pr ices of maize followed an upward trend from 
the beginning of the current season in July  until it peaked in late August to early 
September, and then drifted lower in October.  The upward price movement closely followed repeated downward adjustments to production prospects in the United States 
as crop conditions worsened due to the sev ere drought.  Unfavourable prospects for 
wheat production in the CIS countries also provided support to maize market prices, given the region’s importance as a leading s upplier of feed wheat to world markets.  
In October, prices of major coarse grains fell slightly on early signs of demand 
rationing from the livestock and biofuels sect ors and slowing trade activity, especially 
with regard to export pace from the Unite d States.  The benchmark US yellow maize 
averaged US$ 320 per tonne in October, down slightly from September but US$ 45 per tonne, or 16 per cent, but above the average price in October 2011.  World stocks 
of coarse grains are forecast at 161 million tonnes at the end of season in 2013 G/AG/GEN/106 
Page 4  
 
  season, 13 million tonnes less than the previous  year.  Thus world stock-to-use ratio 
is expected to be at its lowest level since 1980. 
 
(c) Rice:  According to the latest forecasts, world rice production in 2012/2013 season is 
expected to rise to 486 million tonnes, 0.7 pe r cent higher than the previous year.  The 
relatively modest increase from last year prin cipally reflects large shortfalls expected 
in India and Brazil, as most of the other major producers are heading towards record 
crops.  International rice prices were stable in  the first four months of 2012, but have 
since shown a tendency to firm,  caused by large government purchases and stock building in Thailand, and active buying by African countries and China.  Nonetheless, 
between January and October, international rice prices were down 6 per cent year-on-
year, amid abundant world supplies and prospects for good production outcomes in 2012.  International rice trade is forecast at 37.5 million tonnes as high levels of supply in exporting countries intensify competition.  Compared to 2012, world rice stocks are expected to rise 7 per cent to a new high of 170 million tonnes.  Therefore, 
world stock-to-use ratio is forecast to  increase to 35.5 per cent in 2013.  
IV. FOOD  PRICES 
12. The FAO Food Price (FFPI) Index averaged 213 points in October 2012, down 2 points (1 per 
cent) from September (Figure 1).  The decline is larg ely due to reduced international prices of cereals 
and oils/fats which more than offset increases in sugar and dairy prices while meat values remained 
unchanged (Figure 2).  Food prices averaged 8 per cen t lower during the first ten months of this year 
compared to the same period last year, resulting in the real food price index being lower in 2012 
compared to the previous year (Figure 3). 
13. The FAO Global Food Consumption Price Index (F igure 4) tracks changes in the cost of the 
global food basket as portrayed by the latest  FAO world food balance sheet. Representative 
international prices for each of the commodities or  commodity groups appearing in the balance sheet 
are weighted by their contribution to total calorie  intake.  After reaching a record of 247 points in 
April 2011, the index has since exhibited substantia l volatility.  By October 2012 the index stood at 
231 points, some 24 points above the level of June, when the index had fallen to a 20 month low.  
Volatile prices of cereals are behind these deve lopments including the index’s departure from 
the FFPI.  Being consumption based, the index gives a much higher weight to cereals than does the 
FFPI, which derives its weights from trade.  G/AG/GEN/106 
 Page 5 
 
 
  Figure 1:  FAO Food Price Index (2008-2012) Figure 2:  Food Commodity Price Indices (2011-2012) 
Source :  FAO, 2012.  Source:   FAO, 2012
 
Figure 3:  FAO Food Price Index (1990-2012) 
 
Source:   FAO, 2012. 
 G/AG/GEN/106 
Page 6  
 
  Figure 4:  FAO Global Food Consumption and Food Price Indices (2010-2012) 
 
Source:  FAO, 2012. 
 
V. PRICE VOLATILITY 
14. Historical price volatility of major crops (wheat, maize, soybeans, rice) indicates that 
volatility of wheat, rice, and soybeans was relativel y low in the first quarter of 2012, while the 
volatility increased in summer months and decreased at  the end of that October.  Implied volatilities, 
which show the level of expected future vola tility observed in CBOT options on future markets, 
displayed similar pattern (Figure 5). 
15. Price volatility has significant implications fo r LDCs and NFIDCs.  Importing countries that 
face high prices experience deterioration in the ba lance of payments and public finance.  High food 
prices can result in inflation and high import bills a nd cause current account balance deficits.  Fiscal 
measures, such as cuts in import tariffs and in ta xes on food, subsidization of food consumption, and 
risk management tools lead to increased budgetary costs.  Since consumers in developing countries 
spend a significant portion of their total income on b asic foodstuffs, there are also longer term impacts 
on the poorest and most vulnerable such that spen ding is switched to less nut ritious foods and away 
from other basic needs.  G/AG/GEN/106 
 Page 7 
 
 
  Figure 5:  Historical and Implied Volatilities (October 2011-October 2012)  
          
Source:   AMIS Market Monitor, Number 3, November 2012. 
 
 
References:  AMIS (2012).  AMIS Market Monitor, Number 3, November 2012. http://www.amis-outlook.org.  
FAO (2012).  World Food Situation, FAO Food Price Index.  http://www.fao.org/worldfoodsituation/wfs-
home/foodpricesindex/en/  FAO (2012). Food Outlook, November, 2012.  
  G/AG/GEN/106 
Page 8  
Annex Table.  Cereal imports of LDCs and NFIDCs (2000/01 to 2011/12) - Information as of  October 2012  
2000/01 2001/02 2002/03 2003/04 2004/05 2005/ 06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 
(Estimate )2012/2013 
(Forecast ) 
Import Bill (US$ million)  
LDCs 2,181 2,530 3,395 3,644 4,175 4,301 5,884 10,886 7,691 7,687 10,413 10,119 10,595 
NFIDCs 4,862 5,155 5,860 6,555  7,496 7,473 9,465 18,561 14, 939 11,597 17,950 19,427 20,521 
LDCs & NFIDCs 7,043 7,685 9,255 10,199 11,671 11,774 15,350 29,447 22,630 19,285 28,362 29,545 31116 
% change over 2000/01-2002/03 -11.9 -3.9 15. 8 27.6 46.0 47.3 92.0 268.3 183.1 141.2 254.8 269.6 289.2 
Total volume imported (000 tonnes)  
LDCs 16,219 17,156 20,841 18,584 20,392 20,635 21,308 22,102 24,820 26,183 25,337 24,186 24,208 
NFIDCs 35,042 36,031 34,134 33,404  38,670 38,301 37,391 43,969 48, 580 44,401 48,672 51,029 50,540 
LDCs & NFIDCs 51,260 53,186 54,975 51,988 59,063 58, 936 58,698 66,071 73,399 70,584 74,009 75,215 74,748 
% change over 2000/01-2002/03 -3.5 0.1 3.5 -2.2 11.1 10.9 10.5 24.3 38.1 32.8 39.3 41.5 40.7 
Food aid (000 tonnes)  
LDCs 3,949 2,902 3,902 3,638 3,187 3,095 2,797 2,060 3,748 2,977 2,162 1,942 1,942 
% of total imports 24.4 16.9 18.7 19.6 15.6 15.0 13.1 9.3 15.1 11.4 8.5 8.0 8.0 
NFIDCs 1,298 1,014 669 537 453 461 607 337 497 462 295 281 281 
% of total imports 3.7 2.8 2.0 1.6 1.2 1.2 1.6 0.8 1.0 1.0 0.6 0.6 0.6 
LDCs & NFIDCs 5247 3916 4571 4175 3640 3556 3,404 2, 396 4,245 3,439 2,458 2,223 2,223 
% of total imports 10.2 7.4 8.3 8.0 6.2 6.0 5.8 3.6 5.8 4.9 3.3 3.0 3.0 
Commercial imports (000 tonnes)  
LDCs 12,269 14,254 16,939 14,946 17,205 17,540 18,511 20,042 21,072 23,206 23,175 22,244 22,266 
NFIDCs 33,744 35,017 33,465 32,867  38,217 37,840 36,783 43,632 48, 083 43,939 48,377 50,747 50,259 
LDCs & NFIDCs 46,013 49,270 50,404 47,812 55,423 55, 380 55,294 63,674 69,154 67,145 71,551 72,992 72,524 
% change over 2000/01-2002/03 -5.2 1.5 3.8 -1.5 14.1 14.0 13.9 31.1 42.4 38.3 47.3 50.3 49.3 
Per unit import cost  (US$/tonne)   
LDCs 134.5 147.5 162.9 196.1 204.7 208.4 276.2 492.6 309.9 293.6 411.0 418.4 437.7 
NFIDCs 138.7 143.1 171.7 196.2 193.9 195. 1 253.1 422.1 307.5 261.2 368.8 380.7 406.0 
LDCs & NFIDCs 137.4 144.5 168.4 196.2 197. 6 199.8 261.5 445.7 308.3 273.2 383.2 392.8 416.3 
% change over 2000/01-2002/03 -8.5 -3.7 12. 2 30.7 31.7 33.1 74.2 197.0 105.4 82.0 155.4 161.7 177.4 
Wheat export price (US$/tonne)   
   G/AG/GEN/106
 Page 9Annex Table.  Cereal imports of LDCs and NFIDCs (2000/01 to 2011/12) - Information as of  October 2012  
2000/01 2001/02 2002/03 2003/04 2004/05 2005/ 06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 
(Estimate )2012/2013 
(Forecast ) 
US no.2 Hard Winter 128 127 161 161 154 175 212 361 270 209 316 300 365 
% change over 2000/01-2002/03 -7.4 -8.5 15. 9 16.0 11.0 26.6 52.7 160.6 95.1 51.1 128.1 116.4 163.3 
Wheat ocean freight rates (US$/tonne)  
From U.S. Gulf ports to:  
Egypt 15.0 15.0 16.7 37.0 46.5 31.9 50.3 86.2 42.9 43.2 40.1 43.3 36.5 
Bangladesh 18.3 18.5 22.5 48.5 65.4 45. 5 57.8 98.8 55.3 62.7 57.3 56.4 51.0 
Rotterdam 13.1 11.0 12.5 28.3 34.5 20. 8 32.3 71.8 38.6 35.0 28.2 24.8 18.3 
Average 15.5 14.8 17.2 37.9 48.8 32. 7 46.8 85.6 45.6 46.9 41.9 41.5 35.3 
% change over 2000/01-2002/03 -2.3 -6.3 8. 7 139.4 208.2 106.7 195.4 440.6 187.9 196.5 164.4 161.9 122.6 
Source:  FAO, 2012. 
 
 
__________