WORLD TRADE  
ORGANIZATION   
G/AG/GEN/98 
7 November 2011 
 (11-5691) 
Committee on Agriculture Original:   English 
  
 
FOLLOW-UP TO THE MARRAKESH MINI STERIAL DECISION ON MEASURES 
CONCERNING THE POSSIBLE NEGATIVE EF FECTS OF THE REFORM PROGRAMME 
ON LEAST-DEVELOPED AND NET FOOD-IMPORTING 
DEVELOPING COUNTRIES 
 
Submission by the FAO 
 
  The following submission, dated 4 November 2011, is being circulated at the request of the FAO. 
 
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 1. This is the contribution of FAO to the annua l monitoring exercise in the WTO Committee on 
Agriculture.  This Report draws in large pa rt from the November 2011 issue of the FAO Food 
Outlook .  As in previous years, the focus of FAO' s Report to the Committee on Agriculture is on 
developments in the cost of imports of basic foods tuffs, highlighting in particular trends in food 
import bills of the Least Developed and Net Food -Importing Developing Countries (the LDCs and 
NFIDCs, respectively). 
2. In addition, this year FAO reports on develo pments in strengthening the international 
monitoring and response mechanisms to world pri ce volatility in basic foodstuffs by setting up the 
Agricultural Market Information System (AMIS)  at FAO as a response to the initiative by G-20 
Agriculture Ministers.  An example of the analyti cal guidance that would be expected from AMIS is 
also reported having to do with the experience of  transmission of the high world food prices during 
2007/08 and 2010/11 to the domestic markets of food importing developing countries. 
I. COST OF FOOD IMPORTS AT RECORD HIGH THIS YEAR 
3. The world food import bill is set to reach US$1.29 trillion in the current year.  At some 
US$250 billion more than the previous year, the food import bill in 2011 would represent a record in both level and increase. 
4. The global food import bill will be marked by year-on-year double-digit percentage increases 
for all food categories, which are all highly likely to  reach record levels in 2011.  Rising expenditures 
on grain-based products and vegetable oils have fuelled much of the increase at the world level.  The 
combined purchase of food commodities falling w ithin these two categories are now foreseen to 
account for 36 per cent of the entire cost of importi ng food, contributing to well over a third of year-
on increase in the global bill. G/AG/GEN/98 
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5. Rapidly rising import costs in 2011 are not only c onfined to grains and vegetable oils.  For 
instance, world bills for sugar and beverages ar e anticipated to increase by as much as 23 per cent 
while livestock products (meat and dairy) could rise, on average, by 19 per cent.  With the inclusion 
of fish, imports of animal-based proteins are valued at US$365 billion, firmly establishing this 
product group as the most expensive in the globally traded food basket. 
6. Rising world prices, in the context of a falli ng US dollar (the standard denomination of 
international quotations) throughout much of the year  are, in most instances, the principal factors 
behind higher bills in 2011.  In contrast to last year, growth in volumes traded at the global level has 
been virtually insignificant, and the world market has even contracted in the case of sugar.  The 
combination of higher domestic production outcom es and the downgrading of economic growth in 
several important global destinations  is by and large behind fewer transactions in 2011.  An additional 
factor containing the price-led higher bills has been  low and stable international freight costs during 
the first eight months of 2011. 
7. For the most economically vulnerable group of countries, the increase in the cost of 
purchasing food on the international market in 2011 has outpaced the global av erage.  For instance, 
the food import bill of Low-Income Food-Deficit Countries (LIFDCs) could register a 27 per cent 
jump, and that of the LDCs is expected to clim b by 32 per cent, some 5 per cent more than the 
average global rise and by far exceeding the record increase of the 2007-08 high-price year.  Putting 
these numbers in greater perspective, the cost of imported foodstuffs for vulnerable countries could account for roughly 17 per cent of all their expendi tures on merchandise imports, compared with a 
world average of around 7 per cent. 
8. 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 Food-Importing Developing Countries (NFIDC Decision) , 
their cereal import bills during the marketing years 2010/11 and 2011/12 are estimated to be nearly at levels reached in the 2007/08 high price year and a several-fold of levels attained in earlier years
1.  
Much of the increases in the cost of cereal imports in 2010/11 and 2011/12 have been due to higher 
prices of cereals, while volumes imported have not seen much change from the preceding year. 
9. Food aid, one of the instruments under the NFIDC Decision for helping countries facing 
difficulties in financing food imports, continues its d eclining trend and it now c overs some 9 per cent 
of the total cereal imports of LDCs, while it is insignificant in the case of NFIDCs.  The long-term decline in the aggregate volume of food aid is a result of several factors, including reduced overall 
                                                      
1 See table in Annex A, "Cereal imports of LDCs and NFIDCs (2000/01 to 2011/12) - Information as of 
October 2011".  G/AG/GEN/98 
 Page 3 
 
 
  budgets for food aid, higher cost of purchasing food aid commodities and the higher cost of meeting 
the food needs of protracted emergency operations in recent years. 
II. AGRICULTURAL MARKET INFORMATION SYSTEM TAKES SHAPE AT FAO 
10. At their Seoul Summit in November 2010, th e G-20 Leaders requested key international 
organizations to develop options for G-20 consideration on how to  better mitigate and manage the 
risks associated with the price volatility of food and other agricultural commodities, ultimately to 
protect the most vulnerable.  In response, FA O, OECD, the World Bank, IFAD, UNCTAD, WFP, 
WTO, IMF, IFPRI and the UN HLTF joined for ces for the first time to produce a policy report 
entitled "Price Volatility in Food and Agricultural Mark ets: Policy Responses".  The preparation of 
the report was coordinated by FAO and OECD. 
11. In their meeting in Paris on 22-23 June 2011, the G-20 Agriculture Ministers, recognizing the 
importance of timely, accurate and transparent information in addressing food price volatility 
launched a collaborative food information initiative - the Agricultural Market Information System 
(AMIS).  The AMIS inception meeting was held at FAO headquarters in Rome on 15-16 September 
2011, during which the "terms of reference" and the "rules of procedures" were adopted. 
12. The initiative builds on, and complements, exis ting systems and improves global food market 
information.  AMIS is not a new international organization but a platform where countries, international organizations and the private sector can work together to strengthen synergies and 
collaboration in order to improve data reliability, timeliness and frequency.  It will also build 
developing countries' capacity in market outlook analysis and promote policy dialogue. 
13. AMIS focuses on the global food market, and, at least initially, with matte rs relating to wheat, 
maize (corn), rice and soybeans. It is an open initiative.   However, at this early stage, it includes major 
producing, consuming and exporting countries which t ogether account for a large share of the world 
food market.
2  AMIS is managed by a joint Secretariat located in FAO.  It is made up of nine 
international organizations and will have the capacity  to collect, analyse and disseminate information 
on a regular basis regarding the current and future food market situation and food policies.3  These 
organizations will ensure that the information outpu ts of AMIS are objective and benefit everyone - a 
public good for the international community. 
14. In addition to the Secretariat, which will be  responsible for the global market outlook 
analysis, AMIS will include two groups to perform the following important functions:  a Global Food 
Market Information Group (GFMIG) to collect and analyze food market information and a Rapid 
Response Forum (RRF) to discuss policy responses. 
15. The GFMIG will analyze production, stocks, trade, utilization and prices.  It will include food 
market experts from the participating co untries who will be responsible for: 
(a) providing the Secretariat with continuous, quality, reliable, accurate, timely and 
comparable information on supply, dema nd, stocks and short term trends; 
(b) collecting information on national policy de velopments that could impact the food 
markets;  
(c) helping to improve national market outlook information and data systems;  and, 
                                                      
2 These are the G-20 countries and Spain together with Eg ypt, Kazakhstan, Nigeria, the Philippines, Thailand, 
Ukraine and Vietnam.  
3 FAO, IFAD, OECD, UNCTAD, WFP, the Worl d Bank, the WTO, IFPRI and the UN HLTF.  G/AG/GEN/98 
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  (d) collecting information on, and analyzing, national policies and their international 
effects. 
16. The Group will also identify gaps in informati on collection in participating countries and, 
through specific projects, will strive to build capac ity to collect market outlook information and to 
improve the quality of the data in terms of timeliness, coherence and completeness. 
17. The RRF will enhance policy dialogue when the market situation and outlook indicates a high 
food security risk.  As such the RRF will encour age policy coordination and the development of 
common strategies.  The RRF will be made up of  senior policy makers from the capitals of the 
participating countries.  It will meet when the f ood market situation warrants but will not decide on 
policies.  Its objective is to promote discussions on options in order to enhance policy coordination.  
More specifically the RRF will:  
(a) promote early exchange of key information on, and discussion of, prevention and 
responses to crises among policy-makers; 
(b) assist in mobilizing wide and rapid politi cal support for appropriate policy response 
and actions on issues affecting agricultura l production and markets in times of crisis 
without seeking to  influence humanitarian responses;  and, 
(c) brief and interact with the Bureau of the Committee on World Food Security (CFS) 
on its deliberations (as proposed by the G-20).  
18. AMIS could complement CFS in its efforts to  respond to the challenges that emerge from 
highly volatile food prices.  At the AMIS inception meeting in Rome, participants recommended that 
the Chairperson of the CFS be a Permanent Observe r and that a mechanism for collaboration between 
CFS and the RRF be established.  Such synergies w ould result in information relevant to food price 
volatility, actions and policies by various bodies, an d updates on the food security situation, including 
threats, being available to the CFS Bureau. 
III. AMIS REVIEW OF INCREASES IN DOMESTIC CEREAL PRICES DURING 
RECENT GLOBAL PRICE SPIKES 
19. As discussed above, AMIS aims at improving the collection of statistics on various aspects of 
the national food economy and analyse them w ith a view to improving the policy process for 
containing excessive volatility and responding effectively to it.  This note provides an example of the 
analytical guidance that would be expected from AMIS and concerns the experience of transmission 
of the high world food prices during 2007/08 and 2010 /11 to the domestic markets of food importing 
developing countries. 
20. During the episodes of global food price spikes that have occurred since mid-2007, there have 
been reports of widespread price rises across the wo rld.  Changes in domestic prices are determined 
by a number of factors, one of them being prices in world markets.  The strength of this relationship varies across countries and commodities depending on several factors, such as the level of import 
dependence, natural barriers a nd national and international po licies that may moderate the 
transmission.  For example, domestic rice prices in  Africa are often found to be more closely linked to 
the world price than domestic maize prices for the simple reason that the volume of maize imports in Africa is very small and so domestic output and other factors play the dominant role. 
21. The analysis reported here is mostly descri ptive, essentially documenting how much domestic 
cereal prices changed for different food commod ities and different countries (a more detailed 
presentation is given on the November issue of Food Outlook).  To demonstrate the order of  G/AG/GEN/98 
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  magnitude involved, these changes are expressed relative  to the changes in world market prices during 
the periods of recent price spikes.  This measure does not necessarily imply price transmission in the 
sense understood in the econometric literature on mark et integration.  Thus , although the term 
"transmission rate" is used below, this is essentially a ratio of the change in the domestic price relative 
to that in the world price. 
Rice price transmission, 2007/08 spike 
 
 
Wheat price transmission, 2007/08 and 2010/11 spikes 
 
 
22. The review utilizes 155 series of domestic cereal  prices from 52 countries, maintained by the 
FAO Global Information and Early Warning System (G IEWS).  It covers five periods when spikes 
occurred in the world market: three in 2007/08 consis ting of one each for rice, wheat and maize;  and 
two in 2010/11 consisting of one each for wheat and ma ize.  The domestic data show that for most 
countries cereal prices did not stop rising when the sp ike ended in the world market but continued to 
rise strongly for two to three months more, reflecting lagged transmissions. 
23. On the whole, taking into account all 155 pri ce series for both periods, domestic prices rose 
by more than the change in the world market (over 100 per cent transmission rate) in 48 of the 155 
cases, with transmissions of between 50 and 100 pe r cent in 50 cases, and transmissions of less than 
50 per cent in 57 cases. G/AG/GEN/98 
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  24. The transmission rates were significantly lower during the second spike (2010/11).  One 
obvious reason for this was increased food production in 2009, and most likely larger stocks moving 
into 2010.  Better preparedness following the expe rience of 2007/08 might also have led to lower 
transmissions.  With so many instances of tran smissions exceeding 100 per cent, and even 200 per 
cent in many cases, these episodes d eserve more focussed research w ith a view to understanding the 
role of weather related and policy factors in exacer bating the transmission, or in moderating the price 
rises.  Econometric analysis of market integration an d price transmission could shed more light in this 
area and future analytical work under AMIS could address this methodological issue of high relevance to policy response on the effects of price volatility. 
Maize price transmission, 2007/08 and 2010/11 spikes 
 
  
   G/AG/GEN/98
 Page 7ANNEX A 
 
Table:  Cereal imports of LDCs and NFIDCs (2000/01 to 2011/12) - Information as of October 2011  
 
 
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 forecast 
Import bill (US$ million) 
LDCs 2,193 2,546 3,407 3,694 4,179 4,301  5,952 10,657 7,794 7,832 9,860 9,445 
NFIDCs 4,630 4,866 5,533 6,207 7,090 7, 071 8,901 17,241 14,359 11,259 16,587 16,726 
LDCs & NFIDCs 6,823 7,413 8, 940 9,901 11,269 11,371 14,853 27, 898 22,153 19,091 26,447 26,171 
% change over 2000/01-2002/03 -11.7 -4.0 15.7 28.2 45.9 47.2 92.3 261.1 186.8 147.1 242.3 238.8 
Total volume imported (000 tonnes) 
LDCs 16,344 17,278 20,951 18,701 20,521 20,752  20,978 21,333 24,724 25,490 23,660 24,184 
NFIDCs 33,699 34,495 32,534 31,857 37,061 36, 599 35,544 41,490 46,819 43,646 45,918 45,534 
LDCs & NFIDCs 50,043 51,773 53, 485 50,558 57,581 57,351 56,522 62, 822 71,542 69,136 69,578 69,718 
% change over 2000/01-2002/03 -3.3 0.0 3. 3 -2.3 11.2 10.8 9.2 21.4 38.2 33.6 34.4 34.7 
Food aid (000 tonnes) 
LDCs 4,007 2,934 3,950 3,568 3,271 3,187  2,580 2,326 3,698 2,155 2,155 2,155 
% of total imports 24.5 17.0 18.9 19. 1 15.9 15.4 12.3 10.9 15.0 8.5 9.1 8.9 
NFIDCs 1,198 949 623 390 457 378 520 290 344 310 310 310 
% of total imports 3.6 2.8 1.9 1. 2 1.2 1.0 1.5 0.7 0.7 0.7 0.7 0.7 
LDCs & NFIDCs 5,205 3,883 4, 572 3,958 3,728 3,565 3,100 2, 616 4,042 2,465 2,465 2,465 
% of total imports 10.4 7.5 8.5 7. 8 6.5 6.2 5.5 4.2 5.6 3.6 3.5 3.5 
Commercial imports (000 tonnes) 
LDCs 12,337 14,344 17,001 15,133 17,250 17,564  18,398 19,007 21,026 23,334 21,505 22,028 
NFIDCs 32,501 33,546 31,911 31,467 36,604 36, 222 35,024 41,200 46,474 43,337 45,608 45,225 
LDCs & NFIDCs 44,838 47,890 48, 912 46,600 53,854 53,786 53,422 60, 206 67,500 66,671 67,113 67,253 
% change over 2000/01-2002/03 -5.0 1.4 3. 6 -1.3 14.1 13.9 13.2 27.5 43.0 41.2 42.1 42.4 
             
              
  G/AG/GEN/98 
Page 8 
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 forecast 
Per unit import cost (US$/tonne)1/ 
LDCs 134.2 147.4 162.6 197.5 203.7 207. 2 283.7 499.6 315.2 307.3 416.7 390.5 
NFIDCs 137.4 141.1 170.1 194.8 191.3 193.2 250.4 415.6 306.7 258.0 361.2 367.3 
LDCs & NFIDCs 136.3 143. 2 167.2 195.8 195.7 198.3 262.8 444.1 309.6 276.1 380.1 375.4 
% change over 2000/01-2002/03 -8.4 -3.8 12.3 31.5 31.4 33.2 76.5 198.3 108.0 85.5 155.3 152.1 
Wheat export price (US$/tonne) 
US no.2 Hard Winter 128 127 161 161 154 175 212 361 270 209 316 319 
% change over 2000/01-2002/03 -7.4 -8.5 15.9 16.0 11.0 26.6 52.7 160.6 95.1 51.1 128.1 129.9 
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 44.0 
Bangladesh 18.3 18.5 22.5 48.5 65.4 45.5 57.8 98.8 55.3 62.7 57.3 57.0 
Rotterdam 13.1 11.0 12.5 28.3 34.5 20.8 32.3 71.8 38.6 35.0 28.2 27.7 
Average 15.5 14.8 17.2 37.9 48.8 32.7 46.8 85.6 45.6 46.9 41.9 42.9 
% change over 2000/01-2002/03 -2.3 -6.3 8.7 139.4 208.2 106.7 195.4 440.6 187.9 196.5 164.4 170.9 
Totals computed from unrounded data 
1/ Based on per unit cost of total imports  
2/ Average July-October 
Source:   FAO 
 
 
 
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