The State of Food and Agriculture, 1996

WORLD REVIEW

I. Current agricultural situation - facts and figures

1. CROP AND LIVESTOCK PRODUCTION IN 1995

At the global level 1995 was a year of stagnating agricultural production, as total crop and livestock production expanded at an estimated rate of only 0.2 percent following the increase of 2.8 percent recorded in 1994. Such overall stagnation reflected below-average performances in most developed and developing country regions and virtually unchanged aggregate production levels in the countries in transition.
The most significant single feature in global agricultural production in 1995 was the 8 percent decline in crop and livestock output in the United States where cereal crops in particular, affected by adverse weather, declined by over 20 percent. As regards other major developed country producers, overall agricultural output in the European Union (EU) continued the declining trend of the last few years, although at a marginal rate (-0.3 percent, compared with -2.3 percent in 1994). On the other hand, Australian production expanded by 12.8 percent, more than offsetting the sharp shortfall of 1994.
For the countries in transition, 1995 marked the halt of the steady decline in overall agricultural production, which had started at the beginning of their economic reforms, and their total agricultural production remained broadly unchanged at the level of 1994. This outcome was accounted for mainly by expanded harvests in such major producer countries as Poland, which staged a partial recovery from the drought-reduced level of 1994, and Romania. In contrast, production continued to decline in some of the major republics of the former USSR, such as the Russian Federation, Ukraine and Kazakstan.
All developing country regions, with the exception of sub-Saharan Africa, recorded deteriorating overall agricultural production performances in 1995 relative to 1994. Likewise all developing country regions, except the Far East and the Pacific, registered rates of growth of crop and livestock production below those of population growth.
While remaining well below regional population growth, the 2.4 percent increase in agricultural production in sub-Saharan Africa in 1995 (up from 2.1 percent the previous year) was the highest among the developing country regions. Such overall modest increase resulted from widely varying country performances. On the one hand, severe drought conditions in southern Africa sharply reduced agricultural production in Botswana (-5.5 percent), Lesotho (-38.8 percent), Namibia (-7.2 percent), Zambia (-5.0 percent) and Zimbabwe (-17.4 percent), as well as in South Africa (-14.4 percent). On the other hand, moderate rates of expansion were achieved in most countries in western, central and eastern Africa. Strong agricultural production increases were recorded for Mozambique (17.2 percent), Burundi (12.8 percent), Angola (9.4 percent), Malawi (6.5 percent) and Uganda (5.7 percent). In Nigeria, agricultural production is estimated to have expanded by only a modest 1.3 percent.
In the Far East and the Pacific, agricultural production growth slowed significantly in 1995, to 1.8 percent, marginally above the rate of population growth. A major factor behind the slow-down was the sharp deceleration in agricultural production growth in China, to only 1.6 percent (down from 6.2 percent in 1994), the lowest year-to-year expansion since 1989. In India, also, agricultural production expanded at a very modest rate, estimated at 1 percent. Among other major countries, strong agricultural growth was recorded in Bangladesh (7.9 percent), Myanmar (8.8 percent) and Pakistan (6.3 percent), as well as, to a lesser extent, in Malaysia, Nepal and Viet Nam. Major losses in production, on the other hand, were recorded in Cambodia and Laos, which were affected by catastrophic floods.

Agricultural production growth also slowed down in Latin America and the Caribbean, from 4.0 percent in 1994 to 1.8 percent in 1995. Such a reduced growth rate resulted mainly from a 4 to 5 percent contraction in agricultural production in Mexico, decelerating production growth in Argentina, Brazil, Ecuador, Peru, Venezuela and Chile (although growth did remain vigorous in the latter) and a further decline in agricultural production in Cuba, continuing the sharp downward trend that began in 1992. Most countries in the Central America and Caribbean subregions showed poor or modest production performances, notable exceptions being Nicaragua and Guyana where growth was around 5 to 6 percent. The strongest regional agricultural production performances in 1995 were staged by smaller countries such as Bolivia, Nicaragua and Paraguay.
In the Near East and North Africa, production growth slowed to 1.7 percent, remaining well short of population growth for the third consecutive year. After having recovered in 1994 from severe drought conditions the previous year, Morocco was again hit by drought in 1995, with production declining by an estimated 23 percent. Production also fell in Jordan, by 5 percent, and less pronouncedly in Iraq, the Libyan Arab Jamahiriya, Saudi Arabia and Tunisia. On the positive side, production rose by 7.5 percent in Algeria, thus partially recovering from two consecutive years of decline. A strong (8 percent) expansion of production was also recorded in the Sudan, while Egypt, the Syrian Arab Republic and Turkey showed moderate production increases.

2. FOOD SHORTAGES AND EMERGENCIES

No fewer than 26 countries worldwide are currently facing acute food shortages requiring exceptional and/or emergency food assistance. More than half of these countries are in Africa.
Although sub-Saharan Africa's food aid needs fell in 1994/95, a substantial proportion remained unmet. This is largely attributed to tightening world food aid supplies. On current estimates, global food aid shipments in 1995/96 fell to the lowest levels for 20 years. With a major increase in world cereal prices, low-income food-deficit countries (LIFDCs) in the region will face serious difficulties in meeting food deficits through imports.
In spite of some good harvests, emergency food assistance will continue to be needed in eastern Africa throughout 1996. In Rwanda, although there have been favourable weather conditions in recent months, food production remains well below pre-civil war levels and an estimated 1 million people continue to rely on food assistance. In Burundi, crop prospects have deteriorated as a result of insecurity and renewed population displacement. Overall, an estimated 2.4 million refugees and displaced people in the Great Lakes region will continue to need emergency assistance throughout 1996. In southern Sudan, in spite of an overall improvement in production, food difficulties persist as civil strife and insecurity continue to hamper relief activities. In Somalia, as a result of reduced cereal production and persistent insecurity, the food supply situation is expected to deteriorate, especially since May, when stocks were near depletion. Food assistance is also required for vulnerable groups in Ethiopia and Eritrea - the situation in the latter country was expected to deteriorate from May/June when food stocks would have been depleted.
In western and central Africa, prospects are slim for recovery in food production in Liberia, where renewed civil disturbances continue to disrupt food production and relief efforts. Insecurity and internal conflict also continue to constrain food production in Sierra Leone. Elsewhere in the subregion, the food supply situation is generally stable, although localized food supply difficulties persist in several traditional food-deficit areas of Burkina Faso, Chad, Mali and the Niger.
In southern Africa, although a bumper harvest is expected in many countries, a large part of production will be needed to replenish diminished stocks following severely reduced harvests last year. In spite of recovery, the food supply situation in Angola remains particularly tight as domestic production is expected to cover less than half the country's food needs and there are a large number of internally displaced people. The situation is also tight in Zambia where stocks are critically low and commercial imports are constrained by high prices, transport difficulties and the low purchasing power of households. The high cost of commercial imports will also result in food supply difficulties in Lesotho, Malawi and Mozambique.
Elsewhere in the world, domestic food production in Afghanistan remains constrained by a shortage of inputs, damaged infrastructure and persistent insecurity continuing to displace people, who together with destitutes and returnees still require international assistance in the months ahead. In Iraq, the food and nutritional situation has deteriorated further and has reached a critical stage, caused mainly by difficulties encountered by the government in financing imports. Subsidized food rations provide less than half the required energy needs of the population, are of poor quality and lack animal protein and micronutrients. In Lebanon, the United Nations has launched an appeal for emergency relief and humanitarian assistance for 20 000 families for three months, following the recent conflict in the south of the country.
In the Democratic People's Republic of Korea, following severe flooding in 1995, low stocks and the inability of the government to import food commercially have resulted in a critical situation and major international assistance will be required if starvation is to be avoided before the next harvest in October. In Mongolia, input shortages and economic difficulties continue to constrain food production and commercial imports, resulting in a tight food supply situation, which may be worsened by recent widespread fires. In Laos, floods led to a sharply reduced rice harvest in 1995 which resulted in serious food shortages requiring emergency assistance in several provinces.
In Haiti, although the food supply situation is improving, commercial imports remain constrained and international assistance continues to be required to meet domestic requirements.
In Bosnia and Herzegovina, although the food supply situation has eased since the peace agreement in November 1995, which led to an improvement in commercial activities and access to areas where food aid is needed, some 1.9 million refugees and war-affected people still require emergency food assistance in 1996.

In Armenia, the food supply situation continues to improve as a result of increased trade and donor assistance. However, a section of the population seriously lacks resources to purchase food and, together with refugees and internally displaced people, continues to need assistance. In Azerbaijan and Georgia, although some recovery in food production is anticipated in 1996, the food supply situation remains difficult because of economic problems and reduced imports.
In Tajikistan, the food supply situation is extremely serious, with those populations most at risk being threatened by starvation in the absence of international assistance.

3. CURRENT CEREAL SUPPLY, UTILIZATION AND STOCKS

World cereal production in 1995 is estimated to be 1 904 million tonnes, about 3 percent lower than in 1994 and well below trend. The decline reflects a sharp drop in coarse grain production, in particular in the United States and the Commonwealth of Independent States (CIS), which more than offset larger wheat and rice crops. World wheat output increased by 4 percent from the reduced crop in the previous year, mostly as a result of the strong recovery in output in Australia after the 1994 drought and larger than normal crops in several countries in Asia and Europe. Rice output also increased by nearly 4 percent in 1995 to a record level.
Global cereal stocks for crop years ending in 1996 are forecast to decline, for the third consecutive year, to 260 million tonnes, 16 percent less than their opening level and the smallest volume since 1981. At this level, total cereal stocks would be only 14 to 15 percent of the trend utilization in 1996-97, well below the 17 to 18 percent range that the FAO Secretariat considers the minimum safe level for world food security. Most of the decline will be in coarse grains, but wheat and rice carryovers are also anticipated to fall below their already reduced openings.
Early prospects for 1996 point to a recovery in world cereal production to 2 015 million tonnes. Wheat output is forecast at some 571 million tonnes, 4.4 percent up from 1995 and back on trend after below-trend production in the past two years. Larger wheat crops are expected throughout most regions in response to tight supplies worldwide and strong international wheat prices. World coarse grains output in 1996 is forecast to increase by 10.5 percent, to 883 million tonnes, from last year's much reduced crop. At this level, output would be above the trend, but still somewhat below the record crop of 1994. The bulk of the recovery is expected to come from the developed countries, in particular those in North America, but significantly larger coarse grain crops are also anticipated in Africa and the CIS. As regards rice, assuming growing conditions remain as good as in they were in 1995, paddy output in 1996 could be around 560 million tonnes, almost unchanged from the previous year.

If current forecasts materialize, cereal output will be sufficient to meet the expected consumption requirements of 1996-97. However, the supply-demand situation would still remain closely balanced in 1996-97, as the expected increase would allow for only a modest replenishment of cereal reserve stocks after their sharp reduction in the current season. Thus, even assuming a normal growing season, current indications are that global food security will remain precarious, with cereal reserves below minimum safe levels for at least another year.

4. EXTERNAL ASSISTANCE TO AGRICULTURE

The declining trend in external assistance to agriculture continued in 1994, the latest year for which complete data are available. Total commitments to agriculture, in constant 1990 prices, fell to an estimated US$9 898 million, 11 percent below the previous year's level and no less than 23 percent below the level of $12 881 million recorded in 1990. At the same time the share of external assistance to agriculture in total development financing declined from 13 percent in 1990 to around 10 percent in more recent years.
The significant decline in commitments to agriculture in 1994 reflected a 30 percent real term contraction in bilateral commitments to only US$3 550 million. This contraction was only partly counterbalanced by a 5 percent real increase in multilateral commitments, which brought them to $6 348 million in 1994. Nevertheless, total multilateral commitments to agriculture in 1994 remained well below the levels recorded prior to 1993.
While the share of concessional commitments in total commitments to agriculture remained broadly constant at close to 70 percent from 1990 to 1994, the share of grants declined significantly during this period. Indeed, total grants dropped from $5 240 million in 1990 to only $1 675 million estimated for 1994. This negative trend affected both bilateral and multilateral grants.
Most of the major multilateral donors contributed to the increase in multilateral commitments to agriculture in 1994, with the regional development banks expanding commitments from US$1 409 million in 1993 to $1 771 million in 1994, the International Fund for Agricultural Development (IFAD) from US$234 million to $396 million and the World Bank from US$3 343 million to $3 488 million. The United Nations Development Programme, FAO and the Consultative Group on International Agricultural Research (UNDP/FAO/CGIAR) expanded their combined commitments moderately from US$627 million to $648 million. The Organization of the Petroleum Exporting Countries` (OPEC) multilateral assistance, on the other hand, dropped sharply from US$166 million to $45 million.
For the regional development banks, the World Bank and UNDP/FAO/CGIAR, however, the estimated increase in commitments to agriculture in 1994 represents only a partial recovery from the sharp declines recorded over the previous years. For all of these institutions, commitments in 1994 remained below the level of 1993 and well below that of 1990. Only for IFAD did the sharp expansion in commitments in 1994 bring them above the level of 1990.
As regards the regional distribution of assistance flows, the level of commitments to Asian countries fell more steeply than for other regions during 1990-93. In 1994, for the first time, the republics of the former USSR were recorded as recipients of significant assistance to the agricultural sector at a level of commitments preliminarily estimated at US$110 million.

Data for 1995 are still incomplete and cover only external assistance commitments to agriculture from multilateral sources. The World Bank Annual Report 1995 reports a 32 percent decline in commitments to agriculture from that institution against a background of an 8 percent increase in its total commitments from the Bank. Likewise, the statement of loans for the Asian Development Bank shows a decline in commitments to agriculture of 19 percent.

5. FOOD AID FLOWS IN 1995/96

Total food aid shipments in cereals in 1995/96 (July to June) are estimated to be 7.6 million tonnes, compared with 9.2 million tonnes in 1994/95, 12.6 million tonnes in 1993/94 and 15.2 million tonnes in 1992/93.
The low-income food-deficit countries (LIFDCs) are expected to receive about 6.5 million tonnes, or 85 percent of the total cereal food aid, a similar share to that they received the previous year. At these levels, food aid shipments in the form of cereals to LIFDCs will constitute about 8 percent of the 1995/96 forecast for total cereal imports (including commercial purchases), sharply down from 11 percent in 1994/95 and 13 percent in 1993/94. Within the category of LIFDCs, those in sub-Saharan Africa continue to be the largest recipients of food aid, accounting for more than 30 percent of the total.
As of March 1996, contributions to the 1995 International Emergency Food Reserve (IEFR) had reached 922 000 tonnes of cereals and 245 000 tonnes of non-cereal food commodities, while contributions to the World Food Programme's (WFP) Protracted Refugee Operations (PROs) in 1995 amounted to some 504 000 tonnes of cereals and 61 000 tonnes of other food commodities. Total pledges to the 1996 IEFR by nine donors amounted to 280 000 tonnes of food commodities, a volume similar to that which had been pledged at the same time last year. In addition to the IEFR contributions, some 225 000 tonnes of food commodities have also been pledged under the 1996 PROs.

By March 1996, pledges to the regular resources of WFP for the previous 1993-94 biennium amounted to US$1 001 million, representing nearly 67 percent of the target of $1.5 billion. Of the total amount pledged, some $651 million was in the form of commodities and $350 million in cash. For the 1995-96 biennium, total pledges as of December had reached $649 million, representing approximately 43 percent of the target of $1.5 billion. Of the total amount pledged, an estimated $426 was in the form of commodities and $223 million in cash.

6. INTERNATIONAL AGRICULTURAL PRICES

Grain prices rose to record levels during the 1995/96 season as a result of production shortfalls, low stock levels and relatively strong export demand. By late May 1996, international wheat prices had weakened slightly compared with their record levels in April, yet they were still as much as US$100 per tonne - 60 percent above the corresponding period a year earlier. With major maize harvests still months away, continuing strong demand, especially for United States maize, pushed prices to higher levels. By late May, international maize prices were nearly US$95 per tonne - 80 percent above their values last year.
International rice prices were relatively weak in the first five months of 1996 compared with the very high levels reached in the second half of the previous year. The decline in prices was largely a result of reduced demand from Bangladesh, China and Indonesia following a recovery in production in these three countries. Among the different types of rice, the prices of lower qualities fell the most. The prices of higher-quality rice, by contrast, were more resilient, sustained in the first quarter of the year by purchases made specifically for the Chinese spring festival and, later, by the increase in United States rice export prices in anticipation of reduced rice plantings in the United States for 1996.
The rise in prices for oils and fats, which started in June 1994, came to a halt during the second half of the 1994/95 season and prices for some oils started falling, with prospects for higher end-of-season stocks and promising 1995/96 crops. During the first half of the 1995/96 season, international prices for most oils and fats moved further downwards, as a result of ample stocks at the beginning of the season and the expectation that total supplies would again exceed total losses. Prices for soybean oil increased, however, during the second half of the season because of lower supplies and sharply rising prices for grains, which compete for land with soybeans. Prices of oilmeals over the entire 1994/95 season remained about 6 percent below the average recorded in 1993/94, reflecting a continued abundance of supplies, combined with the continued decline in livestock numbers in the former USSR and Eastern European countries. During the 1995/96 season, prices of soybean, rapeseed and sunflower meals rose sharply, driven by a reduction in overall oilmeal supplies, sustained demand for livestock products and more favourable meal-to-grain price ratios.
The rise in world sugar prices, which began in 1994, reached five-year highs during the first quarter of 1995. The International Sugar Agreement (ISA) daily price peaked at US cents 15.45 per pound (0.45 kg) in January. Forecasts of a large production surplus in 1995/96 caused a sharp drop during August and September. However, prices rose slightly from October until March 1996, mainly supported by the scarce availability of high-quality white sugar from the European Union (EU) and delayed exports from several cane-producing countries. The price has declined substantially since April 1996, reaching a two-year low of US cents 10.50 per pound during the first week of May, as larger quantities of exportable sugar came into the market.
World coffee prices strengthened in 1994 and remained high until May 1995. However, as abundant crop supplies from Colombia, Mexico and Uganda offset Brazilian losses, a downward movement in prices began in June 1995 and lasted throughout the rest of the year. Prices during the first four months of 1996 averaged US$2 336 per tonne which was more than one-third lower than its highest level last April.
After significant increases in 1995, cocoa prices remained at their highest level for six years. The high prices reflected a tight supply situation worldwide which was a result of the steady fall in production in Brazil. Although output increased in Côte d'Ivoire and Ghana in 1995, prices continued to increase, reaching their highest level in April 1996 as demand remained strong and supplies tight.
World tea prices declined further in 1995 as a result of record production in a number of key producing countries and weak import demand. After falling to a historical low in July 1995 (the lowest for 20 years), prices recovered significantly to US$1 745 per tonne for the first four months of 1996. However, world tea prices remain under downward pressure in the short term as a result of weak import demand.

World cotton prices based on the Cotlook A index for March 1996 are some US cents 6.5 per pound lower than the 1995 average price and considerably lower than the price peaks reached during the first quarter of 1995. The International Cotton Advisory Committee (ICAC) estimates world production for 1995/96 to increase by 1.8 percent, to 19 million tonnes. Consumption is expected to increase by about 2 percent. At the end of the 1995/96 season (August/July) global stocks are estimated at 8.11 million tonnes, a 2 percent increase over the previous year. World imports for 1995/96 are expected to decline by almost 0.5 million tonnes from 1994/95 levels, and are expected to decline another 300 000 tonnes in 1996/97. China continues to play a key role in world cotton trade. ICAC projects that on balance production increases are expected to exceed consumption requirements, leading to a rise in stocks, but yield swings, disease and pest problems, combined with the prices of competing crops, particularly cereals, will all influence production over the medium term.

7. FISHERIES: CATCH DISPOSITION AND TRADE

In 1994 the world harvest of fish and shellfish from capture fisheries and aquaculture reached a record level of 109.6 million tonnes. The 1994 production represents a record increase of 7.3 million tonnes, or about 7.2 percent, compared with the 1993 catch of 102.3 million tonnes. Fish used for reduction to fishmeal and oil amounted to an estimated 33.5 million tonnes in 1994, which is the highest quantity ever used for non-food purposes and represents an 18 percent increase from the 1993 figure of 29.3 million tonnes. The quantity used for human consumption also increased, from 72.9 million tonnes in 1993 to about 74.8 million tonnes in 1994, resulting in a minor increase in per caput supply.
Marine production accounted for 5.4 million tonnes of the increase and inland production for the remaining 1.9 million tonnes. The production increase in marine waters was almost entirely from higher capture fishery yields, which were up 4.9 million tonnes, mainly attributable to anchoveta catches by Peru and Chile in the southeast Pacific, with mariculture increasing by 450 000 tonnes. In contrast, the increase in inland production was mainly the result of aquaculture, which showed increased output of 1.7 million tonnes, compared with an increase of only 250 000 tonnes for inland capture fisheries. Almost all of the increase in inland water fishery production came from Asia.
The increase in harvest from marine capture fisheries is a result of increased catches of anchoveta, a stock which fluctuates wildly depending on El Niño conditions. This increase in no way contradicts FAO's assertion that the majority of species subject to fishing are now fully or overexploited and that the potential for increasing overall yields from capture fisheries in the long term is extremely limited. Preliminary figures for 1995 indicate a total production level similar to that of 1994, representing an increase in aquaculture production and a decrease in capture fishery yields.
Recent analyses indicate that the proportion of major stocks for which catches are in a declining phase has increased steadily over the past several decades. Effective management is more urgently required than ever before to stabilize biomass and improve economic performance. In order to take the difficult decisions this will require, Member States will have to put in place the infrastructure for assessing and managing their fisheries and bring their management capabilities in line with those spelled out in the FAO Code of Conduct for Responsible Fisheries and other recently adopted international instruments.
The recent trend of expanding production in developing countries and contracting production in developed countries, particularly in the economies in transition which include the republics of the former USSR and Eastern Europe, continued in 1994. Production by low-income food-deficit countries (LIFDCs) continued the pattern of rapid growth which has averaged 6.9 percent per annum since 1988. This figure is deceptive, however, in that growth has taken place mainly in the highest producing LIFDCs such as China (12 percent average for 1988-94), India (6 percent), Indonesia (6 percent), the Philippines (2 percent), Bangladesh (5 percent) and Morocco (5 percent).
China, since 1989 the highest producing country, reported a record production of 20.7 million tonnes for 1994. Of the 3.2-million-tonne increase, over 1 million tonnes are attributable to aquaculture production of five carp species and the remainder to many cultured species (mainly inland) and some wild species (mainly marine) such as largehead hairtail, scads and, notably, filefishes, which had declined markedly between 1988 and 1993. Production of Japanese anchovy decreased for the first time, reversing the rapid growth trend seen from the start of the fishery in 1990 to its peak of 560 000 tonnes in 1993.
During the decade 1984-94, total world aquaculture production increased at an average rate of 9.4 percent, compared with 2.6 percent for livestock meat production and 1.7 percent for total capture fisheries. Aquaculture production grew at a much faster rate within developing countries than within developed countries between 1984 and 1994; since 1984 total production (in tonnes) has increased by 188.7 percent in developing countries compared with 24.6 percent in developed countries. Developing countries and LIFDCs continued to dominate production in 1994, accounting for 86 percent and 75 percent of total production, respectively.
In 1994, world aquaculture production totalled 25.5 million tonnes (21.7 percent of total world fisheries landings), valued at US$39.8 billion, compared with 10.4 million tonnes and $13.1 billion in 1984. Production by weight in 1994 consisted of 51.2 percent finfish, 27.1 percent aquatic plants, 17.2 percent molluscs, 4.2 percent crustaceans and 0.3 percent others.
At present, most of the LIFDCs' finfish aquaculture production is based on the culture of low-value herbivorous/omnivorous freshwater finfish in inland rural communities, within semi-intensive or extensive farming systems that use moderate to low levels of production inputs. These systems produce large quantities of affordable food fish for domestic markets and home consumption. By contrast, about 60 percent of finfish production in developed countries is based on the monoculture of high-value carnivorous species in intensive production systems.

International trade in fishery products increased by about 14 percent between 1993 and 1994 to a total export value of US$47 billion with developing countries accounting for an ever-increasing share which now almost equals that of developed countries. The developing countries' positive trade balance of $15.5 billion in 1994 and the developed countries' negative trade balance of $20.0 billion represented increases from 1993 of 15 and 20 percent, respectively. The overall increase resulted from higher quantities of exports and higher unit values for most food commodities; the latter being a reversal of the downturn in unit values evidenced in 1993.
For the second year running, Thailand was the world's main fish-exporting country with exports of US$4.2 billion in 1994, a 23 percent increase on 1993. Japan maintained its position as highest importer with imports worth $16.1 billion in 1994, or 31 percent of world imports.

8. FORESTRY PRODUCTION AND TRADE

The most important feature of 1995 forest products markets was the strong growth of pulp and paper prices in international markets, which reached a peak in October 1995. During that month, Northern Bleached Softwood Kraft (NBSK) pulp, the industry's benchmark product, was quoted at US$1 000 per tonne, 50 percent above the price for the corresponding period in 1994. Thereafter, as paper demand weakened and new pulp capacity grew, prices of wood pulp and less so of paper fell rapidly, to some 30 percent below their peak by February 1996 for pulp, in spite of production cutbacks aimed at reducing supplies. The high prices that prevailed during much of 1995 boosted the value of trade, particularly for the developed countries which dominate exports of these two products. Thus, while the value of total trade in forest products is estimated to have increased by 8 percent, that for pulp and paper rose by some 15 percent.
World roundwood production reached some 3.47 million m³ in 1995, about 1 percent higher than in 1994. Much of this marginal growth was caused by the demand-driven expansion of fuelwood, the dominant energy source in many developing countries. World production of industrial roundwood, on the other hand, remained at the low level of
1.55 million m³, well below the volume for 1990. This was mainly caused by the continued dislocation of output in the Russian Federation where industrial roundwood removals were estimated to have fallen by a further 15 percent. The decline was also in response to weak construction industry activity in the industrialized countries, the main outlet for mechanical wood products; for example, new housing construction in the United States decreased by 9 percent, with similar declines experienced by Japan and some European countries. Furthermore, the supply of logs continued to be affected by restrictions on harvesting in public forests on the west coast of North America and in key tropical Asian countries, increasingly in response to environmental concerns. In 1995 some African countries, such as Côte d'Ivoire and Gabon, also began to move towards tighter logging and export restrictions.
Pulpwood and particles were exceptional among roundwood products in that they experienced marked growth in 1995 to serve the buoyant wood pulp industry, which for most of 1995 consumed more pulpwood and particles and at higher prices. Most notable growth was for exports of pulpwood from countries of the former USSR to Scandinavia, for wood chips from Chile (volumes of which grew by 35 percent) and for trade in wood chips in general.
World sawnwood production in 1995 continued its long-term decline and, at about 409 million m³, was some 20 percent below that for 1990. The continuous decline has partly resulted from the constant fall of output in the former USSR and especially in the Russian Federation. Major European and North American producers generally maintained the previous year's output of coniferous sawnwood, leading to an oversupply, high stocks and, consequently, downward pressure on prices in Europe in the latter part of 1995. There was further growth of Canadian exports of coniferous sawnwood by 4 percent, mainly directed to the United States. A trade agreement was signed in 1996 between Canada and the United States in order to reduce Canadian exports of coniferous sawnwood to the United States, a trade worth some US$7 billion annually, by 10 percent.
Production of temperate non-coniferous sawnwood increased slightly above 1994 levels as a result of higher demand from the renovation and restructuring sectors. This product is beginning to substitute tropical sawnwood imports significantly in major consuming markets.
Production of tropical sawnwood in 1995 appears to have declined marginally as several tropical producing countries introduced logging and export restrictions. Trade in tropical sawnwood in 1995 declined further as major Asian producers continued to reduce exports deliberately and to divert supplies to higher value-added processing for export.
World production of wood-based panels continued its upward trend and is estimated to have reached 146 million m³ in 1995, some 3 percent above the 1994 level. The year was marked by heavy investment in new capacity, notably for medium-density fibreboard (MDF) and oriented strand board (OSB), which are partially substituting other traditional panels such as plywood and particle board. Investment in new MDF and OSB capacity continues despite some doubts as to whether this expansion is justified by likely future demand. Overall production of plywood increased only marginally because of the weak demand in international markets, although a notable upsurge occurred in Malaysian exports of tropical plywood (up 30 percent) probably at the expense of Indonesian exports, which declined marginally. Canadian exports of OSB grew markedly.

World production of paper and paperboard reached an estimated 280 million tonnes in 1995, up 4 percent and continuing an upward trend started in 1982. Strong growth was registered by some major countries in Western Europe and Asia, with more moderate rates in North America and Scandinavia. Demand was particularly sustained for printing and writing grades and prices moved up sharply. The price for uncoated wood-free paper, for example, was 32 percent higher in August 1995 than in the previous year. In the last part of 1995, however, demand for paper reduced, especially in Asia, and led to the buildup of stocks (in spite of production cutbacks) and rapidly declining prices. Trade was very sustained in the first nine months of 1995, but, with the exception of newsprint, declined markedly afterwards.

World production of wood pulp reached an estimated 159 million tonnes in 1995, some 3 percent above the good level of 1994. The performance of the sector followed very closely that of the paper sector. During the first nine months worldwide demand for wood pulp was strong, stocks low and operating rates very high. As a result prices moved up very sharply, to some 50 percent above 1994 levels. This development also led to higher pulpwood removals, increased trade in pulpwood and chips and price rises for pulpwood and other inputs, including recovered paper. After October, as demand for paper declined and paper stocks piled up, producers' inventories of wood pulp also escalated, prices declined rapidly and many mills announced temporary closures to reduce inventories. In February 1996 wood pulp prices were some 30 percent lower than the previous peak. Trade, which had expanded strongly for the better part of 1995, decreased sharply in line with the plummeting demand for pulp and paper.