Food Outlook 10/96

UTILIZATION

REVIEW OF 1995/96

The sharp rise in international grain prices in 1995/96 contributed to a downturn in global cereal utilization for the first time since 1988/89 to 1791 million tons, although the contraction of 8 million tons was small. A considerable reduction in feed use in the developed countries more than offset the continued growth in demand for food and feed use among the developing countries. While the utilization of coarse grains, mostly used for feed in the developed countries, declined substantially,

wheat and rice consumption showed small increases over the previous year.

The current estimate of the 1995/96 food consumption of cereals is 920 million tons, accounting for one-half of total world utilization, an increase of 1.9 percent, or 17 million tons from the previous year. While most of the increase in food consumption was among developing countries, food use in the developed countries is also estimated to

have risen modestly compared to the previous season. Globally, per caput food consumption in 1995/96 remained virtually unchanged at about 161 kilos per year.

WORLD CEREAL UTILIZATION

	1994/95	1995/96	1996/97 f'cast
	(. . . . . . million tons . . . . . .)
Total utilization
World	1 799	1 791	1 827
Developing countries	1 047	1 079	1 097
Developed countries	752	713	729
Food consumption 1/
World	903	920	933
Developing countries	740	754	767
Developed countries	164	166	167
Feed use
World	646	614	633
Developing countries	199	207	213
Developed countries	447	408	420
Other uses 2/
World	249	258	260
Developing countries	108	118	117
Developed countries	141	139	142

SOURCE: FAO
Note: Total computed from unrounded data.
1/ For direct human consumption.
2/ Other uses include seed, industrial uses and post harvest losses.

Aggregate food consumption of cereals in the developing countries is estimated to have reached 754 million tons in 1995/96, almost 2 percent above the previous year. This rise is matched to that of population growth, and as result, average per caput food consumption of cereals in these countries was unchanged at 171 kilos. Likewise, at 174 kilos, the Low-Income Food Deficit Countries as a group are also estimated to have maintained their annual per caput food consumption of cereals. However, it declined in a numbers of these countries, particularly in Africa, while bumper crops in many parts of Asia in 1995 contributed to a slight increase in this region.

WORLD CEREAL UTILIZATION BY GRAIN

	1994/95	1995/96	1996/97 f'cast
	( . . . . . millions tons . . . . . )
WHEAT
Developing countries	312	322	328
Developed countries	241	241	247
World	553	563	575
Food	393	399	403
Feed	94	92	101
Other uses 1/	67	72	71
COARSE GRAINS
Developing countries	385	399	407
Developed countries	493	454	464
World	878	853	871
Food	186	190	193
Feed	543	512	524
Other uses 1/	149	150	154
RICE (milled)
Developing countries	350	358	362
Developed countries	18	17	18
World	368	376	380
Food	325	330	337
Feed	9	10	9
Other uses 1/	34	36	35

SOURCE: FAO
Note: Total computed from unrounded data.
1/ Other uses include seed, industrial uses and post harvest losses.

Total cereal food consumption in the developed countries is estimated to have increased slightly to 166 million tons in 1995/96, which was sufficient to maintain per caput consumption at 129 kilos. Small increases in food use are estimated for Europe and North America while cereal food consumption continued to decline in the Commonwealth of Independent States (CIS).

Global feed use of cereals in 1995/96 is estimated to have dropped by 32 million tons, or 5 percent, to 614 million tons from the previous year. High international prices have been largely responsible for a sharp reduction in the feed demand for cereal in the developed countries. In the United States, the feed use of grains fell by 18 percent in 1995/96, despite a larger number of livestock, as producers found alternative feed, such as longer grazing periods, to substitute for relatively more expensive grains. In the CIS, the continuing structural change in the livestock sector, rather than high cereal prices, was the main reason for the further decline in feed use of cereals. By comparison, grain feeding increased slightly among the EC-12 countries compared to 1994/95, partly as a result of reduced availabilities of cassava, which is used as a feed substitute for grains, as well as restrictions on grain exports which helped to stabilize domestic grain prices.

PER CAPUT FOOD CONSUMPTION OF CEREALS

	1994/95	1995/96	1996/97 f'cast
	(. . . . . kg. per head . . . . .)
Developing countries	170.3	170.5	170.5
Developed countries	128.9	129.1	129.6
TOTAL
Low-income	161.0	161.2	161.4
food-deficit countries	173.8	174.0	173.9
(exclud. China and India)	(150.3)	(151.4)	(151.5)
Wheat	69.9	70.0	69.8
Coarse grains	33.2	33.4	33.4
Rice (milled)	57.8	57.8	58.3

SOURCE: FAO

Feed use of cereals in the developing countries, which accounts for about one fifth of their total cereal use, is estimated to have risen by about 4 percent to 207 million tons in 1995/96. Most of the expansion occurred in Asia, primarily China, where a bumper maize crop combined with larger imports and a ban on maize exports contributed to meeting the strong demand from the expanding livestock sector.

As regards other uses of cereals (mainly seed, industrial uses and losses) they are estimated to have risen by 9 million tons to 258 million tons in 1995/96. Post-harvest losses are assumed to be largely responsible for this development, especially in Asia where several countries produced near-record crops.

OUTLOOK FOR 1996/97

Preliminary indications for 1996/97 are for world cereal utilization to recover by 2 percent, or 36 million tons, to 1827 million tons, still leaving total utilization slightly below the long-term trend. While this first forecast points to only a modest expansion in food consumption of cereals, feed use is expected to recover significantly, because of lower grain prices compared to last season. Continued strong demand for livestock products in the fast growing economies of Asia and Latin America and the Caribbean is also expected to contribute to expanding global feed use, in particular of coarse grains.

Globally, food consumption of cereals is forecast to increase by 1.4 percent, or 13 million tons, to reach a total of 933 million tons in 1996/97, roughly on trend, and world per caput food consumption is anticipated to remain unchanged at 161 kilos. The bulk of the increase in total cereal food consumption is expected among developing countries mainly due to good harvests in many parts of Asia and a recovery of output in Africa. In the developed countries food use of cereals is forecast to rise only slightly.

By far the most significant change in global cereal utilization in 1996/97 is expected for feed use which is forecast to rise by 3.1 percent, or 19 million tons, to 633 million tons, about the average level for the last five years but slightly below trend. A return to more normal levels of feeding in the developed countries, with some exceptions, is likely to be largely responsible for the recovery, mostly reflecting lower international grain prices. Feed use among these countries is forecast to rise by 12 million tons from the previous year. In the United States, feed use of grains is expected to increase by about 12 percent in 1996/97 to 156 million tons, about the average level of the first half of the 1990s, but below the record of 1994/95. The feeding of grains in the EC could also expand this year following a substantial increase in production this season. The effect of the BSE crisis (see Box on page 30) on the demand for grains in the EC in 1996/97 is uncertain, but there is a potential impact. As meat production shifts away from beef to other types of meat, such as pork and poultry, the use of grains could increase as feed rations for these animals use a higher percentage of grains than those for cattle. Offsetting this effect, however, would be the fact that pork and poultry are more efficient converters of grain to meat, thus requiring less grain per unit of output. In contrast to the expansion expected in the EC and the United States, feed use is forecast to decline in a number of countries in the CIS and eastern Europe due to continuing structural changes, especially in the CIS, and to reduced animal numbers and shortages of feed supplies following heavy slaughter last season.

Cereal feed use in the developing countries is anticipated to continue its upward trend in 1996/97, rising by 3 percent, or 6 million tons, to 213 million tons. While more feeding, especially of coarse grains, is expected in countries with fast growing economies in the Far East, the aggregate increase for Asia is likely to be lower this year due to a possible drop in feed use in Saudi Arabia where much improved pasture conditions are expected to reduce the feeding of barley to camels and sheep. Greater feed use is also forecast for North Africa and South America mainly due to a combination of lower prices and larger domestic supplies.