Food Outlook 10/96

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Total cereal food aid shipments in 1995/96 (July/June) under programme, project and emergency food aid reached 7.2 million tons, some 2 million tons, or 23 percent, below shipments in the previous year and as much as 6 million tons, or 45 percent, below the annual average food aid shipments during the past five years (Table A.14). At this level, food aid shipments in 1995/96 were only 2 million tons above the reduced minimum commitments of just over 5 million tons agreed under the 1995 Food Aid Convention (FAC). It is important to note that while the revised food aid commitments are almost 50 percent below the original target of at least 10 million tons agreed at the World Food Conference in 1974, in most years in the past, actual food aid shipments exceeded the minimum commitments by much larger margins than was the case in 1995/96. The reduced food aid availabilities during 1995/96 also coincided with a sharp increase in international prices of cereals and a near-absence of exports on concessional terms. This development affected the Low-Income Food-Deficit countries (LIFDCs) in particular. Despite lower imports needs, the combination of higher cereal export prices and reduced food aid shipments is estimated to have resulted in an increase in the cereal import bill of the LIFDCs by over U.S.$ 4 billion in 1995/96 or 35 percent from the previous year.

Aggregate cereal shipments as food aid to the developing countries are estimated to have fallen to 5.7 million tons in 1995/96, from 7.1 million tons in the previous year. At this level, food aid shipments were 26 percent below the previous 5 year's average and also the lowest on record, even slightly below the volume shipped during the world food crisis in the early 1970's. Nearly all of the decline occurred among the LIFDCs where shipments in 1995/96 are estimated at only 5.7 million tons, 2 million tons below 1994/95 levels. The bulk of the decline among the LIFDCs occurred in countries in the sub -Saharan Africa, where shipments dropped by almost one-third to 2.3 million tons. While food aid shipments to nearly all countries in Africa fell in 1995/96, the decline was most pronounced in Ethiopia, Ghana, Kenya, Malawi, Mozambique, Rwanda, Senegal and Sudan. Total shipments into Latin America and the Caribbean also fell sharply in 1995/96, to 496 000 tons against 1.1 million tons in 1994/95. The bulk of this decline occurred in Bolivia, Guatemala and Peru though in general most other countries in this region also received less food aid than in the previous year. By contrast, shipments to Asia rose slightly to an estimated 2.8 million tons, close to volumes shipped annually since the early 1990s. This was mainly due to larger shipments to the Democratic Peoples' Republic of Korea, which more than offset the decline in food aid to several countries, including Afghanistan, Bangladesh and Sri Lanka. Total food aid shipments to the developed countries in eastern Europe and the CIS in 1995/96 were estimated at 1.4 million tons, some 800 000 tons, or 35 percent, smaller than in the previous year and 50 percent, below the average for the past 5 years.

In addition, global food aid shipments in terms of non-cereals food commodities fell in 1995 (January-December) for the second consecutive year, by 500 000 tons, or 30 percent, to slightly above 1 million tons. Lower shipments of pulses and vegetable oils accounted for most of this decline. The bulk of the decline occurred again mostly to Africa and countries of Eastern Europe and the CIS.

Estimates of possible food aid shipments for 1996/97 are rendered difficult as information on food aid budget allocations provided to FAO by individual donor countries to-date remain incomplete. However, total cereal food aid shipments may reach 7.5 million tons in 1996/97 (July/June), some 300 000 tons more than the reduced 1995/96 level and over 2 million tons above the minimum commitments agreed under the 1995 FAC. The anticipated increase in cereal food aid shipments in 1996/97 is expected to be mainly on account ofslightly larger shipments from the EC and the United States mostly to the LIFDCs in Africa and Asia.

Contributions to the World Food Programme (WFP) administrated International Emergency Food reserve (IEFR) in 1995 reached around 908 000 tons of cereals and 238 000 tons of non-cereals. Pledges to the 1996 IEFR have reached 626 000 tons for cereals and 159 000 tons for non-cereals as of October 1996 (table A.13). In addition, contributions to the 1995 Protracted Refugee Operations (PROs), also directed by the WFP amounted to 535 000 cereals and 58 000 tons of other food commodities, while some 396 000 tons for cereals and 84 000 for non-cereals have been pledged to-date under the 1996 PROs. Pledges to the regular resources of WFP, which account for 98 percent of total food aid deliveries through multilateral channels, amounted to U.S.$ 1 007 million for the previous 1993-94 biennium, or around 67 percent of the target of U.S.$ 1.5 billion. Of this total, some U.S.$ 651 million was in the form of commodities and U.S.$ 350 million in cash. For the 1995-96 biennium, total contributions as of October 1996 had reached U.S.$ 806 million, representing 53 percent of the U.S.$ 1.5 billion target. Of the total amount pledged, an estimated U.S.$ 537 million were in the form of commodities and U.S.$ 269 million in cash.


1992/93 1993/94 1994/95 1995/96 1996/97

( . . . . . . . . . . . . . . . . . thousand tons . . . . . . . . . . . . . . . . . . )
WORLD 15 088 12 966 9 346 7 163 7 500
LIFDC 10 172 8 012 7 866 5 660 5 900
Africa 6 625 3 709 3 541 2 500
Sub-Saharan 5 794 3 283 3 296 2 276
Others 831 426 245 224
Asia 2 428 2 665 2 470 2 753
East Asia and SE Asia 340 297 307 875
South Asia 1 488 1 536 1 601 1 288
Others 600 832 562 591
Europe and the CIS 4 337 5 010 2 189 1 414
Latin America and the

Caribbean 1 697 1 583 1 145 496

SOURCE: 1992/93 - 1995/96, WFP; 1996/97 forecast, FAO
Note: Totals computed from unrounded data.

Update on the Bovine Spongiform Encephalopathy (BSE) Crisis

Since the beginning of the BSE crisis last March, when the Government of the United Kingdom announced that a possible link existed between the human Creutzfeldt-Jakob disease and BSE, conclusions from experimental research have raised additional concern about the possibility that sheep could also be infected with BSE. A ten percent maternal transmission of BSE to calves born within six months from their mother suffering from BSE has also been evidenced.

In response to the crisis, the United Kingdom, where the vast majority of BSE cases have been reported, has launched various measures to eradicate the disease, including the slaughtering, over the next five to seven years, of 4.5 to 6.3 million cattle aged more than 30 months and at the end of their productive lives, together with the selective cull of 85,000 to 147,000 animals most at risk of having been exposed to BSE. The carcass of these animals is to be destroyed. However, because a recent study concluded that BSE is likely to die out on its own by 2001, the Government of the United Kingdom is currently reconsidering its earlier decision to implement the selective culling scheme and is now aiming at the elimination of a much lower number of cattle at risk. At the same time, Switzerland, the second most affected country by BSE, announced a plan, on 16th September, to eradicate the disease through the slaughtering of some 230,000 cattle either born before 1990 or offsprings of BSE-infected cows.

Domestic demand for beef in the EC dropped strongly in the aftermath of the crisis, triggering a sharp reduction in producer prices for cattle and a concomitant increase in the prices of other meat types, as consumers shifted to alternative sources of proteins. However, a recovery in domestic demand, (associated with the introduction of beef quality and origin labelling in various member states), increased intervention purchases and the resumption of trade with third countries have contributed to a lifting of EC cattle prices since mid-August. Prices for pig meat, have begun to stabilize since July, remaining, nonetheless, much above the pre-crisis levels. Sheep meat prices came under strong upward pressure when the BSE crisis broke; while this effect began to subside subsequently, prices rose strongly again in August as demand for breeding animals intensified, possibly denoting an on-going shift of farmers from cattle to sheep raising. EC poultry prices have been rather stable since the beginning of the crisis.

The EC Commission has earmarked some ECU 850 million to give immediate income support to cattle farmers in member states. In addition, indirect support to the market has been provided through a reactivation of procurement purchases. From April to August, about 270,000 tons of beef had already been purchased by the Commission.

A reduction in EC beef demand of some 850,000 tons, or 11 percent of consumption in 1995, is anticipated in 1996 as a consequence of the crisis. To balance the market, the Commission has proposed a set of measures. These include a cut in the number of cattle eligible for premiums, the lifting of the beef intervention purchase ceiling volume, a widening of intervention purchases to calves of up to 20 days of age and to light weight cattle and measures to promote extensive beef production. On the demand side, it has also made the proposal for an EC-wide voluntary labelling scheme for beef, providing basic information to consumers about the origin and rearing methods of the cattle used for its production.

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