The Intergovernmental Group
on Grains held its 27th Session at FAO Headquarters in early February 1997.
It was attended by delegates from some 70 countries, including all major
grain exporting and importing countries, as well as by representatives
from several intergovernmental and non-governmental organizations. The
Group reviewed developments in world grain markets in 1995/96 and examined
the short-term outlook for the 1996/97 season. It noted that only stocks
held by major exporters for crop years ending in 1997 were likely to increase
due to larger crops and reduced exports. It was concluded that while the
global supply situation had improved in 1996/97, including the increase
in global carryover stocks, the grains market was likely to remain tight
during the remainder of the season. Among the topical issues discussed, the Group assessed the transmission
of international price movements to domestic markets in 1995/96 and reviewed
responses of selected importing and exporting countries to the rise in
world prices. The Group stressed that apart from high international grain
prices transmitted to the domestic markets, there had been a number of
other factors responsible for domestic price increases in importing countries
during the 1995/96 season, including currency depreciation, smaller harvests
and low stock levels. It was noted that in countries where the transmission
of the rise in international prices was strong, producers responded by
increasing plantings. The Group encouraged the Secretariat to undertake
further studies on price transmission, including an analysis of underlying
factors, such as market fundamentals and policy measures. Another subject discussed related to factors contributing to price instability.
The steep price rise in 1995/96 followed by a sharp fall in the first half
of 1996/97 had raised the question of whether these events were of a short-term
nature, implying that prices were to return to greater stability, as was
experienced during the early nineties, or whether the world could be entering
a new phase of greater price instability. The Group recognized that the
continued low level of stocks had been the most important explanation for
the price surge of 1995/96, while the subsequent recovery of global production
during 1996/97 had been the main factor in the downturn in prices. It agreed
that the current grain market was still in a transitional state, characteristic
of an adjustment path towards a new market environment. The Group also reviewed the adequacy of FAO�s benchmark 17-18 percent
cereal stocks-to-utilization ratio. The results of the analysis by the
Secretariat were inconclusive with respect to modifying the existing level
of the stocks-to-utilization ratio. The Group supported the continuation
of the monitoring of cereal stocks in light of the mandate of the World
Food Summit Plan of Action. The Group also discussed matters related to the Common Fund for Commodities.
In an attempt to facilitate project preparation between sessions of the
Group, the Group set up a Sub-group to act on its behalf in matters pertaining
to the Fund, except in supervisory functions. The Group also agreed to
extend its Terms of Reference to include roots, tubers and pulses exclusively
for purposes of sponsoring projects to the Common Fund and endorsed a cassava
development strategy. The Group also approved five new projects to be submitted
to the Fund, three on cassava and two on grains. Finally, an informal symposium was organized to discuss changes in the
efficiencies of cereal ocean transportation and port handling in the past
two decades. The seminar, which was open also to representatives from the
private sector, focused on the impact of recent and expected changes in
seaborn transport and port facilities on food security of grain importing
developing countries. For more details on the 27th Session, please contact: |