FAO/GIEWS - Food Outlook No.5, November 1998

UTILIZATION

REVIEW OF 1997/98 AND THE OUTLOOK FOR 1998/99

Total world utilization of cereals in 1997/98 is estimated to have increased to 1 874 million tonnes, some 21 million tonnes, or 1 percent, more than in 1996/97 and 0.6 percent above the long-term trend (1985/86-1997/98). At the global level, the volume of cereals used for direct human consumption is estimated to have risen by 1 percent, while animal feed usage has grown by 1.4 percent, the faster growth being due mainly to lower grain prices compared to the previous season. Most of the increase in total utilization is estimated to have occurred in the developed countries, reflecting a rapid rise in feed usage for the second consecutive year. By contrast, feed utilization in the developing countries is estimate to have contracted somewhat, especially among the Low-Income Food-Deficit Countries (LIFDC) in Asia.

WORLD CEREAL UTILIZATION BY USE

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

For 1998/99 global cereal utilization is forecast to increase marginally to 1 878 million tonnes, but would be below the long-term trend, albeit slightly, for the first time since 1995/96. This would be mostly due to the economic difficulties in Asia, where feed demand started to fall already in the second half of the previous season. Against the background of continuing economic difficulties, which in recent months has also affected the economies of the CIS, especially the Russian Federation, it is unlikely that global cereal utilization would expand significantly for at least another year.

Direct human consumption accounts for almost one-half of total cereal utilization. Overall, the growth in world food consumption is estimated to have kept pace with the rise in population in 1997/98. Thus, the global per caput food consumption of cereals is estimated to have remained close to the previous year’s level, of about 162 kg. However, per caput food consumption in the LIFDCs, excluding China and India, is estimated to have fallen by 1 kg, to some 152 kg. The decline is estimated to have occurred mostly in Africa, due to domestic production shortfalls in several countries. By contrast, in Central America and eastern Europe, cereal consumption has risen due to more abundant domestic supplies.

PER CAPUT FOOD CONSUMPTION OF CEREALS

SOURCE: FAO

World per caput cereal consumption in 1998/99 is again expected to change little. Overall food habits tend to change very slowly over time, and variations in annual food consumption at the country level are largely conditioned by changes in domestic production and world prices, the latter affecting the eventual size of imports and hence consumption. In this context, an emerging feature in 1998/99 is likely to be a drop in per caput rice consumption in several major producing nations in Asia. The decline in domestic rice production in some Asian countries, such as in Indonesia, may not be fully offset by more costly imports, given this year’s stronger international rice prices and the devaluations of currencies in several importing countries.

In the past 10 years, the annual share of rice and wheat used for direct human consumption has changed very little, representing about 90 percent and 70 percent respectively of their total utilization. Food use accounts for only 20 percent of global maize utilization, although the share is more significant for Africa and Central America, where food use accounts for over 60 percent of total maize utilization. Rye is also used mostly for food in several countries. Food use of rye accounts for 40 percent of global utilization, and is mostly consumed in Europe and North America. Millet and sorghum are also considered major food grains in a large number of countries. Food use accounts for more than 80 percent of world millet utilization, mostly among the developing countries in Africa and Asia. As for sorghum, food use accounts for more than 40 percent of world utilization, which is mostly consumed in Africa and Asia. In Africa, direct per caput food use of sorghum has been the highest, at around 19 kg per year. In Asia, food use represents about 60 percent of world sorghum consumption, although the annual per caput food use is only about 6 kg.

World feed utilization of cereals grew again in 1997/98 but, at 1.4 percent, the expansion was considerably less than in the previous year. With lower grain prices, feed utilization in the developed countries rose by 2.8 percent, a significant expansion although down from the 5 percent growth observed in the previous year. However, aggregate feed use in the developing countries in 1997/98 decreased by 1.7 percent.

For 1998/99, despite a continuing decline in grain prices during the early months of the season, current indications point to a slight decrease in global feed utilization of cereals to 665 million tonnes, 0.3 percent below the previous year’s level. This decline is partly attributed to the continuing economic difficulties in Asia, which is limiting consumer spending for livestock products and thus dampening feed demand. In addition, aggregate feed use in the developed countries is expected to contract by 0.2 percent in 1998/89, largely on account of a continuing crisis facing the livestock sectors among the emerging economies, the Russian Federation in particular. There, the demand

for feed is forecast to be cut sharply in view of the country’s economic difficulties and the sharp fall in domestic grain production. By contrast, in Europe, larger grain supplies are expected to boost feed use in several countries. In the EC, total feed wheat utilization in 1998/99 is likely to peak, due to ample supplies and low internal prices. Also, as low quality wheat, which is destined for feed, no longer qualifies for intervention stocks, it competes with other grains such as barley on the feed market. In the United States, the latest official estimates point to a sharp increase in feed use of maize, by nearly 4 million tonnes, or about 3 percent, in response to ample supplies and low prices.

WORLD CEREAL UTILIZATION BY GRAIN

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

Total feed use in the developing countries is likely to show a decline for the second consecutive year in 1998/99. The bulk of the decrease is in Asia, mainly because of a continuing contraction in feed demand among countries hardest hit by the economic difficulties. In China, the demand for feed from the poultry and livestock industries, which has been rising steadily in recent years, is expected to increase at a much lower rate in 1998/99, mostly because of the rising domestic maize prices since the beginning of the season.

Other uses of cereals, which comprise post harvest losses, seeds and industrial use, are estimated to have peaked in 1997/98, at 261 million tonnes, mainly because of bumper crops in 1997. For 1998/99, following a reduction in production in 1998, other uses, including post harvest losses, are expected to return to more normal levels of around 254 million tonnes. While annual variations in post-harvest losses are often the main reason for significant changes, industrial use of cereals has been growing slowly but steadily in recent years. Most of the increase in the industrial use of grains, particularly maize, has occurred in the developed countries, especially in the United States, favoured by attractive prices. In the United States, according to the official estimates, maize utilization in 1997/98 for high fructose maize syrup (HFCS), starch, and ethanol represented nearly 20 percent of total use, up 1 percent from 1996/97. In 1997/98, the volume of maize used for HFCS production is estimated to increase by 7 percent, mainly in response to a strong demand from soft drink manufactures, which are among the major users. Maize used to make sweeteners (such as glucose and dextrose) is estimated to have increased by 2 percent in 1997/98, driven by its growing application in bakery products as sweeteners. Maize used for starch production is estimated to have increased by 5 percent, mainly due to strong demand for starch from paper recycling firms and building material manufactures. Maize used to make ethanol peaked in 1997/98, up 20 percent from the previous year, as ethanol production continued to recover from the impact of high maize prices in 1995/96.