FAO/GIEWS - Food Outlook No.2 - April 1999 p. 3

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Early prospects for 1999 point to some reduction in global cereal output. Based on the condition of crops already in the ground and planting intentions for those to be sown later this year, and assuming normal weather for the remainder of the 1999 cropping seasons, FAO's first forecast puts world cereal output this year at 1 850 million tonnes (including rice in milled terms), about 1.5 percent below 1998 but still above the average of the last five years. If current forecasts materialize, cereal output would not be sufficient to meet expected consumption requirements in 1999/2000 and global cereal stocks accumulated in the last two seasons would have to be drawn down to below safe levels. However, it should be pointed out that, with many of the 1999 crops still to be sown, and others just in the early stages of development, these forecasts are very tentative, and will firm up only later in the year.

As indicated above, FAO's first forecast of world cereal production in 1999 is 1 850 million tonnes (including rice in milled terms), compared to the revised estimate of 1 877 million tonnes in 1998. Wheat output is provisionally forecast at 580 million tonnes, about 3 percent down from 1998 and below trend for the first time since 1995. Output is expected to fall in Asia, North America and Europe due to a combination of adverse conditions and/or reduced plantings. Although production in the CIS is expected to recover from last year's sharply drought-reduced level, it is likely to remain below the average of the past five years. Elsewhere in the northern hemisphere, wheat output in Africa and Central America is expected to remain largely unchanged from the previous year. In the southern hemisphere, early indications for the crops to be sown later this year point to a recovery in production in Argentina after 1998's reduced crop, and another good crop in Australia, similar to last year's. Regarding coarse grains, FAO's first forecast of global output in 1999 is 890 million tonnes, about 2 percent down from 1998 and just below trend after three years of above-trend crops. Early indications point to reduced levels of production throughout all regions, with the exception of the CIS where some recovery is expected after severely reduced crops in 1998. However, since the major coarse grains crops in the northern hemisphere are yet to be planted, this early forecast is very tentative. As regards rice, in most of Asia where the bulk of the crop is grown, the season has yet to begin pending the arrival of the monsoon rains. FAO is tentatively anticipating a recovery in global rice production in 1999 to 380 million tonnes (or 570 million tonnes of paddy), compared to the revised estimate of 375 million tonnes in 1998 (or 560 million tonnes of paddy). This is based on favourable early indications for the first 1999 crops already planted in the southern hemisphere and along the equatorial belt, and the planting intentions in some of the major producing countries in the northern hemisphere.


(. . . . . . million tonnes . . . . . .)
Production 1/
1 906
1 877
1 850
Coarse grains
Rice (milled)
Supply 2/
2 208
2 211
. . .
1 871
1 881
. . .
Trade 3/
. . .
Ending Stocks 4/
. . .

1/ Data refer to calendar year of the first year shown. Rice in milled equivalent.
2/ Production plus opening stocks.
3/ July/June basis for wheat and coarse grains and calendar year for rice.
4/ May not equal the difference between supply and utilization due to differences in individual country marketing years.


FAO's forecast of world trade in cereals in 1998/99 (July/June) has been revised upward by 1.6 million tonnes, to 205.6 million tonnes since the last report but would still be some 7 million tonnes below the previous year's volume. All of the revision since the last report regards coarse grains and rice. The latest forecast for global wheat imports in 1998/99 remains at 93.3 million tonnes, about 3 million tonnes down from the previous year. Global coarse grains imports are now forecast to increase marginally from the previous year to 90.7 million tonnes after the latest upward revision associated with increased imports expected for some countries in Africa and Europe. The forecast for trade in rice in 1999 has also been increased slightly since the last report and now stands at 21.6 million tonnes. Nevertheless, this would still be about 6 million tonnes less than the estimated record level in 1998.

FAO's latest forecast of global cereal utilization for 1998/99 remains virtually unchanged since the last report at 1 881 million tonnes, marginally above the previous year's level and close to the long-term trend. Wheat utilization is forecast to increase by about 1 percent and minor increases are anticipated also in the utilization of rice and coarse grains. The limited growth in utilization can be largely attributed to a forecast reduction in feed use of cereals due mostly to economic difficulties in Asia and the CIS. By contrast, food consumption of cereals is forecast to expand by 1.7 percent, maintaining global per caput food consumption at last year's level of 162 kilograms. Per caput food consumption of cereals among the developing countries in aggregate, and the low-income food-deficit countries (LIFDCs) in particular, could improve slightly, mainly due to higher 1998 production in many areas.

FAO's forecast of global food aid shipments in 1998/99 (July/June) remains at 9 million tonnes, some 3 million tonnes more than in the previous year, reflecting greater availability of grain supplies among the major donors combined with higher food aid requirements, particularly in Asia, Central America and the CIS. Food aid packages agreed by the Russian Federation with the EC and the United States account for a large part of the increase. However, delays in implementing the agreements may prevent the full volumes from being shipped in the current year. Of the total volume forecast for 1998/99, the LIFDCs are expected to receive about 5.6 million tonnes, 300 000 tonnes more than in the previous year, and representing 8.3 percent of their estimated total cereal imports in 1998/99.

The international wheat market continues to be characterized by sluggish global import demand and large wheat inventories which caused prices to weaken further during February and early March. However, by late March prices recovered slightly in response to estimates of increased export sales in the United States. In the last week of March, U.S. wheat No. 2 (HRW, fob) was quoted at US$ 119 per tonne, US$ 5 per tonne above the beginning of the month but US$ 6 down from late January and still well down compared to a year ago. Prices in Argentina also increased slightly in recent weeks due to the smaller than expected size of the recent crop, but remained much below the previous year's levels. Regarding coarse grains, prices rose slightly since the last report under pressure from indications of tightening supplies. In late March, US maize was quoted at US$ 101 per tonne, US$ 3 per tonne up from January but still US$ 10 per tonne lower than a year earlier. International rice prices remain under downward pressure from large exportable supplies and relatively limited import demand. The FAO Export Price Index for Rice (1982-84=100) averaged 116 points during March, 4 points down from February, 8 points less than a year ago and the lowest level since April 1995.
FAO's forecast of global cereal stocks at the end of the 1998/99 seasons is now put at 330 million tonnes, up 2 million tonnes from the previous report, but still 3.6 million tonnes below their opening levels. The bulk of this year's reduction is expected in rice stocks, which have been drawn down sharply in several Asian countries to offset the adverse affects of weather anomalies on 1998 production. Rice stocks are forecast to fall sharply, by 5 million tonnes, to about 50 million tonnes. World wheat stocks are now forecast to remain virtually unchanged from their relatively high opening levels, while coarse grains inventories could increase slightly. At the aggregate level, the global ratio of end-of-season cereals stocks in 1999 to trend utilization in 1999/2000 would be, at 17.4 percent, within the 17-18 percent range which the FAO Secretariat considers as the minimum necessary to safeguard world food security. However if current forecasts of production for 1999 cereal crops materialize, to meet expected utilization, carryover stocks will have to be drawn upon in the 1999/2000 marketing season.


In eastern Africa, the number of people in need of food assistance has increased due to poor cereal harvests caused by dry weather and civil strife in several parts. In Tanzania, food difficulties are being experienced in parts of central, northern and coastal regions. With the sharply reduced 1998/99 secondary "Vuli" harvest, the number of people in need of food assistance has risen to an estimated 1 million. In Somalia, the food supply situation is extremely tight as a result of a succession of reduced harvests and persistent civil conflict. An estimated 1 million people are facing food shortages, with 400 000 at risk of starvation. In Kenya, severe food shortages are being experienced by a large number of people in parts of Eastern and Central provinces and in pastoral areas following the failure of the secondary rainy season. In Ethiopia, some 3 million vulnerable people, as well as 272 000 internally displaced people due to the on-going conflict with Eritrea, require food aid in the current year. In Eritrea, the Government estimated that 450 000 people affected by the conflict with Ethiopia are in need of food assistance. In Sudan, some 2.36 million people need emergency food assistance in southern parts due to the long-running civil conflict. In Uganda, emergency food assistance is still needed for some 400 000 displaced people in northern areas, affected by continuing insurgency. In Burundi the food situation remains difficult for some 550 000 people in displacement camps. In Rwanda, food assistance is needed for some 600 000 internally displaced people in northwestern prefectures affected by persistent insecurity.

In western Africa, while the overall food outlook for 1999 is favourable, food supply difficulties persist in several parts. In Sierra Leone, violence in the rural areas continues to displace large numbers of people and to disrupt agricultural production. In Guinea-Bissau, civil strife has hampered agricultural production and the overall food outlook is poor. In the Sahel, localized food supply difficulties are anticipated in southern Chad, parts of Mauritania, and in Cape Verde.

In central Africa, civil strife in the Democratic Republic of Congo since early August continues to hamper agricultural activities particularly in the east where increasing population displacement is reported. In the Republic of Congo, the food supply situation has deteriorated in the capital city, Brazzaville, and in the Pool region, following an upsurge of fighting which has caused renewed population displacement.

In southern Africa, the food outlook has become increasingly bleak in Angola. Despite favourable rainfall over most regions since October, crop production is expected to be considerably reduced this year as a result of renewed civil strife since December. Many farmers have abandoned their land to join the rapidly increasing number of displaced people or as refugees to neighbouring countries. In many areas, food and other relief supplies can only be delivered by air, drastically increasing the cost of transport. Elsewhere in the subregion, rains between December and February caused localized flooding in parts of Malawi, Zambia, and Zimbabwe. In central Mozambique, torrential rains in February and early March resulted in floods with loss of human life, property and crops.

In Asia, a grave food supply situation persists in Korea DPR, with continuing reliance on food aid. In Indonesia, a recent FAO/WFP Mission found that, despite an anticipated recovery in rice production in the current season, continuing economic problems have severely affected the livelihood of the poorest, who need urgent food assistance. In Afghanistan, the food situation remains precarious mainly in the areas affected by civil strife. In Iraq, notwithstanding the easing of the food supply situation with the implementation of the oil-for-food deal, malnutrition still remains a serious problem. In Laos, a joint FAO/WFP Mission found that, despite increased rice production in 1998/99, targeted food assistance is required for households affected by localised drought. In Mongolia, serious food supply problems persist among vulnerable sections of the population.

In Latin America, above-average 1998/99 third season crops in several Central American countries have contributed to a partial recovery from the heavy losses earlier incurred due to hurricane "Mitch". In the Caribbean, in Cuba, unusually dry weather since December is threatening the crops.

In the Commonwealth of Independent States (CIS), vulnerable people in Armenia, Azerbaijan, Georgia, Tajikistan and remote and disadvantaged areas of the Russian Federation continue to need relief food assistance.

In Europe, the unprecedented exodus of refugees from the Kosovo Province of the Federal Republic of Yugoslavia to the surrounding countries calls for continued international humanitarian assistance on a large scale in the coming months.


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