FAO/GIEWS - Food Outlook No. 5 - Rome, December 2001 p. 7

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World cereal trade to stagnate

World cereal trade in 2001/02 is forecast to remain unchanged from the previous season's volume, now estimated at around 233 million tonnes. Total cereal imports by the developing countries are also expected to remain close to the 2000/01 level, at around 171 million tonnes. Of this total, some 74.5 million tonnes are expected to be imported by the LIFDCs, up 2.3 million tonnes from the previous season. On an individual commodity basis, wheat and rice imports are expected to expand slightly, while trade in coarse grains could decline. Overall, higher cereal imports in Asia could offset the anticipated declines in other regions.

Among the major international trade developments since the previous report has been the launching of the new round of global trade negotiations at Doha (see box on page 16). One important feature of the "Doha Round" would be the inclusion of China, the world's most populous nation, as a member of the World Trade Organization (WTO). As far as the global cereal market is concerned, the agreement in Doha is not expected to have any immediate impact on world cereal trade. However, the longer-term implications could eventually prove more important; especially as negotiations over curbing export subsidies and reducing other trade distorting measures intensify. China's entry into the WTO should not have any significant impact on this season's cereal trade prospects. Although the demand for wheat imports, the most important cereal imported by China (mainland), is already much stronger than in the previous season, this reflects a rise in demand for higher quality wheat since the overall domestic wheat supplies are ample.

World trade in wheat and wheat flour (in wheat equivalent) in 2001/02 (July/June) is currently put at 105 million tonnes, up 1.5 million tonnes from the previous season. However, at 82 million tonnes, wheat imports by the developing countries would be 2 million tonnes higher than last year. Most of this increase is expected in the LIFDCs, where wheat imports are forecast to reach 40 million tonnes. The largest regional expansion in wheat imports in 2001/02 is forecast for Asia, where aggregate imports could reach 50 million tonnes, up nearly 4 million tonnes from the previous season. In addition to large anticipated shipments of wheat as food aid to Afghanistan, several countries are likely to add to their foreign purchases, namely China, Japan, the Republic of Korea and Turkey. By contrast, Pakistan and India will have no need for imports for the second consecutive season, while imports by the Islamic Republic of Iran, the regions largest wheat importer in recent years, could decline slightly below the previous year's near-record volume.

Overview of World Cereal Imports - Forecast for 2001/02

Coarse grains
Rice (milled)
( . . . . . . . . . . . . . . . . . . . . million tonnes . . . . . . . . . . . . . . . . . )
Central America
South America
North America

Total wheat imports by countries in Africa are forecast to reach 24.5 million tonnes, down 1.2 million tonnes from the previous season. Most the decline in northern Africa would be on account of smaller purchases by Morocco, following a more than doubling of wheat production in 2001. In other regions, imports by Ethiopia are also forecast to decline because of good crops, while another year of above-average production in the Republic of South Africa is expected to lead to a reduction in imports by that country. However, imports by a number of countries in Africa are forecast to increase this season. The most important among them is Egypt, where because of a reduction in domestic production and a continuing strong demand, wheat imports are forecast to rise by at least 400 000 tonnes to 6.6 million tonnes.

In Europe, total wheat imports are forecast to decline by 1 million tonnes to 8.6 million tonnes, despite an expected sharp increase in imports by the EC. Wheat imports by the EC are likely to surge to 4.8 million tonnes in 2001/02, up 1.4 million tonnes from the previous season. The main reason for this increase is the removal of the 10 Euro per tonne tariff surcharge on grain imports by land, river or sea from Mediterranean, Black Sea and Baltics ports. Given the large surpluses expected in several central and eastern European countries, and the relatively higher domestic prices in the EC, the suspension of this levy, in effect as of 9 November 2001, could result in a large flow of sales from those countries to the Community. Most other European countries, however, are expected to cut their imports, following good harvest results in many parts, especially in the Russian Federation, Ukraine and Poland.

Aggregate imports into Latin America and the Caribbean in 2001/02 are likely to remain similar to the previous season's level of around 18.7 million tonnes. Most countries in the region are likely to import as much as in the previous season. Imports by Brazil, the region's largest wheat importer, are expected to remain at last year's level because of a continuing strong demand from the large private millers and despite higher domestic production. Elsewhere, the slight declines currently envisaged for Mexico and Chile would be largely offset by higher imports from several other countries in the region, including Cuba, which in the aftermath of the Hurricane Michelle, would need to resort to higher imports. Cuba made a symbolic purchase of wheat from the United States in November, marking the first commercial wheat transaction between the two countries in 40 years.

Turning to wheat exports, among the traditional wheat exporting countries, the United States and Argentina are expected to expand exports this season due to large export supplies. This, to a large extent, would offset the likely sharp declines expected in sales from Canada and the EC, following a reduction in their wheat production, while shipments from Australia are likely to remain unchanged from the previous season. Among other exporters, sales from Turkey are likely to drop to only a small volume this season because of tight domestic supplies. However, several other countries are seen to make larger sales this season, mostly because of a strong recovery in their domestic outputs, including several non-EC countries in Europe as well as a number of non-traditional exporters, specifically Pakistan and India.

World trade in coarse grain in 2001/02 (July/June) is forecast to decline to 104.5 million tonnes, down 2 million tonnes from the previous season. This decline mostly reflects lower expected imports by the developing countries, although imports by the LIFDCs are likely to remain close to last season's volume. Among the major coarse grains, only maize trade is forecast to expand this season, to around 74 million tonnes, whereas, trade in barley and sorghum could decline slightly, to 17 million tonnes and 8 million tonnes, respectively.

Similar to the wheat market, the largest coarse grain importing region is Asia where imports this season are forecast to reach 57.5 million tonnes, nearly unchanged from the previous season as most countries are seen to maintain their imports at last year's levels. The few exceptions include, the Republic of Korea, which is likely to cut its maize purchases this season in order to buy larger quantities of low quality wheat, and the Syrian Arab Republic, because of a strong recovery in its domestic barley production. Coarse grain imports by countries in Africa are expected to decline to 14 million tonnes in 2001/02, down 1.3 million tonnes from the previous year. The decline would be mostly on account of a likely reduction in maize purchases by Egypt and lower barley imports into Morocco; higher domestic production is the main reason in both cases. By contrast, aggregate imports by countries in the sub-Saharan region are forecast to increase slightly despite a likely drop in purchases by Kenya, which is experiencing good production prospects. The increase would be most pronounced in the southern subregion, where production shortfalls in a number of countries have led to higher import requirements, especially in Zambia and Zimbabwe, but also in the Republic of

South Africa, although that country would still be able to maintain its position as a large supplier of maize to the region.

In Europe, imports of coarse grains are likely to decline by 600 000 tonnes from the previous season to nearly 8 million tonnes. The main reason is a strong recovery in domestic maize and barley production in several eastern European and the CIS countries. The biggest declines are expected in Poland and Romania; whereas, maize imports by the Russian Federation are forecast to increase largely due to strong import demand, but also a reduced maize production. Total imports by countries in Central America would remain close to the previous season and Mexico, the region's largest importer, is likely to import as much maize and sorghum as last year despite larger domestic production because of continuing fast growth in domestic feed demand. Imports by most countries in South America are also likely to remain close to previous year's volume but Brazil, normally the biggest importer in the region, harvested a record maize crop this year and, hence, has turned into a maize exporter instead. In North America, Canada is emerging as a larger maize importer than anticipated earlier in the season. This results from reduced domestic barley production, low maize stocks and a continuing strong feed demand from the livestock sector.

Although world trade in coarse grains is forecast to contract slightly this season, exports from the United States, the world's largest exporter, are expected to increase by around 2 million tonnes. Large maize stocks in the United States could facilitate higher maize sales from that country to meet the expected increase in global maize import demand this season. Maize exports from Argentina could decline a bit because of lower supplies. Smaller barley sales are anticipated from Canada and the EC, because of a drop in domestic production, but barely exports from Australia could keep pace with last year's levels because of good production prospects.

China is likely to remain an important supplier of maize to world markets but mostly because of smaller

domestic production in 2001, exports from China are likely to be much smaller than in the previous season. Similarly, exports from the Republic of South Africa would also be reduced because of lower domestic production. By contrast, because of larger crops, higher sales of maize from Brazil and Hungary as well as a notable increase in barley exports from the Russian Federation would make up for some of the reductions in coarse grain exports from other major suppliers.

As the end of the year approaches, there is growing evidence that international trade in rice in 2001 will exceed the previous year's level. FAO's forecast for global rice trade in 2001 now stands at 22.8 million tonnes, 400 000 tonnes more than earlier anticipated and 1.3 percent above the estimate for 2000. The latest revision is mostly due to adjustments to the import forecasts for Bangladesh, from the original 300 000 tonnes to 450 000 tonnes, and for Indonesia, from 1.2 million tonnes to 1.4 million tonnes. Indonesia remains the world's leading rice importer, but its volume of rice imports this year is the smallest since 1997. Estimates of rice shipments to Côte d'Ivoire and Nigeria have also been raised by 100 000 tonnes to 1.1 million tonnes each. By contrast, the forecasts of imports by China (Mainland), South Africa and Sri Lanka have been cut somewhat since the previous report.

Regarding exports, the forecast for China (Mainland) has been lowered by 100 000 tonnes to 1.8 million tonnes, based on a volume of 1.44 million tonnes shipped between January and October. The revised export figure would imply a reduction of over 1 million tonnes with respect to 2000, consistent with the substantial contraction in output the country experienced in the past and current years. A 100 000 tonnes reduction was also applied to sales from Viet Nam, now officially put at 3.7 million tonnes, amid flood problems in the Mekong Delta that delayed the arrival of supplies to the market, pushing local prices above those offered by other exporting countries. By contrast, sales by Myanmar in 2001 are forecast at 500 000 tonnes, up from the earlier forecast of 350 000 tonnes, as latest information indicates that the country had already shipped 400 000 tonnes in the first ten months of the year. At the forecast level, Myanmar's exports would be the highest since 1995, much in line with Government objectives to promote the rice sector. Similarly, the forecast for Pakistan's export has been raised from 1.9 million tonnes to 2.0 million tonnes, which would be virtually unchanged from last year. The new forecast assumes rather small sales from the country in November and December, reflecting, in part, rising shipping costs, through the application of war-risk insurance premium, and unstable currency exchange rates, which are deterring potential customers. Finally, rice sales by Thailand are now forecast to surge to a new record of 7.2 million tonnes, 400 000 tonnes above the previous forecast, reflecting dynamic sales since August and reduced competition from China, Pakistan and Viet Nam. Exports from India are expected remain at 1.5 million tonnes, since the pace of shipments remains subdued, despite competitive pricing.

World rice trade in 2002 is tentatively forecast to rise to 23.3 million tonnes, 2 percent above the current forecast for 2001. Among traditional importers, Indonesia is expected to increase its purchases, following the rather disappointing 2001 paddy season. The Government is reportedly considering a proposal to raise border protection, which, if implemented, could dampen the increase. The earlier forecast for imports by the country has been raised by some 400 000 tonnes to 2 million tonnes, which would be substantially above the 1.4 million tonnes currently estimated for 2001. China's rice purchases are also likely to surge, with the preliminary forecast set at 1 million tonnes, following the 5 percent and 4 percent drops in output experienced in 2000 and 2001 respectively. For illustration, a smaller contraction in output in 1993 and 1994 , in percentage terms, caused imports to soar to 2 million tonnes in 1995. Although such a hike took place within a different policy context, recent developments could again facilitate some increase in purchases next year, in particular the country accession to WTO on 10 November 2001. According to the terms of the WTO Agreement, in 2002 China (Mainland) would allow entry to up to 4 million tonnes of rice (2 million tonnes of long grain rice and 2 million tonnes of short and medium grain rice) subject to a low 1 percent import duty, half of which should be allotted to private sector importers. However, it remains to be seen whether these preferential quotas will be issued by the Government already in 2002, since a mechanism for assignment of the quota still has to be designed. Moreover, although domestic prices for rice have been recovering this year, they still appear too low, under present international price conditions, to warrant such a large inflow of imports.

By contrast, the forecasts of purchases by several countries in Africa, in particular Côte d'Ivoire, Madagascar, Senegal and Nigeria have been revised downward, since under current expectations of stronger world prices next year, imports could become less attractive to these countries.

Following the positive export performance this year, the forecast of rice shipments from Thailand in 2002 has been raised by 600 000 tonnes to 7.3 million tonnes, which would be a new record. The country is expected to take advantage of reduced supplies from other major exporters, especially China. The bumper 2001 harvest and competitive pricing could also boost exports from India in 2002, now forecast at 2.1 million tonnes, 300 000 tonnes more than previously reported and 600 000 tonnes above the level expected to be sold in 2001. The forecast of shipments from Japan has also been raised, this country's exports being exclusively in the form of food aid. Myanmar exports in 2002 are now anticipated to reach 700 000 tonnes, up from a previous forecast of 400 000 tonnes, especially if the Government continues to promote increases in production. By contrast, the forecast of sales by China (Mainland) has been lowered, as the country's supplies have tightened considerably. Similarly, expected shipments from the Chinese Province of Taiwan, which have usually hovered around 100 000 tonnes, are likely to be considerably reduced in view of the relatively high domestic prices and the restrictions on subsidized exports it will face, following its accession to WTO. Viet Nam's official export forecast now stands at 4 million tonnes, slightly less than last reported.


At the Fourth World Trade Organization (WTO) Ministerial Conference held in Doha, Qatar from 9-14 November 2001, the WTO Members agreed to launch a new round of multilateral trade negotiations that will have important implications for agriculture, fisheries and forestry. In addition to the talks on agriculture and services that have been underway for over a year, the new round will cover a much broader agenda, including other sectors of the global economy as well as a range of implementation issues that have arisen since the Uruguay Round Agreements came into force. The outcome of the Conference improves the prospects that progress will be made in the negotiations on agriculture because it enhances the opportunities for trade-offs with other sectors and addresses a number of concerns that have hindered the negotiations thus far.

The new round offers opportunities for further market liberalisation in non-agricultural goods. The negotiations will also cover foreign investment, competition policy, government procurement, as well as trade and environment, and will revisit WTO rules regarding trade-related intellectual property rights (TRIPS), dispute settlement, subsidies and countervailing measures and anti-dumping. A substantial work programme was agreed in the area of environment and trade. The Ministers also made a commitment to provide special and differential treatment for developing countries, including the objective of duty-free, quota-free market access for products originating from least developed countries (LDCs). The technical co-operation and capacity building needs of small, vulnerable and low-income transition economies were also recognised, and the delivery of technical assistance was emphasized.

Elements of the negotiations that are particularly relevant to agriculture, fisheries and forestry are summarised below.

Agriculture: The WTO Members recognized the work already undertaken in the negotiations that began in March 2000 under Article 20 of the Agreement on Agriculture. They agreed to undertake "comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view of phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support." Special and differential treatment is to be provided for developing countries to enable them to take account effectively of their development needs, including food security and rural development. Non-trade concerns are to be taken into account. Modalities for the further commitments are to be established no later than 31 March 2003 and comprehensive draft Schedules of commitments based on these modalities submitted no later than the date of the Fifth Session of the WTO Ministerial Conference (which must be held before the end of 2003). The negotiations on agriculture will be concluded as part and at the date of conclusion of the negotiating agenda of the round as a whole.

Market access for non-agricultural products: Negotiations in this area will aim, by modalities to be agreed upon, to reduce or eliminate tariffs including the reduction or elimination of tariff peaks, high tariffs and tariff escalation, as well as non-tariff barriers. Product coverage shall be comprehensive and without a priori exclusions. Fishery and forestry products and agricultural products that were excluded from the Agreement on Agriculture such as rubber and hard fibres will be covered under the new round.

TRIPS: It was agreed to negotiate the establishment of a multilateral system of notification and registration of geographical indications for wine and spirits. Issues related to the extension of the protection of geographical indications to products other than wine and spirits will be addressed in the Council for TRIPS. The WTO Committee for TRIPS was further instructed to examine inter alia the relationship between the TRIPS Agreement and the Convention on Biological Diversity and the protection of traditional knowledge and folklore.

Subsides and countervailing measures: Negotiations will aim at clarifying and improving disciplines under the Uruguay Round Agreement on Subsidies and Countervailing Measures. The Conference agreed specifically that the negotiations would "aim to clarify and improve WTO disciplines on fishery subsidies, taking into account the importance of this sector to developing countries."

Trade and environment: The Ministerial Declaration, for the first time, recognized the right of each country to take measures to protect the environment "at the levels it considers appropriate" on the same basis as measures taken for the protection of human, animal and plant life or health, i.e. provided such measures are not applied in an arbitrary or discriminatory manner or as a disguised restriction on trade and that they are in compliance with other WTO provisions. It was agreed that there would be negotiations on the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements and on the reduction of or elimination of tariff and non-tariff barriers to environmental goods and services.

The negotiations will be supervised by a Trade Negotiations Committee, which will hold its first meeting not later than 31 January 2002 to establish the appropriate negotiating mechanisms in each area as required. It was agreed that the negotiations will be concluded by 1 January 2005.

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