|No.4 November 2009|
|Crop Prospects and Food Situation|
Harvesting of the subregion's 2009 winter crops has been completed, coarse grains (maize and sorghum) are presently being harvested and in Egypt harvesting of paddy is about to start. Aggregate wheat output for the subregion is estimated at 21.5 million tonnes, a new record, compared with 14.3 million tonnes in 2008, when crops were affected by poor rainfall in some countries. In Algeria, wheat and barley production in 2009 will be nearly three times higher than last year's drought-reduced crop, according to official sources. In addition to favourable weather conditions, this substantial increase from the previous year and from the five-year average is attributed to government incentives to increase domestic production to mitigate the negative impact of high international cereal prices on consumers. The incentives included increased output prices and subsidised inputs. The same trend was observed in Morocco where 2009 wheat harvest reached 6.5 million tonnes, 74 percent over last year's level and more than four times the poor crop harvested in 2007, following exceptionally favourable weather throughout the winter cropping season. Even in Tunisia where poor rainfall has kept production low over the past three years, wheat output was above average and 67 percent above the 2008 production level, while barley output more than doubled to 650 000 tonnes. In Egypt, the largest cereal producer of the subregion, wheat output increased by some 800 000 tonnes, or 10 percent, while maize production is anticipated to be about 7 million tonnes, an average crop, some 400 000 tonnes less than last year's output.
The favourable crop prospects for 2009, combined with a significant decline in international commodity prices, have helped to reduce inflation and have improved the access to food in the subregion. In Egypt, the most affected country, the year-on-year overall inflation rate in urban areas dropped steeply to 9.9 percent in June 2009 after having peaked at 23.6 percent in August 2008. This decline was mostly due to price changes in the food sector where the year-on-year rate of inflation dropped from 30.9 percent in August 2008 to 12.2 percent in June 2009.
Following last year's record crop, a more normal harvest is anticipated in the subregion in 2009. Erratic and below-average rainfall well into July necessitated replanting in several countries. Precipitation improved significantly from mid-July with heavy rains causing substantial flooding across the subregion. Considerable human casualties and damage to infrastructure were reported in several countries in August and September, notably in Burkina Faso, Gambia, Ghana, Mali, Mauritania, Niger, Nigeria, Sierra-Leone and Senegal. Latest assessments indicate that over 800 000 people were affected in the region including 350 000 people in Senegal, 150 000 in Burkina Faso and 100 000 in Niger. However, in spite of the heavy rains and floods, dry conditions have persisted in several areas, affecting crops and livestock. Areas affected include northern Nigeria and Mali, southern Niger, central Chad as well as Liberia and western Côte d'Ivoire. In some of these regions, notably in Mali, Chad and Niger, crops and range lands have been seriously affected with reports of livestock deaths.
Interagency Crop Assessment Missions are in most West African countries since late October to review preliminary cereal production estimates for 2009 prepared by the national agricultural statistics services and assess the impact of the various hazards on crop production and livestock. Although no evaluation of the impact of the floods and dry spells on the agriculture sector is yet available, it is not expected that there will have been any widespread damage to crops and livestock. Nonetheless, in localized areas, where crop yields and livestock were severely reduced by delayed rains or floods, populations may be at risk of food shortages, and may require assistance. In particular, coarse grain production is anticipated to decline in Nigeria, the largest producer of the subregion, due to late and poorly distributed rains in the North, which will also affect regional food supply.
In spite of last year's record crop, cereal prices have remained well above the levels of 2 years ago, before the food price crisis. For example, although coarse grain prices declined somewhat from their peak of August-September 2008 in most countries, most recent wholesale prices in national currencies of millet in markets of Mali (Bamako), Burkina Faso (Ouagadougou) and Niger (Niamey) were still 35, 42 and 21 percent respectively higher than in the corresponding period of 2007. The maize price in Ghana (Accra) in July was more than double its level of July 2007. The situation is not better for imported rice, whose price is determined by world prices and has exhibited high pass-through from the international market. In Burkina Faso, Niger and Mali rice prices remain very high, being 29 percent, 46 percent and 22 percent higher respectively in October 2009 than 2 years earlier. Although latest data show that coarse grain prices have started to decline in October in some coastal countries, reflecting the arrival of new crop supplies from this year's harvests in the markets, the expected reduction in Nigeria's cereal production could lead to a new rise in cereal prices across the subregion with serious negative impact on rural food-deficit households and urban consumers. Safety net interventions, such as targeted distribution, sales at subsidized prices, food for work or cash for work activities, will be required during next year lean season, with quantities depending on the extent of food supply and pasture deficits, in specific areas.
In Cameroon and the Central African Republic, harvesting of the first maize crop is nearly complete in southern parts, while harvesting of the late maturing cereal crops just started in northern areas. Satellite-based rainfall estimates indicate that the crops benefited from adequate rains, following slight water deficits at the beginning of the season (April-May) in southern Cameroon. By contrast, in the northern part of these countries, precipitation has been erratic and below average since the beginning of the season, which may have affected land preparation and plantings of cereal crops, predominantly sorghum and millet. Moreover, in the Central African Republic, where an estimated 1.2 million people are food insecure, agricultural recovery continues to be hampered by persistent civil unrest and inadequate availability of agricultural inputs. This is most notable in northern parts of the country where nearly 300 000 people have reportedly been uprooted from their homes over the past two years.
Unfavourable prospects for 2009 crop production and poor status of pastures and livestock are reported in several countries. Harvesting of the 2009 main season cereal crops has been concluded in Somalia, the United Republic of Tanzania (both "msimu" and "masika" season crops) and Uganda, while it is still underway in Kenya. The harvest of the main 2009 cereal and pulse crops in Sudan, Ethiopia and Eritrea has started at the beginning of November. Aggregate cereal production in 2009 is preliminarily estimated at 31 million tonnes (rice in paddy terms), some 2 million tonnes less than the bumper harvest obtained in 2008. In fact, late and below-average rains from March to July, in most of Eastern Africa affected agricultural activities and hindered crop growth. The low cumulative rainfall has also reduced water availability in pastoral areas of northern and south-eastern Kenya, south-eastern Ethiopia and inland regions of Djibouti. The scarcity of adequate pasture and water has caused major animals losses and/or worsening of livestock conditions, with a detrimental impact on pastoralists' income and their ability to access staple foods. Reproduction rates of livestock have also suffered from successive poor seasonal rains since 2007, making the recovery of agro-pastoral and pastoral livelihood systems more difficult and worsening long-term food insecurity.
In addition to crop and pasture failures due to unfavourable weather conditions, food security in the subregion continues to worsen also as a result of trade disruptions, high food and non-food prices, conflicts and displacements. In several countries, food needs are expected to rise in the following months, while food aid in the pipeline is often reported to be insufficient. Food insecure population in the subregion is currently estimated at nearly 20 million people, especially marginal farmers, pastoralists and low-income urban dwellers.
In Eritrea, the late start of the main season "kiremt" rains, which normally occur between June and September, has lowered expectations for a good harvest. This was preceded by poor secondary "azmera" rainy season (March to May) especially in Debub and Maekel regions. Pasture and forage availability were also unsatisfactory and pastoralists in North and South Red Sea regions were particularly affected by reduced pasture and water access following a prolonged dry spell during the summer months of 2009. The performance of the "bahri" rainy season, just started in October, will be crucial for pasture regeneration and the coastal secondary season crop production.
In Ethiopia, late, erratic and below average "kiremt" rains have affected 2009 main season Meher crops and pastures in many parts of the country, in particular Gambella, lowlands in southern SNNPR, eastern Oromya, Dire Dawa, Harari, the north of Somali region, some eastern woredas in Amhara and Tigray and most of Afar region. In particular, the late onset of precipitations has negatively affected planted area of 2009 meher long cycle crops of maize and sorghum. In some low-lying woredas of North Shewa, East and West Hararghe, Arsi, West Arsi and in large parts of SNNPR, farmers decided to re-plant wheat, teff and barley crops to minimize failures of long-cycle crops. Better production prospects are reported in western areas of the country. The output of 2009 Meher cereal crops, to be harvested from November to January, is forecast to be well below the over 15 million tonnes bumper harvests obtained in 2007 and 2008. In addition, cereal crop production prospects could deteriorate further due to the likely negative effect of the El Niño that in other similar years has caused unseasonable heavy precipitations at harvest time. Scarcity of water and pasture in many lowland woredas of Bale, Borena, East and West Harerghe, South Omo and Somali region have already caused several deaths of animals and led to a general deterioration of livestock conditions with consequent worsening of terms of trade for pastoralists. It is estimated that between 100 000 and 200 000 animals have crossed the border with Kenya, moving away from drought-affected areas and contributing to the early depletion of local pastoral resources. Distress sales of livestock and firewood collection are the major coping strategies being reported to face the worsening food security situation. The findings of a Multi-Agency Livelihood Security Assessment conducted in June-July 2009 and subsequent monitoring indicate an increase in the number of people requiring food assistance from 5.3 million in May to 6.2 million in July. A joint FAO/WFP Crop and Food Security Assessment Mission is currently in the country to assess the situation.
In Kenya, harvesting of 2009 long-rains season maize crop, which accounts for 80 percent of total annual production, is underway and it will be completed in January. Seasonal maize production is preliminarily estimated at 1.84 million tonnes, almost 30 percent below normal levels. By the end of May, erratic and low cumulative rainfall levels, between 10 to 50 percent of normal, affected maize yields especially in Eastern, Coast and (part of) Rift Valley provinces. Dry weather conditions were also very severe in north western and eastern pastoral regions, deteriorating pasture availability and livestock conditions with consequent increase of mortality rates. Water deficits have also led livestock to undertake forced migrations with extended trekking distances in search of areas with better water supplies that has often worsened body conditions, increased disease outbreaks and exacerbated resource-based conflicts among pastoralists. The poor conditions of livestock has led to below-normal prices, deteriorating pastoralists' terms of trade and consequently limiting their access to staple foods. About 3.8 million people are estimated to be highly or extremely food insecure, mainly located in pastoral and marginal agricultural areas. Current levels of food insecurity are driven by the cumulative effects of several factors, such as four to five seasons with inadequate rainfall, the lingering impacts of the 2008 poor harvest, high food prices and escalating conflicts for grazing resources, which were all highly detrimental to households' resilience.
In Somalia, harvesting of 2009 "gu" season maize and sorghum crops is underway and production is tentatively estimated to be below average. This is mainly due to the mixed performance of main "gu" rains (March to June), with below average rainfall that led to a severe and deepening drought conditions in Central regions, parts of the South and in the northwest regions of Hiran, Galgadud, Mudug, Nugal, Sool, Sanaag, and Togdheer. On the contrary, 2009 "gu" cereal production prospects for the main southern agriculture regions of Shabelle, Bay and Middle Juba are favourable, on account of better rainfall, improved irrigation systems and significant increases in cultivated area. The early onset of 2009 "deyr" rains during late September started to improve water and pasture availability in drought-affected pastoral areas in north, northeast and central regions. Pastoral livelihood systems of these regions have been severely affected by recurring seasons of poor rainfall since 2007 that caused a progressive reduction in herd sizes due to both increasing mortality rate and low reproductive levels. More than 3.6 million people, about 50 percent of total population, are estimated in need of emergency food and non-food assistance, at least until December 2009. They are mostly concentrated in rural and urban areas in south and central regions of the country where a combination of reinforcing factors, such as conflicts, civil displacements, inflation and drought have progressively eroded household ability to cope with crisis.
In Sudan, the harvest of main season cereal crops is underway. Production has been negatively affected by a prolonged dry spell that lasted from May to July and a joint FAO/WFP Crop and Food Security Assessment Mission is currently in the country to assess the situation. It is reported that, in several cases, the consumption of green crops is improving the food security situation that had severely deteriorated since August due to increased conflicts and resulting displacements. These conflicts exacerbated the food security problems that usually occur during the hunger season.
In the United Republic of Tanzania, harvesting of 2009 "msimu" season crops in unimodal areas and "masika" season crops in bimodal areas have been recently completed. Crop production estimates in unimodal areas are favourable as a result of beneficial rains received from March to May. In contrast, with the exception of Kegera and Kigoma regions, "masika" rains have been late and below average in most parts of bimodal northern, north-eastern and coastal areas, leading to below average crop production and deterioration of pasture and browse. In the North-east, the pastoralist livelihood systems have often been disrupted as a consequence of a series of poor rainy seasons between 2005 and 2009 that caused deterioration of livestock conditions and productivity with increased mortality rates. Planting of 2009 "vuli" season crops, which contributes to approximately 30 percent of the total annual cereal production, has just started in bimodal areas with the arrival of first seasonal rains. If "vuli" precipitations are adequate during the whole season, the green maize harvest is expected to start in December. Official preliminary forecast of 2009 cereal production points to 5.8 million tonnes, some 4.2 percent below the bumper harvest obtained in 2008.
In Uganda, harvesting of 2009 first season crops has been completed at the beginning of August. In the Acholi region, northern Uganda, the late onset of the main rains (March-July) together with the below average precipitation between April and July have severely hindered crop development and 2009 first season cereal and pulse production is estimated about 50 percent below the average. This limits households' ability to replenish food stocks and improve their food security situation following several years of displacement due to civil insecurity. Similarly, in Karamoja, low cumulative rainfall negatively impacted on crop growth, especially sorghum, whose harvest has just started. Access to water and pasture for livestock has also been limited. The progressive deterioration of livestock conditions has often lowered their market prices, worsening terms of trade for pastoralists. By contrast, the supply of the main staple roots and tubers is normal in most parts of the country, partly cushioning households' food intake. The secondary 2009 rainy season was expected to start in late September, but a weak El Niño phenomenon resulted in well distributed precipitations since mid-August. This has induced farmers to intensify field activities and early planting of seasonal crops. Rainfall is forecast to continue through December, with positive effects on crop production with some risk of flooding, especially in the East.
In general the region continues to experience above-average cereal prices, above the pre-crisis level of June 2007 by a range that goes from 50-70 percent on average. In the United Republic of Tanzania, wholesale maize prices registered a record level of USD 419 per tonne in Dar es Salam in August 2009 and then declined to USD 334 per tonne in October. This price is still about 30 percent higher than the same month in 2008. In Kenya, wholesale prices of maize in Nairobi reached a record level in May 2009 with USD 442 per tonne and then started to decline until USD 364 per tonne in October 2009, that is still 5 percent higher compared to a year earlier. In Uganda (Kampala), the wholesale price of maize registered a peak in April 2009 with USD 355 per tonne, as a consequence of large scale purchases for schools, relief aid and institutional requirements. Maize price has since decreased up to USD 294 per tonne in August 2009 and then inverted its seasonal trend to reach USD 345 per tonne in October 2009. In Ethiopia, the wholesale price of maize, the most widely consumed cereal, is reported at USD 270 per tonne in September 2009, well below the record level of USD 600 per tonne of September 2008. This price is similar to the level of the beginning of 2008, but still 45 percent higher then mid-2007. At the same time, the wholesale price of white sorghum in Addis Ababa, a main staple in most of the lowland areas of the country, is stabilizing around USD 500 per tonne, well below the record price of USD 853 per tonne registered in August 2008. On the contrary, the wholesale price of wheat (which is predominantly consumed in urban centres) showed a rising trend from January to August 2009, from USD 443 to USD 617 per tonne, and only in September it dropped to USD 483 per tonnes, about 47 percent lower than a year before. In Somalia, the retail price of red sorghum in Mogadishu has declined since the beginning of the year, reaching a value of USD 156 per tonne in September 2009, some 40 percent below the level of same month in 2008. In Sudan, the wholesale prices of wheat and sorghum in Khartoum where quite stable from April to July 2009 and then started climbing with the beginning of the hunger season. In September 2009, wheat price was USD 482 per tonne, some 38 percent below 12 months before, while sorghum price was USD 519 per tonne, about 13 percent more than in September 2008.
Land preparation for planting of the 2009/10 main season's cereal crops is underway across Southern Africa, with governments continuing their support towards enhancing cereal production growth, including the distribution of fertilizers and seeds. In most countries the bulk of plantings normally occurs in November. Parts of Angola, Botswana, Namibia, western regions of Zambia, the Maize Triangle in South Africa and south-eastern Madagascar received well distributed early rains during the last dekad of September and in October while in Zambia, Zimbabwe and Mozambique, they were below average. The early start of the seasonal rainfall in parts of the subregion combined with the timely distributions of inputs, are likely to support early season cropping activities. In South Africa, the expected planted area for maize is estimated to increase by 6 percent relative to last season, owing to a reduction in area sown to sunflower and the utilisation of fallow wheat lands. However, there are concerns that the occurrence of an El Niño dry-weather pattern during the end of 2009 may negatively affect the development of the main season crops in the coming months, and the situation needs to be closely monitored.
Following good harvests earlier in 2009, due to favourable weather conditions and increased use of agricultural inputs, the food security situation remains relatively stable across Southern African. Aggregate cereal production, including harvests from the largest producer in the subregion, South Africa (which has a share of approximately 50 percent), is estimated at 30.6 million tonnes for 2009, 4 percent above last year's good level. At a national scale, record cereal production in Malawi, Mozambique, Zambia (maize) and Madagascar (rice), improved cereal availability and helped to stabilise prices. In Zimbabwe, however, in spite of a significant increase of the 2009 cereal harvest by 73 percent relative to last's years drought affected production, the country still needs to import approximately 690 000 tonnes of cereals (or about 20 percent of total consumption) to cover national utilization requirements for the 2009/10 marketing year (April/March). Only South Africa, Angola and Lesotho recorded a decline in cereal production from the previous year, on account of flooding (Angola) and a reduction in area planted (South Africa and Lesotho). The 2009 aggregate maize harvest, the main staple food in the subregion, estimated at 22 million tonnes, marked the fourth successive production increase. Harvesting of the wheat crop in South Africa, which accounts for over 90 percent of the subregion's total wheat production, is scheduled to be completed in November. Latest production estimates indicate a drop of 6 percent relative to last year's level, down to approximately 2 million tonnes, which is, however, still above the five-year average.
In spite of the improved aggregate cereal production in Southern Africa, pockets of food insecurity persist in the subregion as a result of localised adverse weather-related events during the 2008/09 agricultural season, which led to crop losses in the affected areas.
FAO estimates that the aggregate cereal import requirements for the subregion (excluding South Africa and Mauritius) declined by 18 percent for the 2009/10 marketing year compared to 2008/09, reflecting sharply lower maize import requirements (-34 percent) following improved production levels in 2009 (Table 9). Malawi and Zambia more or less reached self-sufficiency in maize, and South Africa's exportable maize surplus is approximately 2.1 million tonnes for 2009/10. Maize import needs of Botswana, Namibia and Zimbabwe are lower this year, about the same in Swaziland and Mauritius and larger in Angola and Lesotho.
Staple food prices (in US dollar terms) have exhibited a general declining trend since the beginning of 2009. However, price levels still remain above the pre-food crisis level of 2 years ago, impeding normal food access and exacerbating food security conditions for vulnerable households. The price of maize in Zambia (national average) and Malawi (Lilongwe), in spite of seasonal increases since July, are lower than their peak levels (February-March) reflecting increased market availability following good harvests in 2009. However, in September prices were respectively still 41 and 103 percent above their levels of two years earlier. Similarly, maize prices in Zimbabwe (Harare) have decreased since reaching a record high in December 2008 and have shown signs of stabilising following market reforms introduced in March 2009. Maize prices in Mozambique (Maputo) have shown signs of stabilising since May and are below the price level of last year, but remain above average. Rice prices in Madagascar have reduced significantly since January 2009 and in September they were close to those prevailing in the same period in 2007. In South Africa, maize (white) and wheat prices have steadily declined since mid-2008, and in September 2009 prices were, respectively, 29 and 31 percent below their levels for the same period in 2007.
RECENT POLICY DEVELOPMENTS IN AFRICA
04-11-2009: The Government has set the maximum ceiling price for millet, maize and rice, respectively at CFA franc 26 400 (USD 59.20), CFA franc 27 500 (USD 61.67), CFA franc 42 000 (USD 94.19) per 100 kilogrammes.
22-10-2009: The rice export ban, introduced in March 2008, is due to remain in effect for another year to October 2010 except for the export of broken rice for which the ban has been replaced by an export tax. However, the restriction was eased in February 2009 to allow exporters to sell rice abroad if they delivered the same amount of rice to the state grain buying agency as part of its food subsidy scheme. Under the revised measures the Government has announced in mid-October 2009 that it will hold monthly tenders to grant rice export licenses to traders and that it will reconsider the value of its rice export tariff. A total of between 400 000 to 600 000 tonnes of rice are expected to be exported in the marketing year 2009/10 (September/August).
22-10-2009: The Government has stated it will continue to subsidize basic food (mostly bread) prices as a social programme.
28-10-2009: The Government has completely liberalized fertilizer prices.
19-10-2009: The Government has removed the export ban on maize in September 2009 and is planning to export 80 000 tonnes of maize to drought-hit Kenya and Zimbabwe at an expected export price of USD 340 per tonne.
30-10-2009: The Government is distributing some 6 678 tonnes of maize to the 147 492 people assessed as food insecure by the Malawi Vulnerability Assessment Committee (MVAC) in the district of Balaka, Chikwawa and Nsanje. This intervention, which is led by the Department of Disaster Management Affairs, will continue until March 2010.
4-11-2009: The Government has set the minimum support price for maize at MWK 30.85 (USD 0.22) per kilogramme for the 2009/10 crop season.
19-10-09: The Federal Government earmarked 25 000 tonnes of assorted grain for release from the National Strategic Food Reserve (NSFR). Commodities are to be sold with a subsidy of 30 percent as follows: 50 kilogrammes of maize at N 1 925, (USD 12.5), 50 kilogrammes of sorghum and millet at NGN 1 855 (USD 12).
31-08-2009: The Government has banned maize and other cereals exports.
United Republic of Tanzania
24-09-2009: The Minister of Agriculture announced it would provide TZS 118 bn (USD 91 million) to subsidize input costs for 2.1 million farmers in 2009/10.The subsidy is 50 percent higher than in the previous year.
23-7-2009: The Zambian Government announced the lifting of the maize export ban and has initially allowed export of up to 100 000 tonnes.
19-10-2009: The Government reduced import duty on crude vegetable oil from 5 percent to zero.
19-10-2009: To enhance growth in the agricultural sector VAT for agricultural equipment has been fixed at zero.
30-10-2009: The Government has decided to continue its Fertilizer Support Programme targeting small-scale farmers. The number of beneficiaries has been increased to 500 000 from last year's 250 000. This has been achieved through reducing by 50 percent the amount of fertilizer per beneficiary household from eight to four bags (of 50 kilogrammes each).
19/10/2009: Duty free regulation on imports of basic food commodities, started in March, has been extended until December 2009. This measure is part of a wide economic reform that includes the abandonment of the Zimbabwe dollar and the adoption of the US Dollar and South African Rand as legal currencies as well as allowing private traders to operate.
30-10-2009: The Government announced an assistance package worth USD 210 million, to support farmers in all farming sectors. Farmers will access loans (in the form of vouchers to be redeemed against agricultural inputs) from commercial banks to be repaid after selling their harvest in 2010.
Harvesting of the 2009 main season rice crop is either completed or drawing to a close in the subregion. FAO forecasts the 2009 aggregate output of cereals (including rice in paddy equivalent) at 1.07 billion tonnes, just below last year's record harvest of 1.09 billion tonnes but still above average the of the previous five years. In some countries, however, in spite of the incentive of attractive prices and agricultural input support programs in several countries, poor weather has dampened hopes of a good crop. Harvest of rice, the major staple cereal in the sub-region accounting for about 50 percent of the total, due to significant losses from this year's droughts and floods in some countries, is forecast at 601 million tonnes, or 2.7 percent below the bumper harvest of 2008. The increase in the wheat crop, harvested earlier in the year, was not enough to compensate for the anticipated loss in the current rice crop.
The major decrease in this year's total cereal output, primarily that of summer crops such as rice and coarse grains, is expected in India, Japan, the Republic of Korea, Lao People's Democratic Republic and Sri Lanka. On the other hand, better than last year's harvest is forecast in countries such as Cambodia, Indonesia, Democratic People's Republic of Korea, Malaysia, Myanmar and Pakistan, which were less affected by the irregular monsoon season. The remaining countries, namely Bangladesh, Bhutan, China, the Philippines, Thailand and Viet Nam are expected to produce total cereal output this year more or less similar to that of the year before.
Winter and spring wheat was harvested earlier in the year and produced a record aggregate level reaching 223 million tonnes mark, over 3 percent on the previous high obtained in 2008. Significant gains were made in the major wheat producing countries in the sub-region, namely China, India, Pakistan, and Indonesia.
In China (Mainland), the harvest of the 2009 secondary spring wheat crop was completed in August and output is estimated at record 6 million tonnes. The 2009 aggregate wheat output is now estimated at a record 114.9 million tonnes, some 2.2 percent above the previous high set last year reflecting Government support and favourable weather. Harvesting of the 2009 maize crop is just completed and the annual output is estimated at 158 million tonnes, lower than the record level of last year but above the five-year average. Harvesting of the 2009 early rice crop, a small crop accounting for less than 20 percent of total annual paddy output, was completed in July. The output is estimated at some 38 million tonnes, about 3.3 percent above the good crop of last year, reflecting increased area and yields. The aggregate paddy output in 2009 is officially forecast at 196 million tonnes, some 2 percent up from last year's record. In view of this bumper harvest, China eliminated export taxes on some grains, including wheat (3 percent), rice (3 percent), and soybeans (5 percent), effective 1 July. China also eliminated special export taxes on some fertilizers.
In India, delayed and less than satisfactory monsoon season which brought in only 77 percent of the normal precipitation on average for the country as a whole is estimated to reduce significantly the harvest of the main season kharif crops. FAO preliminarily forecasts the total paddy crop at 126 million tonnes and total coarse grains at 34 million tonnes, about 16 and 9 percent below the record harvest of the year before, respectively. In view of the current drought affected rice harvest the Government has placed a ban on rice exports except for the basmati variety. Earlier in the season, the official support price of paddy was raised from INR 850 to 950 (USD 19.80) per quintal and similar increases were announced for some other food crops. Some of the loss in rice production is compensated by a record harvest of wheat earlier in the year estimated at 80.6 million tonnes. In spite of the expected reduced total food grain production of this season, the overall food security in the country is considered satisfactory given the high level of public food stocks on hand and the distribution of highly subsidised rice or wheat especially for the below-poverty line families under the National Food Security Act.
In Pakistan, harvesting of the 2009 paddy crop is underway. Total paddy output is forecast at a record level of 9.6 million tonnes. Wheat crop harvested in June is also estimated at a record output of 24 million tonnes, some 3 million tonnes more than last year, reflecting a higher government supported purchase price of PKR 950/40 kg (USD 11.40), favourable weather, and subsidised fertilizers. As a result of the large wheat production, the country is expected to switch back to be a net wheat exporter in 2009/10. In September the Government removed the 35 per cent wheat export duty. Rice exports during 2010 are expected to be around 3 million tonnes.
In Thailand, the world's largest rice exporter, 2009 paddy production is preliminarily forecast at 31.8 million tonnes, higher than 2008 and the average of the last five years but slightly below the record harvest in 2007. Rice exportable surplus for next year is estimated at about 8.6 million tonnes, similar to that of 2009 but down from the near record level of about 10 million tonnes in 2008. The Government had set the farmers guaranteed price for second-crop paddy at THB 11 800 (USD 332) per tonne under a new intervention scheme starting on March 16 and running through July. The intervention program has reportedly led to the procurement of 4.1 million tonnes of paddy, valued at THB 46 million (USD 1.4 billion). A record harvest is officially forecast for 2009 paddy crop in Viet Nam resulting in a near record potential exportable surplus of about 6 million tonnes of rice for 2010. Reportedly the state-owned companies have been instructed to buy as much as 2 million tonnes of rice to support the production of the second season paddy rice crop.
The Far East subregion, in general, is a net exporter of rice and net importer of wheat. In 2010, in spite of a small decline in the 2009 rice production, the improved carry over stocks from the record harvest of 2008 are expected to contribute to a rise in rice exports (i.e. in exportable surplus), as compared to the year before, from the major rice exporting countries of the subregion such as Thailand, Viet Nam and Pakistan. Record harvest of 2009 aggregate wheat crop, on the other hand, is expected to increase exports and reduce gross and net imports for the 2009/10 marketing year (mostly in 2010) over the corresponding figures of the year before of several countries, namely the Philippines, Bangladesh, Pakistan and China (see Table 11). Total trade, the sum of the imports and exports, of wheat and rice together, is forecast to remain almost unchanged. However, an increased export supply and reduced import demand would have softening effects on the international prices of these commodities, other things being equal.
Nominal prices of staple food commodities, mainly rice and wheat, have declined from the 2008 peak but remain significantly higher in comparison to the pre-2008 food-crisis levels in several countries. The price impact on overall food consumption of the vulnerable population is still expected to be substantial.
In India, basically a non-trading country this year, rice price in Mumbai, for example, increased sharply since June in anticipation of the drought affected harvest of the main Kharif season and were 35 percent higher in October 2009 compared to the same month 2 years earlier. Wheat prices followed the same trend in recent months but due to good domestic production are only 19 percent above the level of two years earlier. This rise is slightly higher than the general inflation in the economy.
In Pakistan, one of the major rice exporter, the domestic price has more-or-less followed the pattern of the international export prices (Thai price, for example). In nominal terms the latest monthly retail price of rice in the central location of Multan is 63 percent higher than the corresponding price 24 months back. The retail prices of wheat, both nominal and real, on the other hand have steadily climbed up over the last 24 month period. Wheat price in Pakistan is affected by cross-border exports to neighbouring Afghanistan.
In the Philippines, a net rice importing country, the national average rice price has followed the Thai export price in USD terms very closely. In nominal terms the retail price of rice in September 2009 was some 30 percent higher than the corresponding price two years ago. Domestic maize prices currently have come down due to the record harvest in 2009.
In Bangladesh, staple food prices have declined to the pre-2008 food-crises levels. The retail price of rice (national average) was 19 rupee/kg in September 2009, 40 percent below the peak in April 2008 and 12 percent below that in September 2007. The retail price of wheat flour (national average) was reported at 15.3 Rupee/kg in September 2009, 51 percent below that in September 2008 and 35 percent below the same month two years ago.
Across the subregion, planting of 2010 winter cereal crops is expected to start in November with the arrival of first seasonal precipitations. Cereal production in 2009 is estimated at 66.3 million tonnes, compared to last year's output of 56.5 million tonnes, when extreme drought conditions decimated crops. Wheat and barley crops, harvested between June and August, have been favoured by above average and well distributed rainfall in the main producing countries such as Turkey, the Islamic Republic of Iran and Afghanistan.
On the contrary, in Iraq, generally unfavourable weather conditions for most of the cereal cropping season led to drastic reductions of winter cereals. Water shortages and high soil salinity have hampered cultivation compelling farmers to reduce their level of planting, often decreasing by as much 50 percent. Aggregate output of wheat and barley in 2009 is estimated at a low level of 1.8 million tonnes, slightly higher than 2008 production level that was the smallest crop in recent history. In Israel, 2009 wheat production is estimated at 80 000 tonnes, 35 percent higher than in the previous year, but still well below the previous five-year average of about 130 000 tonnes as a consequence of the continued drought conditions in the Negev region, the largest wheat growing area in the country. In Yemen, a recent FAO/WFP Crop and Food Security Assessment Mission has estimated 2009 cereal crops production at average level. However, the food security situation is worsening in the northern Governorates of Sa'ada and Amran where, due to the escalating conflict, the number of IDPs increased from 100 000 to 150 000 people in the last three months.
In the Islamic Republic of Iran, the wheat harvest gathered in June-July 2009, estimated at 13 million tonnes, indicates a recovery over the drought-affected harvest of 2008. This output is still below the five-year average production level of 13.63 million tonnes and much below the record harvest of 15 million tonnes obtained in 2007. With this level of domestic supply the country would need to import some 3.5 million tonnes of wheat during the 2009/10 marketing year (Apr/Mar), much below the estimated imports of 8.5 million tonnes in 2008/09. In Afghanistan, thanks to the well distributed rainfall, increased use of improved seeds and chemical fertilizer, and the expansion in area planted possibly due to the successful poppy reduction program, the winter and spring wheat is officially estimated at a record level of 5.06 million tonnes representing a 93 percent increase over the drought affected output of 2008.
In the eight Asian CIS countries, harvesting of the 2009 cereal crops are close to the end. The aggregated cereals output is estimated at the record level which is 34.2 million tonnes or 7 per cent higher than in 2008. Production rose in most Central Asian countries due to favourable weather and increased sown area by 6 per cent. The cereals harvest was slightly lower than the previous year in Azerbaijan and significantly lower in Armenia and Georgia, by 13 and 8 per cent respectively.
In Kazakhstan, this year's cereals production was 19.8 million tonnes, 6 percent higher than in the previous year and 23 percent above the average harvest for the last five years. The increase reflects larger plantings (by 8 percent) only partly offset by slightly lower yields. The export of cereals from Kazakhstan in the 2008/09 marketing year declined to about 6.2 million tonnes. For the 2009/10 marketing year, an increase in exports by some 6 per cent is currently forecast. Plantings of the 2010 crop (mostly next spring) are planned to increase by 8.3 percent and production is preliminarily forecast to be some 6 percent above this year.
Cereal production in Tajikistan in 2009 was a record of over 1 million tonnes, 29 percent above 2008 production and sharply above the previous five-year average. Tajikistan still depends on import of cereals especially wheat. Wheat imports in 2008/2009 were about 1 million tonnes, but could decline in 2009/10 reflecting the higher domestic output.
In Kyrgyzstan, total cereal production in 2009 has increased by 9 per cent, with wheat output rising by 16 percent. This reflects an expanded planted area and higher yields due to favourable weather conditions. Kyrgyzstan still imports significant amounts of wheat from Kazakhstan because the poor quality of the wheat produced inside the country. Turkmenistan and Uzbekistan also produced larger harvests of cereals including wheat in 2009; both countries are considering increasing the wheat planted area this year by cutting the cotton areas which face irrigation problems.
In Armenia, it is estimated that cereal output fell in 2009 by 13 percent due to drought in several regions of the country. In Azerbaijan, a total 2009 crop close to the previous year was harvested. Next year's cereal production is expected to decline partly due to lack of inputs and fertilizes in the country. Unfavourable weather conditions and lack of equipment have resulted in a low harvest of cereals in Georgia, 8 percent below 2008 and 25 per cent below the average output for the previous five years. Adverse weather conditions were responsible for an overall decline in the area sown to cereals by about 10 per cent and lower yields of winter-sown wheat and barely, only partly compensated by above-average yields for maize.
RECENT POLICY DEVELOPMENTS IN ASIA
23-10-2009: The Government removed the ban on rice exports imposed in November 2008 and has allowed private traders to export 10 000 tonnes of aromatic rice from 1 September to 31 December 2009.
12-10-2009: the State Council raised the minimum purchase price of wheat by CNY 60 per tonne to CNY 1 720 - 1 800 (USD 252 - USD 264 per tonne). The rice minimum purchase price would also be increased. The Government will also continue buying other major crops, including maize, soya beans and rapeseed, for state reserves to stabilize domestic output.
23-10-2009: Export taxes on wheat and rice (3 percent), wheat flour, wheat starch and rice flour (8 percent), soybean (5 percent) and soy flour (10 percent) have been removed. Maize export taxes were already removed in 2008.
20-08-2009: The Government has increased by 5.40 percent the minimum support price for rice to INR 950 per kilograms (USD 198 per tonne).
22-10-2009: The Government has lowered by 18 percent the minimum export price for basmati rice from USD 1 100 per tonne fixed in January 2009 to USD 900 per tonne.
22-10-2009: Duty-free sugar imports have been extended until March 2010 for raw sugar and up to November 2009 for white sugar.
22-10-2009: The Government has announced that it will continue the ban on export of non-basmati rice introduced in 2008, in view of an expected historical-low rice crop in the 2009/2010 crop year. According to the new arrangements the ban will remain in place until the middle of 2010.
22-10-2009: The Government has announced the sale of a further 1 million tonnes of wheat from strategic reserves under the open market sale scheme (OMSS), after the open market sale of 3 million tonnes of wheat and 2.5 million tonnes of rice from state reserves on 18 August 2009.
27-10-2009: The Government announced the removal of the 70 percent import tax on certain varieties of rice to boost supplies, after late and uneven monsoon rains led to a significant reduction in the main (Kharif) crop plantings and production. Duty-free imports of semi- and wholly-milled rice will now be permitted until 30 September 2010.
22-10-2009: The Logistics Agency (Bulog) is planning to release 2 250 tonnes of rice through a market operation to avoid price spikes before the harvest of the second season.
22-10-2009: Japan is cutting the price at which it sells imported wheat to domestic flour millers by an average 23 percent to jpy 49 820 (USD 549) per tonne.
23-10-2009: To counter rising food prices, particularly for sugar, the Lahore High Court ordered traders to ensure a retail price of PKR 40/kilogramme (USD 0.50), 27 percent lower than the peak of the last month.
23-10-2009: The Government has removed a 35 percent export duty on wheat products. The ban was imposed in 2007 because of shortages and high domestic prices.
28-10-2009: The National Food Authority announced that it will allow private-sector traders to import up to 563 000 tonnes of rice annually. The measure aims at enhancing market participation ahead of liberalization of the sector, including the removal of quantitative restrictions on imports, in 2012.
23-10-2009: Fertilizer subsidies in Sri Lanka continue. The Government is supplying to each farmer five kg. of fertilizer worth LKR 9 000 (USD 78.60) at LKR 350 (USD 7.50), to support rice cultivation.
21-10-2009: On July 17th the National Rice Policy Committee agreed to release 763 920 tonnes of intervention rice stocks from the marketing year 2008/09, including 300 000 tonnes of fragrant rice, through tenders for domestic and export markets.
22-10-2009: The Government rice intervention scheme due to end on 30 July 2009 has been reinstated in September for a month following protests. The price of USD 535 per tonne for benchmark 100 percent B grade white rice has been maintained.
08-09-2009: The Viet Nam Food Association (VFA) confirmed the purchase of 400 000 tonnes of husked rice for state reserves under the first phase of the procurement plan announced by the Government in mid-June. Under the plan, the VFA is instructed to buy two million tonnes of summer-autumn rice to prevent a fall in domestic prices at the peak of the harvest, when export demand is low.
22-10-2009: Viet Nam will ban rice export to destinations where sales would be in competition with Government contracts handled by the top two state controlled exporters. According to the Viet Nam Food Association, from 10 August, exporters will not be allowed to sell rice to foreign companies that have signed government-backed deals, or to foreign traders who compete in the markets where Viet Nam aims at signing such contracts.
28-10-2009: the Agriculture Minister announced that, in an effort to improve the competitiveness of its grain exports, it would spend USD 33 million in subsidizing shipments to Baltic and Black Sea ports.
The 2009 aggregate cereal output of the Central America and the Caribbean subregion is forecast by FAO at 41.2 million tonnes, about 3 percent or 1.4 million tonnes below last year's record level but still 2.4 million tonnes above the average of the previous five years.
In Mexico, harvesting of the 2009 main rain-fed summer coarse grain crops, accounting for approximately 75 percent of the annual production, is underway in the states of Guanajuato, Mexico, Jalisco and Puebla. Despite the intense drought in some of the above mentioned states including Aguascalientes during the month of July with an estimated of 840 000 ha affected, production is expected to be very similar to the record level obtained in 2008. In fact, in September, increased water availability recorded in most of the farming states coupled with programmes for resowing short cycle crops and feedcrops improved crop prospects. The sorghum summer crop is being harvested. The outlook for the 2009 production is very favourable with a record output of 6.2 million tonnes expected. As regards next year's crop, land is being prepared for planting the important winter wheat crop for harvest in 2010 in the almost fully irrigated areas of north-western states.
In Guatemala, which suffered from a prolonged mid-summer dry spell period during 2009, precipitation levels were below normal in the region of the Oriente dry corridor. This caused a decline in primera bean and maize harvests in some localized areas and reduced plantings of the postrera crop season. However, this may not have had a strong impact on aggregate national production since damages were localized and partly offset by larger production in areas where a number of farmers had planted early benefiting from the first rains in May. Rains in early November were too late to improve the crop outlook.
In Costa Rica, El Salvador, Honduras and Nicaragua, harvesting of the 2009 first season maize crop is approaching completion. Planting of the second season crops, especially beans, has been affected by dry weather in parts. Heavy rains in the first week of November resulted in flooding and landslides in El Salvador and Nicaragua causing loss of life and damage to infrastructure and agriculture. Damage to cereal and bean crops has not yet been assessed.
The cropping season was also favourable in Haiti, where harvesting of first season maize has been completed in July-August and planting of the second season crop, to be harvested by the end of the year, is well advanced. The total 2009 maize production is tentatively forecast at 230 000 tonnes, 15 percent above 2008 and 12 percent larger than the previous five years average. This result is mainly due to an increase by 10 percent in planted area of maize and to the positive effects of well distributed precipitations coupled with Government subsidies for inputs.
In Jamaica, harvesting of the 2009 main season's maize crop is completed, with production estimated to be below average. Despite above average rainfall recorded at the beginning of the main rainy season (April-September), rainfall deficits were observed between June and September. Since approximately 95 percent of the cultivated land for cereals is under rain-fed conditions the low cumulative rainfall level has negatively affected yields per hectare.
In Cuba preliminary estimates of the important 2009 main paddy crop, harvesting of which is underway, are positive. Production is estimated at a record level of about 500 000 tonnes well above the 2008 already good production (436 000 tonnes).The favourable production prospects reflect an increase in area planted, by almost 15 percent, compared to 2008, and the implementation of Government policies to boost domestic staple food production.
Despite a recent downward revision of the estimate, rice paddy output in Dominican Republic in 2009 is, at 788 000 tonnes, still 3 percent above 2008 and substantially larger than the previous five years' average.
Harvesting of the 2009 winter wheat crop has started or is well advanced throughout the subregion. Aggregate wheat production for 2009 in South America is tentatively forecast at 16.4 million tonnes, 4 percent below the already poor 2008 crop and 22 percent lower compared to the average of the previous five years (21.1 million tonnes). The aggregate planted area was at a low level of 6.8 million hectares, largely as a consequence of the prolonged drought that affected Argentina since May.
In Argentina harvesting of the winter wheat crop is now starting in northeastern provinces and in the northern parts of Santa Fe. To date, yields recorded in these provinces are well below the average national productivity and preliminary crop forecast are unfavourable due to the critical weather conditions during the key developing stages of the crop. By contrast, although the harvest has not yet started, prospects are favourable in the provinces of Entre Rios, southern of Santa Fe and most of the farming areas of Buenos Aires which might partially offset the low expected production of other regions. Nevertheless, the total 2009 wheat production is preliminarily estimated at only 7.5 million tonnes, one of the lowest outputs on record and about half the previous five-year average.
Given the low expected outcome for the current season, the wheat exportable surplus is likely to drastically drop in the 2009/2010 marketing year to only between 1.5 and 2 millions tonnes compared to 3.8 millions tonnes shipped in 2008/09 and more than 10 millions tonnes in 2007/08.
In Uruguay the 2009 winter wheat will be harvested starting from November in the producing states of Colonia, Soriano, Río Negro and Paysandú. Boosted by the low production costs (prices of urea declined by 48 percent and phosphate fertilisers by approximately 50 percent) compared to the same period of 2008, and by favourable weather, output is forecast to double compared to the already good result obtained in 2008, reaching 1.4 million tonnes. Uruguay is expected to expand wheat exports in 2009/10 as a result of the new market opportunities offered by Argentina's low production this year.
In Brazil, harvesting of 2009 winter wheat is already well advanced in the state of Paraná and just started in Rio Grande do Sul, the second main wheat producing state. Early forecast point to an expected production of 5.3 million tonnes, slightly below earlier projections and close to last year's near record output of 5.9 million tonnes. The favourable production expected is partly due to the Federal Government's measures aiming at reducing Brazilian reliance on external markets to supply its domestic demand.
Harvesting of the 2009 second season maize crop was completed in August and aggregate production (first and second season) for the South American subregion is estimated at 74.8 million tonnes, sharply below 2008 but close to the average of the previous five years. In Brazil, the main maize producer in the subregion, the 2009 aggregate maize output was 51.1 million tonnes, about 13 percent below the record level obtained in 2008. By contrast maize output fell sharply in Argentina to only 12.7 million tonnes, 42 percent below 2008.
Planting of the main summer maize crop for harvest in 2010 has started in all southern countries of the sub region and is approaching completion in several countries. In Argentina, official planting intentions point to an area of about 1.9 million hectares, 44 percent less than last year. This is primarily on account of the delayed start of planting caused by the low soil moisture levels. In addition to the water shortage, maize producers have serious financial constraints, reflecting low production in the last campaign, and low cereal market prices.
In Brazil planting of the 2010 main season maize crop began in September and benefited from abundant rainfall in most central and southern states. The high level and good distribution of precipitations boosted crop development in most parts of the country but, despite the favourable weather conditions at sowing time, preliminary planting forecast point at 13.7 million hectares, which is some 4 percent below last year's acreage. In the North-East of the country plantings will commence in February.
In Central American and Caribbean countries, staple food prices are gradually declining since peaking in mid-2008, although remaining generally well above the pre-crisis level.
In Guatemala the price of rice is continuing to decline owing to, but not only, the good 2009 domestic production now being harvested, which was not affected by drought. The wholesale price of white maize has also declined steadily and is now 14 percent below compared to October 2008 and somewhat below the pre-crisis level. Maize prices have also declined to below pre-crisis levels in Nicaragua and El Salvador reflecting generally favourable crops this year. By contrast, the price of maize tortillas has remained generally stable in the last 12 months. In Nicaragua, the wholesale prices of rice (2nd quality) in the capital Managua has decreased by approximately 10 percent in the last year, but it is still almost 53 percent higher than the pre-crisis level.
In Mexico, prices of black beans remain at record level. Prices began to climb at the beginning of 2008. This upwards movement is sustained by the unfavourable forecast for the production of spring-summer crops. In some of the main growing states namely Zacatecas, Chihuahua, Durango and Sonora, which account for more than 70 percent of the total national bean production, a decline in planted area by approximately 20 percent is reported for the 2009 season. In addition, high transportation costs and the lack of national stocks to supply the internal demand are contributing to the high price level.
In Haiti, official estimates of the number of food insecure people continue to be revised downwards. According to the Coordination Nationale de la Sécurité Alimentaire (CNSA) by the end of July, the population with food insecurity declined to 1.9 millions, 25 percent from the previous trimester's estimates. Domestic prices have declined or remained stable (except for a slight gain in the last months for rice and sorghum) since the peak of mid 2008. This is partially on account of the good production of 2008 and the estimated good output for 2009.
In South America, Argentinean domestic wheat prices have continued to move upward in the last months, starting from February 2009. The main driving factor is the drastic drop in wheat production that the country has experienced for two consecutive years. The wholesale price of wheat in the Cordoba market has increased by 10 percent between September 2008 and September 2009, and in the last three months alone prices surged by 13 percent reflecting the expectations of reduced planting and output for next year.
In Brazil which imports more than half of its domestic requirements, wheat price increased from December 2008 till August 2009 although they remain well below the level of two years ago as international prices weakened. Despite the good production obtained in the last two years, the country will still have to import more than half of its consumption needs in 2009/10, mostly relying on non-Mercosur countries. Domestic wheat prices are expected to continue to follow closely those in international markets.
In Uruguay, prices have risen steadily in the last year but are expected to move downwards thanks to the excellent wheat production that will arrive in the markets starting from mid-November.
RECENT POLICY DEVELOPMENTS IN LATIN AMERICA AND THE CARIBBEAN
23-10-2009: Export restrictions on wheat and maize have been eliminated after main exporters and millers agreed to ensure adequate supplies for the domestic markets. The Government will grant export permits in 2009/10 in exchange for a commitment from exporters to guarantee 6.5 million tonnes of wheat and 8 million tonnes of maize for the domestic market. Moreover wheat and maize export taxes are to be eliminated for small and medium-sized farmers.
30-10-2009: The Government has restricted import licences for wheat flour, wine and oils from Argentina to support the milling industry in the south of the country that has been affected by the Argentine incentives for wheat flour exporters.
In the United States, the winter wheat planting for the 2010 harvest was about 75 percent complete by late October, although behind the 5-year average pace of about 85 percent for the same time of the season. Delays have mostly been encountered in the Midwest and Delta areas where wet weather has hampered the harvest of the 2009 soybean crop. The land coming out of soybean is normally that which is dedicated to winter wheat in the following year. However, even before weather-related delays in these areas that would have an impact, if any, mostly on the final area sown to soft winter wheat, the overall winter wheat area for the 2010 harvest was already expected to decline for the second year in succession, in response to the downturn in prices compared to the levels a year ago. Early indications suggest the reduction could be in the region of about 3 percent from the previous year's level.
The latest official estimate of the United States 2009 wheat crop stands at 60 million tonnes, a well-above average crop, although 8 million tonnes below last year's record. As of late October, the 2009 maize harvest was reported to be about 20 percent complete, significantly behind the 5-year average for the same time of season, which is about 60 percent. Harvesting operations have been hampered by damp weather, raising concerns over grain quality and reducing the likelihood that this year's record yield forecast will materialize. The latest official forecast puts the 2009 maize crop at about 331 million tonnes, 7.6 percent up from last year and just marginally less than the 2007 record output.
In Canada, the bulk of the wheat is spring planted and the 2010 crop will not be sown until March-April next year. Latest information regarding the 2009 cereal harvest mostly confirms earlier expectations: output of wheat fell significantly to 24.6 million tonnes, 14 percent down from last year's crop due mostly to adverse early-season dry weather reducing average yields, while production of the other major cereals - barley, maize and oats - also fell, reflecting area reductions and lower yields.
In the EU, the bulk of the winter grain crops have been sown throughout northern and central parts, but planting has yet to be completed in the south. Although firm estimates are still not available from many countries, early indications suggest that the overall wheat area may be slightly down from the previous year in response to lower prices and lower return expected for wheat compared to competing crops such as oilseeds. On top of this, while weather conditions have been generally favourable for sowing throughout most western parts, dry conditions have prevailed in some eastern countries, particularly in Romania and Hungary, hampering planting progress.
The EU's aggregate cereal output in 2009 is now estimated at 293 million tonnes, some 7 percent down from the previous year. Output of wheat fell by 9 percent while that of coarse grains fell by 6 percent compared to last year's bumper levels, but in both cases the outputs remained well above the five-year average.
In European CIS countries, harvesting of 2009 cereal crops has been completed and planting of winter cereals for harvest in 2010 has started. Total cereal production in the 4 Former Soviet Union republics in Europe (not including the three Baltic States) was 145.4 million tonnes, some 16 million tonnes or 10 percent lower than in 2008. However, it was still 10 percent higher than the average of the previous five years and the second highest on record.
This year's good result reflects increased planted area. Yields were lower than in 2008 by 12 percent due to dry and cold weather at the beginning of the spring season reflecting also the weakness of agriculture infrastructure. Severe drought in parts of Russia, Belarus and Ukraine in July and August did not significantly affect crop output. As compared to the previous year, smaller wheat crops were harvested in Moldova, Russia and Ukraine. Coarse grain crops were also down in Moldova and Ukraine. Because of the reduced production this year, exports of both wheat and coarse grains from Russia and Ukraine are expected to be down in 2009/10. Government policy in these two countries is now focussed on supporting grain production and grain prices, though economic conditions are limiting the budgetary availability for this support. An important factor for this season's world wheat price developments will be the timing of the Russian government decision to begin its intervention campaign.
Planting of winter cereals for harvest next year has started with delays due to localised drought in several regions of Russia and the eastern part of Ukraine. However, recent rains have provided needed soil moisture but much will depend on the final level of plantings and on weather in coming months.
In the Russian Federation, output of cereals in 2009 was 93.3 million tonnes, some 10 per cent below the bumper year of 2008. The total cereals planted area increased by 3.7 per cent but yields were lower by 13 per cent due to unfavourable weather. Cereal exports in the 2009/10 marketing year are estimated to decline by 19 percent reflecting increased competition and decreased demand in the world grain market. Despite the expected slowdown in exports, both external and internal conditions for the export activity of Russia's grain suppliers in general have improved in October due to the strengthening of world prices which has increased the competitiveness of Russia's grain in international markets, despite the strengthening of the ruble. Larger winter wheat sowings, for harvest next year, are expected while barley plantings are anticipated to be lower compared to last year. Larger plantings are reported in the Volga region while the sown area in the Central Regions is declining as a result of very dry weather, particular in the eastern part of the region. Plantings are continuing.
In Ukraine, the 2009 cereal harvest, at some 42.2 million tonnes, was 13 percent less than the 2008 record, but still higher than average output in the previous five years. Ukrainian cereal exports in 2008/09 were 24.5 million tonnes, making Ukraine one of the leading exporters of wheat in the world. In marketing year 2009/10 cereals exports from Ukraine are expected to decline due to the lower harvest and decreasing demand in the world grain market.
Plantings of winter cereals for harvest in 2010 have stared in southern and eastern areas. Total plantings are forecast at almost at the same level as in the last year. Dry weather in August-September has affected some areas. Although the situation has improved following rainfall in late September and early October, the earlier dryness hampered the emergence and establishment of winter crops in significant areas of southern and eastern Ukraine. Subsurface moisture reserves remain significantly below normal and the overall crop outlook for 2010 is cause for concern.
In Belarus, total cereals production in 2009 was about 5 percent above the previous year and 22 percent above the average cereals production for the previous five years. The wheat sown area was slightly more that in 2008, but this was offset by a decline in yields resulting in production of wheat at the same level as in the previous year. For coarse grains, both area planted and yields per hectare rose in 2009.
In the Republic of Moldova due to mostly favourable weather conditions, the total cereals production in 2009 has increased significantly, to 2 million tonnes, though still some 4 per cent below the average production for the previous five years.
The prospects for the 2009 winter cereal crops in Australia remain generally favourable and the country is gearing up for what will likely be the biggest harvest since the record crop in 2005, following a slight increase in plantings but mostly due to better yield prospects after generally favourable rainfall, particularly in Victoria, South Australia and New South Wales. The latest official forecast in September puts wheat output in 2009 at 22.7 million tonnes, 1.3 million tonnes up from the previous year. A significant increase in barley output is also forecast, by about 1 million tonnes to almost 8 million tonnes.
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