Part I World review

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I. Current agricultural situation - facts and figures

1. Crop and livestock production in 1993

• At the global level, 1993 was an unfavourable agricultural year. Global agricultural production declined by 1.2 percent, following the 2.8 percent expansion recorded in 1992. Performance, however, was uneven among regions and between developing and developed countries.
• The global contraction was largely accounted for by a significant drop in developed country production, which declined by 5.2 percent after the expansion of 2.9 percent recorded in 1992.
• Agricultural output declined in 1993 in most developed country regions, but particularly so in North America, where production dropped by no less than 10 percent. Crop production in the United States fell by almost 17 percent, as adverse weather conditions sharply reduced major crops. A reduction of 3.3 percent was recorded in the EC, while in Oceania the estimated contraction was of 2.1 percent.
• In Eastern Europe, agricultural production increased for the first time since 1989, by 2.1 percent, as crop production in major producing countries picked up after the drought-affected 1992 crop. Reliable aggregate indices of overall agricultural production in the former Soviet republics do not exist at present, but agricultural production appears to have declined in 1993 in most of the republics.
• Developing country production in 1993 expanded by an estimated 1.7 percent, slightly below population growth, representing a further deceleration from the rates of 2.7 percent recorded in 1992, 3 percent in 1991 and 4.1 percent in 1990.
• Among the developing country regions, the most favourable performance in 1993 was recorded by sub-Saharan Africa with an estimated expansion of 3.4 percent. This increase was, however, only marginally above the rate of population growth of 3.2 percent and followed a virtual stagnation in production the previous year, characterized by severe drought in southern Africa.
• An increase in agricultural production of about 2.4 percent was recorded in the Far East (0.5 percent per caput), which nevertheless constituted a slow-down from the production growth of the previous three years.
• After three years of mediocre agricultural performances, when output barely kept pace with population growth, Latin America and the Caribbean experienced a severe production shortfall in 1993. The 1990-93 average growth in agricultural production - 1.2 percent - was about half the already low average growth rate of the 1980s.
• The Near East and North Africa saw a marked deceleration in agricultural output growth after the bumper 1990 crop year. In 1993 regional output declined slightly, largely as a result of damaging droughts in Morocco, for the second consecutive year, as well as in Algeria.

Exhibit 1: Changes in agricultural production, 1990-1993 (Percentage change over preceding year) Source: FAO

2. Per caput food production

• The period 1988-1993 saw a decline in per caput food production levels in approximately 60 percent of the total number of developing countries. Nevertheless, regional differences were significant. In sub-Saharan Africa about three-quarters of all countries recorded stagnating or falling levels of per caput food production. By contrast, in Latin America and the Caribbean, the Near East and North Africa and continental Asia, roughly the same number of countries recorded gains and losses.
• A more positive picture emerges when considering the populations involved. Several of the largest and most densely populated countries in each region achieved gains in per caput food production: Nigeria and Zaire in sub-Saharan Africa; China, India, Pakistan, Indonesia and Bangladesh in Asia; Brazil, Mexico and Colombia in Latin America; and Egypt and Algeria in North Africa.
• Exhibit 2 clearly points to a grave domestic food supply problem in much of sub-Saharan Africa. No less than 33 countries have seen their production lag behind population growth - in several cases dramatically so. Problems of supply instability have compounded the gravity of the situation. In many cases, favourable performances overall conceal wide year-to-year fluctuations. For instance, behind the average positive growth in Zimbabwe, Mali, Uganda, Zambia and Togo were very high rates of increase in 1993, a year of recovery from the severe shortfall the previous year.
• All countries in transition in Eastern Europe and the former USSR except Poland suffered a dramatic contraction in per caput food production. The year 1993 saw a continuation of negative trends for the former Soviet republics, former Yugoslavia, SFR, former Czechoslovakia, Bulgaria and Hungary. For Romania and Poland, however, 1993 saw a recovery in food production following the drought-reduced harvest of 1992.

Exhibit 2: Changes in per caput food production by developing countries, 1988-1993 (Average percentage rate of change)

Source: FAO

Exhibit 2: Changes in per caput food production by industrial countries and economies in transition, 1988-1993 (average percentage rate of change)

Source: FAO

3. Food shortages and emergencies

• Africa is still the continent most seriously affected by food shortages requiring exceptional and/or emergency assistance. The situation is most critical in East Africa, where severe food shortages are emerging and deaths from starvation-related causes and acute malnutrition are increasingly reported from several areas. Fifteen countries in the region are currently facing exceptional food emergencies and half of these countries are also being affected by civil strife.
• In Rwanda, the civil strife has had disastrous consequences for national food security. The strife has seriously disrupted farming activities. Massive international support for the provision of relief food and the rehabilitation of the agricultural sector will be needed to avert suffering and further losses of lives.
• In Burundi, agricultural activities were seriously affected by ethnic conflicts in October 1993. The food deficit in 1994 is estimated to be 1 million tonnes. In addition to emergency food assistance, donor support and the implementation of a massive agricultural rehabilitation programme are needed to restore domestic food production to its pre-crisis levels.
• Famine conditions are emerging in several parts of the Horn of Africa. Substantial relief assistance is required by Ethiopia, Eritrea, Kenya, Somalia and the Sudan. In the United Republic of Tanzania, the food supply situation is critical for a large number of subsistence farmers who lost their short rains crops. The already tight food supply situation in Uganda has been further aggravated by the influx of refugees from Rwanda and the Sudan.
• Grave food shortages persist in Angola. The food supply outlook for 1994 is extremely bleak owing to a sharp reduction in the output of cereals and cassava. There is a serious threat of widespread famine unless arrangements for large-scale food assistance and its distribution are made to feed the affected population.
• Despite some recovery of cereal production, the food supply situation will remain tight in Mozambique, as the 1994 cassava output is forecast to be down by 6 percent from last year. Some 1.5 million people will need emergency food aid in 1994/95. A poor harvest in Malawi points to a substantial increase in cereal import requirements in 1994/95.
• Other African countries facing shortfalls in food supplies and requiring exceptional or emergency assistance include Chad, Liberia and Zaire.
• In Afghanistan, the already tight food supply situation has deteriorated further as a result of renewed fighting, and large numbers of returnees and internally displaced people need international food aid. in Iraq, the food and nutrition situation remains grave in all parts of the country. The latest FAO Nutrition Status Assessment Mission stressed that the food supply problems cannot be solved by the provision of food aid alone and that a more constructive solution should be sought for the country to produce and/or import its food needs. In Laos, following a reduced paddy output in 1993, some 10 percent of the total population is in need of exceptional emergency food assistance. The food supply situation is also tight in Cambodia and Mongolia.
• In Bosnia and Herzegovina, the tight food situation has eased somewhat with the improved food aid distribution to central parts, particularly Sarajevo, following the opening of the roads from the Adriatic coast and the increasing commercial traffic in the past two months.
• The already difficult food supply situation in Haiti is deteriorating rapidly owing to the tightening of the UN embargo. Prices of basic foods and essential consumer goods have increased sharply and conditions in all sectors of the economy continue to worsen.
• Other countries facing shortfalls in food supplies and requiring exceptional and/or emergency assistance are Armenia, Azerbaijan, Georgia and Tajikistan.

Exhibit 3: Food suply shortfalls* requiring exceptional assistance; Source: FAO, Global Information and Early Warning System, July 1994; (* In current marketing year)

4. Current cereal supply, utilization and stocks

• Global cereal production fell in 1993 by 3.8 percent to 1890 million tonnes, mainly as a result of a significant decline in maize output in the United States. With rice converted from paddy to a milled basis, this corresponds to 1705 million tonnes, as shown in Exhibit 4. Reflecting this, world cereal supplies in 1993/94 dropped to 2088 million tonnes, or 33 million tonnes less than in 1992/93.
• As a result of smaller crops, global cereal carryover stocks were drawn down sharply during the 1993/94 seasons to 326 million tonnes, i.e. some 12 percent or 46 million tonnes below their opening level. However, the ratio of global cereal stocks at the end of the 1993/94 seasons to the trend utilization in 1994/95 remained within the 17 to 18 percent range, which is considered by FAO to be the minimum necessary to safeguard world food security.
• FAO's first forecast of 1994 global cereal output is 1947 million tonnes, 3 percent above the reduced crop in 1993, but still below the trend. Most of the rise in production in 1994 is expected to occur in the developed countries and should be confined to coarse grains, although some advance in rice production in developing countries may take place, provided weather is normal. Cereal output in the developing countries is currently forecast to rise by 0.8 percent only, partly owing to sharp production falls anticipated for wheat in Turkey and Saudi Arabia. Nevertheless, the 1994 cereal production increase in other developing countries as a group will probably still remain below population growth.
• If current production forecasts materialize, total global cereal availabilities in 1994/95 will be sufficient to meet the expected rise in consumption, although a drawdown of wheat stocks is likely. In aggregate, however, the global carryover of cereals at the close of the national crop years ending in 1995 would remain close to the minimum safety level as determined by FAO.

Exhibit 4: up - Supply/utilizations trends in cereals (Including rice on milled basis); down - Cereal carryover stocks, 1989-1994 (Crop year ending in the year shown); Source: FAO; (* Estimate, ** Forecast)

5. External assistance to agriculture

• Available data for 1992 and 1993 indicate a continuation of the downward trend in commitments of external assistance to agriculture. After fluctuating around $11 billion yearly during 1980-1985, commitments in real terms peaked at about $12 billion in 1986 and have declined steadily since.
• For 1992, the latest year for which complete information is available, total commitments in current prices amounted to $11.3 billion, 6.6 percent less than in 1991. At constant 1985 prices, commitments in 1992 reached approximately $7 billion, representing a 9 percent decline from the previous year in real terms and a 42 percent decline in real terms from the peak levels of 1986.
• The concessional component of external assistance commitments to agriculture represented 70 percent of the total in 1992, close to the levels of 1989 and 1990 but above the 64 percent recorded in 1991.
• Preliminary data for 1993 indicate a further reduction in multilateral commitments from all sources except OPEC. The overall reduction (21 percent below 1992 levels at constant 1985 prices) mainly reflected lower commitments by the World Bank (-17 percent). The World Bank's soft-lending IDA branch reduced its commitments by as much as 60 percent, more than offsetting a 24 percent expansion in IBRD commitments.

Exhibit 5: Commitments of external assistance to agriculture* (At constant 1985 prices); Source: FAO and OECD; (*Broad definition, ** Preliminary)

6. Food aid flows in 1993/94

• Shipments of food aid in cereals during 1993/94 (July/June) are estimated to be 12.2 million tonnes (21 percent below the previous year's level of 15.1 million tonnes), mainly owing to the reduced level of budgetary allocations.
• Of the total cereal food aid in 1993/94, 7.5 million tonnes were destined for developing countries compared with 10.8 million tonnes in 1992/93. In fact, the level of cereal food aid provided in 1993/94 to developing countries was the lowest observed since 1975/76.
• Most of the decline is expected to occur in Africa, where food aid is projected to fall from the 6.7 million tonnes recorded in 1992/93 to about 3.5 million tonnes. Although food aid requirements have declined considerably after the southern African drought emergency, requirements of many countries still remain unmet.
• Shipments of food aid to the CIS and East European countries in 1993/94 are estimated to be 4.7 million tonnes, compared with 4.4 million shipped in 1992/93.
• As of July 1994, pledges to the 1994 IEFR amounted to 808365 tonnes of food commodities, of which 635798 tonnes were in the form of cereals and 172567 tonnes in the form of other foodstuffs, about the same level as the previous year.
• In addition to IEFR contributions,. as of late July 1994, 534000 tonnes of cereals and other commodities had been pledged under the subset of WFP regular resources for meeting the requirements of Protracted Refugee Operations, compared with 830000 tonnes pledged in 1993.
• As of March 1994, total pledges to WFPs regular resources for the biennium 1993-1994 stood at $912 million, representing 61 percent of the pledging target of $1.5 billion. In the previous biennium 1991-1992, total contributions amounted to $1.14 billion, representing 76 percent of the pledging target of $1.5 billion.

Exhibit 6: Shipments of food aid in cereals (Grain equivalent); Source: FAO; Note: Years refer to the 12-month period July/June; (* Estimate)

7. International agricultural prices

• After a protracted period of steady decline, the international prices of several major traded agricultural commodities strengthened during the fourth quarter of 1993. The tendency continued, or even accentuated, for some commodities in the first half of 1994.
• Most cereal prices strengthened during the fourth quarter of 1993. The upward trend for wheat halted in January and prices generally weakened in the first half of 1994 as a result of slack import demand, stiff competition for available markets among the major exporters and mostly favourable prospects for 1994 crops in the major producing countries. The global decline in coarse grain production in 1993 resulted in tighter market conditions and stronger prices for these commodities in late 1993 and early 1994; however, with good prospects for the 1994 crops, prices have weakened in recent months. Prices of rice rose steeply during the second half of 1993 following an unusually poor harvest and strong demand for high-quality rice in Japan. Prices weakened subsequently, reflecting expectations of increased area in several major producing countries, improved prospects for the second-season rice crop in Thailand and ample supplies of lower-quality rice.
• Prices of oilseeds, oils and oilmeals increased significantly during the second half of 1993, reflecting expectations of supply shortfalls. A downward movement was recorded in more recent months owing to increased harvests in South America and depressed demand for oilmeals. In July 1994 price increases relative to mid-1993 were 14 percent for sunflower seeds and 35 percent for rapeseed.
• Coffee prices increased steeply in recent months reflecting tight supplies, caused in particular by the worst frost in Brazil since 1961 and a production decline in Colombia. By late May, prices had increased to the highest levels in seven years. After a second frost in Brazil in June, coffee prices rose through July to more than three times the levels of July 1993. Stock retention by ACP members also contributed to tighter supplies.
• Cocoa prices also rose markedly, mainly because of an increase in demand from the Russian Federation, European countries and North America, and this may cause consumption to exceed production in 1993/94 for the third year in a row.
• World tea prices fell to record lows during the first nine months of 1993, following a recovery in supply in all the main tea-producing countries. Prices have recovered somewhat since October 1993, mainly Owing to a severe drought that reduced Kenya's output.
• Cotton prices soared during the first quarter of 1994, as a massive shortfall in world production in 1993/94 reduced exportable supplies.

Exhibit 7: Export prices of selected commodities, 1990-1994 (S per tonne); Source: FAO

8. Agricultural terms of trade

• The recent increase in international prices of several commodities of economic importance to many developing countries must be seen in the context of earlier trends. The 1980s and early 1990s had seen a steady deterioration in both the terms of trade and the purchasing capacity of agricultural exports. By 1992 the net barter terms of trade (or real prices) of developing countries' agricultural exports had fallen to less than 60 percent of the levels of the early 1980s.
• The deteriorating trend continued in 1993, as the general commodity price increase only manifested itself by the fourth quarter of the year. For the year as a whole, the UN index of agricultural export dollar prices indicated a 6 percent decline from 1992 levels. For the developing countries, the decline was 3 percent. On the other hand, the combined price index of manufactured goods and crude petroleum declined by 3 percent. This implies a 3 percent deterioration in agricultural real export prices overall and a levelling off of agricultural real export prices for developing countries.
• The economic importance of terms of trade is best appreciated when considering trends in both prices and volumes of agricultural exports. The index of income terms of trade = or purchasing capacity of agricultural exports - takes both variables into account. The general picture presented by the income terms of trade is also unfavourable for the developing countries, although it is subject to important qualifications. First, purchasing capacity deteriorated far less than net barter terms of trade after the early 1980s, implying that developing countries were able to compensate for falling agricultural real prices through larger volumes of exports. Second, regional trends varied widely. The Far East and the Near East and North Africa regions actually expanded the purchasing capacity of agricultural exports from the levels of the early 1980s despite adverse real price. trends. The Latin America and Caribbean region was less successful, as the expansion in export volumes was insufficient to compensate for declining real prices. in sub-Saharan Africa real prices and purchasing capacity of agricultural exports deteriorated pari passu. In 1992 sub-Saharan African agricultural exports could theoretically finance approximately 40 percent less of manufactured goods and crude petroleum than they did in 1979-81.

Exhibit 8: Terms of trade of agricultural exports for manufactured goods and crude petroleum (Index 1979-81 = 100); Source: FAO

9. Fisheries: catch, disposition and trade

• Preliminary data for 1993 indicate that total world catch and culture of fish and shellfish reached about 98 million tonnes, thus remaining at the level of 1992.
• Peru expanded its production rapidly from 6.8 million tonnes in 1992 to 8.4 million tonnes in 1993. China's production is also expected to have increased substantially over the same period. Among other large producer countries, Chile and the Russian Federation reported declining production in 1993.
• World marine fish production in 1992 has been confirmed at 82.5 million tonnes, about the level reached in 1991. The decline in production of clupeoids continued; however, they remained the largest group of marine species, accounting for 20.4 million tonnes of catch. As a result of decreased catches of wild salmon, total production of salmon from catch and culture fell back by 12 percent to 1.4 million tonnes, the level reached in 1989 an 1990.
• World inland fish production continued to grow rapidly in 1992, reaching a total of 15.6 million tonnes, which represented an increase of 5.5 percent over 1991 production. Production of carps and barbels expanded by 11 percent to just more than 7 million tonnes.
• Preliminary estimates of the disposition of world catch in 1993 indicate a 2 percent decline in fish used for human consumption to 69.2 million tonnes, following an increase of about twice that magnitude in 1992.
• In 1992, international trade in fishery products grew slightly in value, as exports increased from $38.9 billion in 1991 to $40.3 billion in 1992. Volume was 17 million tonnes of processed product, a negligible decrease compared with 1991.
• Developing country exports in 1992 represented 32 percent of their total catch, as compared with 47 percent for developed countries. Developing countries as a group recorded an increasingly positive trade balance in fishery products, which reached a surplus of $11.7 billion in 1992, as developed country imports of fish products continued to grow strongly. Indeed, in 1992 the value of developed country fish exports was equivalent to only about 56 percent of their imports.

Exhibit 9: World fish cath, disposition and trade; Source: FAO

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