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Production. World production of fats and oils is projected to reach 108.6 million tonnes by the year 2000, 42 percent above the 1987-1989 average. This output would be only marginally different (one percent higher) from the baseline projections before taking into account the impact of the Uruguay Round Final Act.
The additional quantity of oils and fats expected to be produced by the year 2000 as a result of the Uruguay Round (about one million tonnes) will be concentrated in the low-cost exporting countries of the Far East and Latin America and most of it would enter world trade. About three-quarters of the increase in production of oils and fats due to the Uruguay Round implementation is projected to be on account of larger availabilities of palm and palm kernel oils (which are the oils produced at lowest costs) originating mainly in Malaysia and Indonesia' where oilpalm plantings are expected to accelerate in response to the incentive of the Uruguay Round-induced higher prices for oils. Increases in soybean oil production, accounting for about 22 percent of the additional world output of oils and fats would largely originate from Brazil and Argentina. The export subsidy reduction commitments of the United Sates would result in a decrease of production in the United States. A marginal increase is projected for production of lard and tallow, mainly on account of the Uruguay Round induced expansion of the livestock sector projected in North America, while world output of butter is projected to fall in response to the trend towards a reduction of the protection given to this commodity in many developed and developing countries.
In the case of oilmeals, world production is expected to amount to 71.7 million tonnes (100 percent protein) by the year 2000 nearly 43 percent above the average during 1987 to 1989 and only 0.7 percent higher than the baseline projections ignoring the outcome of the Uruguay Round. Over 90 percent of the additional production of oilmeals, largely of soybean meal, originating from Brazil and Argentina would be for export. The slight increase of the soybean meal production projected in the Far East (Indonesia mainly) would be absorbed by the local requirements for animal feeding.
Consumption. World consumption of fats and oils by the year 2000 is projected to be 108.3 million tonnes, i.e. almost 40 percent over the 1987-89 average, out of which 1.0 million tonnes would be due to the Uruguay Round. However, while the projected impact of Uruguay Round commitments on the consumption of oilseed-based commodities its expected to be modest at the global level, substantial changes would occur at regional or country levels, and for individual commodities.
About 55 percent of the projected increase in world consumption of oils and fats induced by the Uruguay Round is projected to occur in the developing countries. The Uruguay Round-induced higher price would result in a lowering of consumption in Latin America and Africa, but these decreases are expected to be largely offset by the substantial increase in consumption in the Far East region due to the demand-boosting effect of higher GDP growth.
In the developed countries, the global increase in consumption of oils and fats due to the Uruguay Round is estimated at 464 000 tonnes. Most of the additional growth in consumption is expected to occur in eastern Europe and the area of the former USSR.
World consumption of oilmeals by the year 2000 is expected to reach 71.7 million tonnes (100 percent protein equivalent), about 40 percent over the 1987-1989 annual average. The boost to world consumption resulting from the Uruguay Round is projected at 500 000 tonnes (100 percent protein equivalent). Almost all of this additional amount would occur in the developing countries (60 percent in the Far East and 30 percent in Latin America). As regards the developed countries, a decrease of 800 000 tonnes (100 percent protein equivalent) is expected to occur in the demand for oilmeals in Western Europe, resulting from the Uruguay Round-induced decline in livestock numbers. However, a rising output of livestock products as a result of the Uruguay Round is expected to lift the demand for oilmeals in North America (730 000 tonnes), which would largely offset the decline in the consumption in Western Europe. Therefore, the global growth in the consumption of oilmeals in the developed countries by the year 2000 attributable to the Uruguay Round is expected to be minimal.
Trade. The effect of the implementation of the Uruguay Round on world trade in oilseed-based products, in particular oils and fats, would be greater than for production and consumption, largely as a consequence of the expected reduction in export subsidies, of the market access commitments and the general trend towards liberalization and increased transparency of trade. The average of reduction commitments of ad valorem tariffs, which are the most used form of protection is of 11.3 percent for oilmeals, 16.4 percent for fats and oils and 15.1 percent for butter. Minimum and current access commitments have been established by some developing and developed countries, but they cover only 5 percent of the world trade in fats and oils and 6 percent of the trade in oilmeals and the increase in access offered during the implementation period is small. The export subsidy reduction commitments cover 18 percent of the world trade in fats and oils (6 percent of which for developing countries), and 11 percent of the trade in oilmeals (7 percent for developing countries). The incidence of the full implementation of commitments by the year 2000 to reduce by a global 29 percent5 the subsidized exports of fats and oils and by 17 percent the subsidized exports of oilmeals will be significant (these reductions refer to the trade in quantity, and include the oil and respectively the oilmeal content of traded oilseeds).
It is important to note that while the projections for trade in oils, fats and oilmeals by the year 2000 have been revised to take account of the Uruguay Round commitments, this study assumes no revisions to preferential agreements, such as the Generalized System of Preferences and the Lomé Convention.
World trade in these commodities is expected to amount to 69.3 million tonnes (38.5 million tonnes of oils and fats and 30.8 million tonnes of oilmeals - 100 percent protein equivalent), 1.8 percent above the forecast figure excluding the Uruguay Round. The value of world trade in oilseeds, oils and oilmeals, which would have risen by 32 percent between 1987-1989 and the year 2000 in the absence of the Uruguay Round, is now projected to increase by an additional 6 percent to US$29 600 million by the end of the century. Developing countries would account for a considerably larger share of the increase in trade than the developed countries.
World trade in fats and oils by the year 2000 would reach 38.5 million tonnes, 47 percent above the 1987-1989 average. The additional trade resulting from the implementation of Uruguay Round is estimated at 1.3 million tonnes. The bulk of the Uruguay Round induced increases in exports of fats and oils is projected to be in vegetable oils originating from Latin America, i.e. Brazil and Argentina (with combined exports of soybean and sunflower oils of 520 000 tonnes) and in palm oil from the Far Eastern countries, i.e. Malaysia and Indonesia (with combined exports of palm and palm kernel oil of 640 000 tonnes). The global effect of the Uruguay Round on exports of fats and oils from developed countries is expected to be minimal, as the slight increases in the exports induced in North America is expected to be offset by a decrease in export availabilities of eastern Europe. About two-thirds of additional imports by the year 2000 resulting from the Uruguay Round would be concentrated in large importing countries in the Far East, in particular China. The balance would be imported by developed countries in wester Europe, eastern Europe and Japan, reflecting the effect of increased GDP and the trend to reduce protection, which would limit domestic production.
Global world trade in oilmeals due to the Uruguay Round is projected to decrease marginally by the year 2000, compared to the level of trade in the baseline projections. This is largely the result of over 800 000 tonnes decrease projected in the imports of western Europe. By contrast, the imports of the developing countries are expected to increase by over 600 0(10 tonnes, mainly due to larger purchases by some Far Eastern (China, Indonesia, the Philippines) and Latin American countries.
Prices. Uruguay Round commitments to reduce subsidies to production and exports would induce some reallocation of production and trade, and world prices are expected to be higher than they would have been in the absence of the Uruguay Round. The impact on prices is particularly marked for commodities for which protectionism is most widespread, namely butter whose world prices by the year 2000, assuming full Uruguay Round implementation, are expected to be 12 percent higher than in the absence of Uruguay Round. The impact of the Uruguay Round on prices is expected to be stronger for vegetable oils than for oilmeals, and world prices in real terms of vegetable oils are expected to be 4 percent higher by year 2000, against almost no change for oilmeals.
Conclusions. The Uruguay Round impact on world production and consumption of both oils and oilmeals is likely to be limited, but somewhat larger for the volume of world trade in oils, for the international market prices of oils and fats and for the value of the world trade in oilseeds, oils and oilmeals.
The bulk of the Uruguay Round-induced increases in the production and exports of oils is projected to be in the developing countries in the Far East and in Latin America, chiefly on account of palm and palm kernel oils from Malaysia and Indonesia and soybean-based products from Brazil and Argentina, while for oilmeals the major expansion would lake place in Latin America.
By the year 2000, the increase in import demand will be mainly for fats and oils in the Far East, particularly China, and less marked expansions are expected in imports of oils and fats in eastern European countries (Poland and Romania) and western Europe.
The implementation of the Uruguay Round would increase not only the transparency of the trade environment in the sector, but also the competition for markets between exporting developing countries, which would still be confronted with competition from subsidized exports mainly from developed countries.
Both exporting and importing countries will be required to conform to the SPS Agreement and ensure that the standards governing international trade, including those on aflatoxin contamination, remain in conformity with the Agreement without creating barriers to trade because of their excessive stringency.
Introduction. The impact of implementing the Uruguay Round on the world sugar economy is expected to be relatively limited. The following analysis is of a preliminary nature, reflecting mainly the consensus of opinion regarding the likely effects of agreed commitments on trade flows and price levels. Analysis of the full implications at the global level and for individual countries will be covered in detail in a new joint study of prospects in the world sugar economy to be carried out by FAO and the International Sugar Organisation in the latter part of 1995. The last joint projections study of the two organizations was published in 1992, and subsequent developments indicate the need for reassessment of projected trends for individual countries. Therefore, the present analysis has been carried out at a high level of aggregation. It assumes no further policy changes apart from the implementation of the Uruguay Round agreements, for example further national sugar policy reforms or changes in preferential trade agreements. Moreover, stocks are taken as constant. Though providing only a rough indication, the analysis at the regional and global level gives some indication of the direction and magnitude of changes in trade which might result from the Uruguay Round.
Over 55 percent of world sugar production and consumption takes place in developing countries. About 25 percent of world production is traded internationally, with developing countries accounting for about 65 percent of total exports. On the importing side, the developed and developing regions shared about equally the total market in 1987-89. However, because of underlying factors affecting consumption, the projected growth is expected to continue to be rapid in the developing countries while import demand would stagnate or decline in the developed regions. Almost every government intervenes in the sugar market, and various restrictions and regulations in different forms are imposed on sugar production and trade. As a reflection of the role of sugar as a foodstuff and important source of calories, as well as the sensitivity of farm support measures in many major sugar producing areas, under the Uruguay Round little change will occur in domestic support programmers since existing regimes are generally considered to be consistent with the provisions of the Agreements, particularly in the European Community and the United States. Nevertheless, the extent of future support programmer is under discussion within the context of domestic legislative processes. Should changes be made in regulatory provisions, there could be far-reaching effects on global production and trade of sugar.
Uruguay Round provisions affecting sugar markets. Among the elements under the Uruguay Round Agreement on Agriculture that are foreseen to have an impact on the world sugar market are tariffication, tariff reduction, minimum access provisions and reductions in export subsidies. Tariffs are widely used by governments to intervene in trade in sugar. According to a recent study by the International Sugar Organisation (ISO), almost all countries involved in sugar trade impose tariffs or duties on sugar imports. The importance of preferential treatment of imports has been sharply curtailed since the mid-eighties and it is estimated that the volume of preferential trade is currently less than 3 million tonnes compared to about 8 million tonnes in 1985. It is therefore significant that under the Uruguay Round 89 countries have agreed to reduce tariffs on sugar imports, though average rates will still remain very high. On average, the developing and developed countries would reduce tariff rates on raw sugar imports by 22 percent and 16 percent, respectively, by 2004. For white sugar, the developed countries will undertake a larger average tariff reduction, 30 percent, compared to a 14 percent reduction by the developing countries. For some major markets, the impact of such reductions is of lesser significance as they are being made from relatively high levels, for example the European Community, Japan and the United States. Nevertheless, the binding of tariff rates provides a ceiling for these policy instruments, which could in due course constitute a starting point for further negotiations.
A total of 20 countries made commitment on minimum access for sugar, amounting to 3.11 million tonnes in 1995, rising to 3.35 million tonnes by 2004. The United States and the European Community set minimum annual low-duty import quotas at average 1986-88 levels, about 1.14 million and 1.30 million tonnes, respectively. While based on actual import levels of the late eighties, and thus not contributing to increased access, the Uruguay Round accord effectively limited the extent to which future adjustment in supply would need to be borne by exporting countries. The import quotas of 18 other countries would provide markets for about one million tonnes of sugar exports, largely additional compared with 1986-88.
Commitments on export subsidies represent a major innovation in policy developments affecting volumes and patterns of world sugar trade. Some reductions, for example in the European Community would be achieved by the year 2000 while others would be concluded by 2004. Among the major commitments, the European Community would reduce subsidized exports by 340 000 tonnes, or 21 percent below the 198688 average level. South Africa would also reduce subsidized exports by 21 percent, or 200 000 tonnes. Reductions of subsidized exports shall also be made by several major developing country suppliers including Brazil and Mexico. While the reduction commitments amount to a small proportion of world sugar trade, less than 5 percent, and are thus expected to have a limited impact, nevertheless they represent an important step in the direction of less subsidized trade in the world sugar economy. Annex tables A4 and A5 present a summary of base tariff rates, reduction commitments and minimum low-duty import quotas for selected countries.
Production. Before taking account of the Uruguay Round world sugar production was projected to grow by about 1.6 percent annually from 1987-89 to reach 127.3 million tonnes in the year 2000. Production in all regions would increase, but growth in developing countries would considerably exceed that of developed countries. In particular, production was projected to expand in the Far East and Africa by about 3 percent annually to reach 38.5 million tonnes and 7.4 million tonnes, respectively. Production in developing countries would account for two-thirds of world output by 2000. Among the developed regions, production would expand by about 1.5 percent in North America but would remain relatively stable in Europe. Also in the area of the former USSR and eastern Europe little change is projected in production.
Implementation of the Uruguay Round would increase world production by about 1 percent to nearly 129.0 million tonnes. Most of the addition to output would occur in Latin America and the Caribbean and the Far East, where production would reach 31.1 million tonnes and 38.9 million tonnes, respectively. The (Uruguay Round would have a little impact on production in most developed countries where agricultural policies are assumed to remain unchanged. Growth in North America and the European Community would continue in line with domestic market opportunities since minimum access provisions and limitations on subsidized exports would constrain the shifting of adjustments to the world market. Some additional impetus to production would, however, occur in relatively low cost developed exporting countries, such as Australia, to take advantage of market opportunities arising from trade liberalization.
Consumption. The baseline projections indicated that world sugar consumption would increase from 105.8 million tonnes in 1987-89 to 126.8 million tonnes by 2000. Consumption growth at 1.6 percent would be lower than that achieved during the eighties. As in the past, however, the expansion would be concentrated overwhelmingly in the developing countries, consumption increasing from 58.3 million tonnes to 79.0 million tonnes by 2000. All regions would experience growth, but the bulk of the rise in consumption would occur in the Far East. However, in contrast to the eighties, consumption would increase also in the developed countries mainly in the United States and the European Community.
The rise in consumption of sugar as a consequence of the Uruguay Round would occur mainly in the developing countries, where consumption would expand by a further 2.0 million tonnes, or 2.5 percent. In the developed countries, on the contrary, consumption would be only slightly greater. The rise in income resulting from overall trade liberalization would contribute significantly to the increase in consumption in developing countries. Most of the increment would occur in Asia, but consumption would also increase in Africa, Latin America and, to a lesser extent the Near East. The Uruguay Round would have only a limited impact on sugar consumption in the developed countries because of low price and income elasticilies.
Trade. Some increase in trade volume is expected to occur as a result of the Uruguay Round. Both the reduction in tariffs, but more important, rising incomes would induce world imports to expand by 5 percent over the baseline projections to 28.6 million tonnes by 2000. imports into the developing countries would account for most of the expansion, with increases occurring mainly in the Far East, the Near East and Africa. Imports into the European Community and the United States are not expected to exceed greatly import access commitments. The increase in import requirements would bring the world sugar market into a better balance. The reduced volume of subsidized exports would also improve the balance. As a result of increased import demand and reductions in subsidized exports, world market prices are expected to increase. The current analysis indicates that world market prices would be 7 percent higher in 2000 compared with the previous projections, thus providing some inducement for increases in production and exports, particularly among low cost competitive supplying countries.
Conclusions. The implementation of the Uruguay Round Agreement would induce increases in world sugar production, consumption and trade, but the overall effects would be relatively small. Further developments in the world sugar market will be heavily influenced by policy developments which may occur leading to reduced support to sugar production and exports. Other factors such as the economic growth in the area of the former USSR and in eastern Europe, production recovery in Cuba, and regional trading arrangements will also have important effects on future prospects in the world sugar market. Lastly, developments in productivity and comparative advantages for sugar and alternative crops could over the longer run significantly affect the sugar sectors of individual producing and exporting countries.
Consumption. World meat consumption is projected to grow by 2.2 percent per annum from 1987-89 to the year 2000 to 213 million tonnes, down from the 3 percent growth rate in the 1980s. Average per caput consumption would then rise from 31.9 kg to 33.8 kg. Demand for poultry products is expected to show the strongest momentum among the various types of meat, followed by pork, which should remain the most popular meat. The contribution of the Uruguay Round Agreement to projected meat consumption is expected to be marginal at the global level, although it is estimated to be positive in the Far East. In most other regions, consumption is expected to be negatively affected by the rise in international prices of meat associated with the Bound which would tend to offset the impact of lower duties on domestic prices.
The developing countries are expected to account for the bulk of the 50 million tonnes projected expansion in overall meat consumption, with an annual growth of 4.5 percent. Meat consumption is likely to expand fastest in the Far East. Strong income growth will stimulate per caput demand, particularly in China, Indonesia, the Republic of Korea and Pakistan. Relatively fast expansion has been projected for poultry and bovine meat in the region as diets, often based largely on pork, diversify.
Multiplication of fast-food outlets could also become an important influence underpinning demand for poultry and bovine meal.
In the rest of the developing world, population is anticipated to be the dominant factor driving demand. Nonetheless, increased economic growth in the Latin America and the Caribbean region should also stimulate demand, especially for pig and poultry meat, though beef would still account for over 40 percent of total meat intake. In Africa and the Near East, little change in per caput consumption is expected, but fast population growth would still provide the basis for a rapid expansion of domestic meat markets.
Growth of consumption in the developed countries has been projected to stagnate in the 1990s. Increases in per caput levels of consumption, which are already very high, will be constrained by the modest growth in incomes and increasing health concerns. A decrease in the already low rate of population growth will further contribute to slow the expansion in demand. These factors will be particularly felt in western Europe and Oceania. By contrast, in Japan, relatively fast growth has been projected reflecting changes in the dietary patterns, rising incomes and falling prices, following the reduction in tariff protection initiated in the early 1990s and carried on under the aegis of the Uruguay Round.
Structural changes in eastern Europe and in the area of the former USSR since 1989 have been a major development affecting projections. In particular, the reduction or removal of the exceptionally large retail price subsidies, which guaranteed to most people easy access to livestock products, have already cut consumption sharply. Although a recovery in disposable incomes in the latter part of 1990s should underpin the demand for meat, consumption levels of the late 1980s are unlikely to be regained by the year 2000.
Overall, consumers in the more affluent societies are likely to place a greater emphasis on quality and convenience over increases in quantities consumed. At the end of the decade the developed countries are expected to account for less than half of total meat consumption, clown from 60 percent in the late 1980s. However, the projections still show a considerable disparity between average per caput meat consumption in the developed countries of 79 kg and in the developing countries of 22 kg. The two groups of countries are, however, expected to share the long-run shift in demand towards poultry meat.
Production. Growth in world production of all major types of meat is projected to slow compared with the 1980s, except for that of bovine meat, which is projected to be maintained at a relatively low rate. Although the overall Uruguay Round effect on meat production is expected to be very small at the global level, it is projected to be important for countries in North America and Oceania where the transmission of higher international prices under the Round should boost an expansion in the meat sector. By contrast, production in the European countries, especially in the EC, and in Japan is projected to be slightly reduced under the Uruguay Round scenario.
In the developing countries, growth in overall meat production is projected to diminish from an annual rate of 5 percent over the 1980s to 4 percent till the end of the decade. In volume terms these countries will record an expansion of some 43 million tonnes to 106 million tonnes, considerably more than the 24 million tonnes increase they achieved during the 1980s. Among the different types of meat, poultry and pig meat output is expected to grow faster than that of bovine and sheep meat as most developing countries have a strategy of catering for consumption growth by expansion of intensive poultry and pig husbandry.
More dynamic meat production growth than in the past decade has been projected for Africa and the Latin America and the Caribbean region, while it may slow down in the Near East and in the Far East regions reflecting resource constraints there and a reduced potential for large productivity gains. Nonetheless, meat production in the Far East is still projected to expand the fastest, at over 5 percent per year.
Meat production in the developed countries is projected to rise by less than half a percent a year, as a 2 percent growth in poultry meat will be offset by stagnating output for the other meat categories. Production growth in North America and Oceania is anticipated to be fastest at 2 percent and 1 percent per annum respectively. In North America this tendency should reflect significant productivity gains, and a very dynamic poultry sector. In Oceania, production is projected to recover from the near stagnation of the past decade, mainly owing to a reversal of the previous negative trends in bovine meat output, bolstered with improved access to foreign markets under the Uruguay Round.
By contrast, production growth rates in western Europe are expected to be curbed by continuing policies to limit surpluses of livestock products. In the EC, this was mainly fostered through the reform of the Common Agricultural Policy. In eastern and central Europe, structural changes and, in some cases, the loss of traditional export markets have been responsible for a depletion of animal stocks and for a scaling-down in meat production in the early 1990s. For most of these countries a full recovery is unlikely to occur by the cud of the century. The meat sector in the area of the former USSR has been seriously impaired by the reduction of direct state support and the movement towards a market economy, leading to massive slaughtering in the first part of the 1990s. Although it is expected that the recovery in income and demand, and progress in the transformation of the industry will assist in reversing the falling trend after the mid-1990s, meat output in the area of the former USSR is projected to decline by one quarter over the 1990s.
Projections for meat production in Japan also point to a contraction, reflecting fiercer foreign competition following the progressive opening of the domestic market to imports since the early 1990s and further improvements in access under the Uruguay Round, as well as rising production costs, in part related to a strengthening of environmental protection measures.
One outcome of these projections would be a rise in the share of global meat production of the developing countries from 39 percent in the late 1980s to over 50 percent by the year 2000.
Trade. A significant increase is projected in the volume of global trade in meat (including trade in live animals and intra-EC flows), from 14 million tonnes in 1987-1989 to 19 million tonnes in the year 2000, or 36 percent over the whole period. Of this, 3 percent can be attributed to the implementation of the Uruguay Round.
Bovine meat is likely to remain the most important commodity in international meat trade, accounting for 42 percent of total shipments. World bovine meat imports are projected to grow by 35 percent since the late 1980s (i.e. 2.5 percent per annum) to 8.0 million tonnes, of which close to 6 percent due to the Uruguay Round. Import markets are expected to expand by over 4 percent in the developing countries. This would reflect growth in the Far East, (especially China, Indonesia, the Republic of Korea, the Philippines and Malaysia), in Latin America and the Caribbean (especially Brazil and Mexico), and in Africa (especially Nigeria). Among the developed countries, Japan is projected to import 1.3 million tonnes, three times more than in the base period, following tariffication in 1991 and the subsequent lowering in import duties from 70 percent in 1991 to 38.5 percent in the year 2000. By contrast, shipments to the United States may decline somewhat while its exports are projected to be boosted by its growing penetration of the expanding markets in the Far East. For countries in the area of the former USSR, imports and exports are projected to decline following restructuring and the dissolution of the traditional trading relationships between these countries. In the EC, the commitment to reduced subsidized exports under the Uruguay Round, combined with measures to stabilize production introduced in 1992 under the reform of the Common Agriculture Policy, should lower net bovine meat exports compared with the baseline projections. By contrast, countries in Oceania are anticipated to regain part of the world market shares which they lost during the 1980s, reflecting improved access to some Pacific markets, especially Japan and the Republic of Korea. Under the Uruguay Round the United States has also raised Australia's and New Zealand's specific import quotas compared with recent years, but these increases basically restored access to the levels of the base period. Compared with the baseline, exports from Latin America and the Caribbean are expected to recover somewhat, following improved access to the EC and continued expansion in Asian markets. Deliveries from the region could be further boosted should some South American producing countries become eligible to supply Foot-and Mouth Disease (FMD) free countries, as a result of eradication of the disease or the recognition of FMD-free regions within their territory, following the application of sanitary and phytosanitary measures under the Uruguay Round.
Prospects for sheep and goat meat are for a 2 percent per annum growth in trade to the year 2000 with little extra effect expected from the Uruguay Round. World trade has been projected to reach 1.4 million tonnes in 2000, stimulated mainly by an expansion in import demand from countries in the Near East, North Africa and the EC.
Developed countries in Europe and Oceania are expected to remain the major suppliers.
By contrast, the expansion of trade in pig meat products is anticipated to slow compared with the high growth rates achieved in the past decade, with the Uruguay Round bolstering the volume of flows by 3 percent, mainly from North America. Although the developing countries are anticipated to play an increasing role in world pig meat markets, the developed countries would still account for the bulk of world imports and exports, a considerable proportion of which being traded within the EC. Import markets are expected to expand in the Far East, notably in Japan and Singapore. However, shipments to the area of the former USSR are likely to fall significantly from the level of the late 1980s. One of the major developments would be the projected shift of the United States from being a net importer to a net exporter, following large scale investments in the sector in recent years. By contrast, net exports from the EC are expected to decline, reflecting a reduction in subsidized sales and a strengthening of pollution-control measures, including the EC Nitrate Directive. This may erode the positive effects of falling grain prices on production costs and, hence, on international competitiveness. In eastern and central Europe, Bulgaria, Hungary and Romania are expected to remain net exporters, although overall sales from the region would shrink notably, reflecting, to a large extent, the Uruguay Round limitations on export subsidies. In China, expansion of the pig sector should enable the country to meet rising domestic requirements and to increase sales to foreign markets slightly, even though exports from the Province of Taiwan may be constrained by a strengthening of environment regulations on producers and rising feed costs.
World trade in poultry meat has been projected to grow by 5 percent per annum to 4.4 million tonnes between the base period and the year 2000, with marginal impact from the Uruguay Round. The expansion would reflect major increases in imports by high-cost producing countries such as Japan. Particularly large deficits have also been anticipated in the Near East, especially Iraq and Saudi Arabia, and in Mexico. Exports are projected to originate mainly from developed countries, with the United States consolidating its leading position supplying 35 percent of world exports while the EC commitment to reduce support to exporters is likely to lessen the EC poultry trade surplus. The developing countries are expected to raise their share in world exports following an expansion of sales by countries such as Brazil, China and Thailand. At the same time, imports by developing countries are projected to double by the year 200(1, with large increases anticipated in all regions, especially in the Far East and in Latin America and the Caribbean.
Despite the expected expansion in meat trade to the year 2000, total meat imports are expected to account for only about 9 percent of world consumption by the end of the decade, about the same share as in 198789. Developed countries are projected to rely on trade to meet 13 percent of their domestic demand compared with 5 percent for developing countries. The reliance on imports will be larger for bovine (14 percent) and sheep and goal meat (12 percent) and less for poultry (8 percent) and pig meat (6 percent). The balance of projected world import demand and export supplies to the year 2000 would result in a strengthening of international prices, varying between 13 percent for pig, 14 percent for bovine and poultry and 24 percent for sheep and goat meat, with a substantial boost provided by the Uruguay Round. However, given the small share of meat trade in relation to production and consumption, relatively small variations in these two basic variables may lead to large changes in world trade balances and hence to unexpected changes in international prices.
Contribution of the Uruguay Round Agreement to the projections. The impact of the Uruguay Round on projected global meat production anti consumption is only slight, although there are expected to be changes in their location. Its effect is expected to be much stronger on international meal prices and to a lesser extent on trade. The reduction in export subsidies and tariffs under the Uruguay Round will contribute to a substantial rise in international prices of livestock and meat with bovine, pig and poultry meat estimated to rise by some 8 percent and sheep meat by 10 percent compared with the "no Round" scenario. Overall, the implementation of the Uruguay Round is estimated to bring about a 3 percent increase in the volume of trade in livestock and meat by boosting bovine and pig meat transactions, while trade in poultry and sheep meat should be little affected. Countries in Latin America and the Caribbean, North America and Oceania are expected to benefit the most as the transmission of higher international prices onto their domestic markets would stimulate production and depress consumption. The commitment to reduce subsidized sales is a major reason for reduced exports from the EC and, to a lesser extent, from the Far East, especially China. On the import side, the improved access resulting from the reduction in tariffs is estimated to stimulate the developed countries' purchases, especially those by Japan, countries in eastern Europe and South Africa. The impact on the imports of the developing economies is much less, except in the Far East. For most other countries, the increase in international prices would offset the positive effects of reduced tariff on imports.
The increased volume of trade combined with the strengthening of international prices resulting from the implementation of the Uruguay Round should lead to a substantial boost of the global value of international trade in livestock and meal products of the order of 13 percent compared with the "no Round" projections results. Among the different meat categories, bovine meat and pigmeat trade value should be boosted the most at 14 percent, followed by sheep anti goat meat and poultry meat at 10 and 9 percent respectively. Although developing countries' export earnings are estimated to rise by 13 percent, slightly faster than their import bills, their unfavourable balance of trade in meat would increase by 3 percent. This would mainly reflect rising deficits in the Far East and Near East countries which would outweigh improved balances from countries in Latin America and the Caribbean, and to a lesser extent, in Africa The implementation of the Uruguay Round should add 13 percent and 14 percent respectively to the developed countries' meat export revenues and import bills, resulting in a 3 percent increase in their net earnings, although meat trade deficits are projected to increase for countries in eastern Europe and in the Area of the former USSR, as well as for Japan.
Production. World milk production is projected to rise to 559 million tonnes by 2000, and is virtually no different from that before including the effects of the Uruguay Round. The average annual growth rate would be 0.6 percent, less than half that of the previous decade. At the global level, the increase in production is expected to result from increases in both the number of milking animals and in yields. Milk production in developing countries is projected to be largely unchanged as a result of the Round; that is, it will increase at an annual average growth rate of 2.9 percent to reach 198 million tonnes by 2000. The developing countries would then account for 35 percent of world output in 2000, compared to 27 percent in 1987-89. For the developed countries, production, at 361 million tonnes, would bring their share of world output down to 65 percent. Unlike past trends, production is expected to rise primarily in the same areas as consumption and in a number of low-cost producing countries which do not subsidize exports. In Asia, in particular, strong growth in demand is likely to stimulate milk production. In absolute terms, milk output is projected to expand most in India. However, other countries in Asia will also rapidly raise milk output, particularly Pakistan and China. An increase is also projected in Latin
America and the Caribbean, partly in response to higher demand from the growing urban population. The improvement in international trade conditions as a result of the Uruguay Round would also favour expansion of production and exports of several low-cost producing countries in South America, particularly Argentina and Uruguay. By contrast, in Africa, difficult economic conditions coupled with inadequate feed supplies, are expected to continue to restrict dairy development, irrespective of the Round.
In the developed countries, milk production is expected to drop by 20 million tonnes relative to 1987-89, falling to 361 million tonnes in 2000, largely unaffected by the Round. The global decrease in output relates mainly to changes in eastern Europe and the area of the former USSR. There, production has contracted sharply since 1990, following the removal of producer and consumer subsidies and the restructuring of production. This tendency is expected to continue over a number of years, unrelated to the Uruguay Round, with milk output in the year 2000 projected to be 24 million tonnes less than at the end of the 1980s. By contrast, in Oceania the Round is expected to have a notable impact. Milk production there is projected to rise by 11 percent in response to increased export opportunities created under the Round; output in New Zealand is particularly sensitive to changes in international conditions, as over 80 percent of milk production is exported. In the United States, output will probably increase at a similar pace to domestic demand to reach 75 million tonnes by the end of the decade. Canada has been assumed to continue policies of curbing surpluses leading to some decrease in production during the current decade; however, recent decisions to increase quotas in that country may result in the drop in output being less than expected. The EC is assumed to make no changes in its quota system other than those implemented at the end of the 1980s and the early part of the 1990s, and would maintain production near 1994 levels. Other western European countries are also expected to maintain levels of milk production similar to those prevailing in 1994. In western Europe as a whole, adjustment will probably be carried out through a reduction in the numbers of dairy cows, as progress in breeding and animal husbandry suggests further increases in yields. In Japan, output is anticipated to rise by 0.8 million tonnes over the base period. This is significantly below the expected expansion in domestic demand, and, as in recent years, Japan may admit imported products to satisfy a larger portion of its consumption.
Demand. Slower growth in global milk consumption is projected for the 1990s and would be largely unaffected by the Round. This slowing would mainly reflect a lower average per caput food demand and a sharp reduction in milk use in feed in Europe and area of the former USSR. Consumption in the developed countries is expected to fall slightly, from 367 to 342 million tonnes, while that of the developing countries is projected to increase substantially, from 160 to 217 million tonnes.
The decline in consumption of milk and milk products amongst the developed countries mainly reflects contraction of demand in eastern Europe and the former USSR, dating from the beginning of the 1990s, and is unconnected with the Uruguay Round. In these two groups of countries, per caput consumption is projected to fall by almost 20 kg, from 178 kg at the. end of the 1980s and to 159 kg in 2000. There, the wider availability of high quality margarine and a larger supply of vegetable oil and cooking fat will tend to reduce butter consumption. However, this may be partly offset by increased consumption Or a greater variety of cheese and fresh milk products which will become available in these countries during the 1990s.
For the other developed countries, the Uruguay Round is not anticipated to have any substantial impact on milk consumption. In western Europe the reduction relative to levels in late 1980s would mainly reflect construction of surplus disposal as animal feed associated with the decline in milk output. Elsewhere, consumption is expected to increase in the United States, Oceania and Japan. In per caput terms, Japan is expected to register the largest absolute increase in consumption amongst the developed countries; however, at 70 kg per caput, consumption will be well below the anticipated level of 190 kg for developed countries as a whole in 2000.
In the developing countries, consumption of milk and milk products is projected to grow at an average annual rate of 2.6 percent between the late 1980s and 2000, largely as a result of factors unrelated to the Uruguay Round. Developing countries' share of global consumption is projected to rise from 30 percent in the base period to 39 percent in 2000. However, per caput consumption in the developing countries, at 39 kg, will be only one fifth of that the developed countries. Growing population and urbanization, coupled with some increase in average incomes, will be the main factors behind the expansion of total consumption. Response to changes in incomes will remain high in all developing countries. With economic growth projected to be most pronounced in Asia, this continent is likely to experience the fastest expansion in consumption of milk and milk products: sustained growth in consumption is also anticipated for Latin America. Elsewhere, slight growth in consumption is forecast for most countries. For a number of developing countries, population increase will mean that, while the total amount of milk and milk products available for consumption increases, per caput consumption will be lower in 2000 than it was at the cud of the 1980s.
Trade. At the global level, the Uruguay Round is not expected to alter the amount of milk and dairy products traded internationally. Overall, the volume of milk and milk products exported, expressed in milk equivalent, is in any case expected to be 5 percent less in 2000 than in the 1987X9, a decline of 3 million tonnes. The principal reason for this is that in the years 198789 dairy exports, particularly by the EC, were especially large. Since that time, the EC has diminished milk production through quota reductions and has expanded internal schemes for surplus milk disposal. However, the commitments to reduce subsidized exports were specific to four distinct classes of dairy products, namely: butter and butter oil; cheese; non-fat dry milk; and other dairy products. Thus, even though EC exports of the butter were estimated to have fallen, by 1994, to below half the level stipulated as the maximum for 2000, exports of cheese had grown to far exceed even the initial maximum level in the EC schedule. Implementation of commitments in the dairy sector is thus likely to put an important constrain! on EC cheese exports while subsidized exports of butter and skimmed milk powder are likely to be far below those permitted under the Round.
Australia and New Zealand, which were already expected to benefit from reduced supplies of dairy products to the world market from elsewhere, are projected to increase their exports by 1.7 million tonnes as a result of increased opportunities opened up by the Uruguay Round. Both are expected to benefit from both reduced competition from subsidised exports by other developed countries and the increased openness of markets of some developed countries to imports. In North America, the United States is projected to move from being a net importer to being a net exporter of dairy products; however, this was already foreseen in the baseline projections. The principal factor behind this switch is expected to be reductions in domestic prices relative to those prevailing internationally.
Exports of milk and milk products by developing countries are projected to increase under the Uruguay Round; however, countries in this category will continue to account for a small proportion of global exports, .approximately 5 percent. Most exports from the developing countries are projected to originate in Latin America, in particular Argentina and Uruguay. In Asia, growth in India's milk production could mean that it will become a regular exporter.
Comparing imports projected for 2000 with those in 1987-89, the decline by developed countries would be largely offset by growth in purchases from the developing countries, and would be largely unaffected by the Round. Developed countries would still account for most imports, although the establishment of regional trade agreements, such as MERCOSUR in South America, may act as a stimulus to trade within developing regions. Competition for limited export supplies and reduced subsidies are expected to lift the general level of dairy product prices considerably above the average for 198789, this would be accentuated by implementation of the Uruguay Round. However, by 1994, average export prices for dairy products were already over 20 percent higher than those prevailing in the base period. Since then, the prices of most dairy products on the international market have risen further.
Conclusions. At the world level, virtually no change in milk demand and production is expected to result from the Uruguay Round. However, on a regional basis, the Agreement is projected to stimulate higher production in Oceania following increased export opportunities, which will be offset by a contraction in Europe and the area of the former USSR. Similarly, the Round is expected to have a slight positive impact on production in Latin America.
The overall level of trade in milk and milk products is not expected to be affected by the Uruguay Round; however, there will be some redistribution in terms of region of origin and destination. The reduced volume of subsidised exports from several developed countries will, to an extent, be offset by increased exports from Oceania. Some growth in export opportunities is also likely to promote the expansion of shipments by some developing countries, especially in Latin America. A decrease in the proportion of subsidised exports of milk and milk products is expected to result- in higher prices, which could restrain imports by many developing countries. In contrast, imports by some developed countries could be increased as a result of minimum access agreements under the Uruguay Round.