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WORLD REVIEW

I. Current agricultural situation – facts and figures

1. CROP AND LIVESTOCK PRODUCTION IN 1996

• Estimates of crop and livestock production in 1996 indicate growth at the global level of 2.6 percent, close to the rate of 2.4 percent recorded in 1995. However, while the expansion in 1995 reflected strong output expansion in developing countries and a contraction in developed countries, the estimated increase in 1996 was more balanced between the two country groups. For the developing countries as a whole, the 2.9 percent growth in crop and livestock production in 1996 represented a significant slowdown relative to the preceding years (5.2 percent in 1995, 5 percent in 1994 and 4 percent in 1993). For the developed countries, the increase of 2.4 percent in 1996 represents a recovery after the 1.9 percent decline of the previous year.

• The expansion in output in the developed countries mainly reflected a recovery in North America from the sharp weather-induced drop the previous year. In the United States, crop and livestock production in 1996 increased by an estimated 5.5 percent, largely recovering from the 6.1 percent fall in 1995. In particular, crop production rebounded by an estimated 12.1 percent after the 15.3 percent drop recorded in 1995 but still remained short (by about 5 percent) of the record production level of 1994. Crop and livestock production also expanded in Canada by a robust 3.1 percent, continuing the upward trend of the previous years. In the European Union (EU), production grew by 3.1 percent after three years of declining output. Increases of 4.5 and 2.7 percent were recorded in Australia and New Zealand, while production in Japan fell by 1.9 percent.

• After the halt in the downward trend in crop and livestock production experienced in 1995, production in the transition countries fell further in 1996, although at a more moderate rate of an estimated 1.9 percent. The decline was concentrated mainly in the Eastern European transition countries (-4.6 percent after the 6.1 percent increase in 1995). Substantial production shortfalls were recorded, in particular in Bulgaria, Romania, the Federal Republic of Yugoslavia and Poland. Within the area of the former USSR as a whole, crop and livestock production in 1996 remained virtually unchanged, but with variations in performance among the republics. In particular, production is estimated to have expanded by 3.8 percent in the Russian Federation and by 1.5 percent in Kazakstan. In both cases this represents the first year of increasing total agricultural production since the beginning of the reform process. In Ukraine, on the other hand, production fell by a further 1.1 percent, continuing the downward trend although at a slower pace than the preceding years. Production increased slightly in Armenia and Kyrgyzstan but continued to expand at a sustained rate in Azerbaijan.

• Among the developing country regions, one of the most encouraging features in 1996 was the positive performance in sub-Saharan Africa, where total crop and livestock production is estimated to have increased by 4.2 percent, up from 3 percent in 1995 and 2.3 percent in 1994. The vast majority of countries in the region participated to varying degrees in the expansion in production. Strong percentage growth rates were reported in Angola (+9), Mauritania (+9), Mozambique (+16), the Sudan (+11) and Ethiopia (+7). Even more impressive rates of expansion took place in several southern African countries, including Lesotho (+22), Swaziland (+11), Zambia (+18) Botswana (+16), Malawi (+7) and Zimbabwe (+42), as improved weather conditions enabled recovery from the disastrous shortfalls the previous year.

• In Asia and the Pacific, production growth slowed dramatically in 1996 to an estimated 2.4 percent, from rates of about 6 percent in each of the three previous years. The slowdown primarily reflected less buoyant performances of the sector in China where, at 3.4 percent, crops and livestock expanded at the lowest rate since 1989. In India, production growth also fell to a mere 0.5 percent, well below the rates of the preceding years. Poor performances were experienced in the Philippines, where crop and livestock production virtually stagnated, and in Pakistan where production actually declined after several years of sustained expansion. On the other hand, generally favourable performances were recorded in Indonesia, Cambodia, Malaysia, Thailand, Viet Nam and, in particular, Myanmar, where output increased by more than 9 percent. In the Pacific Islands overall, production expanded slightly, reflecting modest expansions in Papua New Guinea and Solomon Islands and broadly unchanged production levels in Samoa.

• In Latin America and the Caribbean, growth of crop and livestock production slowed down somewhat in 1996 to an estimated 3.2 percent, compared with the 4.4 percent recorded in 1995 and the 4.9 percent in 1994. The rate of production growth, however, remained above the rate of population growth for the region, ensuring gains in per caput agricultural production for the third consecutive year and confirming the trend towards recovery of the sector at the regional level after a prolonged stagnation in per caput production through the 1980s and 1990s. Among the major countries in the region, the preliminary estimates point to declines in production in 1996 only in Colombia and Venezuela. Increases in production, both absolutely and in per caput terms, are estimated to have occurred in Brazil, Mexico, Argentina, Peru, Chile and Ecuador. The Caribbean subregion recorded a small increase in production: Bahamas, Cuba and Haiti achieved production increases – in the case of Haiti, this represented only a partial recovery from the shortfall in 1995 – while Trinidad and Tobago experienced a fall in production for the second consecutive year, although less pronounced than in 1995.

• In the Near East and North Africa, crop and livestock production rebounded after mediocre performances the preceding years, increasing by 5.1 percent for the region as a whole. The overall high rate of expansion can be largely attributed to vastly improved agricultural conditions in Maghreb countries, more particularly Morocco and Tunisia, where production expanded by around 50 percent, more than offsetting the severe drought-induced shortfall in 1995. Very strong production growth (12 percent) was also recorded in Algeria, following the 15 percent increase in 1995. Strong rates of expansion were also recorded in the Syrian Arab Republic (8 percent), continuing the strong upward trend of the previous two years, and in Jordan (9 percent). In the Islamic Republic of Iran and Turkey, production in 1996 grew at relatively modest rates of 1.9 percent and 1.2 percent, respectively, while production remained stagnant in Egypt after the robust 7.4 percent increase recorded in 1995. In Iraq, crop and livestock production continued the decline of the previous two years, contracting by a further estimated 3.6 percent.

Exhibit 1

2. FOOD SHORTAGES AND EMERGENCIES

• No fewer than 29 countries worldwide were facing acute food shortages requiring exceptional and/or emergency food assistance at mid-1997. More than half of these countries were in Africa.

• In sub-Saharan Africa, despite a recovery in production in several parts of the region in 1996, large-scale emergency assistance continues to be needed for millions of people affected by natural or human-caused disasters.

• In East Africa, in spite of a satisfactory cereal output for the main season in 1996, large numbers of people were suffering severe food shortages owing to the failure of the secondary season crop. Emergency food assistance was needed in eastern and northeastern parts of Kenya, in pastoralist southern regions of Ethiopia, in northern parts of the United Republic of Tanzania, eastern Uganda and in Somalia. There was also a need for emergency assistance in Eritrea, where grain production in 1996 was 29 percent below average. In Burundi, despite the recent partial relaxation of the economic embargo, the food supply situation remained tight for most products. In Rwanda, the huge number of returning refugees and the considerable deterioration of the security situation in areas bordering the Democratic Republic of the Congo (former Zaire) aggravated the already precarious food supply situation in the country. In the Sudan, despite an overall satisfactory food supply position, several areas of Darfur and Kordofan states, where cereal harvests were reduced for the second consecutive year, needed to be closely monitored and contingency plans worked out for provision of food assistance. In addition, food aid was required in the states affected by prolonged civil war.

• In West Africa, despite average to above-average 1996 harvests in the main producer countries, food supply difficulties were reported in several areas of Chad, Mauritania and the Niger, owing to localized poor harvests and income constraints. The 1997 rainy season started on time and even early in the western Sahel. Following several years of civil strife in Liberia, the food supply situation remained precarious, while in Sierra Leone the situation had deteriorated significantly following the recent upheaval. Food assistance continued to be required in both countries.

• In central Africa, the food situation continued to be tight in the eastern part of the Democratic Republic of the Congo. Famine conditions faced the tens of thousands of Rwandan refugees in the region whose repatriation back to Rwanda was under way with the help of relief agencies. Civil disturbances in the Congo were affecting the food supply situation in Brazzaville and that of refugees coming from the Democratic Republic of the Congo.

• In southern Africa, the 1997 cereal harvest was expected to be lower than the previous crop year but close to average levels. However, substantial food assistance will be needed in Angola and Lesotho where production was seriously affected by below-normal rainfall and reduced planting. In Mozambique, despite an overall 11 percent increase in coarse grain output, immediate food assistance was required for approximately 172 000 people, particularly those in central regions, who lost their crops as a result of floods.

• Elsewhere in the world, agricultural activities throughout Afghanistan continued to be hindered by shortages of agricultural inputs, damage to the irrigation system and insecurity. Displaced and destitute people will continue to need food assistance for some time to come. In Iraq, production of the 1997 winter crops was estimated to be the lowest since 1991 owing to a reported low rainfall in all parts of the country, a shortage of inputs and pest infestations. The food situation is expected to improve as a result of the implementation of the oil-for-food deal, but more food and agricultural assistance is still needed.

• In the Democratic People’s Republic of Korea, the food situation continued to deteriorate and the outlook for 1997 appears grim. Following severe floods over two consecutive years, domestic supplies of rice and maize were depleted and large-scale food imports (including assistance) were urgently needed to avert human suffering. In Mongolia, cereal production (mainly wheat) declined for the fifth consecutive year in 1996 as a consequence of insufficient rainfall and continuing problems in the sector, caused by economic transition and market reforms. Dwindling domestic cereal supplies and the limited capacity of the country to import sufficient quantities of grain resulted in a further deterioration of the country’s food security situation.

• In Laos, low and irregular rainfall in June and July 1996 delayed the transplanting of paddy, affecting crop growth, while typhoons caused widespread flooding in major rice-producing areas in the lowlands of central and southern regions. Emergency food assistance was needed to meet the needs of 420 000 of the most vulnerable people affected by floods. In Sri Lanka, rainfall during the 1996/97 maha season was low and erratic. As a result, the area cultivated was as low as in the drought-affected year of 1995. Part of the population in the north was not able to practise normal farming because of civil strife and drought conditions.

• In Haiti, despite an improved food supply situation in most parts of the country, serious food problems were being experienced in the North-West Department where almost 70 percent of the crops were lost because of a long severe dry spell which seriously affected about 120 000 people. Food assistance was required for an estimated 350 000 people in the whole country.

• In Bosnia and Herzegovina, although the food supply situation has improved with the cessation of hostilities and the progressive normalization of economic and trade activities, low purchasing power remains a constraint to food access. The food aid requirement was estimated to be 119 000 tonnes in 1997/98. In Armenia and Georgia, the food supply situation continued to improve with increased crop yields resulting from good spring rains, an increased use of fertilizer and the improved availability of fuel. However, emergency food assistance was needed for vulnerable populations. In Azerbaijan, some recovery in food production was expected in 1997 but a large number of vulnerable people were in need of targeted food assistance. In Tajikistan, the food situation continued to be precarious, and more than 600 000 people were in need of relief assistance.

Exhibit 2

3. WORLD CEREAL SUPPLY SITUATION AND OUTLOOK

• World cereal production in 1996 is estimated to have been 1 873 million tonnes (including rice in milled terms), about 8.5 percent above 1995 and above the trend. A larger coarse grain crop, particularly in the United States, accounted for the bulk of the increase, although outputs of wheat and rice also rose significantly. World wheat output increased by 8 percent following bumper harvests in the major exporting countries and good crops also among the developing countries. Rice output rose by about 2 percent to a record level in 1996.

• Global cereal stocks from crops harvested in 1997 are forecast to increase to 281 million tonnes, 9 percent above their reduced opening volume. The combined cereal carryover stocks held by major exporters are expected to increase for the first time in three years, approaching about 36 percent of the world total, compared with 28 percent at the beginning of the season. Globally, the ratio of end-of-season stocks to expected utilization in 1997/98 is just over 15 percent, an improvement from 14 percent in the previous season but still well below the 17 to 18 percent range that FAO considers to be the minimum necessary to safeguard world food security.

• Prospects for 1997 cereal crops point to another above-trend output of 1 881 million tonnes (including rice in milled terms). Wheat output is forecast to be 593 million tonnes, marginally up from the previous year and above-trend for the second year in succession. Output is forecast to rise in most of Asia, Europe and the Commonwealth of Independent States (CIS) and to remain similar to last year’s in North America, but will slip back somewhat in South America, North Africa and, in particular, Australia after a record crop last year. World coarse grain output in 1997 is forecast to remain similar to the above-trend crop in 1996 of about 911 million tonnes. The bulk of the increase is expected in North and South America but also in the CIS, where production is expected to recover from the reduced crop last year. As regards rice, assuming growing conditions remain as good as they were the previous year, paddy output could be around 562 million tonnes (377 million tonnes in milled terms), almost unchanged from the previous year.

• If current forecasts materialize, cereal output will be sufficient to meet expected consumption requirements in 1997/98 and should allow for a further modest replenishment of cereal stocks for the second consecutive year after the sharp drawdown in 1995/96. Nevertheless, the forecast global stock-to-utilization ratio may only reach 16 percent and thus would remain below the minimum level considered safe by FAO. The global cereal market would be particularly tight for wheat, with ending stocks in 1997/98 expected to remain low. By contrast, coarse grain carryovers are projected to continue to expand significantly, particularly among the major exporters. This outcome, however, would very much depend on coarse grain price developments next season, as a fall in prices could trigger more intensive feed use and thus cause utilization to rise faster than currently anticipated, with an ensuing downward adjustment in stocks.

Exhibit 3

4. EXTERNAL ASSISTANCE TO AGRICULTURE

• Total commitments made by bilateral and multilateral donors to agriculture (broadly defined) amounted to $10 312 million in 1995, just short of the $10 345 million reached in 1994. In real terms, however, this constituted an 8.6 percent decline which indicates the continuation of an overall declining trend in external assistance to agriculture. Indeed, when measured in 1990 prices, total assistance fell by 21.2 percent from $12 113 million in 1991 to $9 549 million in 1995. The share of external assistance to agriculture in total development financing has declined from 13 percent in 1990 to about 10 percent in recent years.

• Contrary to 1994, which saw a decline in bilateral and an increase in multilateral commitments, the total decline in 1995 was primarily the result of a decrease in multilateral contributions. In particular, commitments by the International Fund for Agricultural Development (IFAD) fell by 36 percent and those by the Asian and African Development Banks by as much as 60 percent in real terms. However, the level of commitment, in real terms, from the World Bank remained roughly the same. Commitments by the International Bank for Reconstruction and Development (IBRD) expanded from $2 016 million to $2 281 million, representing about 4 percent in real terms, while those by the International Development Association (IDA) also increased from $1 472 million to $1 545 million, but declined by nearly 4 percent in real terms. The aggregate commitments from the United Nations Development Fund (UNDP), FAO and the Consultative Group on International Agricultural Research (CGIAR) went up to $656 million from $647 million; however, in real terms this represented a decrease. After a sharp drop in assistance in 1994, multilateral assistance from the Organization of the Petroleum Exporting Countries (OPEC) rose significantly from $45 million to $161 million.

• Total bilateral commitments increased from $3 792 million in 1994 to $4 515 in 1995, corresponding to an increase in real terms of 9.2 percent. Half of total bilateral commitments in 1995 came from Japan, the major contributor to bilateral assistance among the Development Assistance Committee (DAC) members. Japan’s commitment was 48 percent higher than the previous year. Among DAC members, Germany was the second highest donor in 1995, followed by the Netherlands, the United States and France.

• While the share of concessional commitments in total commitments to agriculture remained broadly constant at close to 73 percent from 1994 to 1995, the amount in grants increased from $4 461 million to $5 044 million. Virtually all (95 to 97 percent) bilateral assistance is channelled through grants. The grant element in multilateral commitments has increased slightly, from around 10 percent in 1991 to 12 percent in 1995.

• For 1996, information is available only for lending to the agricultural sector from IBRD and IDA. According to the World Bank Annual Report 1996, $2 577 million were lent in 1996 for the development of agriculture, down from $2 752 million in 1995. This fall was noted in both IBRD and IDA assistance.

• In terms of the areas of channelled assistance, commitments towards environmental development increased substantially, from $139 million in 1994 to $1 465 million in 1995, as did commitments for rural development, rising from $875 million in 1994 to $1 678 million in 1995. On the other hand, commitments towards fisheries, forestry and land and water development declined significantly between 1994 and 1995.

• With regard to the regional distribution of assistance flows, while the major share of commitments went towards Africa and Asia, they fell from the 1994 level. Latin America and countries in transition, on the other hand, registered increases in external assistance in 1995. In fact, the share of total external assistance to agriculture in countries in transition has increased steadily over the past five years from 1.4 percent of overall assistance in 1991 to 5 percent in 1995. In per caput terms (with respect to rural population and agricultural population), however, availability of assistance was highest for Latin America, followed by Africa and Asia.

Exhibit 4

5. FOOD AID FLOWS

• As of July 1997, total cereal food aid shipments under programme, project and emergency food aid in 1996/97 (July/June) were estimated to have reached 7.5 million tonnes, which is about the same as in 1995/96 and more than 2 million tonnes above the minimum commitments of 5.35 million tonnes agreed under the 1995 Food Aid Convention (FAC). Aggregate cereal shipments to low-income food-deficit countries (LIFDCs) in 1996/97 were likely to have reached 5.9 million tonnes, almost the same as in 1995/96. Of this total, some 2.5 million tonnes were destined for LIFDCs in sub-Saharan Africa.

• Global food aid shipments in non-cereal food commodities fell in 1995 (January-December) to about 1.2 million tonnes, about 460 000 tonnes, or 28 percent less than in 1994. Reduced shipments of pulses and vegetable oils accounted for most of this decrease. The bulk of the decline occurred mostly in Africa and countries of Eastern Europe and the CIS.

• Contributions to the International Emergency Food Reserve (IEFR), administrated by the World Food Programme (WFP), in 1996 fell to 849 000 tonnes of cereals from 908 000 tonnes in 1995. Similarly, contributions were also reduced for non-cereal shipments, from 238 000 tonnes in 1995 to 198 000 tonnes. In addition, contributions to the 1996 Protracted Refugee Operations, also directed by WFP, amounted to 495 000 tonnes of cereals and 85 000 tonnes of other food commodities, compared with 535 000 tonnes and 58 000 tonnes, respectively, in 1995. As of 31 December 1996, pledges to the regular resources of WFP, which account for 98 percent of total food aid deliveries through multilateral channels, amounted to $840 million for the 1995-96 biennium, representing 56 percent of the target of $1.5 billion. Of the total amount pledged, an estimated $576 million were in the form of commodities and $264 million in cash.

• As regards the future orientation of the food aid programme of the United States, the world’s largest donor, initial proposals released in February 1997 for the 1998 fiscal year (October/September) suggest a cut in funds for the Food-for-Peace programme, known as PL-480, by $117 million to $990 million. The full amount of the reduction is expected to be made in Title I, the concessional sales programme, which is targeted at $123 million compared with $240 million initially appropriated for fiscal year 1997.

Exhibit 5

6. INTERNATIONAL AGRICULTURAL PRICES

• By July 1997, international wheat and maize prices had dropped by 32 and 48 percent, respectively, from their average in July 1996, largely as a result of generally improved production, including in major importing countries. Looking ahead to the 1997/98 marketing season, in the absence of any significant increase in import demand, wheat prices are projected to remain under pressure and become more volatile in the second half of the season owing to the relatively small size of stocks, a development which would replicate the situation in the 1996/97 season. Next season’s maize prices may also face downward pressure as demand in the international market for maize is forecast to grow slowly while supplies remain ample among the major exporters, in particular the United States.

• World rice prices in the first six months of 1997 were relatively weak compared with the high prices that prevailed in the same period in 1996. The decline in prices was a result of the overall slackening of world import demand following two years of bumper trade. Among the higher grades, Thai 100 averaged $336 per tonne in June 1997 compared with $363 in June 1996, while the lower-quality, fully broken rice, such as Thai A1 Super, was about $17 per tonne lower than in June 1996.

• The decline in the prices of oils and fats accelerated during the 1995/96 marketing season, with the monthly average FAO price of edible and soap fats and oils falling by nearly 10 percent when compared with the previous season. However, prices remained quite high in historical terms. Refurbished stocks and a good new oilseeds crop were the main contributors to this decline, despite the continued increase in the prices of lauric oils (coconut and palm kernel) throughout the season, caused by tight supplies. The decline in oil prices has slowed down considerably since the beginning of the 1996/97 season, to a level about 4 percent below the same period last season. Moreover, since early 1997, the prices of soft oils have strengthened somewhat, reflecting a recovery in demand in certain markets. This upward trend is likely to be maintained until the end of the current season, although not enough to register a significant increase over the entire season when compared with 1995/96.

• A unique feature of the past two seasons has been the fact that the movements in international prices of oilcakes and oilmeals have exhibited a tendency opposite to that observed for oils and fats. Thus, the fall in global output, coupled with the upward shift in the global demand for oilcakes and oilmeals, was the primary cause which triggered a substantial drawdown of stocks during the 1995/96 season and resulted in a sharp rise in prices of these commodities of about 38 percent compared with 1994/95. The rapid rise in the monthly average prices of meals, however, appears to have subsided appreciably since the beginning of this season as a result of the supply response observed in most of the countries producing meal-rich oilseeds. Between October 1996 and May 1997, meal prices rose by 14 percent compared with the same period for 1995/96. Although the demand for livestock products in fast-growing developing economies is likely to continue increasing, the pressure on meal prices is expected to ease somewhat, at least until the end of the season, as a result of the soybean harvest in the Southern Hemisphere. Nevertheless, it is unlikely that these developments will eventually lead to a decline in meal prices for the entire 1996/97 season when compared with 1995/96.

• Following good harvests and rising stocks, world sugar prices have been under downward pressure since the beginning of 1995, when the International Sugar Agreement (ISA) price peaked at 13.3 US cents per pound. The price fell markedly to a two-year low of 10.5 US cents per pound in April 1996 and, following some recovery in the middle of the year, weakened again in October and November when a larger than expected surplus began to emerge. It is believed, however, that the decline in world market prices during 1995-96 would have been even greater but for two factors: the supply of high-quality white sugar, particularly from the EC, remained tight and a substantial part of the surplus in India was channelled to re-build stocks rather than being exported. World sugar production for 1996/97 is estimated to be 122.5 million tonnes (raw value), slightly below the record 122.9 million tonnes set in 1995/96. However, production for 1996/97 would still result in a surplus, as consumption is not expected to grow significantly and therefore continues to exert pressure on prices in 1997. The average ISA price in July 1997 was 11.08 US cents per pound, compared with 12.81 US cents per pound 12 months earlier.

• Coffee prices continued their downward trend in 1996 despite earlier efforts by producers to maintain firm market prices by instituting an export retention scheme. In July 1995, the Association of Coffee Producing Countries (ACPC) agreed to restrict their exports of green beans to 3.6 million tonnes between mid-1995 and mid-1996, approximately 8 percent less than in the previous 12 months. However, the goal – to lift futures prices in the New York exchange to 180 US cents per pound – was, not achieved, although prices could have slipped further without the retention scheme. As the ACPC strives to bring supply levels more into line with consumption, prices should gradually firm during 1997. In addition, expectations of a shortfall in Brazil owing to frost damage contributed to the strengthening of prices in early 1997. Although prices subsequently eased somewhat, by mid-year quotations were still more than 50 percent above the 1996 average level.

• World cocoa prices remained relatively firm in 1996, with the ICCO daily price closing at 68 US cents per pound in the third quarter, 5 US cents per pound higher than in the corresponding period of 1995, and substantially higher than in the early 1990s when they averaged 52 US cents per pound. By July 1997, the price peaked at 77.10 US cents per pound, bringing the average for the first seven months of 1997 to 70.34 US cents per pound. Thus, cocoa prices have been on a continuous upward trend since the new International Cocoa Agreement of 1993. World cocoa consumption, as measured by grindings of cocoa beans, rose in 1995/96 by 6 percent to 2.7 million tonnes, the highest annual growth rate in ten years. All major consuming countries recorded increases, notably the Netherlands and the United States. Prospects are for lower rates of growth in 1996/97, however, as a reaction to the higher prices.

• World market prices of tea firmed considerably in 1996, averaging $1.76 per kg and 8 percent higher than in 1995 for all teas in London, mainly owing to increased demand in the Russian Federation. Prices continued to rise in the first five months of 1997, reaching $2 271 per tonne in April and $2 274 per tonne in May and reflecting production shortfalls, particularly in Kenya and Sri Lanka. Some corrections occurred in June and July 1997 when prices fell to $2 080 and $1 943 per tonne, respectively. Although expected to remain relatively high during the remainder of the year, world prices beyond 1997 could again be vulnerable to downward pressure given the slow growth in demand in importing countries and the strong supply potential in major exporting countries.

• World cotton prices, as indicated by the Cotlook ‘A’ Index for July 1997 were only 1.5 US cents per pound above the 1996 average of 80.5 US cents per pound, considerably lower than the peak levels of over 110 cents per pound in early 1995. The International Cotton Advisory Committee (ICAC) expects that, with modest prices, production in 1996/97 will contract by more than 1 million to 19.1 million tonnes. Consumption is expected to increase by about 500 000 tonnes to more than 19 million tonnes. Since world production and consumption are almost equal, stocks at the end of the 1996/97 season (on 31 July 1997) are expected to be almost unchanged, at 9 million tonnes. Global trade is expected to contract from 6 million tonnes in 1995/6 to 5.8 million tonnes in 1996/97. China continues to play a key role in the world cotton trade. ICAC estimates that, despite a marked fall in production and a small increase in consumption in 1996/97, imports by China will contract as stocks are drawn down. This weaker demand in world markets is one of the factors contributing to the relatively weak prices in 1996/97. For 1997/98, further increases in both production and consumption are forecast.

Exhibit 6

7. FISHERIES: CATCH, DISPOSITION AND TRADE

• Fish supplies have expanded rapidly in recent years, reaching 110.5 million tonnes in 1994 and an estimated new peak of 112.9 million tonnes in 1995, the latest year for which complete data are available. The increase was due mainly to continued rapid growth in aquaculture production, particularly in China, and a rapid expansion of highly fluctuating harvestable stocks of pelagic species off the west coast of South America. As a result, both fishmeal production and fish supplies for human consumption have reached record levels.

• Aggregate fishery production in developing countries continued expanding in 1995, although at a slower rate (2.6 percent) than in the preceding years. The cumulative increase in developing country production in the five-year period from 1990 to 1995 amounted to 39 percent, while developed country production contracted by an estimated 18 percent over the same period. Overall, the developing country share in total fishery production increased from 58 percent in 1990 to 70 percent in 1995.

• In 1995 total landings by capture fisheries are estimated to have remained at about 92 million tonnes, the same level as in 1994. Provisional production figures for marine and inland aquaculture show an estimated increase from 18.4 million tonnes in 1994 to 20.9 million tonnes in 1995.

• The rapid growth in aquaculture production is the result of increased expansion of carp species, primarily in Asia. Five Asian countries (China, India, Japan, the Republic of Korea and the Philippines) accounted for 80 percent of the volume of aquaculture produce in 1995. In 1994, carps accounted for almost half of the total volume of cultured aquatic products (aquatic plants excluded). Even though cultured fish and shellfish contribute significantly to total national fishery production, aquaculture in most countries is dominated by only a few species.

• Of the preliminary figure of 112.9 million tonnes of total fishery production in 1995, it is estimated that about 31.8 million tonnes were used for reduction. The amount of fish available for direct human consumption in 1995 was estimated to be 81.1 million tonnes, 5.3 million tonnes more than in 1994, representing a greater increase than the estimated population growth rate in the same year. Therefore, the average annual per caput availability of food fish increased to 14.3 kg.

• The value of international fish trade continues to increase. In 1985, the value of international fish exports was $17 billion; in 1990, it was $35.7 billion; and by 1994 it had reached $47.4 billion. The increased volume of international trade in fishery products in 1994 was associated with higher trade in low-value commodities such as fishmeal, with the result that the value of exports increased less than the volume. Preliminary figures for 1995 indicated an increase in the value of trade, reaching $51.7 billion, owing to higher prices.

• Developed countries accounted for about 85 percent of the total value of fish imports in 1995. Japan continued to be the world’s largest importer of fishery products, accounting for about 30 percent of the global total. In 1995, fish imports by all three major world importers (Japan, the EU and the United States) increased.

• For many developing nations, fish trade represents a significant source of foreign exchange. The increase in net receipts of foreign exchange by developing countries – calculated by deducting their import from their export value – is impressive. As such, net receipts rose from $5.1 billion in 1985 to $16.0 billion in 1994, and further to $18.4 billion in 1995.

Exhibit 7

8. PRODUCTION AND TRADE OF FOREST PRODUCTS

• The year 1996 witnessed the interruption of a longstanding ascending trend in world production of paper and paperboard. World paper production had in fact grown steadily, but by the beginning of 1996 there was an oversupply of pulp and paper products in major markets as a result of a weakened paper demand and increased industrial capacity. Many pulp and paper mills in North America and Scandinavia had to take downtime in order to reduce an exceptionally high level of pulp and paper stocks. Output and operating rates of the industry consequently declined rapidly.

• The 1996 drop in production of paper and paperboard occurred only in the main developed country producers, while production is estimated to have grown by about 8 percent in the developing countries. As in the past, Asian countries enjoyed the strongest growth. In fact, production of paper and paperboard in the Republic of Korea was up by an estimated 9 percent from the previous year. Large capacity expansions took place in Indonesia and Thailand (by 30 and 15 percent, respectively).

• Prices of pulp and paper, which had reached an all-time high in October 1995, continued to fall sharply for a good part of 1996. In the last part of 1996, however, prices tended to stabilize at a low level as some signs of recovery began to appear in major paper markets. The strong fall in pulp and paper prices had a negative effect on the total value of trade of forest products. The total value of exports of forest products is estimated to have decreased by approximately 14 percent, and trade in wood pulp and paper and paperboard products by 22 percent. Imports of round coniferous pulpwood by the Scandinavian countries, for example, which had grown strongly in the last few years, were reported to have decreased by about 2.5 million m3, reflecting the diminished fibre needs of their pulp industries.

• World production of roundwood in 1996 is estimated to have remained at last year’s low level of some 3.4 billion m3. Production of fuelwood, the main roundwood component and the dominant energy source in many developing countries, is estimated to have grown by 2 percent, mainly driven by the demand from growing rural populations of developing countries. Production of industrial roundwood, on the other hand, is estimated to have decreased by 2 percent. The developed countries experienced a sharp drop in pulpwood removals, which went down by 6 percent, as a reflection of weak pulpwood demand by the pulp industries in Europe. In both Finland and Sweden, the main European pulpwood consumers, consumption of pulpwood is estimated to have fallen by nearly 15 percent. Markets for pulpwood, on the other hand, were more favourable in North America. World production of coniferous logs followed the same trend, although the drop was less marked. Production of this commodity went up in North America, after a long period of decline induced by harvesting restrictions, but down by 7 percent in Europe. The steady fall in production of coniferous logs in the Russian Federation was reported to have come to a halt in 1996.

• Production of tropical logs is estimated to have remained at the previous year’s level. Many tropical countries have introduced harvesting restrictions and log export bans, in view of their desire to protect the remaining natural forests. In 1996, Côte d’Ivoire, the main tropical log exporter until the mid-1980s, reinstated its log export ban on 35 wood species. Ghana introduced similar legislation in 1996. As a notable exception, in late 1996 the Malaysian state of Sabah announced the lifting of the ban on log exports, indicating that up to 2 million m3 of logs would be available for export in 1997.

• World production of sawnwood in 1996 continued its slow downward trend. With the exception of North America and in particular the United States, where housing activity was strong, the production of coniferous sawnwood remained elsewhere at low levels. Production in the Russian Federation is estimated to have fallen by a further 10 percent, reflecting mainly a shortage of capital by the sawmill industry and higher transportation costs of wood supply from Siberia. Some signs of recovery appeared, however, in Europe and Japan in late 1996, where construction activity expanded significantly.

• Trade in coniferous sawnwood, which accounts for 85 percent of total sawnwood trade, was estimated to have declined by 2 percent as a reflection of weak demand in Europe for a good part of 1996 and owing to high stocks and competition from other products. The new trade agreement between Canada and the United States, which limits duty-free Canadian coniferous sawnwood exports to the United States (unless a specified price level is reached), caused notable uncertainty among buyers and exporters in the latter part of the year and an upward effect on prices. Total Canadian exports of coniferous sawnwood to the United States rose in 1996 by 3 percent while shipments overseas rose by 1 percent.

• Production of tropical sawnwood is estimated to have increased slightly in 1996. Of the main producer countries, only Brazil reported a significant increase in tropical sawnwood production. Trade in tropical sawnwood continued to decline, as major exporters are favouring exports of more processed products such as plywood, veneer, furniture and furniture parts. For example, exports from Malaysia, the world’s largest exporter, were estimated to have decreased by about 10 percent, while exports of Malaysian wooden furniture were up by 30 percent. As a notable exception, exports of tropical sawnwood from Ghana were reported to be up by 15 percent.

• World production of wood-based panels is estimated to have grown by more than 3 percent. Demand for new products, such as oriented strand board (OSB) and medium-density fibreboard (MDF), continued to remain strong in major markets, and further capacity increases were announced in developed countries as well as in some developing Asian countries. Demand for tropical plywood was robust in Asia. While Indonesian output and exports (the world’ s largest) were hampered by difficulties in log supply, Malaysian production and exports surged.

• World production of paper and paperboard is estimated to have declined by 1 percent, ending a long upward trend which began in 1982. The decline in production occurred only in the developed countries, where output decreased by an estimated 3 percent. With the exception of Japan and the United States, where output grew marginally, all other major producers experienced decreases. Scandinavian countries were particularly affected by weak demand in major European markets. Many mills in Scandinavia and North America had to take downtime in order to reduce a high level of paper stocks. In the last part of the year, however, some signs of recovery began to appear. Production in developing countries, on the other hand, grew by an estimated 6 percent. As in the past, countries in the Far East enjoyed the fastest growth, where large capacity expansions in the region took place.

• World production of wood pulp is estimated to have decreased by 5 percent. Markets for wood pulp suffered from oversupply, weak demand and rapidly falling prices. The major drop occurred in the developed countries, where output decreased by an estimated 8 percent. In the last part of the year, the market situation improved slightly and production started a slow recovery. Because of new capacity installed in 1996, production in the developing countries increased by 18 percent. However, trade value in wood pulp decreased with the rapidly falling prices.

Exhibit 8A

Exhibit 8B

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