Rome, 23 - 28 November 1998
THE STATE OF FOOD AND AGRICULTURE
Table of Contents
1. RECENT DEVELOPMENTS IN WORLD FOOD SECURITY
2. CROP AND LIVESTOCK PRODUCTION
3. FOOD SHORTAGES AND EMERGENCIES
4. WORLD CEREAL SUPPLY SITUATION AND OUTLOOK
5. EXTERNAL ASSISTANCE TO AGRICULTURE
6. FOOD AID FLOWS
7. INTERNATIONAL AGRICULTURAL PRICES
8. FISHERIES: PRODUCTION, DISPOSITION AND TRADE
9. PRODUCTION AND TRADE OF FOREST PRODUCTS
10. MAIN ISSUES FOR DISCUSSION
1. The total number of chronically undernourished people in developing countries is now estimated at 828 million for the 1994-96 period (Table 1). This figure represents a slight decline in the proportion of undernourished since the early 1990s, but also a slight increase in the number of undernourished because of the growth in total population and the changes in age composition which lead to changes in minimum requirements.
Table 1. Proportion and Numbers of Undernourished in Developing Countries, by Region, 1992-94 and 1994-96
[ For the period, 1990-92, the new estimate of undernourished is 822 million. This differs from the earlier estimate of 840 million reported for the same period, 1990-92, at the World Food Summit and in SOFA 1997 mainly because of retrospective downward revisions in the U.N. estimates of total population figures for some critical countries. These revisions made it also necessary to re-estimate the number of undernourished for past periods which leads to slight adjustments of estimates for a number of countries.]
|Region||Percent Undernourished||Number Undernourished (in millions)|
|Africa South of the Sahara||40||39||196||210|
|Near East and North Africa||11||12||34||42|
|East and South East Asia||17||15||289||258|
|Latin America / Caribbean||15||13||64||63|
|All developing country regions||20||19||822||828|
Note: Numbers do not add up to total due to omission of Oceania.
2. The table above confirms that the largest absolute numbers of undernourished people are in Asia, while the largest proportion of the population that is undernourished is in Africa south of the Sahara. The recent trends give no room for complacency, as progress in some regions was more than offset by deterioration in others. It has repeatedly been stated that these numbers are unacceptably high and must be drastically reduced. The World Food Summit Plan of Action is being implemented with the aim of cutting by half the total numbers of undernourished no later than 2015.
3. Per caput dietary energy supply (DES), the most important single indicator underlying estimates of food adequacy levels, measures the food available to each person on average in a country. It is measured in kilocalories per day. Analysis of the average DES by country reveals significant variations within regions that are hidden by the regional aggregation in Table 1. Countries with inadequate food supplywhich are also generally those with higher proportions of undernourished peopleare heavily concentrated in Africa south of the Sahara, with a relatively high number also in South and Southeast Asia.
4. An analysis of changes in undernourishment in individual countries from 1990-92 to 1994-96 shows that the percentage of undernourished declined in the majority of countries in all regions, while a few countries experienced substantial increases due to exceptional circumstances in the early 1990s.
5. In Africa south of the Sahara almost half of the countries experienced increases in the proportion of undernourished between 1990-92 and 1994-96. Also, in many countries which have quickly growing populations, even a lower proportion of undernourished translates into higher absolute numbers.
6. Both in Asia and in the Near East and North Africa, more than two-thirds of the countries achieved decreasing undernourishment in percentage terms between 1990-92 and 1994-96. 21 out of 24 countries in the Latin America and the Caribbean region reduced the proportion of undernourished during the same period.
7. One important aspect of undernourishment is its close association with the peoples financial capacity to purchase food. As expected, countries with higher per caput income are those with higher DES levels and lower proportions of undernourished in their populations. Of particular concern is the fact that, when seen in a longer-term perspective (based on data for the three time periods 1969-71, 1990-92 and 1994-96) and contrary to the overall tendency in the developing countries as a whole, the poorer groups of countries have not experienced any decline in the numbers and percentage of undernourished.
8. World crop and livestock production were estimated to have increased in 1997 by only 1.2 percent over the previous year, the lowest yearly rate of growth since 1993. However, the slowdown occurred after a particularly bountiful crop year 1996, when world output had expanded as much as 4.5 percent. The slowdown was widespread across developed and developing country regions.
9. For the developing countries as a whole, 1997 was a disappointing year for crop and livestock production. The 1.8 percent increase recorded this year was the lowest since 1979 and marked the end of five years of solid and accelerating growth, which by 1996 had reached an estimated 5.3 percent. The recorded rate in 1997 was only just in line with population growth. Thus, for the first time since 1987, the developing countries as a whole did not achieve any gain in per caput crop and livestock production.
10. All developing country regions shared to varying degrees in the slow-down. The sharpest negative turnaround in agricultural performance in 1997 was recorded in the Near East and North Africa region, where agricultural output is estimated to have declined by close to 4 percent following a more than 9 percent expansion in 1996. Production shortfalls in this region reflected unfavourable weather, particularly in some Northern African countries where drought caused sharp reductions mainly in cereal crops, but production is estimated to have declined also in the Islamic Republic of Iran, Iraq and Syria.
11. Also in Africa South of the Sahara agricultural production declined by 1 percent in 1997. This implies a 4 percent decline in per caput terms, interrupting a four- year period of expansion in per caput agricultural output. Patterns of production performance in 1997 varied widely across the sub-region, largely reflecting weather vagaries. Nevertheless, a majority of 36 countries experienced falls in per caput production, with the sharpest shortfalls occurring in southern Africa.
12. In the Far East, agricultural output continued expanding but at a significantly reduced rate estimated at a mere 2.6 percent -- the lowest in the 1990s and only the second time in the same period that output growth has fallen below 4 percent. Behind the decline are lower rates of output expansion in the majority of the larger countries of the region. In particular, Chinas agricultural output growth slowed but remained substantial, while Indias crops were hit by unfavourable weather in large parts of the country. Countries in south-east Asia also suffered from droughts, partly associated to the El Niņo phenomenon, causing a decline in agricultural production in Indonesia and a slowing-down of the rate of expansion in Myanmar, the Philippines and Thailand. Although the effects of the financial crisis may influence planting decisions in some countries in the region, the effects on output were not yet noticeable in 1997.
13. In the Latin America and Caribbean region, agricultural output growth decelerated only marginally in 1997, to an estimated 2.9 percent. This is still slightly above the average of the previous five years and about 1 percent above the rate of population growth. The increase, however, was concentrated in a relatively small number of countries (including Argentina, Brazil and Peru), while several countries in Central America and the Caribbean, as well as Colombia and Paraguay, recorded declines in per caput production. In Latin America / Caribbean, as in other regions, output shortfalls reflected in many cases the early effects of the El Niņo phenomenon.
14. In the developed countries, overall agricultural output growth in 1997 slowed to a mere 0.5 percent, following on an expansion of more than 3 percent estimated in 1996. The most pronounced turnaround was in the EU, where production contracted by close to 2 percent after having expanded by 4-5 percent the previous year. The contraction affected most of the EU member countries and concerned both crop and livestock production. Cereal production was slightly down from the record harvest of 1996, as delays caused by rains affected wheat yields in several countries.
15. In North America agricultural output continued expanding in 1997 at a rate estimated at 2.6 percent. While output contracted slightly in Canada for the first time since 1992, the USA recorded an expansion of 3 percent.
16. Following record output levels in 1996, agricultural production in Australia declined by around 1 percent in 1997, while in New Zealand overall agricultural output continued expanding, posting an increase of 2-3 percent. In Japan agricultural output in 1997 remained practically at the level of 1996 after two years of decline. Overall production levels are thus still around 7 percent below those prevailing a decade ago.
17. Contrasting with the overall negative performances of the other regions, 1997 marked a positive turnaround for the transition countries. It was the first year since the beginning of the transition process in which overall agricultural production expanded, although by a relatively modest 1 percent. Cereal production expanded significantly while livestock production continued its downward trend. Production increased significantly in Ukraine and somewhat less in the Russian Federation and Kazakhstan. In the Central and Eastern European transition countries production patterns were uneven among countries with Poland in particular experiencing a largely weather-induced decline and Romania a major expansion of cereal production.
18. The number of developing countries facing food emergencies has risen to 40 from the 29 reported to Conference at its session in November 1997.
19. In East Africa, food supply difficulties stem from weather adversities and/or civil strife. In Sudan, despite an overall satisfactory harvest, famine conditions are developing in the South affected by civil-strife and drought-reduced crops; overall some 2.6 million people are in need of food assistance. In Somalia, the food supply situation gives serious cause for concern as a result of a sharply drought-reduced 1998 main crop, which followed the worst floods in decades in the previous season. In Kenya, despite a good cereal harvest in prospect, food assistance continues to be required for flood-affected pastoralist areas. In Uganda, emergency food assistance is still required for some 400 000 displaced people in northern areas, affected by continuing insurgency, as well as for 130 000 persons in eastern parts where harvest was poor. In Tanzania, notwithstanding an overall increase in the 1998 food production, some 300 000 people in central, northern and coastal areas will require food assistance in the coming months. In Ethiopia, over 5 million vulnerable people, including those affected by a poor 1997 harvest, need food aid. In Eritrea, following two successive reduced cereal harvests the overall food supply is tight and food prices have increased sharply. In Burundi and Rwanda, despite a recovery in food production this year, food assistance is needed for large numbers of displaced people affected by persistent insecurity in parts.
20. In West Africa, despite above-average 1997 harvests in coastal countries, food supply difficulties are reported in several countries. In Liberia and Sierra Leone, the agriculture sector is improving, with rehabilitation programmes underway, but both countries remain heavily dependent on international food assistance. In Sierra Leone, the poor security situation in the north and east is causing large population displacements and is disrupting all agricultural activities. In Guinea-Bissau, civil disturbances have hampered agricultural activities and food production is likely to be reduced. The overall food supply situation has deteriorated with displacement of a large number of people. In the Sahel, several countries are facing localized food supply difficulties following poor harvests in late 1997, notably in northern Senegal, Mauritania, The Gambia and parts of Burkina Faso and Niger.
21. In Central Africa, intensified civil strife in the Democratic Republic of Congo since early August will disrupt agricultural and marketing activities in the Kivu region in the east, and fresh population displacements are likely.
22. In southern Africa, although the impact of El Niņo on crop production has been relatively limited, the food supply situation in the sub-region is anticipated to be tighter during the 1998/99 marketing year than in the previous year. In Zambia, production of cereals is expected to be much below average as a result of incessant rainfall and extensive flooding in northern areas, while the southern part experienced drought conditions. In Angola and Mozambique, production of food crops is expected to improve this year, but relief assistance will be required for the internally displaced, vulnerable people and drought/flood affected population.
23. In Asia, from late June onwards, persistent rains, attributed to the La Nina phenomenon, and consequent flooding have taken a heavy toll on human life, crops and property. Food supply difficulties are expected in some countries. In Bangladesh the floods destroyed standing summer (Aus) rice and delayed the autumn (Aman) rice planting. The Government has appealed for international assistance. Recent floods in the south and eastern parts of Korea DPR have damaged crops which would further exacerbate the already serious food supply situation in the country. In Indonesia, the food situation due to last years prolonged drought and the continuing financial crisis could be aggravated by severe floods in some parts and forecasts of more heavy rains in several parts of the country. Similarly, in Nepal, heavy monsoon rains have caused flood damage to crops. Although the 1998 cereal production in Afghanistan is the highest since 1978, the food situation is likely to remain tight in the areas affected by civil strife and recent earthquakes. In Iraq, despite some improvement in the overall food supply situation following the implementation of the "oil for food" deal, malnutrition still remains a serious problem throughout the country. In Laos, adverse weather conditions have caused crop damage in some regions exacerbating food supply problems. In Mongolia, despite generally favourable weather conditions for this years summer crops, the food security situation of vulnerable groups continues to be precarious due to the effects of economic transition. In Papua New Guinea in the Pacific rim, despite favourable prospects for foodcrop harvest, the food situation is expected to be tight for vulnerable groups.
24. In Latin America, abnormally dry weather associated with El Niņo has affected planting of the 1998/99 first season cereal crop in several Central American and Caribbean countries. Emergency food assistance is being provided in Cuba, El Salvador, Guatemala, Haiti, Honduras, Nicaragua and Panama.
25. In the Commonwealth of Independent States (CIS), the need for targeted food aid has increased in Tajikistan following widespread damage caused by floods and landslides. Vulnerable people in Armenia, Azerbaijan and Georgia continue to need relief food assistance. Elsewhere, displaced people in Albania, Bosnia-Herzogovina and Kosovo are receiving food assistance.
26. World cereal production in 1997 reached a record 1911 million tonnes (including rice in milled terms), about 1 percent, or 15 million tonnes, above 1996. Global wheat output rose to an all-time high of 615 million tonnes, 4 percent, or 25 million tonnes, above the good crop of 1996. Wheat output increased in nearly all regions with the exception of North Africa where severe drought reduced production in several countries. By contrast, world coarse grain production in 1997 fell by about 2 percent, or 15 million tonnes, to 908 million tonnes, though it was still above trend. The decline in coarse grain production was mainly on account of reduced maize crops in China, North America and Africa, while much larger crops were harvested in South America, Europe and the CIS. World paddy production in 1997 rose to 578 million tonnes, 1 percent above the previous year's above-average level. Slightly higher rice production in Australia, China, Egypt, Pakistan, Nigeria and the United States more than offset reduced output in Brazil, the Democratic Republic of Korea, Indonesia and Myanmar.
27. Global cereal stocks for crop years ending in 1998 are estimated at 329 million tonnes, up 10 percent, or 29 million tonnes, from their opening volume. Most of this replenishment is expected to be due to larger wheat and coarse grain inventories, reflecting good crops and slower growth in feed utilization, despite weaker grain prices during the season. Total cereal carryovers held by major exporters would rise for the second consecutive year, approaching 40 percent of the world total, as compared to 34 percent at the beginning of the season and only 29 percent in 1996. Globally, the ratio of end-of-season stocks to expected utilization in 1998/99 is estimated at 17.4 percent, up more than a one percent point from the previous season and within the 17-18 percent range the FAO Secretariat considers the minimum necessary to safeguard world food security.
28. The prospects for the 1998 cereal crops point to another above trend harvest this year, although slightly below last years record situation. Based on the condition of crops, as of August 1998, and assuming normal weather for the remainder of the 1998 seasons, world cereal production in 1998 is tentatively forecast at 1892 million tonnes, 1 percent below 1997. Coarse grain production at 907 million tonnes, would be almost unchanged from 1997 and above trend for the third consecutive year. However, wheat output is forecast to decline somewhat to 606 million tonnes, while global paddy output is also forecast to contract slightly to 566 million tonnes, following bumper crops in the previous two years.
29. If current forecasts materialize, cereal supplies would be sufficient to meet expected demand in 1998/99 and allow for a small increase in global cereal reserves. Early indications suggest that cereal carryovers for crop years ending in 1999 could rise for the third consecutive year and reach 330 million tonnes, 1 million tonnes more than their estimated opening levels. At 330 metric tonnes, the global cereal situation to trend utilization in 1999/2000 is expected to reach 17.3 percent, thus remaining within the 17-18 percent range.
30. Global cereal utilisation in 1998/99 is forecast to rise to 1890 million tonnes, slightly above the long-term trend. At this level, world utilisation would be up only 0.7 percent from 1997/98, against a 1.3 percent rise estimated for last year and a nearly 3 percent expansion two years ago. Slower pace in feed use would be mainly responsible for this year's expected reduced growth in global utilisation of cereals. The gradual but almost continuous decline in grain prices since they peaked in 1995/96 had triggered higher global feed utilisation, particularly in 1996/97. However, with the outbreak of the financial crisis in Asia last year, the fast growth in feed utilisation started to fade despite the even steeper fall in international prices. While grain prices have declined further in recent months, the scope for strong growth in utilization in 1998/99 is likely to remain limited, given the deterioration in global financial markets and the continuing economic difficulties confronting the economies of several countries in Asia and more recently also the Russian Federation.
31. Total commitments to agriculture (broadly defined [ The broad definition of agriculture includes agriculture, forestry, fisheries, land and water, agro-industries, environment, manufacturing of agricultural inputs and machinery, regional and river development, and rural development.] ) made by bilateral and multilateral donors as Official Development Assistance (ODA) in 1996 were estimated at US$ 10,985 million in current prices, not including the USA (for which the sectoral breakdown for 1996 is not yet known). Comparison with 1995 (also excluding the commitments from USA of US$ 373 million) shows a slight increase from US$ 10,909 million.
32. Measured in constant 1990 prices, total commitments in 1996 (excluding the USA) amounted to US$ 10,363 million, compared to US$ 10,101 million in 1995 (US$ 10,446 with the USA). However, this can hardly be said to represent a turnaround in the declining trend in external assistance to agriculture during the 1990s, which brought total commitments measured in constant 1990 prices from a level of US$ 12.2 billion in 1991 to US$ 10.4 billion in 1995.
33. The share of concessional assistance in total commitments has been oscillating around 70 percent throughout the 1990s, and stood at 72 percent of the total in 1996, with the share grants at 47 percent. Most of the bilateral assistance (indeed more than 95 percent) is in grant form, while for multilateral assistance the share of grants is only 20 percent.
34. Multilateral assistance was estimated to have declined slightly. Among the multilateral donors, commitments in 1996 from the World Bank were down some US$ 1.2 billion. IFAD expanded its commitments from US$ 276 million in 1995 to 405 million in 1996, bringing their levels back to approximately those of 1994, following the sharp reduction of 1995. The commitments of the Regional Development Banks also increased by US$ 869 million to US$ 1,987 million, almost the same level in real terms as in 1994 after a sharp 1995 decline similar to that recorded by IFAD.
35. Provisional data for commitments by the World Bank Group in 1997 indicate that contributions by the IBRD should be higher than in 1996 by about US$ 1 billion, while those of the IDA would remain at the same level.
36. Information available from WFP as of August 1998 indicate that total cereal food aid shipments under program, project and emergency food aid in 1997/98 (July/June) are an estimated 5.3 million tonnes, the same level as the revised estimate for 1996/97 and down from a peak of 15.1 million tonnes in 1992/93. Cereal food aid shipments to Low Income Food Deficit Countries (LIFDCs) in 1997/98 are estimated to have risen by 4.5 percent to about 4.6 million tonnes from 1996/97, mainly on account of slightly larger shipments resulting from more food emergencies.
37. Estimates of shipments of non-cereal food aid, i.e. largely pulses and vegetable oils, show a further decline of about 20 percent in 1997 (January-December) to around 688 000 tonnes, compared to an estimate for 1996 of 864 000 tonnes. [ While cereal shipments are monitored on July/June basis, shipments of non-cereals are monitored on calendar year basis.] This reduction affects most regions and also the LIFDCs.
38. As of December 1997, contributions of cereals to the International Emergency Food Reserve (IEFR), administered by the World Food Programme (WFP), expanded by almost 12 percent in 1997 (January-December) to 993 000 tonnes, from 887 000 tonnes in 1996. These contributions are substantially above the minimum annual target of 500 000 tonnes set by the World Food Conference in 1975. For non-cereals, the contributions fell from 225 000 tonnes in 1996 to 167 000 tonnes in 1997. Furthermore, cereal contributions to the Protracted Refugee Operations (PROs), also administered by WFP, at 529 000 tonnes, were marginally higher in 1997 than in 1996. The PROs contribution for non-cereals fell by about 20 000 tonnes to 70 000 tonnes in 1997.
39. Bumper grain crops in the 1997/98 season kept grain prices significantly below the previous year's levels. In the absence of any major fundamental change in international wheat markets and given the favourable crop prospects and the seasonal harvest pressure, wheat prices continued to decline during the second half of the 1997/98 season and by late June they were at some 20-25 percent below the corresponding period a year ago. Maize, barley and sorghum prices also dropped further, by some 10-15 percent. The decline in coarse grain prices is partly explained by weaker import demand, especially from Asia, while favourable crop prospects in all regions, with the exception of southern Africa, have put even more downward pressure on prices. Since the start of the current season in July, export prices of all types of grain have fallen considerably, given the prospects for large supplies and reduced export demand, especially for wheat.
40. In contrast to recent developments in grain markets, international rice prices from most origins continued on an upward trend during recent months through August 1998. As a result, the FAO Export Price Index for Rice (1982-84), which has been on the rise since December 1997, averaged 131 points in August and July, up from 130 points in June. The increase in prices is attributable partly to the strengthening of the Thai baht against the United States dollar and partly to concerns about the availability of exportable supplies, especially in Viet Nam and Pakistan, following large purchases by Indonesia and the Philippines.
41. The decline in the international prices of oils since the 1994/95 season came to an end during 1997/98. The FAO price index of edible and soap fats and oils rose by about 15 percent when compared to the 1996/97 season. The monthly average increase in the weighted prices of all types of oils and fats between August 1997 and July 1998 was about 1.6 percent, reflecting the tight market conditions for the commodities concerned, but especially for soft oils for which the price increase was even steeper. At the same time, the rise in the international prices of oilmeals since the 1994/95 season also terminated during 1997/98, and the FAO price index of oilcakes and oilmeals fell by about 10 percent in 1997/98 compared to the previous season. The divergent movement of prices, i.e. the increase in the international prices of oils and the decrease in the international prices of meals, coupled with other changes in market fundamentals, resulted in a 2.5 percent decline in the international prices of oilseeds, as reflected by the FAO price index of oilseeds, over the same period. Indications are that global oilseed production will expand again in 1998/99. As a result, the downward pressure on the prices of oilseeds, oilcakes and oilmeals could continue well into the next season, with the upsurge in oils and fats prices eventually levelling off or even reversing.
42. In January 1997, the average monthly ICCO cocoa price was 65 US cents per pound corresponding to the end of a cycle of downward price movements from 1996. In March 1997, an upward trend in prices began as concerns over a continuing deficit in the global cocoa market resurfaced and weather related concerns over crops in Indonesia emerged. In September 1997, the average ICCO price peaked at a ten year high of 80 US cents per pound, and this was also underpinned by increased purchases as a reaction to El Niņo phenomenon. In the last quarter of 1997, an analysis of the El Niņo impact became available and market concerns dissipated, prices began to stabilize. In December 1997, the average monthly ICCO price closed the year at 78 US cents. In the first half of 1998, prices fluctuated within the 75 to 80 US cents per pound range. The average 1997 ICCO monthly price was 73 US cents per pound, as compared to the ICCO 1996 average of 66 US cents, representing an annual average increase of 8 US cents per pound, or 12 percent.
43. World coffee prices rose dramatically during 1997, with the International Coffee Agreement (ICA) composite price increasing from 100 US cents per pound in January 1997 to 130 US cents per pound by December 1997, representing an increase of 30 percent. The peak was reached in May 1997 where the ICA composite price reached 180 US cents per pound, its highest level since 1986. Unlike previous dramatic price increases in 1986 and 1995 which were caused by frosts in Brazil, the price increase of 1997 was driven by strong demand and tightness of supply of Arabica coffee, particularly Colombian and other milds. Reflecting this tightness, the price of Arabica coffee beans rose by over 100 percent between January 1997 and May 1997, compared with only 39 percent for Robusta. From its May 1997 peak, the composite price began to fall as production and exports were able to satisfy consumption needs. By December 1997, the price had fallen to 130 US cents per pound and remained near this level in the first quarter 1998 and has since begun to fall again as crop prospects for the 1998 season appear favourable, particularly in Brazil. In August 1998 the ICA composite price was 101 US cents per pound.
44. World cotton prices, as indicated by Cotlook A-Index have trended downwards since July 1997, from US cents 81.3 per pound in July 1997 to US cents 68 per pound in August 1998. World production in 1997/98 (the marketing year begins on 1 August) is expected to be at the same level as that in 1996/97. Consumption, however, is expected to be lower than last year largely due to a significant decline in consumption in several Southeast Asian countries. Thus, by the end of 1997/98 world stocks are expected to be slightly higher than at the same time last year. World trade is expected to contract about 6 percent in 1997/98. Imports by China, South-eastern Asia and the Republic of Korea are expected to decrease by 45, 20 and 21 percent, respectively, from their 1996/97 levels. Although drought in the United States and flooding in China will result in a substantial drop in production, any increase in world prices is likely to be limited by weak demand and no substantial increase in price is expected in the near future.
45. World sugar prices were relatively stable in 1997. The 1997 ISA average price was 11.37 US cents per pound, as compared to the 1996 ISA average price of 11.96 US cents per pound. The ISA price rose marginally throughout 1997 and ended the last quarter at 12.33 US cents per pound. In the first quarter of 1998 world sugar prices again began to decline, weakening to 8.00 US cents per pound in August 1998. Considering that sugar from the new crop in the Southern Hemisphere will soon be on the market, a substantial recovery in prices is not likely to take place in the short term.
46. World market prices of tea continued their upward trend in 1997, averaging US $2 200 per tonne on the London market, and 19 percent higher than in 1996, mainly owing to a further improvement of demand in the Russian Federation and former CIS countries, and drought-reduced output in Kenya. Prices continued strong at the beginning of 1998, reaching US $3 118 per tonne in January. After initial 1998 reports indicated that production in major exporting countries such as Sri Lanka, Kenya and India was significantly above the previous year's level, tea prices declined rapidly to US $1 660 in August 1998. There is a strong indication that for the remainder of 1998 the downward pressure on prices might continue.
47. Production of fish, shellfish and other aquatic animals reached a record level of 121 million tonnes in 1996, an increase of 3.2 percent compared to 1995. Capture fisheries at 94.6 million tonnes increased by 1.7 percent and contributed 78 percent of the total volume. The remaining 22 percent was contributed by aquaculture production, which at 26.4 million tonnes recorded an increase of 8.2 percent over 1995. In addition, 9 million tonnes of aquatic plants (in wet weight) were harvested, nearly 90 percent of which from aquaculture production.
48. Inland capture fisheries increased globally by 2.3 percent to 7.6 million tonnes; the increase occurred entirely in Asia while decreases were recorded in Africa, South America and Europe.
49. Global catches from marine waters increased by 1.7 percent in volume - for an estimated value of some 80 billion US$. This was as a result of higher landings from the Northwest Pacific - which accounts for nearly 30 percent of total marine capture fisheries - and, to a lesser extent, from the Eastern Central Atlantic and the Indian Ocean. These increases more than compensated the lower landings reported for fisheries from some other marine areas, such as the Mediterranean and Black Sea (where landings declined by 11 percent) , the Western Central Pacific (-2 percent) and the North East Pacific (-5 percent).
50. Output from aquaculture continued to expand at a faster rate than from any other food production sector. Between 1986 and 1996 global aquaculture production increased at an average annual rate of 10 percent both in terms of quantity and value, and in 1996 the value of total world output from the sector reached US$ 46.6 billion (aquatic plants included).
51. Total fisheries exports amounted to US$ 52.5 billion in 1996, virtually the same level as in 1995. Trade volumes increased, but as prices were lower for the most important fisheries commodities, the change in global value was insignificant. In value terms just below half of total exports in 1996 originated from developing countries, as against a share of 51 percent in 1995.
52. The destination of most of the fisheries exports is in the developed economies. Industrialized countries accounted for more than 80 percent of the value of imports, and Japan (with US$ 17 billion of imports) alone for close to 30 percent of the world total. The USA was the second largest importer, with imports of US$ 7 billion, followed by France and Spain with just above US$ 3 billion each. In 1996, however, all the three largest importers recorded declining imports relative to 1995. Developing country imports grew by 7.5 percent to more than US$ 9 million, corresponding to 16 percent of the world total, one fourth of which imported by the low-income food-deficit countries. Some of these imports, however, were composed of fish meal for poultry, and aquaculture feeding for the growing of high value species for exports.
53. The major part of world fish and shellfish production (75 percent in 1996) is destined for direct human consumption. As a result of increased fishery production and unchanged levels of reduction to meal, world fish availability for food increased from 15.2 kgs in 1995 to 15.7 kg per caput in 1996.
54. Preliminary estimates point to a world fish catch in 1997 of 122 million tonnes, virtually unchanged from the record level in 1996. A large increase in China, the worlds major fish producer, is expected to be mostly offset by a smaller catch in South America due to the adverse effects of the El Niņo. The contribution of aquaculture, in general, to the world fish catch continues to expand, but growth rates of shrimp culture are levelling off.
55. In spite of still increasing levels of catch, the complicated problem of over-exploited fish stocks - often the result of excess fishing capacity, commonly caused by counterproductive subsidies - remains in many parts of the world. Effective management is still urgently required to stabilize and/or allow recovery of stock biomasses and improve economic performance. To enable this, it is important that Member States establish the infrastructure for assessing and managing their fisheries and bring their management capabilities and actions into line with those included in the FAO Code of Conduct for Responsible Fisheries and other international instruments.
56. World roundwood production in 1997 increased by 1.6 percent to reach 3,410 million cubic meters. In the developing countries, which account for close to 2/3 of the total (64 percent in 1997), roundwood production increased by 2.3 percent, while in the developed countries output growth was limited to a modest 0.5 percent. Industrial roundwood production (which excludes fuelwood and accounts for 45 percent of the total - 86 percent in the developed, but only 21 percent in the developing countries) in its turn increased by 1.9 percent to 1,520 million cubic meters. The developed countries are responsible for the larger share of industrial roundwood (70 percent) and expanded production by 2.2 percent to 1,060 million cubic meters, with developing country production increasing by a more limited 1.5 percent to 460 million cubic meters.
57. Global production of solid wood products (sawnwood and sleepers, and wood-based panels) was up in 1997 with production of sawnwood and sleepers estimated to have increased by 2.3 percent to 439 million cubic meters and that of wood-based panels by 2-3 percent to 153 million cubic meters. Again the bulk of the expansion occurred in the developed countries, which account for more than 2/3 of total output of both.
58. The year 1997 saw significant growth in world output of pulp and paper products following the small decline experienced by the sector in 1996. Production of paper and paperboard increased by 6.3 percent. The strongest growth was recorded in the developed countries, at 6.8 percent. The situation was less favourable in the developing countries, where the past strong growth of some major Asian producers slowed down considerably. Like for paper products, also production of wood pulp grew considerably, at a rate of 5.7 percent, with international prices slowly recovering after the sharp fall experienced in 1996. Because of the Asian financial crisis, analysts have predicted a decline in 1998 in Asian consumption, which is likely to depress world demand for pulp and paper products and lead to reduced prices.
59. Markets for other forest products were particularly favourable in Europe, where demand strengthened and consumption of nearly all forest products rose. However, because of highly competitive markets, European prices of wood products showed no increase in 1997. In North America demand was favourable for most of 1997. In Canada housing starts, the main economic indicator for the mechanical wood industry, was up by some 20 percent. In the USA, however, because of strongly reduced log prices caused by the diminished demand in Asian markets, domestic prices of sawnwood fell sharply in the second part of the year. Japan, in 1997, experienced a serious decline in starts of wooden houses, down by some 20 percent. This resulted in a marked reduction of its imports of processed wood products, both tropical and temperate.
60. Prices for most forest tropical wood products such as logs, sawnwood and plywood decreased considerably in 1997 reflecting the weak demand of major Asian importers. On the other hand, international prices for wood pulp and paper products rose marginally above the depressed levels of 1996.
61. Due to the increased prices for pulp and paper products, 1997 saw an estimated increase in the total value of exports of forest products of 2.2 percent. The increase was mainly confined to the developed countries, which are the main producers and traders in pulp and paper products. On the other hand, the depressed prices of tropical wood products resulted in a 5 percent decline in developing country forestry exports and in a diminished weight of the developing countries in the total value of trade in forest product, with their share declining from 18,0 percent in 1996 to an estimated 16.5 percent in 1997.
62. According to latest FAO estimates, world-wide there was a net loss of forests of 56 million ha between 1990 and 1995 as the result of a decrease of 65 million ha in developing countries and an increase of 9 million ha in developed countries. Considering only natural forests in developing countries, the annual loss of natural forests was, however, slightly lower in the 1990-95 period than the 1980-90 period (13.7 million ha versus 15.5 million ha). Thus, although deforestation continues to be significant in developing countries, it appears that the rate of loss of natural forests may be slowing.
63. The following main features of the above report are called to the attention of Delegates for the discussion of this agenda item.
64. The overall economic situation has vastly improved in a large number of developing countries in recent years, but the effects of the financial crisis that initially affected Asia threat to bring this favourable period to an end. Indeed, the crisis has already caused deeply depressed economic situations in many countries and threatens to deepen and spread. A global recession would inevitably translate into greater food insecurity for millions of people, through its negative effects on household incomes, employment and prospects for agricultural production and trade. An economic crisis would also undermine the Government's financial capacity to support agricultural and rural development and negatively affect the environment for international assistance.