1. Basic foodstuffs

Grains

Characteristics of the grains^[1] market

· The bulk of the world’s wheat production (80 percent) is located in North America (United States and Canada), Argentina, Europe (EC, CEEC, Russia), China, India, Australia and North Africa. For maize, the same share of world production is concentrated in a smaller number of countries, i.e. the United States, Europe (EC, CEEC), Argentina, Brazil and China. The United States alone accounts for 40 percent of the world’s maize output. Other grain production is more widespread around the world.

· Grains are produced for three principal reasons: direct human consumption (41 percent), animal feed (45 percent) and other uses, including industrial consumption. Cereals (including rice) contribute 55-70 percent of the total calories in the diets of developing countries, and maize and wheat alone make up close to two-thirds of the world’s food energy intake. Maize, wheat, barley, sorghum and oats are the main grains used in animal feeding, with maize accounting for about 60 percent of the world total. Industrial uses include malts for brewing, alcohol for fuels, starches and sweeteners.

· Wheat is the most important cereal traded on international markets. The developing countries account for nearly 80 percent of all wheat imports. The United States ranks as the world’s largest wheat exporter, contributing around one-third of world export volume. Among the developing countries, the only major exporter is Argentina, although Turkey and few other countries could also have export surpluses on occasions. Trade in coarse grains closely matches that of wheat, especially in recent years, and maize accounts for most of the traded coarse grains. Developing countries account for over 60 percent of all coarse grain imports.

Patterns of grain production and consumption

· World wheat production expanded at an annual rate of 1.2 percent over the past two decades while coarse grains grew by 0.9 percent annually. Grain production grew the fastest in the developing countries during the previous two decades (2.5 percent per year), while in the developed countries growth was virtually flat because of supply control measures, in response to changes in domestic and international policies, and the collapse of grain production in the countries of Eastern Europe and the former USSR.

· Similar to the trends in production, the fastest growth in grain consumption was recorded in the developing countries during the past two decades (2.8 percent annually). Food consumption of grains in developing countries grew at 2.2 percent per year, compared to 1.7 percent for the world total, allowing for an increase in per caput food consumption of about 5 kilograms.

· In the developing countries, the growth rate for feed use of grains was 4.4 percent annually over the same period, compared to a 0.8 percent at the global level. Behind the stronger growth rates in food and feed in the developing countries were the tendencies of low-income families to spend more of their additional income on food and rural-to-urban migration resulting in changes in diets towards higher-protein grains and livestock products.

Trade and price policy developments

· Prior to 1990s, two dominant, yet unpredictable, buyers, namely the former USSR and China, triggered the sharpest year-to-year price swings. The break up of the USSR not only eliminated the world’s largest grain importer but also led to the accumulation of unsold grains (hence large inventories) in major exporting countries, which continued to overhang the markets through 1995. Between 1990 and 1995, major exporters accelerated their use of export discounts and subsidies in order to reduce their large stocks and excess production. This, coupled with serious production problems across the globe, resulted in 1996 in sharp reduction in inventories to levels not seen since the early 1970s, which was the prime reason for the sudden surge in grain prices from 1995 through mid-1997. Grain prices remained on a declining path between 1997 and 2000, mostly because of weak export demand, the emergence of non-traditional grain exporters, reformed stock policies and producer support in the face of declining prices mainly developed countries.

· Production-friendly policies adopted by a number of net-import, grain-producing countries, such as Pakistan and India, also contributed to maintaining the downward pressure on prices. In addition, China, once a major grain importer, also encouraged higher production so that by the late 1990s the country needed to import only small amounts of grains. China’s maize production also began to exceed domestic demand which gave rise to a period of rising stocks and exports. The absence of China as a major wheat importer and its continuing maize sales into the world market continue to put downward pressure on international prices.

Emerging issues

· Driven by the high financial burden of rising inventories along with the preparation for WTO, which prohibits the continuation of export subsidies, China has started to reform its grain economy by reducing production incentives and lowering its large stocks.

· Brazil is emerging as a potential grain export competitor due to its low costs of production, especially for maize, and its vast, unused land resources, despite facing high transportation costs from its grain production zones to its export ports.

· Proposals to increase spending under the United States farm bill and the Agenda 2000 reforms to expand the EC to include 10 new central and eastern European countries may have significant impacts on international grain markets, which may lead to expansion of grain production and additional downward pressure on international grain.

Wheat Production Trends

Deflated Grain Price Trends

Grain Trade Shares

Coarse Grain Production Trends

Wheat and Coarse Grain Trade

Rice

Characteristics of the market

· Rice is a major food staple and a mainstay for the rural population and for household food security. It is mainly cultivated by small farmers in holdings of less than one hectare. Rice also plays an important role as a “wage” commodity for workers in the cash crop or non-agricultural sectors.

· Global rice production in the 1990s has been expanding at 1.8 percent per year, marginally above population growth. Developing countries account for 95 percent of the total, with China and India alone responsible for over half of world output. Most of increase recorded in the 1990s has been sustained by productivity gains rather than land expansion.

· Global trade in rice has expanded on average by 7 percent a year over the 1990s. Despite such a dynamic growth, the international rice market remains thin, accounting for only 5-6 percent of global output.

· Unlike for other bulk commodities, the international rice market is segmented into a large number of varieties and qualities, which are not easily interchangeable because of relatively strong consumer preferences. Ordinary indica rices are the most commonly traded, accounting for some 80 percent of international flows by the end of the 1990s, followed by aromatic (Basmati and fragrant rices), at 10 percent, and medium and glutinous rices at 9 percent and 1 percent respectively.

Changing patterns of international trade in rice

· Developing countries are the main players in world rice trade, with a share of 83 percent of world exports and of 85 percent of world imports. The concentration is particularly high on the export side, since five countries (Thailand, Vietnam, China, the United States and India) supply about three-quarters of the trade.

· This contrast with the fragmentation of import markets and the wide year-to-year fluctuations in individual countries’ purchases, as most importers do not rely consistently on the international market to get rice supplies, but only as a last resort to fill the gap caused by a production shortfall.

· Because of the special characteristics of the commodity for food security and political stability, a significant share of trade is conducted by state trading enterprises, some of which are also vested with the obligation of procuring or distributing rice domestically. This applies to both importing and exporting countries.

· Government-to-Government transactions, which used to account for about half of world trade in the 1970s, are now estimated to account for less than 10 percent. In the last few years, however, they have regained some popularity as low international prices have incited or compelled Governments to play a more active role in trade to gain bargaining power or as an indirect means to sustain producer prices.

Thrust of government policies

· Government support to producers in the developing countries has mainly concentrated on research in improved or hybrid rice varieties, investments in irrigation, preferential credits, extension and distribution of improved seed. Intervention to influence prices is also common, through procurement purchases or releases from stocks, or through changes in trade policies. In the developed countries, much assistance to the sector is being conveyed through direct payments and through price support.

· In general, the involvement of the public sector in paddy processing and rice distribution to consumers has been more limited. However, management of rice stocks or trade policy measures has been used extensively to stabilize domestic market prices.

· Trade measures, especially tariffs, are widely used to protect domestic rice markets. Besides relatively high WTO bound tariffs, rice imports are often subject to special safeguard in countries’ schedules. Many commercial transactions are conducted through government-to-government deals, without much transparency. Restrictions on exports of paddy or husked rice are very common, in order to promote the processing of rice domestically.

· Because of the importance of rice as a staple food, many governments maintain minimum food reserves for food security. In addition, countries engaged in rice distribution schemes and producer price support usually hold large rice inventories in public stores.

· Rice stands as one of the most protected traded commodities. However, because of its importance for food security, income generation and political stability, governments may be reluctant to decrease that protection and is being promoted for consideration in the forthcoming round of multilateral trade negotiations.

Current issues and problems

· Falling international prices have been the principal cause for concern in the last few years, both for the importing and exporting countries. The slide in world quotations is a reflection of expansionary production policies in a large number of countries.

· Supply releases from stocks have also been instrumental in keeping the downward pressure on prices.

· Although genetically modified rice varieties have been developed (mainly as a way to enhance its nutritious characteristics, e.g. “golden rice” or to adapt the rices to extreme growing condition, e.g. varieties tolerant to salty water), the issue about their acceptability world-wide has not yet gained prominence because rices produced from such varieties are not yet widely traded. More important, concerns have arisen regarding the use of “Basmati” rice denomination and claims of bio-piracy on fragrant rice genes.

· Rice production sites are often the habitat of a wide variety of birds and plants. Water management in rice lands also ensures a soil desalination process essential to the maintenance of land fertility. As a result, environmental concerns are frequently brought up in defence of the sector, especially in the developed countries.

Global Rice Production and Consumption

Global Rice Trade Volume and Share in Global Production

Major Rice Producers 1998-200

Major Rice Importers Shares 1998-2000

Major Rice Exporters hares 1998-2000

FAO Exports Price Index for Rice

Beef

Characteristics of the market

· The extensive nature of beef production, difficulties in vertically integrating the beef production/processing chain, as well as stagnant beef demand in developed countries have constrained growth in global beef production to only one percent annual growth over the past decade.

· The process of technical innovation and restructuring has proceeded slowly in the beef sector, constrained by the small size of farms and the other special roles these animals play in a large numbers of countries, e.g. as capital assets, for dairy production, social status and draught power.

· Trade growth, while rising 2 percent annually, lags considerably that of total meats, which has registered almost double-digit annual growth over the same period, leading to beef’s share of global meat trade declining to 30 percent recently from 45 percent in the early 1990’s. In addition, animal disease outbreaks and food safety issues (particularly related to BSE) around the world have raised considerable health concerns among consumers and limited consumption growth in developing countries and moved consumption to other meats.

· Developing countries share of imports beef remained unchanged over the past decade despite the growth in trade, while its shares in exports declined from 6 percent to 4 percent. Constraints to expanded beef exports by developing countries include disease issues, particularly FMD, which is endemic to many countries, increasing number of SPS regulations, and the higher relative price of beef to alternative meats.

Policy developments affecting international beef trade

· Global beef markets, over the late 1990’s, have been characterised by a gradual dismantling of trade barriers, with countries reducing tariffs and replacing non-tariff barriers by tariff rate quotas (TRQs). However, increasing instances of animal diseases affecting beef, particularly BSE and FMD have led countries over the 1998-2001 period to impose import bans and stricter sanitary requirements, as well as other technical barriers, such as requirements on labelling and animal traceability schemes.

· While progress towards the restructuring and privatisation of the beef sectors in many developing countries continued in the late 1990s, this trend was disrupted as animal disease outbreaks in developing countries resulted in increasing support to livestock sector while heightened concerns regarding food safety and animal disease issues escalated the trend for countries to enact legislation to improve meat quality standards.

· Beef trade has been, in general, significantly influenced by WTO provisions, especially the URA limits on subsidized exports as witnessed by the declining share of the EC in world beef exports since 1994. Of the various meat products, the global market for beef was expected to feel the most direct effects from the policy development under the AoA because both export subsidies and market access barriers were more prevalent for beef than for other meats.

Challenges in the future

· Despite a progressive dismantling of trade barriers to beef trade and country specific initiatives to reduce expenditures on government support, the support for beef industries around the world remains high.

· The extensive nature of beef production limits the transfer of new technology to the sector and the productivity increases which have benefited the pork and poultry industries. This combined with stagnant beef demand in many developed countries will limit overall growth in the industry.

· Participation of developing countries in the global beef market will continue to be constrained by difficulties in managing animal disease issues as well as the challenge of meeting increasing more stringent food safety regulations in developed countries.

Pork

Characteristics of the market

· The international pork economy, while witnessing 3 percent production gains over the past decade, continues to be a very concentrated market. China, the EC, the US, Brazil, Canada, and Poland represent a combined share of more than 80 percent of global pork production and nearly 90 percent of global pork exports. China while accounting for nearly one half of global production, accounts for only 5 percent of global exports.

· Japan and Russia, on the other hand, account for more than one-half of world pork imports..

· Global pork markets are relatively thin, with less than 4 percent of world output traded internationally. This is partially due to cultural/religious preferences in consuming markets where, in many instances, poultry and beef are preferred to pork. In addition, pork trade has been handicapped by problems associated with heterogeneous quality.

· The heterogeneous quality of pork products is being addressed by structural improvements in hog industries in major exporting countries with larger, and more integrated, operations using production technologies that yield a more consistent quality of pork. The ease of transferring technologies in the area of genetics, feeding, and the growing move in investment flows from developed to developing countries is increasing the size of pigmeat operations also in developing countries.

Policy developments affecting international trade

· Markets for pigmeat are less restricted than those for beef products. However, the Asian markets, constituting nearly 50 percent of imports, with Japan alone accounting nearly one-third, than maintain relatively high tariffs. A WTO-safeguard provision allows a snapback provision to be implemented in Japan in the case of import surges, raising tariffs and restricting imports.

· Other importers, such as the EC and Mexico, have in place TRQ’s which limit imports, while the EU, one of the largest pigmeat exporters, periodically uses its export subsidy allocation for pigmeat of 400 000 tonnes.

Challenges in the future

· Larger and more concentrated production processed have been accompanied by rising environmental concerns which, in developed countries, have driven increases in the stringency of environmental regulations facing animal feeding operations. However, industries in developing countries are also expanding operations without accompanying environmental regulations, raising questions about the long-term sustainability of livestock operations.

Poultry

Characteristics of the market

· Growth in livestock production in both developed and developing countries has been led by the poultry sector, with poultry contributing nearly 50 percent of meat production gains over the past decade. Output growth in developing countries, increasing by 8 percent over the decade, has expanded at double the rate of that in developed countries, now constituting more than half of global production.

· Increasing productivity in the sector, as production units have become more integrated, concentrated, and better managed, has allowed poultry meat to be produced at a lower cost than competing meats. This has led to double digit gains in trade over the past decade, now accounting for nearly 43 percent of world meat trade, up from 25 percent in 1990. Much of the growth in import demand has stemmed from developing/transitional economies, in particular China and Russia, which now account for over one-third of global poultry trade.

· Several important events have shaped demand for poultry imports over the past 5 years. Animal disease outbreaks, particularly BSE, shifted consumption and trade demand away from beef to pork and poultry.

Policy developments affecting international poultry trade

· Among the meat sectors, poultry is perhaps the least protected and is consequently characterized by the fewest new market access opportunities under the Agreement on Agriculture. Canada and Mexico contribute the main share of TRQ access opportunities. Additional marginal gains in trade may be attributed to TRQ commitments by several Central American countries, including Costa Rica and Guatemala.

· The use of export subsidies for poultry meat is sanctioned under the AoA with levels gradually declining from the 802 000 tonnes authorised in 1995 to an estimated 594 000 tonnes in 2000. However, the actual use of these subsidies is lower, with only EC and Hungary regularly using their allocations.

Challenges in the future

· Trading patterns in poultry meat will continue to be shaped by the increasing specialisation of operations which focus on value-added processing. This will result in low-cost labour markets importing commodity products (leg quarters), providing value-added and re-exporting. This will increasingly occur in Asian markets, a region with the highest growth opportunities.

Sheepmeat

Characteristics of the market

· The sheep and goat sector is of least significance in the world meat economy, accounting for less than 5 percent of world production and trade. Except for a small number of countries in Asia, in particular China, which contributed to sustained growth at the global level, there has been a tendency for the sector to contract over the last decade, which can partly attributed to low wool prices.

· However, because of the resistance of sheep and goats to harsh rearing conditions and their cultural role, these animals are important for food security and social cohesion, especially in Africa and the Near East. In Africa, in particular, this sector is of particular importance, constituting 26 percent of total meat output and serving as an important source of income for many vulnerable families.

· Global trade of sheep and goat meat is very concentrated, with New Zealand and Australia accounting for 90 percent of global shipments which are destined for three major markets: the EC, the US, and the Middle East. Increasingly, the composition of lamb exports is shifting to higher-valued chilled product.

· Live sheep/goat trade is of considerable importance to the sectors in Africa, particularly to countries in the Horn of Africa. Animal disease concerns related to Rift Valley Fever, however, constrain animal movements. Difficulties in resolving trade barriers in the region have been complicated by the fact that only a few of the countries involved in this trade are members of the World Trade Organisation.

Policy developments affecting international trade

· Sheepmeat sectors in developed countries tend to be recipients of high domestic support; this is particularly true in Western European countries and the US. This protection is accompanied by the imposition of TRQs, which have been successfully challenged through the WTO.

· The WTO accession of China and the Chinese Province of Taiwan is likely to support the global lamb industry, as declining tariffs could increase market access and trade.

Challenges in the future

· The sheepmeat sector is expected to continue to contract in developed countries with meat preferences shifting away from lamb, as a speciality product. Consequently, it is a market with only limited potential for developing countries interested in expanding exports.

· Sheep and goat production will continue to be of critical importance to some countries in Africa and Asia, both for food security and export earnings. Animal disease control and membership in WTO will shape the abilities of many of these countries to participate in and benefit from increased access to global markets.

WORLD MEAT EXPORTS: 1990-2000

WORLD MEAT IMPORT: 1990-2000

MEAT PRODUCTION BY TYPE: 1990-2000

WORLD P/C MEAT CONSUMPTION: 1990-2000

WORLD MEAT PRICE INDEX: 1990-2001

Milk and milk products

Characteristics of the market

· Most of the world’s milk production is concentrated in the developed countries, especially Europe and North America; however, some developing countries are important producers, for example, India, Pakistan and Brazil.

· Milk production is growing most strongly in the developing countries, as a result of increased consumption in this group of countries.

· There are, however, substantial differences in the characteristics and level of development of production and processing capacity between countries. In many developed countries all milk is essentially collected from the farm and processed before being distributed to the consumer. While, in some developing countries the bulk of milk is processed and consumed on farm or at the village level, with little or no additional processing. Even between countries with similar levels of dairy development, characteristics of production activities can vary substantially.

Patterns of milk production and consumption

· During the first part of the 1990’s, overall world milk production declined, principally as a result of falling output in Eastern Europe and the former USSR. Since the mid-1990’s, world milk production has been growing at the rate of 1 or 2 percent per year.

· Throughout the 1990’s and into this decade, the relative importance of milk production in the developing countries has continued to increase.

· Milk output has also grown significantly in Australia and New Zealand, where low costs of production have led to increased participation in the world market.

· Comparing milk consumption in developing and developed countries, substantial differences exist: average consumption of milk and milk products (in milk equivalent) in the developing countries is 200 litres/person/year, compared to 45 litres/person/year in the developing countries.

· Milk consumption is growing in the developing countries, as personal income levels increase and diets become more diversified. Conversely, in the developed countries, consumption of milk overall is stable, with the main changes beginning switches from one type of product to another, for example from drinking milk to eating cheese, rather than in total consumption.

Trade and price policy developments

· Developed countries account for 90 percent of exports of milk and milk products. Although small, the participation of developing countries in international exports is increasing, reflecting mainly growing sales from the southern-cone countries of South America.

· Developing countries account for 70 percent of imports of milk and milk products.

· Since the start of the 1990’s, the relative importance of the type of products traded has moved away from the traditional bulk commodities of skimmed milk powder and butter/butter oil to whole milk powder and cheese. This reflects changes in import preferences and a movement on the part of exporting countries away from lower-value products.

· Over the same period, the participation of state trading companies in the import market has been substantially reduced and the importance of private sector importers has increased. This has been reflected in fewer large-scale, periodic purchases of bulk commodities and the development of smaller-scale, but more regularly spaced, purchases of more highly specified products.

· As a result of domestic policies to limit milk production and URA commitments on the use of export subsidies, participation of Europe and North America as exporters of dairy products has decreased. Conversely, exports by Australia and New Zealand have grown substantially and exports by southern South American countries, especially Argentina and Uruguay, have increased.

· International prices for milk and milk products have been characterised by a substantial degree of volatility as supply and demand on the world market are generally finely balanced.

Emerging issues

· The movement from a market dominated by northern hemisphere countries (and the use of export subsidies) to one dominated by non-subsidising exporters implies that supplies to the world market will be less controlled, as the use of government financed stocks and production controls decline in importance. Additionally, as supplies to the export market will come increasing from countries with pasture-based systems of production. The combination of these two factors may lead to prices for dairy commodities traded on the international market showing substantial variations in future years.

· In an effort to reduce dependence on the bulk commodity market, many exporting countries are placing greater emphasis on developing more highly specified products. Beyond this, the movement amongst exporting countries from surplus disposal to market development means that an increasing volume of dairy products is being exported as retail-branded products and not as bulk commodities.

· International dairy companies, many of which have their headquarters in Europe or North America, are making substantial investments in areas of the world where milk consumption is increasing or where supplies of low-priced milk are available. Consequently, such companies are able leap-frog over national domestic policy measures or URA commitments limiting production or trade in the products they produce.

Global Milk Production

Dairy Supply/Cap/Yr

WORLD DAIRY TRADE - Exports (milk equivalents)

WORLD DAIRY TRADE - Imports (milk equivalents)

Dairy Price Index - 1990-92 = 100

Oilseeds, oils and fats, oilcakes and meals

Characteristics of the market

· Oilseeds and oleaginous fruits include a wide range of crop and tree plants that are grown under a variety of agro-ecological conditions across the globe, by variety of different types of producers. Except soybeans, over 90 percent of global oilcrop production occurs in tropical and subtropical countries.

· Only a small part of production is directly consumed as food; the bulk of production is processed into oil and cakes/meals for use as food and feedstuffs respectively. The sector is characterized by a strong integration with downstream processing industries.

· Oils and fats play an important role in human diets across the world (primarily as energy source), while the meals and cakes derived from oilcrops represent a primary protein source for feedstuffs in many countries.

· In several countries, the contribution of the oilcrop sector to overall export earnings is substantial.

· A number of countries - developed and developing - depend on imports of oilseeds and derived products to satisfy domestic demand for these goods. As a result, oilseeds and oleaginous fruits and the products derived thereof form the second largest group of agricultural commodities traded internationally (in value terms), after cereals, averaging over US$ 51 billion annually during the period 1995-2000.

· The markets for the oilcrop are particularly complex because on the supply sides crops are both annual and perennial, while on the demand side tend to be influenced by factors ranging from competition with feed grains to demand for livestock products, for oils for food as wells as industrial (paints, bio-fuels, detergents etc.) uses.

Overall production pattern

· World oilseed production has expanded at over 3 percent per year during the last decade. Soybean is by far the most important oilseed, followed by rapeseed, cottonseed, groundnut and sunflowerseed.

· The share of developing and developed countries in total production is respectively 58 and 42 percent. In a number of developing countries there is considerable potential for expansion of oilcrop production through both yield improvements as well as expansion in cultivated area. Compared to developed countries, average yield levels are considerably lower in developing countries. Soybean and rapeseed yields, for example, are, respectively, 30 and 60 percent lower in developing countries.

· Asia (which includes the two majors players China and India) is the world’s leading production region, followed closely by North America and then South America. Europe and Africa play a more limited role.

· The oilseeds group includes some of the crops most affected by the recent strides made in the area of genetic modification. Cultivation of GMO oilseeds has rapidly expanded in recent years and accounts for the bulk of production in certain countries.

· In terms of oils and fats, the developing countries’ share in global production exceeds 60 percent, with Asia alone accounting for over 40 percent. The share of tropical oils (derived from the fruits of the oil and coconut palm) in overall vegetable oil production is increasing steadily.

· In the case of oilmeals and cakes, the single most important producing regions are North and South America, which together account for over 70 percent of production. The group of developing countries accounts for about 53 percent of global output.

Overall consumption pattern

· Global consumption of oils and fats expanded at about 3.5 percent per year during the last decade. Growth in global oil consumption has been led by palm oil in recent years (as opposed to soyoil in earlier years). About 60 percent of global consumption occurs in developing countries, prompted by steady population increases and rising incomes, particularly in Asia

· As to per caput consumption of oils and fats, average intake in developing countries does not exceed 16 kg, less than half of that in developed countries.

· With regard to oilcakes and meals, close to 60 percent of global utilization occurs in developed countries. However, annual growth in consumption in developing countries (over 7 percent annually in the 1990s) by far exceeds expansion recorded in developed countries, reflecting changing consumer preferences that accompany income growth and greater concentration in livestock production in the former group of countries.

Overall trade pattern

· Within the oilseeds complex, seeds account for about 30 percent of the total value of trade, whereas the share of the two sub-products, oils and meals, amount to 55 and 15 percent respectively.

· Eight oilseeds and the respective oils and cakes/meals account for over 90 percent of global trade. Soybean and its meal dominate trade in oilseeds and meals, whereas palm oil and soyoil are the most important vegetable oils traded.

· The proportion of world supply entering international trade - at almost 40 percent in the case of oils and close to 50 percent for meals - exceeds those recorded for most other basic foodstuffs.

· During the last two decades, trade in oilseeds and products experienced considerable growth, encouraged mostly by economic expansion in many regions of the world. With average annual growth rates at 4 percent or above, expansion in trade of oilseed products (during the 1990s) was strong compared to that recorded for other sectors. Most of this expansion emanated from importing developing countries, with Asia playing a central role in recent years.

· With regard to oils and fats specifically, imports have surged in many developing nations as domestic demand is expanding at a faster rate than production. This process has partly been aided by increased market liberalization.

· Also global trade in oilmeals continues to rise, again on account of sustained demand increases in developing countries, accounting for about two thirds of the expansion in global trade. By contrast, growth in oilmeal imports by developed countries is rather limited, as reduced expansion in the livestock sector slows down the demand for meals.

· In recent years, a number of importing countries shifted from the importation of oils or meals to purchases of oilseeds so as to promote domestic processing and value addition.

· With regard to exports, a main feature of the market is the high level of concentration, with three developed and eight developing countries accounting for some 90 percent of world exports of oilseeds and derived products. This applies in particular to the market for vegetable oils, where the dominance of some key players and a few major oils is felt strongly, especially under conditions of general oversupply as observed in recent years.

· Whether the recent expansion in genetically modified oilcrop varieties in some countries will lead to separate markets for GMO and non-GMO crops (including the respective price differentiation) remains to be seen.

General trends in policies^[2]

· In general, over the last several years, the URA-induced trend towards a gradual reduction of potentially market distorting, direct government intervention in production, marketing and international trade of oilseed-based products has continued.

· However, more recently, as a result decreasing prices a number of exporting countries stepped up direct support to domestic producers and to increase export promotion efforts, while major importing countries tended to raise border protection in an effort to shield domestic industries form international competition. It is important to note, however, that, in supporting the oilseeds sector, WTO member countries generally adhered to the commitments made under the URA.

Global Production of Oils/Fats and Meals

FAO Quarterly Price Indices for Oils/Fats and Meals (1990-92 = 100)

Global Trade of Oils/Fats and Meals

Cassava

General characteristics

· Cassava is cultivated in most tropical countries situated in the equatorial belt, which attest to its adaptability to a wide range of ecosystems. Some of the characteristics of the crop are its efficiency in producing carbohydrate, its tolerance to drought and to impoverished soils, and its high flexibility with respect to the time of planting and harvesting, and therefore plays an essential role for food security. It is the world's fourth most important staple after rice, wheat and maize and an important component in the diet of over a billion people.

Patterns of production and trade

· Almost 70 percent of world production is concentrated in five countries Nigeria, Brazil, Thailand and the Congo Democratic Republic.

· The bulk of world trade in cassava consists of pellets and chips for feed (80 percent) and the balance in starch and flour for food and industrial use. Thailand and Indonesia are the major suppliers to the world markets, contributing respectively for some 85 and 10 percent of total trade; while small farmers in Asia, Africa and Latin America provide the remainder.

· The European Community is the main destination for cassava traded products, particularly chips and pellets for the feed industries and volume is sensitive to developments in livestock and feed markets. In recent years, falling grain prices coupled with environmental concerns and animal diseases outbreaks have depressed demand in the EC, causing imports of chips and pellets to fall more than 40 percent. However the contraction in the EC market was more than compensated by larger purchases by countries in the Far East, in particular China, stimulated by very attractive prices.

International cassava prices

· Since 1990 the international prices of cassava pellets exported to the EC have fluctuated from a minimum of US$ 82 per tonne to a maximum of US$ 182 per tonne, though hitting historical lows during the past five years. The decline was essentially due to the downward pressure exercised by the competitive grain pricing policy in the EC and the weakness of the Euro compared to the US dollar.

Prices of Cassava, Soybean meal and Barley in EC

CASSAVA PRODUCTION (million tonnes)

Cassava Trade by Major Exporters

Pulses

General characteristics

· Pulses are the edible dry mature seeds of leguminous crops, excluding those harvested for fresh products which are classified as vegetables. Pulses include dry beans, dry peas, dry broad beans, chickpeas, lentils, cow peas, pigeon peas, lupins, vetches and pulses.

· Pulses are produced throughout the world. Pulse crops, especially in developing countries, are planted on marginal land and grown under rain-fed conditions, which explain their low yields and large year-to-year production variability.

· Over 60 percent of total utilisation of pulses is for human consumption. Pulses, especially dry peas, are also used as feedstuff. Some 25 percent of pulse total use goes for feeding animals, namely pigs and poultry.

· On the nutrition side, pulses are known for their high protein content and also as a good source of energy. They also contain significant amounts of other essential nutrients like calcium, iron and lysine.

· The importance of pulses in human diets varies from region to region and country to country, with a general trend of higher consumption in lower income nations. The share of food use in total utilisation of pulses in the developing countries is over 75 percent, compared to 25 percent in the developed countries.

· Pulses, by contributing about 10 percent in the daily protein intake and 5 percent in energy intake, are of particular importance for food security in low income countries where the major sources of proteins are non-animal products.

Patterns of production and trade

· Production of the major pulses, except dry pea, is concentrated in developing countries; with developing countries accounting for 70 percent.

· Dry pea production is dominated by developed countries, accounting for over 80 percent of the global dry pea output.

· World pulse production posted a low growth rate over the past two decades (1.3 percent) partly due to low profitability of pulse crops relative to other crops.

· Global trade in pulses exhibited a positive trend since 1980 with an annual growth rate of 7 percent, translating into some 5-million-ton increase in absolute terms. The proportion of pulse production that is traded increased from 6-7 percent in the early 1980s to about 15 percent currently.

· For market composition, dry peas are the largest traded pulse with a 37 percent share of the total pulse trade, followed by dry beans (28 percent), lentils (9 percent) and chickpeas (8 percent).

International market structure

· Global trade in pulses is not a residual market, as several countries produce for the export market, while many others rely on the world market to meet domestic demand.

· The largest market for food pulses is South Asia (mainly Bangladesh, India, Pakistan and Sri Lanka), while the largest market for feed pulses is the European Union (EU-15).

· In 1998-2000, over 70 percent of global pulse exports were supplied by 5 countries: Canada Australia, Myanmar, China and the United States.

· On the import side, 50 percent of global pulse imports in 1998-2000 were made by 6 countries: EU, India, Egypt, Pakistan, Bangladesh and Mexico.

World pulse production and utilisation

World pulse exports

Shares of major pulse exporters 1998-2000

Shares of major pulse importers 1998-2000