CL 127/2

Council

Table of Contents

I. INTRODUCTION

II. CURRENT FOOD SECURITY SITUATION

A. TRENDS IN UNDERNOURISHMENT

B. food emergencies

C. food aid

III. CURRENT AGRICULTURAL SITUATION

A. CROP AND LIVESTOCK PRODUCTION

B. WORLD CEREAL SUPPLY SITUATION

C. INTERNATIONAL COMMODITY PRICE TRENDS

D. AGRICULTURAL TRADE

E. FISHERIES: PRODUCTION, UTILIZATION AND TRADE

F. FORESTRY

IV. RESOURCES TO AGRICULTURE

A. EXTERNAL ASSISTANCE TO AGRICULTURE

B. AGRICULTURAL CAPITAL STOCK

V. SUMMARY

ANNEX: THE STATE OF FOOD AND AGRICULTURE IN FIGURES

I. INTRODUCTION

1. This year’s Council document on the State of Food and Agriculture (CL 127/2) presents information on global food security developments and highlights recent trends in agricultural production, markets and trade. The information is based on data available as of August 2004. As this document goes to press, the most recent food security estimates are for 1999-2001.

2. Delegates are invited to refer to various recent FAO documents and web pages for more current information and detailed analysis. For example, the latest versions of “Food Outlook” and “Foodcrops and shortages” offer updated commodity production and market information, as well as information on food emergencies; comprehensive information on food insecurity can be found in the forthcoming “The State of Food Insecurity in the World: 2004”.

II. CURRENT FOOD SECURITY SITUATION

A. TRENDS IN UNDERNOURISHMENT

3. FAO estimates the number of undernourished people in the world in 1999-2001 at 842 million: 798 million in the developing countries, 34 million in the countries in transition and 11 million in the developed market economies (see Annex, fig. 1). More than half of the total numbers of undernourished, 60 percent, are found in Asia and the Pacific, followed by sub-Saharan Africa, which accounts for 24 percent of the total.

4. The proportion of the population which is undernourished varies between the different developing country regions (Annex, fig.2). The highest incidence of undernourishment is found in sub-Saharan Africa, where FAO estimates 33 percent of the population to be undernourished. This is well above the 17 percent undernourished estimated for Asia and the Pacific and the 10 percent estimated for both Latin America and the Caribbean and the Near East and North Africa.

5. At the global level, the long-term trends for many food security indicators have been positive. The average global calorie supply per person grew by 19 percent since the mid-1960s to reach 2800 kcal/person/day, with the developing country average expanding by more than 30 percent. As consumption increased, diets shifted towards more meat, milk, eggs, vegetables and oils and away from basic cereals.

6. The number of people undernourished has declined over the long run, although progress has slowed in recent years (Annex, fig. 3). The prevalence of undernourishment in developing countries fell from 37 percent of the total population in 1969-71 to 17 percent in 1999-2001 (Annex, fig. 4). However, due to population growth, the decline in absolute numbers of undernourished people has been slower than for the percentage incidence of undernourishment. The past progress in aggregate food consumption numbers and undernourishment indicators for the developing countries was influenced decisively by the significant gains made in the most populous countries, including Brazil, China, India, Indonesia, Nigeria and Pakistan.

7. Most of the improvement in undernourishment figures over the past three decades has been concentrated in Asia, which reduced the incidence of undernourishment by almost two-thirds over the period. In sub-Saharan Africa, the very limited reduction in the prevalence of undernourishment has been more than counterbalanced by population growth, resulting in a large increase in absolute numbers of undernourished. Latin America and the Caribbean experienced a significant decrease in the both prevalence and the absolute numbers of undernourished in the 1970s, but has made little progress since then. In the Near East and North Africa the prevalence of undernourishment fell significantly in the 1970s but by 1999-2001 it was slightly above the level of two decades earlier, after having actually increased over the 1990s.

8. FAO has projected the numbers of undernourished by 2015 and by 2030 based on UN population projections and World Bank projections of income growth (Table 1). According to the FAO projections, the proportion of undernourished people in the developing countries should fall significantly, from 20 percent in 1990-92 to 11 percent in 2015 and 6 percent in 2030. However, due to population growth, the total number of undernourished people in the developing countries is expected to decline more slowly, from 815 million in 1990-92 to 610 million by 2015 and around 440 million by 2030. These forecasts suggest that the World Food Summit target and the Millennium Development Goal of halving hunger in the world by 2015 will not be met.

Table 1: Projections of food and hunger indicators by region

* Projections to 2015 and 2030 have 1997-99 as base period.
Source: FAO, World agriculture towards 2015/30, Summary Report, Rome 2002.

9. The data in Table 1 emphasize the urgency of addressing the problems of the countries of sub-Saharan Africa, with the numbers of undernourished in this region projected to increase by 9 million people between 1997-99 and 2015. By 2030, approximately 40 percent of the under- nourished people in the developing countries will be in sub-Saharan Africa, compared to 25 percent today. Over the next 15 years, the average regional food consumption level in Africa is expected to increase only by 7 percent to 2360 kcal/person/day, compared with 2700 for South Asia, 2980 for Latin America and the Caribbean and 3060 for East Asia.

10. These trends and projections are important reasons for placing high priority on agricultural development in sub-Saharan Africa. Agricultural conditions vary widely both among and within countries in sub-Saharan Africa but they do share a number of worrisome characteristics and trends. Examples include a high degree of production variability, relatively low crop yields and dependency on exports of primary commodities, many of which are subjected to low income and price elasticity of demand and high price volatility. Sub-Saharan Africa falls well below other developing regions in the proportion of area irrigated, value added per worker, fertilizer use levels and productivity growth in both crop and livestock activities. Agriculture’s relatively weak, and often declining performance is symptomatic of inadequate investments in human capital, agricultural infrastructure, research and extension networks, and long-term crisis management. The longer these basic investments are delayed, the less competitive agriculture will become and the weaker its potential for contributing to reducing undernourishment and poverty.

11. In addition to the human suffering, the damaging consequences of hunger and malnutrition on human productivity are increasingly documented and understood. Recent evidence demonstrates that hunger can have severe negative effects on the economic growth rates of countries with a high prevalence of undernourishment. FAO’s work on the links between hunger and economic growth suggests that for sub-Saharan Africa the economic cost of hunger and malnutrition is high. Over the period 1960 to 1990, countries in the region could have attained an average per-caput GDP level of US$ 2 200 by 1990 in the absence of undernourishment. Instead, the region’s average GDP per capita in 1990 was just US $800 per year.

B. FOOD EMERGENCIES

12. A large number of countries and people continue to be affected by food emergencies. As of May 2004, the number of countries facing serious food shortages throughout the world stood at 35. Twenty-four of these were in Africa, 5 in Asia, 5 in Latin America and 1 in Europe.¹ The causes are varied but civil strife and adverse weather, including drought, predominate. In many of these countries, the food shortages are compounded by the impact of the HIV/AIDS pandemic on food production, marketing, transport and utilization.

13. Civil strife and the existence of internally displaced people or refugees are responsible for more than half of the reported food emergencies in Africa as of May 2004. The proportion of food emergencies that can be considered human-induced has increased over time. Indeed, conflict and economic failures were cited as the main cause of more than 35 percent of food emergencies between 1992 and 2004, as compared to around 15 percent in the period from 1986 to 1991. In many cases, natural disasters are compounded by human-induced disasters, leading to prolonged complex emergencies.

14. The recurrence and persistence of emergencies often compound the severity of their impact. Thirty-three countries experienced food emergencies during more than half of the years of the period 1986-2004. In particular, many conflict-induced complex emergencies are persistent and turn into long-term crises. No less than 8 countries suffered emergencies during 15 or more years of the period 1986-2004 and, in all instances, war or civil strife was a major factor behind the emergencies.

15. In contrast, many countries that enjoy relatively stable economies and governments but are plagued by unfavourable weather have implemented crisis prevention and mitigation programmes and established effective channels for relief and rehabilitation efforts. For these countries, a natural disaster need not result in a prolonged humanitarian crisis.

C. FOOD AID

16. Food aid in cereals increased to 8.6 million tonnes in 2002/03 (June to July), 1.2 million tonnes (or 17 percent) above 2001/02 (Annex, fig. 5). The increase occurred in Africa and Asia, with shipments to Latin America and the Caribbean falling slightly while shipments to the Russian Federation declined almost to zero. The top 5 recipients of cereal food aid in 2002/03, ranked in terms of volumes of shipments, were Iraq, Ethiopia, Democratic People’s Republic of Korea, Afghanistan and Bangladesh. All of these countries, except Iraq, were among the top 5 food aid recipients during the previous year as well.

17. Cereal food aid has been characterised by relatively large annual fluctuations. It has tended to decline relative to the level of the late 1980s and early 1990s, but remains significantly higher than during the mid-1990s. Also in per caput terms, shipments have declined substantially relative to the early 1990s (Table 2). Disregarding exceptionally large shipments to the Russian Federation in certain years, Africa remains the largest recipient in per caput terms, albeit at levels well below those of a decade ago.

18. The FAO Principles of Surplus Disposal and Consultative Obligations, originally agreed in 1957 and enshrined in the WTO Agreement on Agriculture disciplines on export subsidies in 1995, are intended to limit the potential of food aid to disrupt normal trade flows. Food aid may be further disciplined in the ongoing Doha Round of trade negotiations (discussed more fully in the trade section below). The WTO Members have agreed to eliminate by a fixed date food aid that is not in compliance with operationally effective disciplines. The role of international organizations as regards the provision of food aid by Members, including related humanitarian and developmental issues, will be addressed in the negotiations, as will the question of providing food aid exclusively on fully grant form.²

Table 2: Per caput shipments of food aid in cereals (in grain equivalent) (kg per capita)

Note: years refer to the 12-month period July/June. Countries of the Near East in Asia are classified with Asia; countries of the Near East in North Africa are classified with Africa.

III. CURRENT AGRICULTURAL SITUATION

A. CROP AND LIVESTOCK PRODUCTION

19. The rate of growth of global crop and livestock production has increased in both of the last two years although provisional estimates for 2003 remain below the average for each of the previous four decades. In per caput terms, however, output growth is slightly above the average for previous decades (Annex, fig. 6). For developing countries as a group, output growth in both absolute and per caput terms has been fairly stable although somewhat lower in the 2000s compared with 1980s and 1990s. Output growth has been much more volatile for the developed country group.

20. Output trends for developing countries are dominated by Asia and the Pacific (Annex, fig. 7), and more specifically by China, where the very high rates of agricultural output growth recorded since the beginning of the economic reform process in the late 1970s have been tapering off in recent years. China has indeed attained a high level of per capita food consumption which is expected to slow growth in demand for food products in the future.

21. Sub-Saharan Africa has likewise recorded lower per caput growth in agricultural output over the last four years compared with relatively favourable rates during most of the 1990s. Provisional data for 2003 indicate a slight increase in per caput growth compared with 2002, but still well below the average for the 1990s. Latin America and the Caribbean has experienced relatively favourable rates of per caput production growth over the last 5-6 years, averaging around 3 percent per year, in line with the earlier part of the 1990s and above the lower rates of the 1980s. In the Near East and North Africa, agricultural performance continues to be characterized by very pronounced fluctuations due to variable climatic conditions in many countries in the region. After increasing almost 6 percent in 2002, provisional data suggest that per caput output growth will be virtually stagnant for 2003.

22. Long term trends in per caput food production provide an indication of the contribution of the sector to food supplies (Annex, fig. 8). Over the last three decades, Latin America and the Caribbean and, in particular, Asia and the Pacific have seen sustained growth in per caput food production. In the Near East and North Africa, the increase has been much more limited, amid pronounced fluctuations. Sub-Saharan Africa is the only developing-country region that has not seen increases in per caput food production over the last three decades; indeed, after a pronounced decline in the course of the 1970s and early 1980s, per caput food production has stagnated and is still at the level of two decades ago. After experiencing a steep decline in the early 1990s, per caput food production in the transition countries remains well below the average levels of the 1980s.

B. WORLD CEREAL SUPPLY SITUATION

23. After several years of stagnation, global cereal production increased sharply in 2003/04 and is forecast to continue increasing in 2004/05. Global utilization resumed its upward trend after a slight decline in 2002/03. Utilization has exceeded production by significant amounts since the 2000/01 marketing year (Annex, fig. 9). FAO’s latest forecasts for global cereal production in 2004 and the first forecast for utilization in 2004/05 indicate that output will remain below the expected level of utilization, implying that stocks will be drawn down in 2005 for the fifth consecutive year, although at a slower rate.

24. As in the previous seasons, lower stocks in China account for the bulk of the reduction in world stocks (Annex, fig. 10). Of the overall decline of 300 million tonnes in cereal stocks since 1998, China alone accounts for nearly 80 percent, as a result of deliberate policies to downsize cereal inventories. The global stocks-to-utilization ratio has fallen by half since 1998 from 36 percent to 18 percent.

C. INTERNATIONAL COMMODITY PRICE TRENDS

25. During 2003 and the first half of 2004, prices of basic food commodities reached their highest levels since the mid-1990s (Annex, fig. 11). Prices of oils and fats have led this trend, rising 60 percent from the depressed levels of 2000 and 2001. Other basic food prices, including cereals, meat and dairy, have risen as well, although by smaller margins.

26. Price increases in the oilseeds sector reflect continuing strong demand growth for oils for food use and meals for animal feed. The current high level of oilseed prices is stimulating farmers to increase plantings, and – assuming weather conditions remain good and pest incidence low – an anticipated expansion in oilseed production in 2004/05 could dampen the upward trend in prices.

27. Cereal prices rose 17 percent between 2000 and 2003 and continued rising significantly during the first part of 2004. Despite much lower stocks than have prevailed historically, cereal prices moderated somewhat in mid-year on the basis of favourable harvests.

28. International meat prices increased in 2003 and the first half of 2004 as animal disease outbreaks in major meat exporting countries and resulting bans on imports from these areas reduced exportable supplies. Poultry and pig meat prices have moderated somewhat in 2004, but bovine meat prices continued to surge as disease problems and higher feed prices depress output and trade prospects.

29. In contrast with the rising prices of basic food commodities, the price situation for tropical products and raw materials is mixed. Sugar prices remain depressed in 2004 for the fifth consecutive year. Large harvests in some key exporting countries and expanding production in some net importing countries have maintained downward pressure on world prices despite relatively strong demand growth and declining global stocks.

30. Coffee prices have recovered slightly from the extremely depressed levels of 2001. Despite some evidence of a cyclical recovery, however, coffee prices remain well below the average of the early 1990s indicating that supply remains high relative to demand. After falling almost 50 percent between 1998 and 2000, cocoa prices recovered strongly in 2002 and 2003 largely on the basis of disease-reduced harvests. Cocoa prices have decreased slightly in 2004 but remain at about the average of the mid-1990s.

31. Cotton prices have increased from their sharply depressed levels of 2001 and 2002, as smaller harvests and stronger demand have reduced stock levels, exerting upward pressure on the market. Global cotton production fell 10 percent in 2002/03 as farmers reduced planted area. Rising prices for petroleum-based textiles stimulated demand for cotton. Rubber prices have also recovered in 2003 and 2004 from the very low levels that prevailed during the previous years. Stronger economic growth and higher prices for petroleum-based synthetic rubber are responsible for the recovery in rubber prices.

32. Weak and volatile prices, especially for beverages and other tropical products, have negative effects on the ability of many developing countries to generate export earnings. This can be particularly severe for countries that rely on exports of a small number of agricultural commodities for a large share of their export revenues, as is the case for many developing countries. As many as 43 developing countries depend on one single agricultural commodity for more than 20 percent of their total export revenues and more than 50 percent of their agricultural export revenue. Most of these countries are in sub-Saharan Africa or Latin America and the Caribbean. The most important export commodities for these countries are coffee, bananas, cotton lint and cocoa beans. The high dependence on only a few export commodities makes the overall economies of these countries extremely vulnerable to market conditions for these commodities. Large fluctuations in export proceeds, in their turn, are likely to have negative impacts on income, investment, employment and growth.

D. AGRICULTURAL TRADE

33. After declining every year since 1997, the value of global agricultural exports expanded slightly in 2001 and more strongly in 2002 (Annex, fig. 12). The share of agricultural trade in total merchandise trade continued a long-term downward trend throughout the 1990s, as agricultural trade has expanded more moderately than for manufactured goods. The recent upturn in agricultural exports has stabilized agriculture’s share of total merchandise trade at 7 percent, compared to around 25 percent in the early 1960s (Annex, fig. 13). For the developing countries, the share of agricultural exports in total merchandise exports has dropped from almost 50 percent in the early 1960s to only 7 percent in 2002. The declining share of agriculture in the total merchandise exports of developing countries reflects both a diversification of their trade towards manufactured goods and the relatively slow growth of agricultural trade.

34. Until the early 1990s, the developing countries recorded an agricultural trade surplus in most years. This traditional agricultural trade surplus position of the developing countries has been shrinking over time, and throughout most of the 1990s their agricultural exports and imports were roughly in balance, turning to a trade deficit in 1999 (Annex, fig. 14). FAO’s outlook to 2030³ suggests that, as a group, they will become net agricultural importers and projects a developing country agricultural trade deficit of US$ 18 billion (in US$ of 1997/99) in 2015, rising to US$ 35 billion in 2030.

35. The trend towards a widening agricultural trade deficit is even more pronounced for the group of least developed countries. The LDC group became net importers of agricultural products as early as the mid-1980s and their agricultural trade deficit has been widening so rapidly that already by the end of the 1990s imports were more than twice as high as exports. The outlook to 2030 suggests that the agricultural trade deficit of the least developed countries will continue to widen and could quadruple by that year.

36. Both policy and market factors have been driving these trends in the agricultural trade position of developing countries. On the policy side, barriers to trade in both developed and developing countries and domestic support to agricultural production in many developed countries have restricted agricultural exports. By holding down world commodity prices, these policies have hampered the development of agriculture in developing countries, where less government support to agriculture is available. On the market side, growth in agricultural trade has been limited by sluggish and largely saturated demand in developed countries.

37. Quite different agricultural trade positions are found in the different developing country regions. In particular, the Latin America and the Caribbean region has seen a widening of its agricultural trade surplus, starting around the mid-1990s. At the same time, Asia and the Pacific has become a net agricultural importer, while the significant structural deficit of the Near East and North Africa shows no signs of diminishing.

38. On 31 July 2004 the WTO’s 147 member governments approved a Framework Agreement⁴ and other agreements aimed at advancing progress and successfully concluding the Doha Development Round of trade negotiations. Annex A of this document specifically provides the framework for establishing modalities in agriculture.

39. The Framework Agreement states that “Agriculture is of critical importance to the economic development of developing country Members and they must be able to pursue agricultural policies that are supportive of their development goals, poverty reduction strategies, food security and livelihood concerns.” Throughout the document there are references to special and differential treatment modalities that will be developed in the area of domestic support, market access and export competition to benefit developing countries. There is a commitment to the identification of Sensitive Products and Special Products which will be eligible for more flexible treatment and to a Special Safeguard Mechanism (SSM) for developing countries.

40. The Framework Agreement provides some flexibility for developed countries but reaffirms their commitment to reform. With reference to the Doha Ministerial Declaration which calls for “substantial reductions in trade-distorting domestic support”, the Framework Agreement states that “there will be a strong element of harmonization in the reductions made by developed Members. Specifically, higher levels of permitted trade-distorting support will be subject to deeper cuts”. A timeline for the elimination of export subsidies will be established and as a principle guiding further negotiations on market access the Framework Agreement indicates that “substantial overall tariff reductions will be achieved as a final result from negotiations”. This is in the interest of both developed and developing countries which have an interest in penetrating export markets. In the areas of market access and domestic support, a tiered formula is called for that represents a single approach for developed and developing country Members and at the same time recognizes their different tariff structures and levels of domestic support.

41. After Cancun, the Framework Agreement represents a historic outcome and establishes an ambitious agenda to meet the conflicting needs of member countries in order to promote the goals set at Doha. Food security and rural development, special and differential treatment, are explicitly identified as concerns that must be advanced by the agreement. The difficult task of specifying criteria, levels, measures to be adopted and implementation procedures has been left for the negotiations phase.

E. FISHERIES: PRODUCTION, UTILIZATION AND TRADE

42. Fisheries play an important role in the world food economy. More than 38 million fishers and fish farmers gain their livelihoods from capture fisheries and aquaculture. Globally, fish provide about 16 percent of animal proteins consumed, with variations from an average of 23 percent in Asia to approximately 19 percent in Africa and around 7 percent in Latin America and the Caribbean. Developments in world supply of fish over the last decade have been overshadowed by trends in China, which has reported very strong growth in fish production, in particular from inland aquaculture and has become the world’s largest fish producer.

43. Total fishery production in 2002 was 133.0 million tonnes, of which 39.8 from aquaculture (Annex, fig. 15). World capture fisheries production was 93.2 million tonnes, slightly above (+0.4 percent) production in 2001 (Annex, fig. 16). Most of the fluctuations in capture production in recent years have been due to variations in catches of Peruvian anchoveta, which are driven by climatic conditions (i.e. el Niño). In 2002, China reported a production of 16.6 million tonnes, no variation compared to 2001. Peru (8.8 million tonnes), the USA (4.9 million tonnes), Indonesia (4.5 million tonnes) and Japan (4.4 million tonnes) were other large producers.

44. World aquaculture production has been increasing rapidly in recent years and now accounts for almost 30 percent of total fisheries production (Annex, fig. 17). Most of the expansion has been attributable to China, which is now responsible for more than two-thirds of total aquaculture production in volume terms (27.8 million tonnes in 2002).

45. About 40 percent (live weight equivalent) of world fish production enters international trade, approaching in 2002 a value of US$ 58 billion. Developing countries contributed slightly less than 50 percent of such exports, with the first 9 exporters accounting for two-thirds of the developing country total. The developed countries absorbed more than 80 percent of total world fisheries imports in value terms (Annex, fig. 18). Japan and the USA together accounted for as much as 39 percent of total world imports of fisheries products. The importance of fisheries exports as a foreign currency earner for developing countries has increased significantly. Currently, cumulated net exports of fisheries products from developing countries far exceed export earnings from major commodities such as coffee, bananas, and rubber.

46. In 2002, an estimated 32 million tonnes of world fishery production, all from capture fisheries, was reduced to meal for the livestock and aquaculture industries. The remaining 101 million tonnes was for direct human consumption. In per caput terms, while total supplies of fish for food from capture have been stagnating in recent years, per caput supplies from aquaculture have increased strongly (Annex, fig. 19). This is particularly so in China, where per caput supplies from aquaculture have increased to the point of providing about 79 percent of total per caput food fish supplies, as compared to only 18 percent in the rest of the world.

F. FORESTRY

47. World roundwood production in 2002 reached an estimated 3 384 million cubic metres, about 1.3 percent above the level of the preceding year (Annex, fig. 20). Total roundwood production has been stagnant over the last decade, with production in 2002 at about the level of a decade earlier. The greater part of global wood production is burned as fuel. Of total roundwood production in 2002, 53 percent was wood fuel and the remaining 47 percent industrial roundwood. The vast majority of wood burning occurs in developing countries, where often wood is the most important source of energy. On the other hand, the larger part of industrial roundwood production continues to be accounted for by the developed countries which provide more than 70 percent of the total, although the share of developing countries has increased over time.

48. The developing countries accounted for 2 020 million cubic metres, or 60 percent of total roundwood production in 2002 (Annex, fig. 21). However, in the developing countries almost 80 percent of roundwood production consists of wood fuel, production of which is continuing on an upward trend. Developing country production of industrial roundwood increased relatively strongly until the mid-1990s but has declined marginally from the level of 1995.

49. In the developed countries, industrial roundwood accounts for approximately 85 percent of roundwood production, while wood fuel production is of relatively marginal importance. Also, developed country production, following a significant decline in the early 1990s, is still well below the peak levels of 1989-90.

IV. RESOURCES TO AGRICULTURE

A. EXTERNAL ASSISTANCE TO AGRICULTURE

50. Measured in constant 1995 prices, preliminary data for 2001 indicate that external assistance to agriculture was virtually unchanged from the previous two years. A possible slight increase in 2001 cannot be confirmed until final data become available (Annex, fig. 22). The distribution of assistance by geographic region varies relatively little from year-to-year, with Latin America and the Caribbean and the transition countries experiencing the greatest variability in recent years.

51. The longer term trends in external assistance to agriculture reveal a very significant decline in real terms from the early 1980s (with a peak in 1982) to the early 1990s (Annex, fig. 23). From 1993 onwards, external assistance to agriculture has fluctuated around levels close to half of those recorded over the period 1982-86. Both bilateral and multilateral assistance have contributed to the significant contraction in levels of assistance compared with those of the early 1980s. Overall, multilateral assistance has been fluctuating more over the last few years, while bilateral assistance has remained relatively more constant. The share of concessional assistance in the total varies from year to year but has risen somewhat, ranging from 70 to 80 percent in recent years compared with 60 to 70 percent until the mid-1980s.

52. When measured in terms of amounts per agricultural worker, external assistance to agriculture has declined very significantly since the early 1980s (Annex, fig. 24). The decline has been particularly severe in sub-Saharan Africa, where external assistance per employed person in agriculture is only around a quarter of the peak level in 1982. There are significant differences in assistance per agricultural worker among the developing country regions, with levels in Latin America and the Caribbean vastly exceeding those of the other regions. Moreover, external assistance to agriculture does not tend to reach the neediest countries in terms of the prevalence of undernourishment. Indeed, external assistance per agricultural worker is higher in the countries with the lowest prevalence of undernourished people in the population (Annex, fig. 25).

B. AGRICULTURAL CAPITAL STOCK

53. Capital stock in agriculture is an important determinant of agricultural labour productivity and of farm incomes.⁵ FAO has prepared estimates of capital stock in agriculture, using physical data on livestock, tractors, irrigated land and land under permanent crops, etc. as well as the average prices for the year 1995. This data enabled the derivation of Capital Stock in Agriculture. The annual change in the latter is taken to reflect Investment in Agriculture. Relating capital stock in agriculture to the number of economically active people in agriculture provides an indicator of the degree of capitalization of the sector (Annex, fig. 26).

54. Agricultural capital stock per agricultural worker differs very significantly among the developing country regions, with levels in Latin America and the Caribbean and in the Near East and North Africa well above those in sub-Saharan Africa and in Asia and the Pacific. Also, when looking at the longer-term trend, since 1975 agricultural capital stock per agricultural worker has increased relatively significantly only in Latin America and the Caribbean, while only limited increases have occurred in the Near East and North Africa and Asia and the Pacific. The most worrisome feature is the slow, but seemingly inexorable, decline in capital stock per agricultural worker in sub-Saharan Africa.

55. Relating capital stock per agricultural worker to prevalence of undernourishment shows that countries with the lowest incidence of undernourishment have the highest level of capital stock per agricultural worker and have seen the largest increase in agricultural capital stock per worker over the past 25 years (Annex, fig. 27). By contrast, countries where more than 35 percent of the population is undernourished have the lowest levels of capital stock per worker and have even experienced a decline over the past 25 years.⁶

V. SUMMARY

56. This document highlights a number of positive and negative features in the state of world food and agriculture. Some of the major features include:

• The number of undernourished people in the world remains stubbornly high, at an estimated 842 million people in 1999-2001. Not only has past progress in reducing these numbers been unacceptably slow and extremely uneven across countries and regions, the most recent estimates suggest that the declining trend in the number of undernourished people may have reversed in recent years. Indeed, in the developing countries, the number of undernourished people is estimated to have increased by 18 million between 1995-97 and 1999-2001.
• At the same time, a large number of countries and people worldwide continue to be affected by food emergencies. Many of these are attributable to unfavourable climatic conditions and natural events, but an increasing number are also determined by human-caused disasters.
• Although food security is much more than a food production problem, productivity and income growth in the agricultural sector can nevertheless provide an important and, in some cases, indispensable contribution to reducing both food insecurity and poverty. Analysis of agricultural production data over time reveals sharp differences in the contribution of the agricultural sector in different countries and regions. In particular, sub-Saharan Africa is the only developing country region that has not seen an increase in per caput food production over the last three decades.
• International commodity price trends continue to pose economic development problems for many exporters of agricultural commodities, especially for those developing countries which are highly dependent on exports of just a few agricultural commodities. Rising prices for basic food commodities may also pose problems for net food importing countries, particularly the least developed among them.
• In spite of the presumed comparative advantage of many developing countries in agriculture, the net agricultural trade position of the developing countries, and particularly the least-developing countries, has worsened over time. This trend looks likely to continue. In this regard, it is important to emphasise the role of the on-going WTO negotiations on agricultural trade in the context of the Doha Round. The outcome of these negotiations may play a critical role for enhancing the contribution of trade in agricultural products to economic development in many developing countries.
• The inadequacy of resource flows to the agricultural sector is underlined both by the low levels of external assistance to agriculture, as compared to past levels, and by the very slow increase, and in some cases even decline, in capital stock per worker in the agricultural sector in some of the developing country regions. Increased resource flows to, and investments in, the sector appear indispensable.

___________________________

¹ FAO, GIEWS, Food Crops and Shortages, No. 2, May 2004. The countries of the Near East in Asia are classified with Asia, while the countries of the Near East in North Africa are classified with Africa.

² . WTO, Doha Work Programme, Decision Adopted by the General Council on 1 August 2004, DOC WT/L/579, paragraph 18, Geneva, 2 August 2004.

³ FAO, World agriculture towards 2015/30, Summary Report, Rome 2002.

⁴ WTO, Doha Work Programme, Decision Adopted by the General Council on 1 August 2004, WT/L/579, Geneva, August.

⁵ The capital stock in agriculture refers to replacement value in monetary terms (at the end of the year) of tangible fixed assets produced or acquired (such as machinery, structures, livestock, land improvements) for repeated use in agriculture production process.

⁶ For a further discussion of this, see: FAO, The State of Food Insecurity in the World 2002, Rome 2002.

Fig. 1: Undernourished population by region, 1999-2001 (millions)

Fig. 2: Percentage of undernourished population by region, 1999-2001

Fig. 3: Trend in number of undernourished in developing countries

Fig. 4: Trend in percentage of population undernourished
in developing countries

Fig. 5: Recipients of food aid in cereals (in grain equivalent)

Note: years refer to the 12-month period July/June. Countries of the Near East in Asia are classified with Asia. Countries of the Near East in North Africa are classified with Africa.

Fig. 6: Changes in crop and livestock production
Annual percentage change

Fig. 7: Changes in crop and livestock production by region
Annual percentage change

Fig. 8: Long term trend in per caput food production by country group
(index 1989-91 = 100)

Fig. 9: World cereal production and utilization

Fig. 10: World cereal stocks* and stocks-to-utilization ratio

Fig. 11: Commodity price trends

Fig. 12: Annual change in US$ value of global agricultural
exports (percentage change)

Fig. 13: Global agricultural exports
(US$ and percent of total merchandise exports)

Fig. 14: Agricultural imports and exports by region
(in value and as share of merchandise exports and imports)

Fig. 15: Total fishery production - World and China

Fig. 16: Capture fishery production - World and China

Fig. 17: Aquaculture fishery production – World and China

Fig. 18: Exports and imports of fishery products developed
and developing countries

Fig. 19: Per caput fish supply from capture and aquaculture
-World and China

Fig. 20: Roundwood production, World

Fig. 21: Roundwood production, developed and developing countries

Fig. 22: Commitments of external assistance to agriculture
by main recipient regions (at constant 1995 prices)

Fig. 23: Long-term trend in external assistance to agriculture,
1974-2001 (at constant 1995 prices)

Fig. 24: External assistance to agriculture per agricultural worker
(in constant 1995 prices)

Fig. 25: External assistance to agriculture per agricultural worker
according to prevalence of undernourishment, 1998-2000
(in constant 1995 prices)

Fig. 26: Agricultural capital stock per agricultural worker, by region
(US$ of 1995 per agricultural worker)

Fig. 27: Agricultural capital stock per agricultural worker in developing
countries by prevalence of undernourishment in 1998-2000
(US$ of 1995 per agricultural worker)