Latest indications for the 1997 cereal crops point to another good harvest at the global level for the second year in succession. However, despite this favourable outlook, 29 countries are facing food emergencies of varying intensity (see box below). FAO's latest forecast, based on current conditions of crops in the ground and assuming normal weather in the next few months, puts the 1997 world cereal crop at 1 887 million tons (including rice in milled terms) close to last year's record crop and above trend. Assuming this forecast materializes, cereal output will be sufficient to meet the expected consumption requirements in 1997/98, and should allow for a further modest replenishment of cereal stocks for the second consecutive year after the sharp draw-down in 1995/96. Nevertheless, the forecast global stock-to-utilization ratio in 1997/98 may only approach 16 percent and thus would remain below the 17-18 percent range the FAO Secretariat considers the minimum necessary to safeguard world food security. The global cereal market would continue to be closely balanced for wheat with ending stocks in 1997/98 expected to remain low. Reflecting this, wheat prices, although well below last year's levels, remain poised to react to any signs of deteriorating conditions as witnessed in mid-April. The current cereal supply/demand assessment is based on the assumption of "normal" weather until the completion of 1997 harvests. Any major weather-related problem affecting the remaining spring plantings in the northern hemisphere or winter plantings in the southern hemisphere, or a failure of the monsoon in Asia, would alter significantly the outlook for food security from that currently forecast by FAO. Thus the situation continues to call for close monitoring in the months ahead.
WORLD CEREAL PRODUCTION, SUPPLIES, TRADE AND STOCKS
|(. . . . . . million tons . . . . . .)|
|Production 1/||1 726||1 872||1 887|
|Supply 2/||2 046||2 130||2 168|
|Utilization||1 795||1 842||1 866|
|Ending Stocks 4/||258||281||294|
1/ Data refer to calendar year of the first year shown. Rice in milled equivalent.
2/ Production, plus opening stocks.
3/ July/June basis for wheat and coarse grains and calendar year for rice.
4/ Does not equal the difference between supply and utilization due to differences in individual country trade years.
As indicated above, FAO now forecasts world cereal production in 1997 at 1 887 million tons (including rice in milled terms), less than 1 percent above last year's crop. Wheat output is forecast at 583 million tons, marginally down from the previous year but above trend for the second year in succession. Output is forecast to rise in most of Asia, Europe and the CIS, but to slip back somewhat in North and South America and North Africa, and in particular in Australia after a record crop last year. For coarse grains, FAO forecasts global output in 1997 at 926 million tons, which would be some 2 percent up from the above-trend crop in 1996. Most of the increase is expected to come from North and South America, but also in the CIS, where production is expected to recover from the reduced crop last year. As regards rice, FAO forecasts a 1997 global paddy output of 562 million tons (377 million tons in milled terms), close to the previous year's record crop of 563 million tons.
FAO's first forecast for world imports of cereals in 1997/98 is 197 million tons, 4 million tons up from the estimated volume in the previous year. The bulk of the increase is expected in imports of wheat which are forecast to rise 4 percent to reach 93 million tons. Import demand is expected to expand particularly in Asia and North Africa, while lower demand is envisaged in the CIS and Europe. Regarding exports of wheat in 1997/98, sales from Australia and Argentina are expected to drop from their 1996/97 records, while shipments from Canada, the United States and some eastern European countries are expected to increase somewhat. Coarse grain imports in 1997/98 is tentatively forecast to increase only marginally from the previous year's level to about 86 million tons. The CIS is not expected to import more, and in Asia, only a small increase is expected, reflecting a slow-down in demand growth for feed in several countries and prospects for larger domestic crops. In the absence of any major increase in import demand, coarse grain exports from nearly all major exporting countries are likely to decline or remain at around the same levels as this year. It is too early to make a forecast of global rice trade in the 1998 calendar year, but FAO assumes that world rice shipments will remain around the current year's level, now forecast at 18 million tons.
Reflecting the closely balanced wheat market, export prices of wheat remained very sensitive to weather and crop developments throughout April and May, but moved in a range which is still well below the exceptionally high levels reached in the previous year. In mid-April, sustained demand and concerns about 1997 production prospects, particularly in the United States and western Europe, pushed prices up to U.S.$ 200 per ton, versus U.S.$ 170-180 in January. However, reflecting generally improved crop conditions since that time, by the fourth week in May, wheat prices had eased back to about U.S.$ 162 per ton. Export prices for maize moved within a U.S.$ 120-125 per ton range during April but weakened in May due to lack of import demand and by the end of the month had dropped to U.S.$ 116 per ton. With regard to international rice prices, the FAO Export Price Index for rice (1982-84=100) averaged 128 in May, 2 points up from the preceeding month, mainly reflecting a strong rise in the price of Thai rice in the first three weeks of the month. However, the Index remained 8 points below the average for May last year.
FAO's latest forecast for cereal carryovers for crop years ending in 1997 has been reduced by 13 million tons since the previous report to 281 million tons, reflecting a major downward revision to the estimates of coarse grain inventories in the United States, and a small reduction for wheat stocks. Nevertheless, at this level, global cereal stocks would still be some 9 percent above their reduced opening volume, rising for the first time in three years. Globally, the ratio of end-of-season stocks in 1997 to expected utilization in 1997/98 would be just over 15 percent, up from 14 percent in the previous season, but still well below the 17-18 percent range the FAO Secretariat considers the minimum necessary to safeguard world food security. For the 1997/98 season, early indications point to a further marginal increase in cereal stocks to about 294 million tons, reflecting the expectation that global cereal production in 1997 will exceed anticipated world utilization in 1997/98. As a result, a further recovery in the global stock-to-utilization ratio is forecast, to almost 16 percent, but this would still below the minimum safe level. The wheat supply situation is expected to remain particularly tight in 1997/98 while stocks of coarse grains are forecasts to expand further.
SERIOUS FOOD EMERGENCIES PERSIST
FAOs latest assessment indicates that in total, 29 countries are currently facing food emergencies due to man-made and/or natural disasters. In Africa, food supply difficulties persist in several parts. In the Great Lakes Region, eastern Zaire(Democratic Republic of Congo) continues to face serious food supply problems, but the situation is expected to improve substantially when the current airlift of Rwandan refugees back home is completed. In Rwanda, the food situation remains difficult for some 2.6 million people, mainly returnees who did not cultivate any crop during the previous season. However, their situation is expected to ease in the coming months with the new harvest about to start. In Burundi, the food supply situation remains tight with prices at high levels, despite the partial relaxation of the economic embargo by neighbouring countries. In Eastern Africa, large numbers of people are facing food shortages due to failure of the secondary season crop. Emergency food assistance continues to be needed in eastern and north-eastern parts of Kenya, in pastoralist southern regions of Ethiopia, and in parts of Tanzania, Uganda and Somalia. In Western Africa, the food supply position remains precarious in Liberia while the situation is likely to deteriorate in Sierra Leone following the recent upheaval. In Southern Africa, the overall food supply outlook remains favourable, but continued food assistance is needed by several countries, particularly Angola and Mozambique.
In Asia, a recent FAO/WFP mission confirms a grave food security situation developing in all parts of Korea DPR and warns that the state of malnutrition has become chronic and life threatening. Only urgent and large-scale food assistance will avert further hardship and loss of life in the country. In Mongolia, declining agricultural production and problems of economic transition continue to expose vulnerable sections of the population to serious food shortages. In Sri Lanka, the recent escalation in civil strife in northern parts is likely to increase the number of refugees, further straining food supplies.
In the CIS additional pledges of food aid are urgently needed for Tajikistan, where poverty and acute malnutrition are increasing and stunting of childrens growth is widespread. In Armenia, Azerbaijan and Georgia, privatization of the grain and bread distribution system is progressing well and grain production is increasing. However, over 1 million economically vulnerable people remain in need of targeted assistance, mainly as a result of the consequences of civil strife in the past and the inadequate social security provisions at present.
Since January 1997 the Director-General of FAO has approved jointly with the Executive Director of WFP 13 Emergency Operations valued at U.S.$ 422 million for 16 million beneficiaries.