3.5 The developing countries: prospects by major commodity groups

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Diflering prospects for the individual commodity sectors

As noted, the prospective developments for the entire agricultural sector reflect the diverging growth prospects for the different commodity sectors. These are summarized in Table 3.5, while the prospects for each major sector are discussed in the subsequent subsections.

Table 3.6 All cereals, 93 developing countries (including rice in milled form)*

*For an interface of these projections with those for the developed countries and the world total see Table 3.17.
^†Numbers in parentheses are the net imports of all developing countries, i.e. including those not in the group of 93, some of which are sizeable importers though minor producers. For imports and exports of the developing countries see text.

Cereals in the developing countries

Overall prospects

The trend towards lower growth rates in cereals production is expected to continue (Table 3.6). Notwithstanding this decline, the growth of production should continue to be above that of population in the future. Thus production per caput would continue to grow, but at a slower rate than in the past. For example, per caput production has increased by 30 kg in the last 20 years. It may increase by only 12 kg in the next 20 years. This slowdown is the result of a mix of positive and negative factors. On the positive side, the per caput demand for direct food uses is already at relatively high levels in some countries and demand tends to shift to other food products. This is the case of rice in some East Asian countries. On the negative side, other countries with still low levels of per caput consumption levels may not make much progress because of a combination of low growth in per caput incomes and constraints on increasing production and/or imports. In parallel, the growth of per caput consumption for all uses (+ 19 kg) is likely to exceed that of per caput production (+ 12 kg) with the difference to be met by increasing net imports (Table 3.6). Much of the additional consumption per caput will be for non-food uses, essentially for feed. This would reflect the continued growth in the production and consumption of livestock products (see below).

The result of these possible developments in production and consumption is that the net cereals import requirements of the developing countries would continue to grow, though slowly, more like the path of the 1980s than the explosive one of the 1970s. Thus, net cereals imports may grow from the 90 million tonnes of 1988/90 to some 160 million tonnes in year 2010 and the aggregate cereal self-sufficiency ratio may decline a little to 90 percent by year 2010 (Table 3.6). About one-half of the total increment would be for the Near East/North Africa region and the balance would be mostly for Latin America and sub-Saharan Africa, and only a minor part for South Asia and East Asia, assuming China (Mainland) would continue to be only a small net importer.

The prospect that sub-Saharan Africa's net cereal imports may more than double to nearly 20 million tonnes may be viewed with alarm given the region's difficult balance of payments situation and heavy dependence on food aid. This possible outcome suggests a continued and possibly expanded role for food aid in the future. Still, the region's net import requirements are, and will likely remain, a small part of the total cereals deficit of the developing countries. They are also entirely inadequate for its own needs, as even if its production increased by 3.4 percent p.a. (as assessed by this study) this rate would still be grossly inadequate to raise more than marginally the very low consumption levels. Thus, while it is a matter of concern that the region's net cereal imports may more than double in the next 20 years, the real concern should be how to define a superior outcome for the region, one that would be composed of higher growth of agriculture (though not necessarily of cereals), exports and overall incomes and would lead to higher demand despite, most likely, even higher net food imports.

Production perspectives for the individual cereals

Much of the projected slowdown in total cereals production of the developing countries is due to the prospective developments in wheat and rice, while production growth of coarse grains could be somewhat faster than in the past, though not fast enough to compensate for the slower growth of wheat and rice. This is partly because the bulk of their wheat and rice crops is produced in the two land-scarce regions of Asia and the Near East/North Africa (see Chapter 4); and partly because the demand for wheat and rice is likely to be less buoyant than that for coarse grains for animal feed.

It follows that the scope for increasing production of wheat and rice in the developing countries through area expansion is much more limited than that for coarse grains which have a larger weight in total cereals production in the less land-scarce regions of Latin America and sub-Saharan Africa. This leaves production growth of wheat and rice in the developing countries to depend mainly, and more than in the past, on the growth of yields. In this context, the quantum leaps of yields of these two crops, characteristic of the heyday of the spread of the green revolution, are unlikely to be repeated at the same rate in the future. A slowdown in yield growth in the developing countries (excluding China) is foreseen for both wheat and rice; from an average growth rate of 2.8 percent p.a. in the last 20 years to 1.6 percent p.a. in the next 20 years for wheat; and from 2.3 percent p.a. to 1.5 percent p.a. for rice. Why this would be so is explained in more detail in Chapter 4 where the issue is analysed in terms of the individual agroecological zones, ranging from semi-arid to fully irrigated. A preview of the main parameters of cereals production in the developing countries, excluding China, is given in Table 3.7. More complete data and projections for the individual cereals in a world context are given in the Annex.

Food and feed uses of cereals

Total domestic use of cereals in the developing countries in 1988/90 amounted to 930 million tonnes (with rice included in milled terms) of which 90 million tonnes came from net imports from the developed countries. Direct food consumption absorbed some 670 million tonnes (72 percent of the total, but with wide regional differences, e.g. from 88 percent in South Asia to 56 percent in Near East/North Africa). Animal feed accounted for some 160 million tonnes (17 percent of the total, again with wide regional differences), while the remaining 100 million tonnes were used for seed and industrial non-food uses or represent waste (post-harvest to retail).

As noted (Table 3.6), the direct food part of total cereals use is expected to grow at a rate just above that of population and show only marginal increases from the present per caput level of some 170 kg for the developing countries as a whole. The perspectives for the different regions differ from each other and often from their own historical experiences. Sub-Saharan Africa could see some modest increase in per caput consumption, though this would be far from adequate for nutritional improvement. Still, it would be an improvement following two decades of no growth, and indeed some decline, in per caput consumption. This "optimistic" outcome for the region depends essentially on the prospect that domestic cereals production (mostly of coarse grains) would grow in the next 20 years at 3.4 percent p.a. This is well above that achieved in the past 20 years (2.1 percent) but equal to that of the 1980s. Likewise, growth in per caput consumption in the Latin America and Caribbean region could resume after the no-growth decade of the 1980s. South Asia and East Asia (excluding China) could continue on their past slow and decelerating growth in the per caput direct consumption of cereals, though, as noted, for different reasons. The saturation/diversification effect will likely dominate the developments in East Asia, while the persistence of low incomes will be more decisive for South Asia.

Table 3.7 Area, yield and production by major cereal crop, developing countries (excluding China)

* In the total production of cereals, rice is included in milled terms.
** Numbers in parentheses denote the area under the crop in each agroecological zone as percentage of the total harvested area under the crop for 1988/90.

The end-result is that demand for cereals for direct food consumption may grow at only 1.9 percent p.a. while that for feed would grow nearly twice as fast (3.7 percent p.a.). Why feed use should grow at this relatively high rate is explained below in the discussion of the prospective developments of livestock production and consumption. It is noted, however, that this growth rate is below that of earlier periods, when feed use of cereals started from a low base and reached peak growth rates of 7.2 percent p.a. in the 1970s, before slowing down to 3.6 percent p.a. in the 1980s.

Still, feed use may account in year 2010 for some 22 percent of total use, up from 17 percent today, which itself was up from 11 percent 20 years ago. This prospect for an ever increasing share of cereal supplies of the developing countries to be used in the feed sector may give rise to concern in a situation where many countries and population groups are still far from having met their needs for direct food consumption of cereals. The relevance, or otherwise, of this concern depends essentially on the extent to which it can be considered that the use of cereals for feed diverts supplies which would otherwise be accessible to the poor. The answer is less straightforward than would appear at first glance. Increased demand for feed has traditionally originated in the middle- and high-income countries in which both feed and direct food use of cereals have been increasing and the latter is near "satisfactory" levels, though not for all population groups. By contrast, the need to increase per caput direct food use of cereals is to be found predominantly in the low-income countries, where feed use of cereals accounts for only a tiny proportion of total availabilities.

Under these circumstances, the link between the two, often spatially separate, categories of demand (of the middle-income countries for both food and feed, of the poor countries for food) and eventual diversion from the latter to the former could occur, in the first instance, through the operation of the world markets. But the conditions for this to happen are rather stringent: either (a) global supplies are quasi-constant in which case the additional demand for feed would raise prices with the result that part of the demand of the poor for direct consumption would be priced out of the market, or (b) supplies can be increased but only at prices which are above those that would otherwise prevail.

The empirical evidence from the world markets shows that increasing supplies to meet increments in demand (partly originating in the feed sector) have been forthcoming at declining, or non-increasing, real prices, except for occasional short-term shocks. There is, therefore, a prima facie case that increasing demand for feed has not raised permanently world cereal prices. The key question is, of course, whether prices would have been even lower but for the demand for feed. On this, it is more difficult to have firm views. It is noted, however, that one of the key factors behind the declining, or non-increasing, real prices in the presence of increasing demand has been the lowering of production costs following the diffusion of productivity-increasing technology. It is possible that this technological progress was partly linked to the expansion of demand of cereals by the feed sector.

The above considerations seem to suggest that, in a global context, increasing use of cereals for feed was most likely met from additional supplies which were forthcoming at prices not significantly above those that would otherwise have prevailed. There is, however, reason to believe that such food-feed competition can be a significant factor in diverting supplies away from the poor at the level of individual countries or regions within countries. This would be the case of countries which face stringent production constraints and have little scope for increasing supplies through imports; or regions within countries which, because of local production constraints, low incomes or bottlenecks in transport, can be considered to be in a similar position. Such cases have characteristics closely resembling those of the "closed economy" paradigm. In such cases, an increase in the demand for feed would raise prices rather than production and reduce the direct food consumption of the poor.

The key issue is, of course, whether this process actually happens in poor countries in those conditions. It is noted that in the low-income regions of South Asia and sub-Saharan Africa the feed use of cereals remains a minuscule proportion of total use. Moreover, the projections show that this situation would not change much in the future, as nearly all their increases in demand for cereals would be for direct food purposes. Therefore, there is a prima facie case that the food-feed competition may not really be a significant factor in preventing progress towards raising the per caput direct consumption of cereals in the many countries with such consumption still at inadequate levels. If anything, the historical experience of many middle-income developing countries demonstrates that increases in the feed use of cereals occurred in parallel with increases in the per caput consumption for direct food purposes. The general underlying factor has been the growth in per caput incomes in combination with the growth of domestic cereals production and/or improvements in the import capacity. It is the absence of these factors that stands in the way of increasing per caput direct consumption in many low income countries rather than the fact that feed use may be increasing in the middle- and high-income countries.

Record of earlier projections

The approach used here to project the likely evolution of the main food and agriculture variables is essentially the same one used in 1985-86 to make similar projections to 2000 (Alexandratos, 1988). The projections of that time for total food (calories) and cereals (direct food, net imports) of the developing countries for the period 1982/84-2000 (the three-year average 1982/84 was the base year) may be compared with the actual outcomes to 1992, i.e. half-way into the 17-year projection period. This comparison is made in Figures 3.3(a} (c). Chapter 4 presents similar comparisons for areas, yields and production of cereals. By and large, the actual outcomes track fairly closely the projection trajectories of these variables for the developing countries as a whole. These comparisons do not constitute a validation of the projection method. They are offered here in response to the often asked question of how well the earlier projections have performed.

Livestock products in developing countries

Structural change in the food consumption of the developing countries towards more livestock products will continue with significant increases in per caput consumption of meat in all regions except South Asia and sub-Saharan Africa (see Table 3.3). However, their per caput consumption of such products will still be well below those of the high-income countries in 2010. For some developing countries, the consumption of livestock products may not advance even in the longer term future to the stage when it would match the consumption levels of the developed countries, for various reasons including those of ecology and culture. It is noted, however, that in some, though not all, high-income developing countries, meat consumption levels comparable to or a little below those of the developed regions have been attained, e.g. Taiwan (province of China), Singapore, Hong Kong, the United Arab Emirates and Kuwait. Another factor in considering the livestock sector developments is that in some developing countries, including very poor ones, livestock products (mostly milk) are staples, not luxury foods, e.g. in the predominantly pastoral societies of the Sahel.

Table 3.8 Meat production and consumption, 93 developing countries

Note: Meat is in carcass weight, excluding offals. Production is that of indigenous meat, with live animal exports counted as domestic meat production and live animals imports as meat imports, in their carcass weight equivalent.

For meat there may be a slowdown in the growth of per caput demand (from 2.6 percent p.a. in 1970-90 to 2.0 percent p.a. in 1988/90-2010), total demand (from 4.8 percent to 3.9 percent) and production (from 4.6 percent to 3.8 percent). The relevant data are shown in Table 3.8. The slowdown would occur in the regions of Near East/North Africa and East Asia. Prospective developments in China decisively influence the total outcome because this country accounts for 40 percent of total meat consumption of the developing countries. For the developing countries without China, the growth rate of per caput demand for meat is likely to be maintained at 1.1 percent p.a., while the growth of their total demand and production is somewhat less than in the past because of the lower growth of population. In addition, there might be a net import of about 1 million tonnes, mostly reflecting growing net imports into the Near East/North Africa region, partly offset by increased net exports from Latin America.

Table 3.9 Milk production and consumption, 93 developing countries

Note: All data and projections are for all milk and dairy products in liquid whole milk equivalent. consumption and trade of butter is not included in the dairy products but in the animal fats. This means that, for example, a country importing or consuming milk powder or cheese is shown as importing or consuming the liquid whole milk equivalent; but if it imports/exports only butter it is not shown as importing/exporting milk or dairy products.

Concerning the milk sector, there is likely to be a drastic slowdown in the rate of increase in consumption. In contrast to the prospective developments for the meat sector, the slowdown is generalized and all regions may be affected. The reasons for these prospective developments are to be found in a combination of production constraints and reduced availabilities of exports at highly subsidized prices (including food aid) from the main exporting developed countries. It can be seen from the historical data in Table 3.9 that the slowdown has been under way already in the 1980s. In the decade of the 1970s, the growth of net imports provided one-quarter of the increment in consumption. By contrast, there was no growth in net imports in the 1980s, and only slow growth in such net imports is foreseen for the next 20 years.

The trade picture is likely to be dominated by: (a) the reduced scope for subsidized production and exports from the main developed exporting countries, a policy trend likely to hold in the future and be reinforced by developments following the conclusion of the Uruguay Round with consequent upward pressure in world market prices; and (b) the limited import capacity, already apparent in the 1980s, of those countries which fuelled the growth of consumption and imports in the 1970s. For example, in the Near East/North Africa region the growth of imports in the 1970s provided 55 percent of the growth of consumption and the region accounted for nearly 40 percent of the increment in total imports of the developing countries.

An additional factor in the slowdown of consumption and trade growth is the fact that in the fastest growing region, East Asia, the rapid economic growth will be less of a stimulus for increased milk consumption compared with other products because of the dietary habits of the region (presently consuming 6.5 kg per caput compared with 55 kg in the other developing countries). Finally, of particular concern is the prospect that production constraints would permit little growth in per caput consumption in the regions in which milk is a staple food for large parts of the poor population, e.g. in the pastoral societies of sub-Saharan Africa and, to a lesser extent, South Asia.

Implications for the cereals feed sector

As noted earlier, feed use of cereals in the developing countries is becoming an increasingly important component of total cereals use. It grew at 5.6 percent p.a. in the last 20 years (7.2 percent p.a. in the 1970s, 3.6 percent p.a. in the 1980s); this is nearly double the growth rate of the use of cereals in direct food consumption. This growth of the cereals feed use has been one of the main factors behind the rapid increase in the developing countries net cereal imports, particularly during the 1970s. With the exception of China, the middle-income developing countries account for the bulk of cereals feed use. This is, of course, related to their above-average per caput consumption of livestock products. China also shares this characteristic, even though the criterion of per caput income puts the country in the low-income group. Garnaut and Ma (1993) consider that the food consumption statistics of China indicate that the country's per caput income is much above the level given in the conventional national accounts data.

The general mechanism which drives the growth of the cereals feed sector can be simply stated: growth of incomes increases demand for livestock products. The latter causes production to increase, with the bulk of the additional production in most countries coming from the pig and poultry sectors, as discussed in the preceding section. Unlike the case of the ruminant meat sector in the developing countries, substantial increases in pig and poultry meat, and to a lesser extent also dairy, depend heavily on the expansion of intensive and semi-intensive production systems (see Chapter 4). This general pattern would translate into the feed use of cereals growing faster than the volume of livestock output. In parallel, however, gains in feed use productivity and resort to non-grain products in concentrates would tend to attenuate this pattern. Moreover, this pattern is less pronounced or entirely absent in those countries (both developed and developing) with relatively high shares of the cattle/sheep sector in the total growth of livestock production and ample grassland and other non-grain feed resources.

The historical experience of comparative growth rates of cereals feed use and livestock output in the last 20 years (Table 3.10) broadly conforms to the above discussed considerations. In both sub-Saharan Africa and South Asia and to a lesser extent Latin America feed use of cereals grew at or below the growth rate of total livestock output, with the latter measured by aggregating the different livestock products using weights reflecting the differences in their cereals feed intensity (see footnote to Table 3.10). At the other extreme, the experiences of both Near East/North Africa and East Asia (excluding China) seem to conform to a pattern of increasing cereal feed intensity of their livestock sectors, though at varying rates in different periods.

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