FAO/GIEWS - Food Outlook, April 1998

UTILIZATION

The latest forecast for world cereal utilization in 1997/98 points to an increase of 32 million tonnes, or 1.7 percent from the previous year to 1 889 million tonnes, slightly above the long-term trend. This outlook reflects a continuing recovery in utilization of cereals for animal feed, following its sharp decline in 1995/96, with all of the growth expected in the developed countries, while demand for grain for feed is forecast to stagnate in Asia due largely to the financial crisis. A modest rise in cereal food consumption is expected, mostly among the developing countries, which should maintain global per caput consumption at 163 kilogrammes in 1997/98. For individual cereals, the increase in the global use of coarse grains is expected to be just under 1 percent to 906 million tonnes, again reflecting in part the Asian financial problems. As for the major food grains, wheat consumption could rise by 3.6 percent to 599 million tonnes, largely due to increases in demand in two of the Asian countries not directly affected by the financial crisis, China and India. Rice consumption is expected to rise by only 0.8 percent from the previous year to 384 million tonnes.

Global food use of cereals (excluding industrial uses, such as for alcohol, starches and sweeteners) is now forecast at around 950 million tonnes in 1997/98, which represents about one-half of total utilization. The expected increase over the previous year of 14 million tonnes, or 1.5 percent, would be mostly the result of greater consumption in the developing countries as a group, which would maintain their annual per caput food consumption of cereals at 172 kilogrammes. Among the developing countries, the low-income, food-deficit countries could see a slight decline in per caput cereal food consumption, due largely to poor crops in some countries, especially in Africa.

Total food consumption of cereals in the developing countries is anticipated to rise by 1.4 percent, or 11 million tonnes, to about 781 million tonnes in 1997/98. A modest decrease in food consumption is forecast for Africa, by about 1 percent to 99 million tonnes. Several countries in the region suffered crop shortfalls in 1997, the results of which are expected to be reflected in lower per caput food consumption of cereals, in particular in the eastern and southern regions. Also, some countries in sub-Saharan Africa continue to face serious shortfalls in cereal supplies, and thus consumption, as a result of civil strife and refugee problems. In spite of poor crops estimated for 1997 in some countries of North Africa, the per caput consumption of cereals is expected to be maintained in the subregion as a whole because of above-average production and, subsequently, higher consumption of grains in Egypt.

The outlook for cereal food consumption is brighter among the developing countries of Asia, although demand has been somewhat tempered by the recent financial problems facing a number of countries in the region. Overall, food consumption of cereals in these countries is forecast to expand in 1997/98 by 10 million tonnes, or 1.6 percent, to 616 million tonnes. This level would be sufficient to maintain per caput consumption at 185 kilogrammes per year, which is already above the world average. In China, the largest producer and consumer of cereals in Asia, another good cereal crop in 1997, although down from the previous year, is likely to maintain per caput food consumption in 1997/98. India also had bumper harvests in 1997, which is also expected to maintain its per caput consumption at last year’s level. In Iraq, a country that has faced a decline in consumption levels in recent years, per caput food use of cereals should continue to recover following the implementation of Security Council Res. 986. By contrast, a serious food emergency situation persists in the Democratic People's Republic of Korea where extreme weather conditions sharply reduced cereal supplies in 1997/98. As a consequence, per caput food consumption of cereals is expected to fall to 118 kilogrammes, some 15 percent below last year’s estimated level. The Asian financial crisis is not expected to have much negative impact on cereal food consumption, except in some of the hardest hit countries, such as Indonesia where per caput consumption could decline this year.

In Latin America and the Caribbean, overall grain production in 1997 was above average, in particular in Argentina, but also in the major cereal deficit countries of Brazil and Mexico. Partly as a result of better crops, the region's food consumption this year should increase by almost 2 percent to over 66 million tonnes which is likely to increase per caput consumption, albeit modestly.

Total and per caput food consumption of cereals among the developed countries are forecast to improve slightly in 1997/98. Bumper crops in Bulgaria and Romania are not only expected to maintain consumption levels, but also to provide surpluses for export. In the CIS as a whole, annual per caput food consumption of cereals is forecast to rise by almost 2 kilogrammes following bumper crops in a number of the republics, although the levels would still be below those recorded just before the break-up of the former USSR. However, it is unlikely that per caput consumption levels in the CIS would recover in the medium-term to earlier levels, when consumption was heavily subsidized.

The growth in global feed use of cereals, which represents over one-third of total world cereal utilization, is forecast to slow down in 1997/98 to only 1.4 percent, an increase of 9 million tonnes, to 665 million tonnes. Most of the growth in feed use is expected in the developed countries, in particular in the CIS, non-EC countries in Europe and in North America. In the developing countries, feed use of cereals is forecast to stagnate due to virtually no growth in Asia and a decline in Africa. Among the individual cereals, only coarse grain feeding is anticipated to expand and this largely because feed wheat is being replaced by competitively-priced maize in the United States.

Among the developed countries, good wheat and coarse grain harvests in many of the CIS republics are forecast to lead to an overall 8 percent increase in their feed use, in particular in the Russian Federation and the Ukraine. Cereal feeding is also forecast to expand in Bulgaria and Romania, which can be traced to the results of above-average 1997 grain harvests. Bumper crops in Australia are also expected to encourage more grain feeding of livestock. In the United States, greater demand for pigmeat and poultry and relatively low grain prices compared to last season, are anticipated to raise modestly the feed use of cereals, especially for maize. In the EC, on the other hand, a number of factors, including the earlier outbreaks of swine fever and the aftermath of the BSE scare, are likely to contain feed use to last year’s levels.

The use of cereals for feed in the developing countries is forecast to change little in 1997/98. A small gain is anticipated for cereal feeding in China, the largest feed user in Asia, but the outbreak of foot and mouth disease last year in the Province of Taiwan is likely to continue to depress pork production and, hence, the demand for feed grains. The financial crisis in Asia is expected to dampen the demand for cereal feeds in a number of countries, especially in the Republic of Korea, Malaysia and Thailand where feed use is forecast to be down by 15, 10 and 4 percent, respectively, from the previous year. Among other large cereal feed users, a reduction in grain usage is expected in Saudi Arabia, as good pasture conditions would encourage the grazing of sheep and camels as a substitute for feeding barley. Reduced feed use, compared to the previous year, is forecast for Africa, in particular in North Africa, following poor crops in Algeria, Morocco and Tunisia. A relatively small change in feed use, compared to the previous season, is predicted in Latin America and the Caribbean.

Among other uses of cereals, the continued strong demand for industrial purposes and significant production gains in some countries, leading to larger post-harvest losses, are forecast to raise the volume of cereals in this category by 3.4 percent in 1997/98 to 274 million tons. The largest increase for other uses of cereals is predicted in the United States where strong demand is forecast for sweeteners and for ethanol made from maize. Larger harvests in the CIS may result in increased post-harvest losses in that region compared to the previous year.