No. 2 April 2008 Crop Prospects and Food Situation

global information and early warning system on food and agricultureGIEWS

HIGHLIGHTS CONTENTS

No. 2 n April 2008

Crop Prospects and Food Situation

Countries in crisis requiring external assistance 2

Food emergencies update 3

Global cereal supply and demand brief 4

FAO global cereal supply and demand indicators 10

FAO Food Price Indices 12

LIFDCs food situation overview 14

Regional reviewsAfrica 18Asia 27LatinAmericaandtheCaribbean 31NorthAmerica,EuropeandOceania 33

Special features/boxesMeasurestakenbygovernmentstolimittheimpactofsoaringprices 16Jointinter-agencyMissiontoBenin,NigerandNigeria 20DemocraticPeople’sRepublicofKorea 29China 30

Statistical appendix 37

n World cereal production in 2008 is forecast to increase 2.6 percent to a record 2 164 million tonnes. The bulk of the increase is expected to be in wheat followingsignificantexpansioninplantingsinmajorproducingcountries.Coarsegrainsoutputistentativelyforecasttoremainaroundthebumperleveloflastyear.RiceproductionisforeseentoincreaseslightlyreflectingproductionincentivesinseveralAsiancountries.However,muchwilldependonclimaticconditionsinthecomingmonths.

n Should the expected growth in 2008 production materialize, the current tight global cereal supply situation could ease in the new 2008/09 season.

n International cereal prices have risen further in the past two monthsreflecting steady demand.Pricesofriceincreasedthemostfollowingtheimpositionofnewexportrestrictionsbymajorexportingcountries.BytheendofMarchpricesofwheatandricewereabouttwicetheirlevelsofayearearlier,whilethoseofmaizeweremorethanone-thirdhigher.

n In 2007/08 the cereal import bill of the LIFDCs as a group is forecast to increase considerably for the second consecutive year. Prices of basic foods have soared in domestic markets across the world leading to social unrest in several countriesinAsia,AfricaandLatinAmericaandtheCaribbean.Governmentsofbothcerealimportingandexportingcountriesaretakingaseriesofmeasurestolimittheimpactofhigherinternationalcerealpricesonfoodconsumption.

n In the LIFDCs, as a group, early prospects point to another only marginal increase in 2008 cereal production. Excludingthelargestcountries,ChinaandIndia,theoutputoftheremainingLIFDCsistentativelyforecasttodeclineslightly.

n In Southern Africa, where the 2008 main season cereal harvest is about to start, aggregate output is forecast to increase sharplyfromlastyear’slevel.However,anotherreducedcropisanticipatedinZimbabwe.InNorth Africa,astrongrecoveryofwintercerealproductionisexpectedafterseveredroughtin2007.

n In Asia, prospects for the 2008 wheat crop, already close to harvest, are favourablealthoughoutputsareforecastbelowtherecordlevelsoflastyear.InSouth America,arecord2008maizecropisbeinggatheredmainlyduetolargerplantings.InCentral America, agoodwheatcropisexpectedinMexico.

100

200

300

400

500

600

MFJDNOSAJJMAMFJDNOSAJJMAM200820072006

Wheat

Rice

USD/tonne

Maize

Selected international cereal prices

No. 2 n April 2008�


Countries in crisis requiring external assistance1 (37 countries)

Terminology1 Countries in crisis requiring external assistance are expected to lack

the resources to deal with reported critical problems of food insecurity. Food

crises arenearly alwaysdue to a combinationof factorsbut for thepurposeof

responseplanning, it is important toestablishwhether thenatureof foodcrises

is predominantly related to lack of food availability, limited access to food, or

severebutlocalizedproblems.Accordingly,thelistofcountriesrequiringexternal

assistanceisorganizedintothreebroad,notmutuallyexclusive,categories:

•Countriesfacinganexceptional shortfall in aggregate food production/

suppliesasaresultofcropfailure,naturaldisasters,interruptionofimports,

disruption of distribution, excessive post-harvest losses, or other supply

bottlenecks.

•Countrieswithwidespread lack of access,whereamajorityofthepopulation

isconsideredtobeunabletoprocurefoodfromlocalmarkets,duetoverylow

incomes,exceptionallyhighfoodprices,ortheinabilitytocirculatewithinthe

country.

•Countrieswithsevere localized food insecurityduetotheinfluxofrefugees,

aconcentrationofinternallydisplacedpersons,orareaswithcombinationsof

cropfailureanddeeppoverty.� Countries facing unfavourable prospects for current crops are countries

whereprospectspointtoashortfall inproductionofcurrentcropsasaresultof

theareaplantedand/oradverseweatherconditions,plantpests,diseasesandother

calamities,whichindicateaneedforclosemonitoringofthecropfortheremainder

ofthegrowingseason.

Countries with unfavourable prospects for current crops2

AFRICA (�1 countries)

Exceptional shortfall in aggregate food production/supplies Lesotho MultipleyeardroughtsuntillastseasonSomalia Conflict,adverseweatherSwaziland MultipleyeardroughtsuntillastseasonZimbabwe Deepeningeconomiccrisis,droughtlast

season,recentfloodsWidespread lack of accessEritrea IDPs,economicconstraintsLiberia Post-conflictrecoveryperiodMauritania SeveralyearsofdroughtSierraLeone Post-conflictrecoveryperiod

Severe localized food insecurityBurundi Civilstrife,IDPsandreturneesCentralAfricanRepublic Refugees,insecurityinpartsChad Refugees,conflictCongo,Dem.Rep.Civilstrife,returneesCongo,Rep.of IDPsCôted’Ivoire CivilstrifeEthiopia Insecurityinparts,localizedcropfailureGhana DroughtandfloodsGuinea RefugeesGuinea-Bissau LocalizedinsecurityKenya Civilstrife,adverseweatherSudan CivilstrifeUganda Civilstrifeinthenorth,localizedcropfailure

ASIA (10 countries)

Exceptional shortfall in aggregate food production/supplies Iraq Conflictandinsecurity

Widespread lack of access Afghanistan ConflictandinsecurityKorea,DPR Economicconstraintsandeffectsofpast

floods

Severe localized food insecurity Bangladesh Pastfloodsandcyclone,avianinfluenzaChina Disastrouscold,iceandsnowinthesouthNepal Poormarketaccess,conflictandpastfloodsSriLanka ConflictandfloodsTajikistan Severecold,floods/landslides,poormarket

accessTimor-Leste IDPs,pastdroughtandfloodsVietNam Coldspellinthenorth

AFRICAEthiopia InsufficientrainfallKenya InsufficientrainfallSomalia Adverseweather,conflictsZimbabwe Earlyfloodsandlatedryspellsinparts,

shortageofinputs

LATIN AMERICA (5 countries)

Severe localized food insecurity Bolivia FloodsDominicanRep. PastfloodsEcuador FloodsHaiti PastfloodsNicaragua Pastfloods

Europe (1 country)

Exceptional shortfall in aggregate food production/suppliesMoldova Drought,limitedaccesstoinputsfor

wintercropping

No. 2 n April 2008 �


Food emergencies updateInWestern Africa,arelativelygoodcerealcropwasgatheredin2007intheSahel(withtheexceptionofSenegalandCapeVerde)butcoarsegrainproductiondeclinedsignificantlyinafewcountriesalong the Gulf of Guinea, notably in northern Nigeria andGhana,leadingtoatightfoodsupplysituationatregionallevel,withrisingfoodpricesreportedinBenin,Burkina Faso, Ghana, Niger,Nigeria andTogo.Inthewesternpartofthesubregion,wherefoodpricesareinfluencedmainlybyinternationalmarketsduetothehighdependenceofthesecountriesonwheatandriceimports,bothruralandurbanconsumershavebeenaffectedbytheprevailinghighinternationalcerealprices,notablyinGuinea-Bissau,MauritaniaandSenegal.Throughoutthesubregiontheimpactofhighfoodpriceswillbemoresevereinlocalizedareaswhereyieldsweresharplyreducedbydelayedrainsorfloods.Intheseareaspopulationsmayrequireassistance.

InCentral Africa,althoughanabove-averagecerealharvestwasgatheredinCameroonin2007,soaringinternationalfoodpriceshavepushedupdomesticpricesofseveralbasicfoodstuffs;thishascausedserioussocialunrestrecently.InspiteofmeasurestakenbytheGovernmenttoeasetheimpactonthepopulation,poor urban consumers and vulnerable groups in rural areas,whoseproductionwasaffectedbydryspellsorfloods,needtobecontinuouslymonitoredandassistedasnecessary.

InEastern Africa,notwithstandinggenerallygoodcrops inthelasttwoyears,largelyinthemainproducingcountriesofthesubregion,millionsofpeople continue to relyonhumanitarianfood assistance due to unfavourable weather, conflict, civilstrifeoracombinationof these. InSomalia, the foodsecuritysituationcontinuestodeteriorateformorethan2millionpeople-includinganestimated1millionIDPs,whoareinneedofbasichumanitarian assistance or livelihood support for at least sixmonths. Intensive conflict in Mogadishu continues to force anaverage20000peopletoleavetheirhomeseachmonth.Withrecord high food prices, hyperinflation and drought in largepartsofthecountry,communitiesarestrugglingtosurvive.Thecountrydesperatelyneedsgoodrainfall in thenext (April-June)rainyseasontoavoidaworseningofalreadyextremewaterandfood shortages. In Kenya, a drastically reduced “short-rains”cereal cropandpost-electionpoliticalunresthave resulted inaserioushumanitariansituationforanestimated500000people.Some207000peoplelivingincampsarefacingahumanitarianemergency. The greater disruption of markets, which followedthe political unrest, has produced an increase in the cost ofagricultural inputs. As a result, about half of the agriculturalland in North Rift, the key maize producing area, has not yetbeenpreparedfortheplantingseasonthismonth.About60000peoplearefacingstarvationinTaita-TavetaDistrictalone.Acutefoodcrisesarealsoevident inTurkanaDistrict,while there isagradualdeterioration in foodsecurity ineasternpastoralareas.Food shortages are also reported in lowlands that experienced

up to80percentof crop failure. InEritrea, currenthigh foodpricescontinuetoadverselyaffectalargenumberofvulnerablepeople. In Ethiopia, despite a bumper cereal harvest for twoconsecutive years, 8 million people remain chronically foodinsecure.Another2millionareaffectedbycivil insecurity,highfood prices and localized unfavourable weather, and requireemergencyrelief.InSudan,conflictsbetweenMisseryanomadsand Sudanese security forces in northern Bahr el Ghazal arespreading to Abyei County and northern Unity States, causingmarketdisruptionsandthreateningfoodsecurity.Inthenorth,asaresultofcontinuinginsecurityinDarfur,displacementandlossoflivelihoodsareexpectedtocontinueandmalnutritionratesarelikelytoincreaseinthecomingmonths.IntheUnited Republic of Tanzania,areasintheregionofArushaandIringaarefacingafoodshortagefollowingtheeruptionofmountOldongaivolcano.InUganda,theentireKaramojapopulationof1millionpeopleisfoodinsecureandinneedofemergencyfoodaidasaresultofflooddamage,prolongedinsecurity,droughtin2006,alatestarttothe2007croppingseason,andfallinglivestockprices.

InSouthern Africa,vulnerablepopulationsinseveralcountriesarefacingthepeakofthehungerperiodduetoexhaustionofstocks,compoundedbyhighdomesticandimportedfoodprices.Thenextharvestwillbeginfrommid-Aprilonwards.Householdswholosttheircurrentcropstofloodsrequireurgentagriculturalassistance,especiallyseedandfertilizer,topermitcultivationofthe low lands during the secondary season which has alreadybeguninMarch.FloodlossesweresignificantinMozambique, Zimbabwe, Zambia, Malawi and Madagascar.InZimbabwe,inspiteofabundantrainfallduringthefirsthalfoftheseason,extendeddryweathersinceFebruary,deepeningeconomiccrisis,shortagesoffertilizerandotherchemicalsareexpectedtoresultinareducedharvest.Currentinflationofover100000percentandshortagesoffoodandnon-fooditemsaffectingtheestimated4.1millionvulnerablepeopleareequallyofconcern.InLesotho andSwaziland althoughsomerecoveryisexpected,assetdepletionduetomultiplepoorharvests,widespreadpovertyandtheimpactofHIV/AIDS,haveledtoseriousfoodinsecurity.

In the Great Lakes region, serious fighting in the north-easternparts of theDemocratic Republic of the Congo hasdisplacedlargenumbersofpeoplewhorequirefoodassistance.CurrentpeaceagreementswouldhelpIDPstoresettlebuttheyneedsubstantialassistancetorestartfarmingactivities.FoodandagriculturalaidisalsoneededinBurundi,especiallyforresettlingreturneesandIDPs.

In Far East Asia, the Democratic People’s Republic of Korea faces severe food shortage. A sharply below-averagecerealharvestin2007ledtoanestimatedcerealdeficitforthe2007/08 marketing year (November/October) of 1.66 milliontonnes.InBangladesh,overfourmonthsafterCycloneSidrhitthecountry, large-scalehumanitarian reliefoperationsare stillongoing in30districts toassist themost affected8.9millionpeople.InSri Lanka,foodsecuritycontinuestobeaffectedbytheresurgenceofcivilconflict,naturaldisasters(recentfloods),aswellasrisingcerealprices.ThefoodsecuritysituationhasalsocontinuedtodeteriorateinthepastmonthsinTimor-LesteandNepal dueto politicalinstabilityandrisingfoodprices.InTimor-



Global cereal supply and demand brief


continued from previous pageLeste, a stateofemergency,declared soonafter the February11attacks,wasextendedforanothermonthtoApril.InChina,20 southernprovinces suffered fromdisastrous cold, ice, andsnowinJanuaryandFebruary,andsome100millionpeopleareofficially estimated to have been affected. The most severelyimpactedcropsandproductsincluderapeseed,vegetables,fruits,forestproducts,andlivestockproducts.Similarly,unusuallycoldweather inViet NamhasbeensweepingthroughtheuplandareasneartheVietNam-Chinaborder,makingitarecord-longcold spell. About 150000 hectares of rice were destroyed,withalossofaboutUSD25millionandabout90000headofcattleorbuffalohaveperished.InIndonesiaandBangladeshthe Avian flu situation remains critical despite containmenteffortsundertakenbynationalauthoritiesandtheinternationalcommunity.

IntheNear East,inIraq,followingsomeimprovementinthesecuritysituation,refugeesintheSyrianArabRepubliccontinuetoreturntotheirhomes,althoughlarge-scalemovementshave

notyetbeennoted.Itisestimatedthataround45000individuals-outofatotalof1millionpresentinSyria-havereturnedtoIraqin2007.Theinternallydisplacedpeoplearecurrentlyestimatedat 2.77 million, of whom more than 1 million are in need ofadequateshelterandfood.Inaddition,over1milliondonothaveaccesstoregularincome.Recentclashesinthecountry’ssecondlargestcityofBasra,aswellas inothersoutherngovernorates,havecausedthecessationofhumanitarianassistancetoIDPsandvulnerablepopulations.

In Central America and the Caribbean, Haiti, theDominican Republic and Nicaragua are still recovering fromdamagecausedbytropicalstormsandhurricanesinlate2007.

In South America, severe floods in Bolivia, Ecuador andPeru have led to reduced plantings and yield loss of severalfoodandcashcrops suchaspaddy,maize,potatoes, soybean,bananas,cocoaandvegetables.InBolivia,theimportantlivestocksectorhasalsosufferedlossesofseveralthousandheadofcattleandreductionofpastureavailabilityduetowaterlogging.

World cereal supply could improve in 2008/09Assuming that the current forecast of

an increase in cereal production in 2008

will materialize, the global cereal supply

situation in 2008/09 is likely to improve,

paving the way for a gradual recovery

from prevailing tight market conditions.

With most of the anticipated production

expansiontooccurinseveralmajorcereal

exportingcountries,exportablesuppliesare

expectedtorecoversignificantlyfromtheir

sharplyreducedlevelsthisseason.

An improvement in the cereal supply/

demand situation next season would be

a welcome development for many Low-

Income Food-Deficit Countries (LIFDCs).

The very tight situation of the current

2007/08 season has led to a steady rise

in world prices of all cereals, pushing up

the food import bill of many importing

countriesandgeneratingwidespreadsharp

increasesindomesticfoodprices.

The generally positive supply scenario

forthenewseasonmustbeconsideredwith

caution as the final outcome of harvests

in2008stilldependscriticallyonweather

during the remainder of the agricultural

seasons.Atthistimelastyear,prospectsfor

cerealproduction in2007werefarbetter

thantheeventualoutcome.Unfavourable

climatic conditions devastated crops in

Australia and reduced harvests in many

other countries, particularly in Europe.

But favourable climatic conditions will be

evenmorecritical forproduction in2008

becauseworldcerealreservesaredepleted.

Mostcountriesarestrugglingwithcritically

lowstocklevelsandrequireimprovedworld

supplies in the new season. Any major

shortfalls resulting from unfavourable

weather,particularlyinexportingcountries,

wouldprolongthecurrenttightsituation,

contribute to more price rallies in world

markets, and exasperate the economic

hardshipalreadyfacingmanycountries.

PRODUCTIONWorld cereal production to increase in 2008FAO’s first forecast for world cereal

production in 2008 stands at a record

2164 million tonnes (including rice in

milled terms), 2.6 percent up from last

year’scrop,whichwasthepreviousglobal

high.Thebulkoftheincreaseisexpected

inwheat,outputofwhichissettoreach

some647milliontonnes,6.8percentup

from2007andalsoanewrecord.Inthe

northern hemisphere, where many crops

are already well developed, significantly

largeroutputsareforecastinNorthAmerica

andEurope. In theUnitedStates,winter

wheat plantings increased by 4 percent

andlatestindicationsalsopointtoalarge

expansionofthespring-sownarea.Thus,

assumingnormalyields,thisyear’scropis

forecast to turn out at about 60 million

tonnes,wellabovelastyearandtherecent

average.Thebulkofplantinghasyettoget

underwayinCanadabutearlyindications

pointtoa largearea increase. InEurope,

the winter wheat area has expanded in

mostmajorproducingcountriesandcrops

continuetodevelopwell throughout the

region,pointingtobetteryieldsthanlast

year’s below-average levels, especially in

someeasternpartsthatwerehitbysevere

drought in2007.Production intheEUis

tentatively forecast to reach about 137

million tonnes this year, 13 percent up

from 2007’s reduced output. In the CIS

countriesofEurope,largerwheatareasin

theRussian FederationandUkraine, and

No. 2 n April 2008 5


anexpectedrecoveryinyieldsinthelatter

country after drought last year, should

help to lift thesubregion’swheatoutput

toabumperlevelfor2008over70million

tonnes. InAsia, prospects for thewinter

wheatcropsaregenerallyfavourablebut

aggregateoutputintheregionlookslikely

to slip back somewhat from last year’s

recordlevel.Alargepartofthedeclineis

expectedinKazakhstanintheCISregion

where, despite increased plantings, a

returntonormalyieldsafterbumperhighs

lastyearwouldresultinasmallerharvest.

AsmallerharvestisalsoforecastinIndia,

after a record crop last year. In China,

the largest producer in the region, this

year’swheatoutputisexpectedtoremain

virtuallyunchangedfromlastyear’srecord

levelassuminganexpectedincreaseinthe

spring wheat crop offsets the impact of

adverse weather on some of the winter

wheat innorthernparts. InNorthAfrica,

wheat crop prospects are satisfactory

in Egypt, the subregion’s major wheat

producer,andarecoverytoaverageoutput

in Morocco is forecast after a drought-

reducedharvestlastyear.Inthesouthern

hemisphere,wheremostcropsarestillto

be sown, early indications suggest some

reductioninoutputinSouthAmerica,but

inOceania,assumingareturntoanormal

season after last year’s drought, output

shouldrecoversharplyinAustralia.

With the first of the major 2008

coarse grain crops already being

harvested or close to maturation in

several countries around the world, FAO

tentatively forecasts global output of

coarsegrainsat1075milliontonnes,0.6

percent up from last year’s record level.

InSouthAmerica,harvestingofthemain

season crops is underway and output is

expectedtoincreasetoanewrecordlevel

followingareaincreasesinArgentinaand

Brazil, the largest producers, in response

to high international prices. In southern

Africa, despite far from ideal weather

conditions throughout the season, with

late planting rains, followed by floods

and a subsequent return to excessive

dryness in parts, the overall outlook for

the main coarse grain crops is judged

to be favourable, particularly in South

Africa affected by drought last year. In

thenorthernhemisphere,thebulkofthe

major 2008 coarse grain crops are yet

tobe sown in the comingweeks. In the

United States, the maize area is forecast

to decline after last year’s exceptional

plantings but, nonetheless, will likely

remainataveryhighlevelrelativetorecent

history reflecting strong demand and

high prices. In Europe, output of coarse

grains is forecast to recover somewhat

from last year’s reduced level, reflecting

a combination of increased plantings

in parts and expected yield recoveries in

severalcountriesaffectedbydroughtlast

year,suchasHungaryandRomania,two

importantmaizeproducers.

With southern hemisphere countries

alreadyengagedinharvestingtheir2008

main rice crop, FAO’s first forecast for

world riceproduction in2008 standsat

441 million tonnes (milled terms), 1.8

percent up from the latest estimate of

2007 output. Although the increase of

internationalricepricesinthepastseason

didnotbenefitproducersinallcountries

to the same extent, the profitability of

growing rice appears to have improved

substantially compared to previous

years, even after taking into account

cost inflation.This isexpectedtotrigger

an increase in planting and production

in all regions. In Asia, significantly

larger rice outputs are anticipated in

all the major rice producing countries,

partly reflecting government incentives

to production. By contrast, paddy



1750

1850

1950

2050

2150

200720052003200119991997

Million tonnes

Utilization

Production

Figure 1. World cereal productionand utilization

productionmaycontractinJapan,oneof

thefewcountrieswhereproducerprices

fell last year. The production outlook is

alsopositiveinAfrica,wherehighworld

pricesandmountingconcernsoverfood

importdependencymaysustaingrowth,

particularlyinEgypt,Guinea,Nigeriaand

Sierra Leone. By contrast, Mozambique,

wherethecropisabouttobeharvested,

mayfaceacontraction,asabovenormal

rainfall and cyclones have caused

floodingandcrop losses inricegrowing

areas. The impact of Cyclone Ivan on

production inMadagascar isanticipated

to be more limited, especially as the

Government has launched a free seed

distribution programme to encourage

affected producers to replant their

crops.Productionisexpectedtoincrease

significantly in South America, where

prospects are favourable across the

whole region, and harvesting is already

underwayinsomesouthernparts.

World cereal production up 4.7 percent in 2007FAO’sestimateofglobalcerealoutputin

2007 now stands at some 2108 million

tonnes (rice in milled terms), virtually

unchanged since the previous report in

February, and representinga4.7percent

increasefrom2006.Worldwheatoutput

roseby1.6percent to some606million

tonnes,butthebulkoftheincreasewasin

coarse grains,productionofwhichrose

to 1068 million tonnes, 8.3 percent up

from the previous year. Latest estimates

put the 2007 rice output at 434 million

tonnes (milledterms),1percentupfrom

the2006level.

UTILIZATIONGrowth in cereal utilization in 2007/08Inspiteofthesurgeinworldcerealprices

in 2007/08, world cereal utilization is

expected to demonstrate a relatively

strong growth and reach 2126 million

tonnes,anexpansionofalmost3percent

from the previous season, which is well

above the average annual growth rates

of below 2 percent in the past decade.

Food consumption of cereals is forecast

toreach1006milliontonnes,anincrease

of about 1 percent from 2006/07. Most

of this anticipated rise is expected in

the developing countries, driven by the

increase in population growth. However,

on a per caput basis, wheat and rice

consumption levels decline marginally in

thedevelopingcountries,mostlyinfavour

of higher intakes of more value-added

food,especiallyinChina.Feedutilization

is forecast to increase by 2 percent in

2007/08, to 756 million tonnes. This

expansion mostly reflects higher use of

coarsegrainsforfeedwhichcouldreacha

record633milliontonnes,up2.8percent

from2006/07.Theincreaseinfeedusage

ofcoarsegrainsisseentomorethanoffset

adeclineinfeeduseofwheat,suppliesof

whichhavebeenmuchtighter,especially

intheEU,theregionwherewheatisthe

primary feed grain. Industrial usage of

cereals demonstrates strong growth this

seasonbut theexpansionmainly reflects

therapidrise intheuseofgrainsasraw

materialforproductionofbiofuels,which

in 2007/08 is forecast to approach 100

million tonnes, of which maize accounts

foratleast95milliontonnes.Maizeisthe

main cereal used for the production of

ethanolandtheUnitedStatesistheworld

leaderofthemaize-basedethanolsector.

In2007/08,theUnitedStatesisexpected

touseatleast81milliontonnesofmaize

for production of ethanol, 37 percent

morethanin2006/07.

STOCKSCereal stocks set to fall to 25-year lowUnchanged from the previous forecast

in February, world cereal stocks by the

close of the seasons ending in 2008 are

expected to fall to 405 million tonnes,

down 21 million tonnes, or 5 percent,

from their already reduced level at the

startoftheseasonandthesmallestin25

years.Atthislevel,theratioofworldcereal

stockstoutilizationfallsto18.8percent,

down6percentfromthepreviouslowin

2006/07.

World wheat stocks by the close of

seasonsin2008areforecastat144million

tonnes,down9percentfromtheiralready

reducedopening level.Thesharpdecline

is even more notable in major exporting

countries, with their combined wheat

reserves fallingbyasmuchas10million

tonnes.Strongdemandindomesticand

world markets has contributed to the

depletion of stocks in major exporting

countries where production in 2007

suffered from exceptionally poor yields.

Even in the United States, where wheat

output increased in 2007, stocks are

expected to fall to 8 million tonnes,

4 million tonnes less than the already

reduced level last season. Larger exports

aremostlyresponsibleforthisreductionin

stock in theUnitedStates. Inventories in

theEUareforecasttodropto9.5million

tonnes,morethan3milliontonnesbelow

thepreviousseason’slow,areductionthat

is mainly caused by a sharp production

shortfallin2007.

Several importing countries are also

expected to have their wheat stocks

reduced this season, not only due to a

decline in production, as in the case of

Morocco,butalsobecauseofhighprices



Low-Income Food-Deficit Countries (LIFDCs)6

inworldmarketswhichdiscourageimports

and contributes to larger drawdown of

domesticstocks,as inBangladesh,Egypt

and Kenya. The two largest countries,

IndiaandChina,however,areexpectedto

endthisseasonwithhighercarryovers.In

China, improvedproductionin2007and

tighter controlsonexports could lead to

anincreaseof3milliontonnesinstocks.

In India, the rise in production in 2007

coupledwithlargeimportstowardstheend

ofthepreviousseasoncouldcontributeto

an increase of about 2 million tonnes in

total wheat inventories, also helping to

replenishgovernmentownedstocks.

Worldstocksofcoarse grainsatthe

close of seasons in 2008 are forecast to

reach157milliontonnes,5milliontonnes

less than their already reduced opening

level.Themainfactorbehindthisdecline

is rising demand, which in 2007/08 is

forecasttoexceedtotalsupplyinspiteof

a significant 8 percent growth in world

production. Strong domestic demand

coupled with robust exports are likely

to result in a relatively small increase in

stocks in the United States, the world’s

largestproducer,anincreasenotsufficient

to offset the sharp declines elsewhere,

particularly among the countries which

sufferedfromproductionshortfallsin2007.

Much smaller inventories are forecast,

in particular for: Morocco, Nigeria, the

Republic of South Africa, Turkey and

Ukraine. In Brazil, where production is

expected to be a record, stocks are not

expectedtoincreaseasaresultofhigher

exports,whileinChina,theworld’slargest

stockholderofcoarsegrains,totalreserves

are expected to remain stable, given the

curbonexportsthisseason.

Global paddy carryover stocks at

the close of seasons ending in 2008 are

forecast to diminish by about 1 million

tonnes to103.5million tonnes, implying

that world utilization would outpace

production. The global contraction of

stocks is expected to result from falling

inventories inrice importingcountries, in

particularBangladesh,Brazil,Nigeriaand



Senegal,whiletheymayriseinIndonesia

andthePhilippines.Althoughreserves in

major exporting countries areunlikely to

changemuchfromtheiropeninglevelsas

a whole, amixedpattern mayprevail at

thecountrylevel:substantialincreasesare

foreseeninIndia,onexpectationsofmuch

lower exports in2008, and inMyanmar,

while all the other major exporters are

expected toend theseasonwith smaller

inventories. Theanticipated fall inglobal

carryoversshouldresult ina lowerstock-

to-useratioforrice,estimatedtofallfrom

24 percent in 2007 to 23.4 percent in

2008.

TRADEWorld cereal trade to increase slightly in 2007/08Worldtradeincerealsisforecasttoreach

256 million tonnes in 2007/08, slightly

more than in 2006/07. A sharp increase

inimportsofcoarsegrainsisexpectedto

more than offset declines in wheat and

rice trade. At the current forecast level,

thevolumeofcerealimportsbytheLIFDCs

could reach 82 million tonnes, slightly

downfromthepreviousseason.

World trade in wheat is forecast to

declineto106milliontonnesin2007/08

(July/June), down 7 million tonnes from

2006/07. Smaller imports by India are

largely responsible for this decline but

severalothercountries,includingAlgeria,

Brazil, Kenya, Indonesia, the Republic of

KoreaandNigeriaarealsoanticipatedto

significantlyreducetheirwheatpurchases

fromworldmarkets.Inmostcases,higher

domestic production is the main reason

for the anticipated decline in wheat

imports, but soaring international prices

are also discouraging wheat purchases.

Incountrieswithimporttariffschemesin

place, most have lowered or suspended

their tariffs in order to dampen the

impactofhighworldpricesondomestic

consumers (seeboxonpolicymeasures).

However,severalcountriesareexpectedto

increasetheirimportsthisseasonsuchas

Moroccowhereaseveredroughtreduced

wheatproductionlastyear,orinPakistan

where,inspiteofhigherproduction,large

imports are needed due to significant

cross-borderexportsearlierintheseason.

In spite of the anticipated decline in

world import demand, export supplies

haveproventobeexceptionallytightsince

the start of the season. Among the five

majorexporters,Australia,Canadaandthe

EUallhavelessexportableavailabilitiesthis

season, while shipments from Argentina

continuetoberestrictedaspoliciestokeep

domestic prices under control remain in

effect. Lower supplies in these exporters

andtheweakdollarhaveresultedinmuch

larger exports from the United States,

the only major exporter that also had an

increasedwheatharvest lastyear.Among

other countries, exports from Ukraine

are reduced because of a reduction in

domesticsupplywhichledthegovernment

toimposeastrictquotasystem.However,

exportsfromtheRussianFederationalready

exceeded theprevious season’s levelprior

to recent export restrictions. Similarly, in

China,restrictionsputinplacerecentlyare

likely to prevent further export sales, but

exportshavealreadyexceededtheprevious

season’s level.Severalcountrieshavenow

export ban policies in place, including

India,Pakistan,SerbiaandtheSyrianArab

Republic.

World trade in coarse grains in

2007/08isforecasttoreach121.5million

tonnes, 10 million tonnes, or 9 percent,

more than in the previous season. The

exceptionallyhigherimportsofmaizeand

sorghumby the EUare themain reason

for the expansion in world trade this

season. Reduced supplies of feed wheat

both in itsdomesticmarketaswellas in

those of nearby suppliers in Black Sea

regionresultedinthissurgeinimportsin

the EU. Higher imports are also forecast

forMorocco,MexicoandtheSyrianArab

Republicbutsmallerimportsareexpected

for Colombia, the Dominican Republic,

IndonesiaandtheRepublicofKorea.

Theanticipatedsharpincreaseinworld

importdemandthisseasonistobelargely

metbyhighersalesfromtheUnitedStates

and Brazil; the two countries benefiting

from record harvests. Argentina and

Canadaarealso forecast toexportmore

this seasonbut tighterdomestic supplies

and the imposition of export restrictions

wouldcutexportsfromseveralcountries,

including China and Ukraine. A second

consecutive season of poor production

haspreventedtheRepublicofSouthAfrica

fromincreasingexportsthisseason.

International trade in rice in 2008 is

currentlyforeseenat28.7milliontonnes,

1.6milliontonnesbelowearlierforecasts

and down from the revised estimate of

34.7milliontonnesfor2007.Therecent

downward revision for trade in 2008

mostlyreflectsalowervolumeofimports

than previously anticipated especially to

BangladeshandIndonesia,compensating

for a higher level to Brazil, South Africa

and the Philippines. As for exports, the

revisionwasmainlyonaccountoflower-

than-previously thought deliveries from

Brazil, Cambodia, India and Viet Nam,

often related to a recent tightening

of restrictions on external sales, while

exports from Argentina, China, Thailand

andUruguaywereraisedsomewhat.

Thesizeablecontractioninworldtrade

in 2008 compared to the previous year

is consistent with the very tight supply

situation prevailing in key exporting

countries and high world prices. Among

importers,Asiancountriesareforeseento

takedeliveryof12.7milliontonnesofrice

overall,12percentlessthanin2007.The

dropreflectsprospectsoflowershipments

toBangladesh, Indonesiaandthe Islamic

Republic of Iran, as the supply and

demandsituation in thosecountriesmay

ease somewhatcomparedwith last year.

Bycontrast,deliveries toChina, Iraq, the

Democratic People’s Republic of Korea,

thePhilippinesandSriLankaareforecast

torise.Inparticular,thePhilippines,which

justsecuredtheguaranteeofa1.5million

tonnessupplyfromVietNam,isanticipated

toemergein2008asthemostimportant

destination of rice trade. In Africa, rice



importsaresettohoveraround9.2million

tonnes, 6 percent down from last year,

reflecting widespread declines all across

theregion. Imports tocountries inLatin

Americaand theCaribbeanare foreseen

toremainabout3.5milliontonnes,with

someincreasesexpectedforBrazil,Chile,

ElSalvadorandPanama,offsettingadrop

of shipments to Colombia, CostaRica

and Nicaragua. In the rest of the world,

Australia,theEUandtheUnitedStatesare

foreseen to purchase more rice in 2008,

unlike the Russian Federation, where

tariffsandshippingrestrictionsmayfurther

depressricedeliveriestothecountry.

The very tight supply situations that

most exporting countries may face until

thelastquarteroftheyearandassociated

restrictions on exports lie behind the

anticipated drop of rice trade in 2008.

Currently,China, India, Egypt,VietNam,

fouramongthetraditionalriceexporting

countries,aswellasCambodia,haveeither

imposed minimum export prices, export

taxesorexportquotas/bans.Unlikerecent

years, smalleravailabilityof rice inpublic

stocks is likely to prevent Thailand from

fully filling competitor’s gaps, although

exports from the country are forecast

to increase. Increased shipments from

Argentina,Myanmar,Pakistan,theUnited

States and Uruguay are also anticipated.

Japan may also step up deliveries in the

formoffoodaid.

PRICESInternational cereal prices continue to riseInternational prices for all major cereals

continued their rise in February and

March,largelydrivenbypersistentsupply

tightness and the imposition of new

export restrictions. The weak US dollar

andstrongimportdemandalsoprovided

support.InMarch,theUnitedStates’hard

wheat (HRW, No. 2, f.o.b.) averaged

USD481pertonne,upUSD100pertonne

fromthestartoftheyearandnearly130

percentabove thesameperiod last year.

In the futures markets, prices remained

firmbutvolatile; reacting tonewsabout

further export restrictions, developments

in energy markets and the deteriorating

prospectsinfinancialmarkets.Thenearby

May wheat futures at Chicago Board of

Trade (CBOT) stoodatoverUSD390per

tonneinlateMarch,downnearlyUSD50

pertonnesincelateFebruarybutstillmore

than130percentoverthecorresponding

periodlastyear.Inspiteoftheexpectation

of a significant increase in world wheat

production in 2008, even September

futures,whichprovideabetterindication

of the current market sentiment for the

newseason,wereonlyslightlybelowthe

Mayvaluesandasmuchas120percent

abovethecorrespondingperiodlastyear.

Export prices of coarse grains also

made stronggains since the start of the

year. The United States’ maize (No. 2

yellow) averaged USD234 per tonne in

March, 38 percent more than in March

2007.Shortagesoffeedwheatcombined

withgenerallytightmarketconditionsfor

allcerealsandtheweakUSdollarcontinued

toprovidesupporttomaizeprices.Bylate

March,theCBOTnearbyMaycontractwas

quotedataroundUSD214pertonne,up

20percentfromthecorrespondingperiod

lastyear.Whilefearofageneraleconomic

slow-down and the arrival of new crop

supplies from Brazil and Argentina put

some downward pressure on prices, the

tighteningofsuppliesintheUnitedStates

and uncertainties regarding the size of

plantings thisyearpreventedprices from

weakening as evidenced in December

futureswhichstoodataboutUSD60per

tonne more than in the corresponding

periodlastseason.

Internationalricepriceshaveengaged

onasteepupwardtrendsincethebeginning

of2008,afterrecordingrelativelymoderate

increases of 9 percent in 2006 and 17

percent in2007.Since January2008, the

FAOAllRicePriceIndex(1998-2000=100)

has gathered further strength, gaining

12 percent to 184 in February 2008 and

another17percent inMarch2008when

theindexreached216.Thehikeevidences

growing tightness on the market, after

several of the major exporters imposed

more stringent restrictions on external

sales, combined with strong purchases

by countries such as Bangladesh, Iraq,

Nigeriaor thePhilippines.For instance, In

March 2008 the high quality Thai 100%

B was quoted at USD567 per tonne, up

22 percent on the previous month and

74 percent higher than in March 2007.

Thepressureonpricestorisewasgeneral,

affectingallricequalitiesandorigins.

No. 2 n April 200810


1 Thefirst indicatoristheratioofworldcerealendingstocksinanygivenseasontoworldcerealutilizationinthefollowingseason.Utilizationin2008/09isatrendvaluebasedonextrapolationfromthe1997/98-2006/07period.

2 Thesecond indicatoristheratiooftheexporters’grain(wheatandcoarsegrains)supplies(i.e.asumofproduction,openingstocks,andimports)totheirnormalmarketrequirements(definedasdomesticutilizationplusexportsofthethreeprecedingyears).ThemajorgrainexportersareArgentina,Australia,Canada,theEUandtheUnitedStates.

3 Thethird indicatoristheratioofthemajorexporters’endingstocks,bycerealtype,totheirtotaldisappearance(i.e.domesticconsumptionplusexports).Themajorwheatand coarse grainexportersareArgentina,Australia,Canada,theEUandtheUnitedStates.ThemajorriceexportersareIndia,Pakistan,Thailand,theUnitedStates,andVietnam.

n Theratioofthemajorexporters’ending cereal stocks to their totaldisappearance is forecast to plunge to12.8 percent at the end of the 2007/08seasons.Forwheat,theratioisthesmallest,at only 10.6percent,which explains thereasonforhighandvolatilemarketprices.Forcoarsegrains,theratioisexpectedtodecreasefurther fromthepreviousyear’salready lowlevelto11.7percent.StrongdomesticuseofmaizeintheUnitedStates,especiallyfortheproductionofbiofuels,isexpectedtoabsorbmostoftheexpansioninitsproductionin2007.Theratioforriceisexpectedtoremainsteadyataround16percent.

FAO’s global cereal supply and demand indicators

% %

10

14

18

22

26

30

10

14

18

22

26

30

07/0806/0705/0604/0503/04

Total cereals

Rice

Coarse grains

Wheat

f’castestim.

1. Ratio of world cerealstocks to utilization

% %

100

110

120

130

140

150

100

110

120

130

140

150

07/0806/0705/0604/0503/04f’castestim.

2. Ratio of major grain exporters supplies tonormal market requirements

% %

5

10

15

20

25

5

10

15

20

25

07/0806/0705/0604/0503/04

Total cereals

Rice

Coarse grains

Wheat

f’castestim.

3. Ratio of major exportsstocks to their total disappearance

n Theratioofworldcerealendingstocksin2007/08tothetrendworldcerealutilizationinthefollowingseasonisforecastto fall to 18.8 percent, the lowest in 3decades. In spiteof the increase inworldcerealproductionin2007,suppliesarenotsufficienttomeetdemandwithoutasharpdrawdownofstocks,themainreasonforthedropinthestock-to-useratio.Theratioforwheatisforecasttofallto22.9percent,well under the 34 percent level observedduring the first half of the decade. Theratio forcoarsegrains isputatonly14.5percent. Inspiteofarecordcoarsegrainsproductionin2007,suppliesbytheendofthecurrentseasonareforecasttotightenbecause of the strong surge in worlddemand.The stock-to-use ratio for rice isputat23.4percent,alsoaverylowlevel,whichagainreflectsthetighteningofthesupply and demand balance for rice thisseason.Early indications suggest that the ratioofworld cereal stocks toutilizationmaynotimprove significantly in the next season(2008/09) even though production in2008isforecasttoincreasesharply.Thisismainlybecause the low levelof carryoverinventories expected at the end of thecurrent seasons will mean total supply(productionplusstocks)willstillberelativelylowcomparedtoexpectedutilizationinthefollowingyear(2009/10).

n Given the relatively pooraggregate grain harvest of the majorexporting countries in 2007, mainlyreflectingadverseweatherinpartsoftheEUandinAustralia,combinedwithstrongdemand in domestic markets and forexports,theratiooftheiraggregatecerealsupplies compared to normal marketrequirements in 2007/08 is estimatedtoremainatarelatively lowlevelof117percent.Thisrepresentsasurplusofjust17percent,andwould indicateonlyasmallimprovement compared to the previousseasonintheabilityoftheseexporterstomeet the global demand for wheat andcoarsegrainsimports.

No. 2 n April 2008 11


4 Thefourth indicatorshowstheaggregatecerealproductionvariationfromoneyeartothenextatthegloballevel.

5&6 InviewofthefactthattheLow-IncomeFood-DeficitCountries(LIFDCs)aremostvulnerabletochangesintheirownproductionandthereforesupplies,theFAO’sfifth indicatormeasuresthevariationinproductionoftheLIFDCs.Thesixth indicatorshowstheannualproductionchangeintheLIFDCsexcludingChinaMainlandandIndia,thetwolargestproducersinthegroup.

7 Theseventh indicatordemonstratescerealpricedevelopmentsinworldmarketsbasedonchangesobservedinselectedlocalpriceindices.

-4

-2

0

2

4

6

8

10

20072006200520042003

4. Year-to-year changein world cereal production

Percentage

-2 -1 0 1 2 3 4 5 6 7 8

2003

2004

2005

2006

2007

LIFDCs

LIFDCs less China Mainland and India

Percentage

5 & 6. Year-to-year change incereal production in the LIFDCs

estim.

f’cast

-20 0 20 40 60 80 100

2003/04

2004/05

2005/06

2006/07

2007/08

Wheat (July/June)

Maize (July/June)

Rice (Jan./Dec., second year shown)

Percentage

7. Year-to year changein selected cereal price indices

n Followingfouryearsofsignificantandsustainedgrowthfrom2003to2006,thecerealproductionofLIFDCsincreasedjust marginally in 2007. Excluding ChinaMainland and India, which account forsome two-thirds of the aggregate cerealoutput,productionintherestofLIFDCsisestimateddownby1.5percentaftertwoconsecutiveyearsofsubstantialincreases.Atatimewheninternationalcerealpricesare at very high levels, this will put aheavy burden on the financial resourcesofcountriesthathavetoresorttoimportsduring the current year to cover theirconsumptionneeds.

n The tightening of the globalcereal balance in 2007/08 continues topush up prices of all cereals. The mostsignificant increase has been for wheat,forwhichthepriceindexduringthefirst9months(July2007toMarch2008)ofthecurrent marketing season averaged over91percentmorethaninthesameperiodin 2006/07. The maize index gained 23percent during the same period but thisrelatively modest increase comes after a45 percent surge in 2006/07. Followingthe sudden jump in rice prices in recentweeks,thericeindexaveraged46percenthigher during the first three months of2008 compared to the same period in2007.Higherpricesarecontributingtoasignificantriseinthecereal importbilloftheLIFDCs,which iscurrently forecast tojumpby56percentin2007/08comparedto 2006/07, to about USD39 billion, upUSD6 billion from the previous forecastin February. This sharp increase in thebill caused by the rise in cereal pricesunderlines the growing financial burdenfacingtheLIFDCs.

n World cereal production isestimated tobeup4.7percent in2007,whichwouldrepresentarelativelystrongrebound after two consecutive yearsof contraction. However, in view of thetightly balanced situation demonstratedby the first 3 indicators, another goodcropisneededinthenewseason.Early indications point to an increase of2.6percentinworldcerealproductionin2008,whichifrealized,couldcontributeinstabilizingthemarketandhelptoimprovethesupplysituation.



FAO’s Food Price Indices

110

140

170

200

2302008

2007

20062005

DNOSAJJMAMFJ

1998-2000=100

FAO Food Price Index

100

150

200

250

300

350

MFJDNOSAJJMAM2007/08

1998-2000=100

Dairy

Oils and Fats Cereals

Sugar

Meat

Food Commodity Price Indices

n The FAO Food Price Index

continued to increase since the start of

theyearandbyMarch2008 itaveraged

220, as much as 80 points (57 percent)

morethaninMarch2007.Pricesofnearly

all food commodities have risen since

the beginning of the year supported by

a persistent, tight supply and demand

situation. In 2007, the index averaged

157,up23percentfrom2006.

n The FAO Cereal Index firmed

sincethestartof2008,averaging283in

March2008,up45pointsfromJanuary.

Tight supplies continue to provide

support to the prices of most cereals.

Inrecentweeks,ricepricesgainedmost

butmaizepricesalsomadefurthergains.

Wheat prices have come under some

downward pressure during the first

week of April in anticipation of larger

surpassingitspreviouspeakin2005.The

recentgainsmostly reflect thecontinued

surge in feed prices. The extent of price

increases varied significantly depending

onfeedconversionefficiencies,biological

lagsinproductionresponsesaswellasthe

role played by contract prices. Since the

beginning of the year lamb prices have

increased the most as sheep producers

arerebuildingflocknumbersandreducing

slaughter.

n The FAO Sugar Index in the

first three months of 2008 averaged

166, which is 29 points above the

corresponding value in 2007. Since the

beginning of 2008 sugar prices have

gained some momentum, underpinned

bystrongfund investment incommodity

futures,despiteanexpectedglobalsugar

surplusforthe2007/08season. In2007,

theindexaveraged129,a32percentdrop

over2006.Arecoveryinsugarproduction

in traditional importing countries led to

weakersugarpricesin2007.

n The FAO Oils/Fats Index in the

firstquarterof2008averaged269,which

is 133 points (or 98 percent) above the

corresponding value in 2007. Constant

expansion in the demand for vegetable

oils and fats - for food uses but also as

biofuel feedstock - combined with a

slowdown in production growth has

resultedinagradualtighteningofglobal

supplies, leadingtoasurge inprices.On

anannualbasis,theindexaveraged174in

2007comparedwithanaverageof117in

2006.

cropsin2008.However,becauseoflow

stocks, wheat prices remain high and

wellabovethepreviousyear’slevels.

n The FAO Dairy Index averaged

276inMarch2008,down6percentfrom

itspeak inNovember2007. In termsof

products,pricesofmilkproteinshavefallen

themost,asskimmilkpowderpriceshave

fallen27percent since theirpeak in July

2007;butterpriceshavedeclinedtheleast

sincetheirhighinNovember2007.Tight

suppliesfromtraditionalexporters,strong

import demand, and the exhaustion of

public stocks caused an unprecedented

eruptionofdairyproductexportpricesin

late2006whichhaslastedthrough2007.

n The FAO Meat Index increased

sincethestartof2008withthepreliminary

estimateforMarch2008atahighof133,

No. 2 n April 2008 1�


FAO Food Price Index

Food Price Index 1

Meat 2 Dairy 3 Cereals 4 Oils and Fats 5

Sugar 6

2000 93 100 106 87 72 105 2001 95 100 117 89 72 111 2002 94 96 86 97 91 88 2003 102 105 105 101 105 91

2004 114 118 130 111 117 922005 117 121 145 106 109 127 2006 127 115 138 124 117 190

2007 157 121 247 172 174 129

2007 March 140 121 186 151 138 134 April 142 119 213 148 150 125 May 144 119 222 150 161 121 June 151 120 252 159 170 119 July 156 120 277 160 175 131 August 162 123 287 171 181 126 September 171 124 290 195 190 125 October 175 122 297 201 202 128 November 181 126 302 203 221 130 December 187 123 295 224 226 137 2008 January 197 126 281 239 250 154 February 217 130 278 282 273 173 March 220 133 276 284 285 169

1 Food Price Index: Consists of the average of 6 commodity group price indices mentioned above weighted with the average export shares of each of the groups for 1998-2000: in total 55 commodity quotations considered by FAO Commodity Specialists as representing the international prices of the food commodities noted are included in the overall index.

2 Meat Price Index: Consists of 3 poultry meat product quotations (the average weighted by assumed fixed trade weights), 4 bovine meat product quotations (average weighted by assumed fixed trade weights), 3 pig meat product quotations (average weighted by assumed fixed trade weights), 1 ovine meat product quotation (average weighted by assumed fixed trade weights): the four meat group average prices are weighted by world average export trade shares for 1998-2000.

3 Dairy Price Index: Consists of butter, SMP, WMP, cheese, casein price quotations; the average is weighted by world average export trade shares for 1998-2000.

4 Cereals Price Index: This index is compiled using the grains and rice price indices weighted by their average trade share for 1998-2000. The grains Price Index consists of International Grains Council (IGC) wheat price index, itself average of 9 different wheat price quotations, and 1 maize export quotation; after expressing the maize price into its index form and converting the base of the IGC index to 1998-2000. The Rice Price Index consists of three components containing average prices of 16 rice quotations: the components are Indica, Japonica and Aromatic rice varieties and the weights for combining the three components are assumed (fixed) trade shares of the three varieties.

5 Oils and Fats Price Index: Consists of an average of 11 different oils (including animal and fish oils) weighted with average export trade shares of each oil product for 1998-2000.

6 Sugar Price Index: Index form of the International Sugar Agreement prices.

FAOFoodPriceIndex



Low-Income Food-Deficit Countries food situation overview1

1The Low-Income Food-Deficit (LIFDC) group of countriesincludesfooddeficitcountrieswithpercaputannualincomebelowthelevelusedbytheWorldBanktodetermineeligibilityforIDAassistance(i.e.USD1575in2004),whichisinaccordancewiththeguidelinesandcriteriaagreedtobytheCFAshouldbegivenpriorityintheallocationoffoodaid.

2008 aggregate cereal production of LIFDCs forecast to increase marginally for second consecutive yearFAO’s early forecast of 2008 cereal

production for the82LIFDCsasagroup

points to an increase of 1 percent from

2007. This increase will be lower than

the population growth for the second

consecutive year, implying a further

drawdowninstocks,higherimportsand/

ordeclineinpercaputconsumptioninthe

2008/09seasons.Moreover,whenChina

and India, normally accounting for one-

thirdof theaggregatecerealoutput,are

excluded,productionoftherestofLIFDCs

is forecast to remain virtuallyunchanged

fromlastyear.

In LIFDCs of southern Africa, the

outlookforthe2008cerealcrops,about

to be harvested is generally favourable.

Production is forecast to increase from

last year in most countries. However,

prospectshavedeterioratedinZimbabwe

and southern parts of Mozambique,

followingdryweather inthesecondhalf

of the season. In North Africa, cereal

output is expected to triplicate from the

2007 drought-affected level in Morocco,

while in Egypt an improved harvest is

anticipated on account of larger wheat

plantings. In eastern Africa, a bumper

2008 wheat crop is being gathered in

Sudan, where production nevertheless

covers only some 40 percent of annual

consumption. In other countries of the

subregioncereal cropsarebeingplanted

orareabout tobeplantedbut rainsare

somewhatdelayed.

In Far East Asia, good 2008 wheat

cropsare inprospect inChina, Indiaand

Pakistan, but outputs will mostly be a

bit lower than last year’s record levels,

whilethemainpaddycropsarestilltobe

planted.InmostAsianCIScountries,early

prospectsforthe2008cerealproduction

are favourable following larger plantings

ofwheat,themaincropandfoodstaplein

thesubregion,butinTajikistantheoutlook

is being negatively affected by delayed

springrainsandlocustinfestations.Inthe

NearEast,theoutlookforthisyear’scereal

production is uncertain in Afghanistan,

reflecting below-normal rains and an

extremecoldwinter,respectively.

In Ecuador, the only LIFDC in South

America,theoutlookforthe2008cereal

harvestispoorfollowingheavyrains,severe

floodsandcroplossesinthesecondhalf

ofFebruary.TheGovernmenthasdeclared

astateofemergencyinthewholecountry

and requested international assistance.

Elsewhere,the2008maincerealseasons

havenotyetstartedinWesternAfricaand

inCentralAmerica.

Rising cereal import costsTheLIFDCstotalvolumeofcerealimports

in2007/08 is forecast to reach some82

million tonnes, a marginal decline from

the level of thepast season. Satisfactory

2007 cereal production and significant

drawingoninventorieshavehelpedmost

LIFDCs to keep their imports stable or

even below the previous season’s levels.

However,asaresultofthesharpincrease

ininternationalcerealprices,freightrates

and oil prices, the 2007/08 aggregate

No. 2 n April 2008 15


cerealimportbilloftheLIFDCsisprojected

toriseby56percentfrom2006/07,after

having increased by 37 percent in the

previous year. This will have a negative

impact on the balance of payments and

current account positions of the LIFDCs

in general and in particular on those in

Africa,wheretheaggregatecerealimport

billisprojectedtoincreasebyahigher74

percentrate.

Sharp increase in domestic food prices Soaring international cereal prices,

coupled with reduced national cereal

production in parts, are exacerbating

food inflation in countries across the

world.Despitepolicymeasurestakenby

governmentstomitigatethetransmission

ofinternationalpriceintodomesticfood

markets (see box on Policy Measures),

pricesofbread,rice,maizeproducts,milk,

oil,soybeansandothersbasicfoodshave

increased sharply in the past months in

anumberofdevelopingcountries.Most

affectedbythefoodpriceinflationarethe

low-incomegroupsofpopulation,asthe

shareof food intheir totalexpenditures

is much higher than that of wealthier

populations. Food represents about 10-

20 percent of consumer spending in

industrialized nations, but up to 60-80

percent in developing countries. The

urban poor, together with food deficit

farmers, are among the worst affected

groupsastheydependonthemarketto

accessfoodproducts.

In Western Africa, in Côte d’Ivoire,

pricesof rice inMarch2008more than

doubled their levels of a year earlier. In

Senegal wheat prices by February 2008

weretwicethelevelofayearago,while

thoseofsorghumwereupby56percent.

In the important subregional Nigerian

market of Dawanau, prices of sorghum

andmillethavedoubled inthepastfive

months. In Eastern Africa, in Somalia,

the price of wheat flour in northern

areashasalmost tripled in the lastyear.

In Sudan,pricesofwheat in the capital

city of Khartoum this February were 90

percent higher than a year earlier. In

Uganda,pricesofmaize inMarch2008

have risen by 65 percent from their

levelsofSeptemberlastyear.InEthiopia,

maize prices in Addis Ababa in March

2008doubledtheir levelsofayearago,

while those of wheat were 42 percent

higher. In Southern Africa, maize prices

in Mozambique (capital city of Maputo)



inMarchwere43percenthigherthana

yearago.InAsia, inthePhilippines,rice

prices have increased by 50 percent in

thepasttwomonths.InSriLanka,prices

ofriceinMarch2008werealmosttwice

thoseofayearago,whileinBangladesh

they increased by 66 percent in the

same period. In CIS countries of Asia,

in Tajikistan prices of bread in February

were twice the levels at the same time

in 2007, while in Armenia the price of

wheat flour has increased by one-third

in the same period. In Latin America

and the Caribbean, in Haiti food prices

arereportedasbeing50to100percent

higherthaninthepastyear.

Serious social unrest in several countriesSocialunrestandfoodriots,whichhave

resulted in loss of lives in some cases,

havebeen reported in thepastmonth

in Egypt, Cameroon, Côte d’Ivoire,

Senegal, Burkina Faso, Indonesia,

Madagascar and the Philippines

as well as in Haiti in early April. In

other countries, such as Pakistan and

Thailand, troops have been deployed

toavoidseizingoffoodfromthefields

andfromwarehouses.

Rate of cereal imports higher than last seasonAvailable information received in GIEWS

bylateMarch2008,indicatesthatabout

55percentoftheLIFDC’saggregatecereal

import requirement of some 82 million

tonnes in 2007/08 marketing years has

been already covered. Similarly, half of

Measures taken by governments to limit the impact of soaring international cereal prices on food consumption

As international prices of cereals have continued to increase

inFebruaryandMarch,governmentsallover theworldhave

taken policy measures to reduce the transmission of higher

internationalpricesintodomesticmarkets,andtoprotectfood

consumptionbyvulnerablepopulations.Recentdevelopments

sinceearlyFebruaryarelistedbelow.

In Asia, rising food prices have prompted some of the

world’s largest rice producing and exporting countries to

announce ceilings and even bans on their rice exports.

India banned non-basmati rice exports in late March, set

theminimumexportprice forbasmati riceatUSD1200per

tonne,andauthorizedduty-freeimportsofrice.Viet Namhas

extendedabanof riceexportsuntil June,andannounced in

lateMarchthattotalriceexports,eventuallypermittedin2008,

wouldbecutto3.5milliontonnesfrom4.5milliontonneslast

year.InCambodia, theGovernment announcedon26March

atwo-monthbanonriceexportsandthereleaseofricestocks

to curb risingdomesticprices.China, thathad introduceda

seriesofquotas/bansongrainexports,hasrecentlyannounced

additionalagriculturalproductionsupportmeasures,including

increases in the minimum purchase prices of wheat and rice, in the minimum purchase prices of wheat and rice,in theminimumpurchasepricesofwheat and rice,andrice,,

andagriculturalinputssubsidies(seeBoxonChina).Pakistan,

which had raised duties on wheat exports, has also recently

raised wheat support prices by 23 percent in an attempt to

build up strategic reserves. In Indonesia, following protests

over shortages of soybeans, the Government has reiterated

thatitwilltakeaseriesofmeasurestostabilizefoodprices.In

thePhilippines,theGovernmentisanalyzingthereductionof

riceandmaizeimporttariffs,thatstandat50percentand40

percentrespectively,andhasencouragedtheprivatesectorto

participateinimporting163000tonnesofricetogetherwith

theNationalFoodAuthority(NFA).TheNFAisalsosellingitsrice

stocksatsubsidizedprices.TheGovernmentofBangladeshis

sellingriceatsubsidizedpricesinurbanareas,whileThailand

willrelease650000tonnesofricefromstatestockstobesold

atsubsidizedprices.Malaysiacontinuestoregulatetheprice

of ricewhich is subsidizedandhasnot sufferedvariations in

recentmonths,despitepricehikesininternationalprices.The

Governmentisplanningtoincreaseitsstocks.

North Africa dependsheavilyoncereal importstosatisfy

consumption requirements and soaring international prices

havepushedupdomesticpricesofbreadandotherbasicfood.

InEgypt, aftera significantrise inwheatfloursubsidies,the

Government announced at the end of March a ban on rice

exportsfromApriltoOctober2008.Earlierinthemonth,ithad

orderedthearmytobakebreadforthepopulation.InWestern

Africa, in Senegal, that normally imports half of its cereal

consumption,theGovernmenthassubsidizedthepurchaseof

wheatflourby40percent,waived tariffs and imposedprice

controls. InLiberia, theGovernment recently suspended the

USD2taxleviedonastandardbagofrice.InCôte d’Ivoire,

followingrecentsocialunrestinresponsetosharpincreasesin

oilandmilkprices,theGovernmenthastemporarilysuspended

import duties on essential foodstuffs. In Southern Africa,

No. 2 n April 2008 1�


inZambia, in spiteof availableexport surplusesofmaize in

2007/08 marketing year (May/April) the Government has

reinstated the export ban which had been in place most of

thepreviousmarketingseason.Ithasalsoimplementedlarge

inputsubsidyschemestofostercerealproductionthisyear.In

Malawi, theGovernmenthascontinuedwiththelargescheme

tosubsidizefertilizersandqualityseedinthecurrentagricultural

season.InSouth Africa, theGovernmenthasannouncedthe

increaseofdisabilityandoldagepayments fromApril2008,

andadjustedtheamountspaidinsocialgrantstothepoor.In

Zimbabwe, theGovernmentcontinuestocontrol importsof

maize,wheatandsorghumwhicharesoldatsubsidizedprices.

InEastern Africa, inEthiopia,theGovernmenthasrecently

cancelledthevalue-addedandturnovertaxesonfoodgrains

andflour,aswellasalltaxesoncookingoil,andsurtaxonsoap.

Earlier, theGovernmenttookactionstostabilizecerealprices

and to increase thepurchasingpowerof thepoor, including

expendituresofUSD38milliontosubsidizewheat,andUSD366

milliontosubsidizefuel.Themonthlydistributionof25kgof

wheat to 800 000 low-income urban dwellers introduced in

March2007willbemaintained,aswellasdistributionofedible

oilandotherproducts.TheGovernmenthasalsoannounced

the import of a large quantity of sugar, wheat and cooking

oil.IntheUnited Republic of Tanzania, theGovernmenthas

authorizedduty-freeimportsofsome300000tonnesofmaize,

andbannedexportsofagriculturalcommodities.

In Latin America and the Caribbean, the Government

of Mexico that had earlier removed quotas and tariffs for

food imports,hasmadeagreementswith traders to increase

maizeimportsandreduceretailfoodprices.Ithasalsorecently

announcedfoodproductionsupportmeasuresanditsintention

toreducefertilizerspricesbyathird.El Salvador,Guatemala,

Nicaragua and Honduras have jointly agreed to cancel the

importlevyonwheatflouruntiltheendoftheyear.Argentina

hasdelayedthereopeningofitswheatexportregistryuntil21

April from theprevious scheduleddateof 17March. It has

introduced a new scheme of variable levies for oilseeds and

grains to boost state revenue while commodity prices are

soaring.Asanattempttopartiallyoffsetthenegativeimpactof

thisschemeonfarmers’profits,theGovernmentisconsidering

a 20 percent subsidy on the price of fertilizers. Brazil has

removed the10percent import tariff on1million tonnesof

non-MercosurwheatuntilJune30.InPeru,theGovernment

announced in late March the launching of a programme to

distributefoodtothepooreststrataofthepopulation.Ithad

earlier removed the tariffoncereal imports. InEcuador, the

Governmenthasraisedthesubsidyonwheatflourintroduced

lastOctoberfromUSD10toUSD14.3per50kg.InBolivia,

tariff-free importsof rice,wheatandwheatproducts,maize,

soybean oil and meat are authorized until the end of May,

whileabanonexportsofgrainsandmeatproductshasbeen

introduced.

InEurope, theRussian Federation hasannouncedhigh

purchase prices for grain from domestic producers and is

currentlysellingstockstomillers,afterpricesofwheatreached

record highs in late March, in spite of the introduction of a

40 percent export tariff at the end of January. Ukraine has

announcedaplantoset limitsonprofitmarginsbythefood

industryandtraders,aspartofapackageofanti-inflationary

measures.

the food aid needs in the amount of

4.6 million tonnes, or some 6 percent

of the total import requirements, have

been sourced from donors’ deliveries or

pledges. The pace of both commercial

cerealimportsandfoodaidthisseasonhas

beenfasterthaninthepastyear,despite

soaring international prices. In Southern

Africa, where the 2007/08 marketing

year(April/March)hasjustendedinmost

countries, latest reports indicate that

some 80 percent of the import needs

were sourced; but this percentage could

increase in thenextmonthsdue to time

lagininformationreceived.Importshave

alsoprogressedsatisfactorily inLIFDCsof

NorthAfrica(MoroccoandEgypt),butin

WesternAfrica,wherethemarketingyears

willendinOctober2008(Sahelcountries)

and December 2008 (Coastal countries),

only11percentofthecerealimportneeds

havebeensecured.



Regional reviews

North Africa • winter grains: maturing

Southern Africa: • main season (summer cereals): maturing

Note:CommentsrefertosituationasofApril.

Kenya, Somalia: • main season cereals: planting

Uganda• main season cereals: growing

Eritrea, Ethiopia:• secondary season grains: growing

Burundi, Rwanda• main season cereals: planting

Tanzania, U.R.• main season cereals: growing

Sudan:• secondary season wheat: harvesting

Western Africa coastal countries: • main season cereals: land preparation/planting

Africa

North AfricaHarvestingofthe2008wintercerealcrops isduetostartfrom

June in most countries of the subregion. Crop prospects are

generally favourable especially in Morocco, where a strong

recovery in output from last year’s drought-reduced crop is

expected, provided normal weather prevails in the coming

months.Morocco’saggregatewheatandbarleyareaisestimated

at about4.9millionhectares,up7percent from last year and

yields are expected to recover significantly. The outlook is also

favourable in Egypt, the largest producer of the subregion,

where thewheatarea isestimated tohave increasedbyabout

12percentpointingtosignificantincreaseinproduction,ascrops

are largely irrigated and yields remain relatively constant. By

contrast,inTunisia,inspiteofgovernmentincentivestoincrease

domestic production to mitigate the negative impact of high

internationalpricesonconsumers,prospectsarelessfavourable

andsmallercropsare forecast thisyear.Theexpecteddecrease

ismainlyaconsequenceofinsufficientsoilmoistureatplanting

time,causinganareareduction,andoferraticrainsthroughout

thegrowingseasoninthemainproducingareas,whichwilllikely

leadtopooryields.FAOforecaststheaggregateoutputofwheat

inthesubregionatsome16milliontonnes,21percentupfrom

thepreviousyear’sdrought-reducedlevel,whilethatofbarleyis

putatalmost4milliontonnes,anincreaseofnearly35percent,

bothresultsbeingsimilartotherecentaverage.

NorthAfricancountrieshavebeenseriouslyaffectedbyhigh

international cereal prices due to their high dependence on

imports.However,theanticipatedincreaseinwheatproduction

inMoroccoandEgyptthisyearisexpectedtoeasetheeffectsof

risinginternationalcommoditypricesonthesecountries’import

bills.

Western AfricaLandpreparationisunderwayinthecoastalcountriesforplanting

ofthe2008mainseasoncerealcrops,whileintheSahel,planting

isscheduledforJune.

High and rising food prices which are reported across

the subregion, are having a negative impact on consumers’

purchasingpowerandaccesstofood.Alreadysincethetimeof

thelastharvest,inSeptember2007,significantincreasesingrain

priceshavebeenobservedacrossthesubregion,raisingserious

concernsoverthefoodsecurityoutlook.However,theextentof

thepricerisehasvariedfromregiontoregionandfromcountry

tocountry,reflectingadiversityofdrivingforces.

According to the results of the inter-agency1 Food Market

Assessment Mission that visited key cereal markets in several

WestAfricancountriesfrommid-Februarytomid-March(seeBox:

Joint inter-agency Market Assessment Mission to Benin, Niger

andNigeria),thehighestincreasesinpriceshaveoccurredinthe

eastern part of the subregion, notably in Niger and Nigeria.

1CILSS,FAO,FEWSNET,SIMAandWFP

2000

3000

4000

5000

6000

7000

8000

FJDNOSAJJMAMFJ

NGN/100 kg bag

Maize

CowpeaSorghum

Millet

2007

Figure 2. Nigeria - Average monthly commoditiesprices in Dawanu

2008

No. 2 n April 2008 1�


InDawanau InternationalGrainsMarket inKano (Nigeria), the

biggestinthesubregion,thepriceofsorghum,themosttraded

cereal in Nigeria, jumped from NGN2750 (Nigerian Naira) per

baginSeptember2007toNGN5300perbaginFebruary2008,

an increase of 92 percent in 5 months. Over the same period

milletprice increasedby116percent,while thepriceofmaize

inFebruary2008was96percentaboveitslevelinAugust2007.

The same trend has been observed on all markets surveyed in

Benin,NigerandNigeria.Formaizeforexample,priceincreases

inFebruary2008compared to the sameperiod in2007 range

from3percent inMalanville,northernBeninto165percent in

MinnainnorthcentralNigeria.

The causes of the price rises in these countries are mostly

regional.AlthoughimportsofcerealsbyNigeriaareforecastto

remainabove4.5milliontonnesin2008(mostlywheatandrice),

this represents only 15 percent of the country’s total domestic

cerealutilization.Thecerealimportdependencerateisevenlower

forBeninandNiger,around5percent.Moreover,boththeCFA

Franc2(BeninandNiger)andtheNaira(Nigeria)haveappreciated

significantly in recent years, and domestic oil is subsidized in

Nigeria,reducingthetransmissionofhighinternationalpricesto

2TheCFAFrancispeggedtotheEuro(XOF655.955=1Euro)andtheEurohasappreciateddramaticallyagainsttheUSDollarinrecentyears.

thedomesticeconomies.Theimpactofhighinternationalwheat,

maizeandricepricesonthedomesticmarketsofthesecountries

is, therefore, limited, although some substitution may have

occurred. Domestic cereal prices are driven mainly by regional

supplyanddemand,themselvesdetermined:

n on the supply side, by lower production due to irregularonthesupplyside,bylowerproductionduetoirregular

rains (across the subregion), high fertilizer prices (mostly in

Nigeria),andlowgrainpricesinthepasttwoyearsofferinglittle

incentive to produce. Moreover, the restrictive trade policy in

Nigerialimitsfoodimportsfrominternationalmarketsincreasing

thepressureonthedomesticmarket.

n on the demand side by, to a large extent, foodon the demand side by, to a large extent, food

processingindustriesandthepoultrysector,whichhasrecovered

significantlyalthoughithasnotreacheditspre-crisislevelyet.The

excessliquiditygeneratedbyhighoilpricesisalsocontributingto

higherdemandinNigeria.

InthewesternpartofthesubregionincludingCape Verde,

Guinea-Bissau,MauritaniaandSenegal,foodpricesaredriven

mainlybyinternationalmarkettrendsduetothehighdependence

ofthesecountriesonwheatandriceimportsfromtheinternational

market.Senegal’s domesticproduction,forinstance,coversonly

abouthalfofthecountry’scerealutilizationrequirements,soits

riceandwheatimportsamounttoanaverageofabout900000

No. 2 n April 2008�0


Joint inter-agency1 Market Assessment Mission to Benin, Niger and Nigeria

Ajointinter-agencyFoodMarketAssessmentMissionvisited

keycerealmarketsinBenin,NigerandNigeriafrom14February

to9Marchtoassessthe current stock and price levels, as wellthecurrentstockandpricelevels,aswell

astradeflowswithinandbetweencountriesandtoanalyze

the food security implications in more vulnerable countries.

Mainfindings:

Food production, stocks and pricesAgriculturalproductionin2007wasnegativelyaffectedinall

three countries by an early cessationof rains in September.

This was compounded in Nigeria by a lack of access to

fertilizers. Cereal outputs declined from the previous year. Cereal outputs declined from the previous year

inNigeriaandNiger,andtraders’stocksare lowinall three

countries so cereal prices have risen steeply. In Dawanau

InternationalGrainsMarket inKano(Nigeria),thebiggest in

thesubregion,real prices of maize and sorghum jumped byrealpricesofmaizeandsorghumjumpedby

over80percentand54percentrespectivelybetweenAugust

2007 and January 2008. As a result, average inflation in

Nigeria,whichwasestimatedtohavefallento5.4percentin

2007duetolowerfoodpricesandimprovedmonetarypolicy,

hasstartedpickingup.Theyear-on-yearrateofinflationwas

estimated at 8.6percent in January 2008, drivenmainly by

priceincreasesinthefoodsectorwhereyearonyearrateof

inflationjumpedfrom-0.10percentinJanuary2007to12.60

0 50 100 150 200

DawanuAbuja (FCT)

KadunaLafia

JosGombeMinnaLokoja

Lagos Mile 12MaïgateriMai AduaDamassak

JibiaIllela

JatakaKamba

MagariaBoureïmi

MatameyeZinder

DiffiMaradi

Guidan Roumji Tunfafi

NikkiMalanville

Gaya Benin

Niger

Nigeria

Maize price change in February 2008compared to 2007 (%)

percentinJanuary2008.Foodpricesareamajorfactorinthe

rateofinflation,withaveryhighweightintheconsumerprice

indexacrossthesubregion.

WhereasinBeninandNigerdemandforcerealsisdriven

mainlybyhouseholds’effectivedemandandconsumption,in

Nigeriademandbythepoultryandfoodprocessingindustries,

andbreweriesishigh.In the southern and north central partsnthesouthernandnorthcentralparts

ofNigeria,demandformaizeandsorghumfromprocessing

companies, poultry feed companies, and breweries was

reportedtobeveryhighfromOctobertoDecember.Demand

formaizebyproducersofanimalfeedwasparticularlyhigh,

pointingtoasignificantrecoveryinthepoultryindustry.

Trans-border trade and food security prospectsFoodmarketsarestrongly integratedinWesternAfricawith

pricelevels inseveralcountriesdeterminedtoa largeextent

bydevelopments insomekeyregionalmarkets. Inanormal

year,NigeriaandBeninexportcerealstoneighbouringNiger’s

deficit areas. In years of low output, however, Benin and

Nigeriautilizealargershareoftheirdomesticproductionand

sometimesimportgrainsfromNiger,exacerbatingthedeficit

in the latter country. Parity prices of imports from regional

marketsare, therefore,akeydeterminantof foodsupply in

thesecountries.

Althoughpricesincreasedsignificantlyacrossthesubregion,

thisvariedfrommarkettomarketandfromcountrytocountry,

leadingtosignificantchangesintradepatterns.Whilemillet

priceshaveincreasedinMatameyeandMaradibordermarkets

(inNiger)by23percentand32percentrespectivelyinFebruary-

March2008comparedtothesameperiodin2007,theprice

of thesamecommodityhas risenby78percent inDawanu

regionalmarketinnorthernNigeria,leadingtounfavourable

import parity prices in Niger. Moreover, much higher prices

incentralandsouthernNigeriameantthatsouthwardtrade

within Nigeria became more attractive, limiting trade flows

between Niger and Nigeria. Imports of cereals continue to

take place from northern Benin to south-western Niger,

reflecting lower grain prices in northern Benin. As a result,

the central and easternparts ofNiger,whichdependmore

on imports from Nigeria, are hardest hit by grains shortfall

andhighprices.ThelowestcerealpricesinNigerarecurrently

recordedinGayaregion(West),whileeasternZinderandDiffa

regionsareexperiencingthehighestprices.

1CILSS,FAO,FEWSNET,SIMAandWFP

No. 2 n April 2008 �1


continued

In northern Nigeria, some farming households, which

normallyproduceenoughfoodmay,therefore,faceshortages

beforethenextharvest,duetopoorrainfall.Withhighprices,

accesstofoodbyvulnerablepeople,notablyintheFarNorth,

is expected tobedifficult.However, theproductionof root

and tuber crops was not seriously affected which allows

for some substitution. Moreover, if the Government price

stabilisation intervention targets the northern states andthe northern states and

vulnerablepopulations,andifpricesdeclineasexpected,the

foodsecurityimpactofthefoodshortageshouldbelimited.

InNiger,althoughlivestockpriceshaveremainedrelatively

high, the central and eastern parts of the country may

experienceacutefoodinsecurityiftheupwardtrendinfood

prices continues. FromApril on, the eastern regionswill be

most affected, unless timely targeted actions are taken. In

view of the current food supply situation and unfavourable

prospects for imports from Nigeria, the situation is seen ashe situation is seen as

bothseriousandlikelytodeteriorateinthesepartsofNiger.

Conclusions:nThere is a need to increase access to food by poorThereisaneedtoincreaseaccesstofoodbypoor

and vulnerable populations through targeted food

distribution by Governments in the subregion. Other

safety net interventions, such as sales at subsidized

prices,foodforworkorcashforworkactivities,arealso

recommended,dependingon theextentof foodsupply

inspecificareas.

nDistribution of inputs such as seeds and fertilizer isDistributionofinputssuchasseedsandfertilizeris

alsoneededtoenable farmers toproduceenoughfood

duringthenextcroppingseason.

n In each country, market and price conditions andIn each country, market and price conditions and

the situation of vulnerable groups, need to be closely

monitoredinordertoprovideassistanceassoonas it is

necessary.

tonnesperannum,fromtheinternationalmarket.Bothruraland

urban consumers were affected last year by high food prices,

followingapoordomesticharvestin2006andincreasingcereal

pricesontheinternationalmarket.AlthoughtheGovernmenthas

implementedaseriesofmeasuresaimedatoffsettingtheimpact

ofthecontinuingsharpincreaseinworldpricesduringthisseason,

includingsubsidizingthepurchaseofwheatflourby40percent,

waivingofimporttariffsandpricecontrols,anotherlowdomestic

production in 2007 in the context of the tight international

marketisexacerbatinginflationarypressureonthedomesticfood

market,whichwillfurthererodethepurchasingpowerofurban

and rural consumers. Mauritania also relies heavily on coarse

grain (millet and sorghum) imports fromneighbouringSenegal

andMali,andonwheatimportsfromtheinternationalmarket.

Consequently, food prices are a key determinant of access to

foodforthemajorityofMauritanians.Thepricesofbothcoarse

grainsandwheatremainedrelativelyhighin2007,reflectingthe

poorharvestinSenegalandhighinternationalprices.Foodprices

continuetoclimbin2008duetoanotherpoorharvestinSenegal

and the persisting high international wheat prices. In February

2008,wheatandsorghumpriceswere96percentand56percent

higherrespectively,comparedtoFebruary2007.

Central AfricaPlantingofthe2008cerealcropshasjuststarted.InCameroon,

although an above-average cereal harvest was gathered

in 2007, soaring international food prices have pushed up

domesticpricesofseveralbasic foodstuffs includingrice,oil,

milk,etc,whichhasrecentlycausedserioussocialunrest.As

a result, the Government has taken a number of measures

includingincreasingthesalariesofcivilservantsby15percent,

waiving import tariffs on a set of foodstuffs, and reviewing

thepricingoffuels.IntheCentral African Republic,farming

activitiescontinuetobehamperedbypersistentinsecuritywith

large-scale population movements both within the country

and to neighbouring countries, notably in the north, where

nearly 300000 people have reportedly been uprooted from

theirhomesoverthepasttwoyears.Continuinginsecurityin

bothChadandtheDarfurregionofSudanthreatentofurther

destabilizethesituationinnorthernpartsofthecountry.

No. 2 n April 2008��


Eastern AfricaDelayed rains affecting secondary cereal crop in EthiopiaTheaggregateoutputofthe2007cerealcropinthesubregion

is estimated at 34.2 million tonnes slightly lower than the

previous year but still 20 percent above the average of the

past five years. This total includes apreliminary estimate for

the secondary “belg” season crop in Ethiopia, which will

be harvested from June 2008 and for which the outlook is

uncertainduetoadelayedonsetofrains.

InEritrea,theoutputofthe2007mainseasoncerealcrops,

harvestedlatelastyearwasestimatedtobenormal,reflecting

generally favourable weather conditions. However, domestic

cerealproductioninthecountrycoversonlyaboutone-fifthof

totalconsumptionrequirementsand largequantitieshave to

beimportedeveryyear.Currenthighfoodpricescontinueto

affectlargenumberofvulnerablepeople.

InEthiopia,theprospectsforthecurrentsecondary“belg”

seasoncropsforharvestfromnextJune,areuncertaindueto

adelayedstartoftherains.TheNationalMeteorologyAgency

(NMA)of Ethiopia has forecast below-normalMarch toMay

rains in most parts of the country. These poor rains would

extend existing drought conditions, in southeastern parts

resulting from the poor performance of the 2007 main and

second rain seasons, and have negative impacts on already

highlyfoodinsecurehouseholds.

InKenya,plantingofthe2008mainseasoncerealcropis

about to start. The yields of the recently harvested 2007/08

secondary“short rains” cereal crop,were reduced reflecting

October-December inadequate and poorly distributed rains

inseveralnorthernandeasternpastoralareas,agro-pastoral,

coastal and eastern marginal agricultural regions. This poor

rainfall performance has interrupted three consecutive

seasons of improvement in the food security status of most

households in these areas. Post election political unrest has

further disrupted markets, leading to increased food prices

and impairedagriculturalproductionthrough increasedcosts

ofinputsinthemixedfarmingregionsinRiftValley,Western

andCentralProvinces.Thecombinationofdisplacementand

high production costs threatens to reduce the land under

cultivationintheseareasbyupto30percent,withapotential

negative impactonfoodavailabilityandaccesscountrywide.

About half of agricultural land in North Rift, the key maize

producing area, has not yet been prepared for the planting

seasonthismonth.

In Somalia, planting of the main 2008 “gu” cereal crop

isunderway.AccordingtotheClimateOutlookForumforthe

Greater Horn of Africa, the April to June rains for most of

thecountryareforecasttobenormaltobelow-normal.These

rains are essential for the replenishment of water sources,

regenerationof pasture and for theproductionof the crops

thatareharvestedfromAugustincentralandsouthernareas.

In these areas many pastoral and agro-pastoral households

already facehigh toextreme food insecuritydue tomultiple

recent shocks, includingfloods, conflicts,hyper-inflationand

drought.

InSudan, theoutlook for the irrigatedwheat crop,now

beingharvested, is favourable, reflecting adequate irrigation

water supplies and relatively low temperatures. The output

fromthiscropispreliminaryestimatedatsome800000tonnes,

about15percenthigherthanlastyear’saboveaveragecrop.

Thesorghumcrop,harvestedinNovember-Decemberlastyear,

isestimatedat3.9milliontonnes,onemilliontonneslessthan

previousyear’sbumpercrop,butwellabove theaverage for

thepreviousfive years. The2008 coarsegrains crop,mainly

sorghum,isdueforplantingfromJune.

IntheUnited Republic of Tanzania,themaincoarsegrain

crop,nowintheground,isdueforharvestfromMaywhilethe

harvestingofthe2007/08shortrainfall“vuli”seasoncropsis

over.Thiscropaccountsforsome30percentofannualfood

supplies.Theperformanceof the seasonwasbelowaverage

duetopoorrains,particularlyinKilimanjaro,Arusha,andTanga

regions.The2007/08coarsegrainsproduction,estimatedat

4.0 million tonnes, compares with 4.2 million tonnes in the

previousyear.Thefoodsupplysituationisgenerallysatisfactory

throughout the country with the exception of areas in the

regionofArushaandIringawherefoodshortages,mainlydue

to a volcano eruption on Mount Oldongai and fire disaster,

wherereported.

In Uganda, the sowing of the 2008 main season coarse

grain crops has just been completed. The output from the

second season crop, recently harvested, is estimated to be

aboutaverage,exceptinthefloodhiteasterndistrictswhere

crops were destroyed. It is estimated that about half of the

production will be available for the market. Eastern and

Northern Uganda experienced heavy rains during the three

monthsofJuly,AugustandSeptember2007thatresulted in

severefloodsinmanylocations,includingAmuriaandKatawi

districtsofTesosubregion,wherecroplosseswereparticularly

high.

Large numbers of people in several Eastern Africa countries are currently affected by conflict and civil unrestInSomalia,thefoodsecuritysituationcontinuestodeteriorate

for more than 2 million people who are in need of basic

humanitarian assistance and livelihood support for at least

sixmonths.IntensiveconflictinMogadishucontinuetoforce

anaverageof20000peopletolivetheirhomeeachmonth.

This, coupled with record high food prices, hyper-inflation

No. 2 n April 2008 ��


anddroughtsinlargepartsofcountry,isleavingcommunities

struggling to survive. In many pastoral and agro-pastoral

areas,householdsalreadyfacehightoextremefoodinsecurity

due tomultiple recent shockswhich includefloods,conflicts

and drought. The humanitarian situation has particularly

deterioratedintheShabelle,HiranandCentralregions.

InEthiopia,notwithstandingabumpercerealharvestfor

thesecondyear ina row,8millionchronically food insecure

people,and2millionpeopleaffectedbycivil insecurity,high

food prices and localized unfavourable weather, will require

emergency relief in the form of cash transfers and other

assistance. In an effort to reduce the impact of 20 percent

annualinflationonpoorpeople,theGovernmenthasrecently

decided to cancel the value-added and turnover taxes on

food grains and flour - which constitute more than half of

the country’s consumption – as well as all types of taxes

imposedoncookingoilandonsoap.Earlier,theGovernment

had devised measures which include provision of direct and

indirect subsidies, and had spent ETB372 million (Ethiopian

Birr) or USD38 million to subsidise wheat and ETB 3.52

billion(USD366million)tosubsidisefuel.Thecurrentmonthly

distributionof25kgofwheatforlow-incomeurbandwellers,

introduced in March 2007, will be maintained as well as

distributionofedibleoilandotherproducts.TheGovernment

hasalsoannouncedthe importsofa largequantityof sugar

(1.5milliontonnes),wheatandcookingoil.

In Kenya, the Special Programmes Ministry reports that

over60000peopleinTaita-Tavetadistrictalonefacestarvation

followingacropfailurecausedbyerraticrainsinthelasttwo

seasons. Post election political unrest has also damaged the

livelihoodsoftheIDPs,mostofwhomwerefarmingfamilies,

tradersandgenerally foodsecurewithhigh resilience.Some

207000 living in camps are under humanitarian emergency.

Anadditional130000areintegratedwithhostfamilies.

InSudan,conflictsbetweenMissaryanomadsandsouthern

security forces in northern Bahr el Ghazal are spreading to

Abyei County and northern Unity State, causing market

disruptionsandposinghighrisktofoodsecurity.Inthenorth,

displacementandlossoflivelihoodsareexpectedtocontinue

inDarfurwheremalnutritionratesare likelytodeteriorate in

thecomingmonths.

Eastern and northern Uganda experienced heavy rains

duringthethreemonthsofJuly,AugustandSeptember2007

that resulted in severe floods in many locations including

Amuria and Katawi districts of Teso subregion, where crop

losses were particularly high. The effects of the floods are

stillsevereastheycompromisedfoodsecurityintheseareas.

Karamoja is next in need of assistance, but not primarily

becauseofflooddamage.Here,foodsecurityproblemsstem

mainly from prolonged insecurity, drought in 2006, a late

starttothe2007croppingseason,fallinglivestockpricesand

a severe attack of honeydew on sorghum, the main staple.

TheentireKaramojapopulationofonemillionpeopleisfood

insecureandinneedofemergencyfoodaid.TheGovernment

hasprovidedsomefarmimplementsandseedstofarmers,but

thepopulationstillneedsfoodrelieftobridgeconsumptionup

tothenextharvestinJune.

Cereal prices continue to increaseIn Ethiopia, grain prices have again increased in February and

Marchafteraslightdecreaseinthepreviousthreemonths.Wheatin

AddisAbabainMarchincreasedtoETB432perquintal(USD46.55)

fromETB349.75perquintal (USD37.67) inFebruary.MixedTeff

in thesamemarketwasquoted inMarchatETB519perquintal

(USD55.90)comparedtoETB405perquintal (USD45.80)ayear

earlier.Withprevailinghighprices,poorhouseholdsareexpectedto

finditmoredifficulttosecureaccesstoadequatefoodsupplies.

The factors behind this unusual behaviour of increasing

prices despite successive good crops, include: increased overall

economicactivity, especially constructionof roadsandhousing

inurbanareas,increasedliquidityintheeconomyduetopartially

cash based assistance in the safety net programmes, which in

turnreducein-kindfoodaid;thespreadofthecreditrepayments

by farmers throughout the year rather than immediately after

harvest; budgetary support at district level which increased

effectivedemandthroughsalarypayments;increasedformaland

informalcross-bordertradeingrains;localpurchasescooperatives

andreliefagency.

100

200

300

400

500

600

MFJDNOSAJJMAMFJ

USD/tonne

Maize

Wheat

Teff

Source: Ethiopian Grain Traders

Figure 3. Selected cereal prices in Addis Ababa, Ethiopia



InKenya,duetosoaringimportprices,reducedsecondary

seasoncropandpostelectiondisturbances,thepriceofmaize

intheNairobimarket-whichfluctuatedbetweenUSD210per

tonneandUSD223pertonneintheperiodOctober2007and

January2008-increasedtoUSD257pertonneinMarch.

In Somalia, the disruptions of the Bakara market in

Mogadishu(themainmarketplace insouthernSomalia)have

intensifiedtheriseinstablefoodpriceswhichhadbeenrising

sinceMay2007.The increase inpricesofbasiccommodities

hasbeenevenmorepronouncedinthenorthern-easternregion

(Puntland)becauseofcripplinginflationlinkedtoaninfluxof

currency. Businessmen in Bossaso, the region’s commercial

capitalreportthatthepriceof50kgofwheatflourhadalmost

tripled, in a year, from an equivalent of USD12 to USD33

or SOS900000 (Somalia Shillings). This increase in prices,

coupledwiththedepreciationofSomalishillingandincreased

fuelandtransportcosts,arecausingseriousproblemsoffood

accessforthepoorpopulation.

InSudan, as reportedby theMinistryofAgriculture and

Forestry sorghum and millet prices in all major markets are

stableatahighlevelduringtheusualimmediatepost-harvest

time (February-March). The expected seasonal downward

trends, in prices that normally occur during the harvest and

immediate post-harvest periods, were less marked than

previousyears.ThewholesalepriceofsorghuminKhartoum

is6percent lowerthanthe2002-2006averagefor this time

oftheyear,andintheproducingareaofGedarefit isonly2

percent lower than the average.However, this relatively low

levelofpricesisexpectedtoendinthecomingmonthswhen

privateandgovernmentstockslessen.Bycontrast,wheatprices

havesteadilyincreasedsinceJune2007,followingwidespread

increases on international markets. February wheat prices

in Khartoum increased by some 6 percent compared to the

previousmonth,andwere90percenthigherthantheFebruary

2007prices.

IntheUnited Republic of Tanzania,inresponsetolower

production,increasedtransportcostsfromrisingfuelpricesand

agovernmentcampaignforstandardizationofgrainweightsat

thefarmgate,wholesalefoodpricesinallmarketsarehigher

thannormalforthistimeoftheyear.Wholesalemaizepricesin

Dar-es-Salaam-quitelowinmid-2007,averagingUSD120per

tonne-begantoincreasesharplysinceAugust2007,toreach

USD325pertonneinJanuary2008.InFebruary,pricesstarted

todeclineandwerequotedatUSD298pertonneinMarch.In

anefforttolimitthepriceincreases,andtomitigatetheeffects

of the localized food shortages, the Government authorized

theimportsofabout300000tonnesofmaizeduty-freeand

imposedanexportbanonagriculturalcommodities.

InUganda,pricesofmaizethathadbeendecliningsince

thebeginningoflastyear,reachingtheirlowlevelsofUSD121

per tonne inSeptember2007, increased sharply toUSD151

inOctoberandaveragedatUSD182pertonneinDecember

2007.InMarch2008,pricesreachedUSD231pertonne.

100

150

200

250

300

350

MFJDNOSAJJMAMFJDNOSAJJM2006

USD/tonne

UgandaKampala

Tanzania U.R.Dar-es-Salaam

KenyaMombasa

KenyaNairobi

2008 2007

Source: Eastern AFrica Regional Agricultural Trade Intelligence Network

Figure 4. Maize prices in selected Eastern Africamarkets

3000

6000

9000

12000

15000

JDNOSAJJMAMFJDN

SDG/90 kg bag

Millet

Wheat

Sorghum(Feterita)

Figure 5. Monthly wholesale prices of staplecereals in Khartoum, Sudan

No. 2 n April 2008 �5


Southern AfricaProspects for the 2008 cereal crops in Southern Africa are generally favourable except in Zimbabwe and southern parts of MozambiqueInSouthern Africa,the2007/08agriculturalseasonisapproaching

harvest. Although the planting rains started later than usual,

excessive precipitation persisted during December and January

throughouttheregioncausingseriousfloodinginmanylow-lying

areas,especiallyalongtheriverbasinsinMozambique,Zambia,

Zimbabwe,Malawi andMadagascar. Since February rainshave

diminished,andunfavourablydryweatherhasreturnedtosome

countriesincludingmostofZimbabwe,partsofeasternBotswana,

southernMalawi,southernMozambique,easternSwazilandand

centralZambia.However,despitetheseweathervagaries,overall

prospectsforthesubregionaswholeareconsideredfavourable,

marking a recovery from last year’s drought-affected season in

severalcountries.However,significantrisesininternationalprices

offuelandfertilizerhaveaffectedtheuseofthesekeyinputsin

agriculture,dampeningyieldprospectssomewhat.

The area planted to maize this season in South Africa is

officiallyestimatedatabout3.2millionhectares,10percentup

from last year, largely reflecting high maize prices and above-

averageandwell-distributedrainfallintheprimarymaizegrowing

areas (themaizetriangle).Outputisforecasttoreachabumper

levelof11milliontonnes,anincreaseofabout50percentover

0

200

400

600

800

1000

1200

-30

0

30

60

90

120

150

000 tonnes

Botsw

ana

Moz

ambiq

ue

Angola

Zimba

bwe

Imports covered(as of late March 2008)

% Change in importrequirement from 2006/07

Mala

wi

Swaz

iland

Leso

tho

Mad

agas

car

Zam

bia

Namibi

a

Figure 6. Southern Africa - Total cereal import requirements for 2007/08 and percentage changefrom 2006/07

%Imports not yet covered(as of late March 2008)

last year’s drought-reduced crop. Large input subsidy schemes

wereagainimplementedinZambiaandMalawi,enablingsmall

farmerstousequalityseedandfertilizer.Thisisexpectedtohave

asignificantpositiveeffectontheirtotalmaizeharvestlaterthis

year.On the contrary, a longdry spell of about3 to4dekads

insouthernandcentralpartsofZimbabweandsouthernparts

ofMozambique is expected to lower this season’s harvest. In

Zimbabwe,farmerswerefacedwithadditionalproblemssuchas

shortagesandhighpricesofkey inputs suchas fertilizer, seed,

fuel,andtillagepower,furthercompoundedbysevereflooding

inseveraldistricts.

Food imports this year picked-up during the lean period compared to the same time last yearAvailablefiguresbylateMarch2008showthatonly82percent

ofimportrequirementsofallcerealshavebeenreceivedand/or

contracted/pledgedsincethebeginningofthemarketingyear

inApril2007(seeFigure6).Importshavepickedupduringthe

lastfewmonths,inspiteofhighimportprices.However,wheat

andrice importswereslower than thoseofmaizebecauseof

relatively higher price increases for these commodities. Given

thatthemarketingyearisalmostcompleted,verylittleadditional

imports would come in within this marketing year ending by

MarchorApril.



Current cereal prices remain high but mostly stable in the regionPricesofmaincerealsthismarketingyearhavebeenmuchhigher

thanat the sameperiod last yeardue to strong international

and regional demand and weak supplies. Current prices of

maize,themostimportantstaplefoodstuffinmostcountriesof

thesubregion, includingMalawiwheresignificantexportable

surplus exists, are well above their corresponding levels a

yearearlier (seeFigure7). InSouth Africa, the region’smain

exporting country, the March 2008 price (Randfontein spot)

was13percenthigherthanatthebeginningofthemarketing

0

3

6

9

12

0

200

400

600

800

1000

1200

1400

A M J J A S O N D J F M A M J J A S O N D J F M

A M J J A S O N D J F M A M J J A S O N D J F M2006/07 2007/08

2007/082006/07

0

500

1000

1500

2000

2500

10

15

20

25

30

35

40

2007/082006/07

2006/07 2007/08

A M J J A S O N D J F M A M J J A S O N D J F

A M J J A S O N D J F M A M J J A S O N D J F M

0

60

120

180

240

300

0

50

100

150

200

250

300

0

100

200

300

400

0

100

200

300

400

500

600

700

Figure 7. Prices of white maize and rice in selected markets

South Africa - Randfontein spot price

Mozambique - Wholesale price, Maputo Madagascar, local white rice - National average

Sources: South Africa: Randfontein spot price (www.safex.co.za). Mozambique: SIMA, Monthly average wholesale prices in Maputo.Malawi: Lilongwe - Local market price MoAFS & FEWSNet, Madagascar: Observatoire du riz.

Malawi - local market price - Lilongwe ZAR/tonne USD/tonne USD/tonneMWK/tonne

MZN/kg USD/tonne MGA/kg USD/tonne

yearinMay2007,atZAR1873(SouthAfricaRand)pertonne.

In Mozambique, the price in March (Maputo wholesale) of

MZN8.57 (Mozambique Metical) per kilogramme was 43

percenthigherthanforthecorrespondingmonthin2007.The

April2007toMarch2008averagepriceofrice,themainstaple

in Madagascar, has been about 12 percent higher than the

averageforthesameperiodayearago.Priceshavestabilized

inrecentmonthsandareexpectedtodeclinewiththearrivalof

thenewharveststartinginApril-May.Thetrendinthecurrent

(February-March)pricesinvariouscountriesreflectsexpectations

regardingtheupcomingharvests.

No. 2 n April 2008 ��


Asia

Far EastFavourable outlook for the 2008 winter grain cropsThe outlook is generally favourable for the

developing winter wheat crop throughout the

subregion,butbasedonlatestindications,output

is likely to turn out a little short of last year’s

record.InChina,thewinterwheatcrop,which

accounts for about 95percent ofChina’s total

wheatproduction,wasplantedonanestimated

21.5 million hectares last autumn, unchanged

fromtherecordofthepreviousyear.Winterwheat

outputisexpectedalittlelowerthanlastyear’s

record, reflecting extreme dry conditions that

persistedinnorthernandnortheastregionsfrom

January until late March before much-needed

rains arrived. The winter wheat in some provinces in southern

Chinawasalsomarginallyimpactedbyextremeheavysnowand

coldweather.However,alargerspringwheatcropisexpectedto

offsetthewintercropdeclineandaggregateoutputisforecastto

remainatlastyear’srecordlevel.InIndia,weatherconditionsfor

thisyear’swinterwheatcrophavebeengenerallyfavourableand

outputfor2008isofficiallyforecastatsome74.8milliontonnes,

comparedtoanearrecordproductionof75.8milliontonneslast

year.Thisyear’ssmallercropforecastreflectsadeclineat500000

hectares inplantedareaandunfavourableweatheratplanting

timeinsomemajorproducingprovinces.However,thisoutputis

still6.3percentabovethefiveyearaverage.Similarly,asmaller

wheatcropisexpectedinPakistanthisyear.Outputisforecast

at one million tonnes less than last year’s record, reflecting a

reducedareaduetosowingdelays, lessavailabilityof irrigation

waterandhighfertilizerprices.However,outputcouldstillbe5.3

percenthigherthanthefive-yearaverage.Thepriceofwheatin

Pakistanremains lower than inneighbouringcountries, so that

wheat (flour) is being smuggled out of the country; domestic

foodpricesareincreasingasaresult.

Basedon the latest information,2007paddyproductionof

thesubregion isestimatedatarecordof584.6milliontonnes,

up about 8 million tonnes from the previous year, while 2007

aggregatecerealoutputisestimatedatarecordof1022million

tonnes,some20milliontonnesabovethepreviousyear,mainly

reflectingbumpercropsinChina,India,andIndonesia.

Food supply difficulties persist in several countries due to reduced 2007 cereal crops and rising food pricesIntheDemocratic People’s Republic of Korea,the2007cereal

harvest is officially estimated at some 3 million tonnes (rice in

milledterms),some1milliontonneslowerthantherecordofthe

previousyearand750000tonnesbelowthefive-yearaverage.

Withthislow2007production,thecerealdeficitforthe2007/08

marketingyear(November/October)isestimatedat1.66million

tonnes(seeBox).OverfourmonthsafterCycloneSidrhitupto

30 districts in Bangladesh on 15 November 2007, large-scale

humanitarian relief operations are still ongoing in the country

to assist the most affected 8.9 million people. Food and non-

fooditemsarebeingdistributedin13cyclone-affecteddistricts.

The reduction in 2007 paddy production and rising food price

since2007(Figure9)aresignificantlyimpactingthefoodsecurity

of vulnerable populations in both urban and rural areas. In

Sri Lanka,thecountry’sfoodsecuritycontinuestobeaffectedby


Southeastern Asia: • rice (second): harvesting• maize (second): harvesting

Near East: • winter grains: heading to maturing

China: • winter wheat: vegetative• early rice: planting

South Asia: • wheat and coarse grains: vegetative to reproductive

India: • maize (Rabi): harvesting• wheat (Rabi): harvesting• barley (Rabi): harvesting• sorghum (Rabi): harvesting

Asia (CIS): • winter grains: vegetative-heading• spring grains: planting

100

115

130

145

160

FJDNOSAJJMAMF2007 2008

Figure 8. Retail rice price index in Pakistan(February 2007=100)



theresurgenceofcivilconflict,naturaldisasters (recentfloods),

as well as rising cereal prices (Figure 10). Since the beginning

of 2008, more than 2500 people have reportedly been killed

infightingandthesecuritysituationhasdeteriorated.Riceand

wheatflourpricesinMarch2008inColombocitywerehigherby

77percentand72percent,respectively,comparedtothesame

periodin2007.HeavyrainsinMarchaffectedmorethan340000

peopleanddisplacedsome7000families;cropdamageswere

also reported innorthwestern region, especially in theMannar

district. The food security situation has also continued to

deteriorate inthepastmonths inTimor-LesteandNepal asa

resultofpoliticalinstabilityandrisingfoodprices.InTimor-Leste,

astateofemergency,declaredsoonaftertheFebruary11attacks,

wasextendedforanothermonth,toApril.

Some 20 provinces of southern China suffered from

disastrous cold, ice, and snow in January and February

and some 100 million people are officially estimated to

have been affected. The most severely impacted crops

and agricultural products include rapeseed, vegetables,

fruits,forestproducts,andlivestockproducts.Accordingto

1000

1500

2000

2500

3000

3500

MFJDNOSAJJMAMFJDNOSAJ2006/07 2007/08

Wheat

Rice

BDT/kg

Figure 9. Wheat and rice retail prices in Bangladesh

30

40

50

60

70

80

MFJDNOSAJJMAMFJ2007 2008

Wheat flour

Rice (white)

LKR/kg

Figure 10. Wheat flour and rice retail pricesin Sri Lanka

No. 2 n April 2008 ��


China’sMinistryofAgriculture, theaffectedrapeseedarea

is estimated at 3.26 million hectares (410000 hectares of

which are completely lost) accounting for 48.4 percent of

nationalrapeseedarea.Directeconomiclossesareestimated

at CNY100 billion (Yuan) or USD13.8 billion. Similarly,

unusually cold weather in Viet Nam has been sweeping

through theuplandareasnear theVietNam-Chinaborder

since14January,makingitarecord-longcoldspell.About

150000hectaresofriceweredestroyedandabout90000

head of livestock died, of which 75 percent were young

calvesandyoungbuffaloes.

In Indonesia, the avian influenza situation remains critical

despitecontainmenteffectsundertakenbynationalauthoritiesand

theinternationalcommunity.Avianinfluenzahasreportedlybecome

deeplyentrenchedinthecountrywith31outof33provincesbeing

infected.TheavianinfluenzasituationinBangladeshisalsoserious

with47ofBangladesh’s64districts affected, andmore than1.5

millionbirdsreportedlykilledsinceMarchoflastyear.

Near EastIn Afghanistan, the extreme cold conditions in January and

February, which caused hardship and crop losses, notably in

Severe food shortages in the Democratic People’s Republic of Korea

In addition to long-standing economic constraints, the

DemocraticPeople’sRepublicofKoreawasseverelyaffected

byfloodsin2007andcontinuestosufferfromseriousfood

shortages.BasedonthemostrecentGovernmentestimates,

total cereal production in 2007 is about 3 million tonnes

(milled base, or 3.6 million tonnes unmilled), a significant

reductionfromthe4milliontonnesofthepreviousyearand

thefive-yearaverageof3.7milliontonnes.Themajorcereal

losseswereinmaize,33percentdownfromthepreviousyear,

and in rice25percentdownfromthepreviousyear.Potato

productionwasestimatedtohaveincreasedby80000tonnes

(in cereal equivalent), or17percent from theprevious year.

Soybeanoutputalsoreportedlyincreased.

With this low 2007 production, the cereal deficit for the

2007/08 marketing year (November/October) is estimated at

1.66milliontonnesonthebasisofapercaputcereal-equivalent

consumptionclosetothereferencehistoricaltrendofsome170

kgpercaput(includingpotatoandsoybeans).Thecountrymay

again have to depend on external assistance as its capacity

to import commercially remains limited by poor economic

performanceandrecentincreasesinworldfoodprices.

Asa resultofdomestic food shortages,marketprices in

Pyongyang have increased significantly. By comparison to

early2007,currentpricesforbothriceandwheatflourhave

doubled,whilemaizepriceshavealsorisensubstantially.The

PublicDistributionSystem,themainsourceofstaplefoodsfor

themajorityof thepopulation,hasreportedly reducedstate

foodrationsinitsmaingrain-producingareasandeveninthe

capitalcity.

Winterwheatand springbarleyare thecurrentgrowing

crops,buttheyaccountforasmallshareoftotalannualcereal

production,some10percent.Winterwheatwassownfrom

theendoflastSeptembertomid-October,whilespringbarley

hasbeensowninMarch.Bothcropsaretobeharvestedinthe

secondhalfofJune.

0

1000

2000

3000

4000

5000

06/0705/0604/0503/0402/0301/02 07/08

Democratic People’s Republic of Korea - Cereal production and imports

Production

Imports000 tonnes

2000/01

Notes:Cereal production in milled rice equivalent.Imports for the 2007/08 marketing year (November/October)are forecast based on the historical utilization trend.



Some recent policy developments in China Mainland

Production

AftertherecentsurgeinriceandotherfoodpricesinAsia,

theGovernmentofChinaannouncedaseriesonmeasures

toboostagriculturalproductionin2008,including:

n Increasing the minimum purchase prices of wheatIncreasing the minimum purchase prices of wheatthe minimum purchase prices of wheattheminimumpurchasepricesofwheat

andrice. White wheat price will rise from CNY 1 440 (Yuan).White wheat price will rise from CNY 1 440 (Yuan)hitewheatprice will rise from CNY 1 440 (Yuan)willrise from CNY 1 440 (Yuan)fromCNY 1 440 (Yuan)CNY1 440 (Yuan)1 440 (Yuan)440 (Yuan)440(Yuan)(Yuan)uan))

pertonne in 2007 to CNY 1 540 per tonne 2008, red wheattonnein2007toCNY 1 540 per tonne 2008, red wheatCNY1 540 per tonne 2008, red wheat1 540 per tonne 2008, red wheat540 per tonne 2008, red wheat540per tonne 2008, red wheatpertonne 2008, red wheattonne2008,redwheat

andmixed wheat from CNY 1 380 to CNY 1 440 per tonne,ed wheat from CNY 1 380 to CNY 1 440 per tonne,wheatfromCNY 1 380 to CNY 1 440 per tonne,CNY1 380 to CNY 1 440 per tonne,1 380 to CNY 1 440 per tonne,380 to CNY 1 440 per tonne,380toCNY 1 440 per tonne,CNY1 440 per tonne,1 440 per tonne,440 per tonne,440per tonne,pertonne,tonne,,

early indica (unmilled) from CNY 1 400 to CNY 1 540 perCNY1 400 to CNY 1 540 per1 400 to CNY 1 540 per400 to CNY 1 540 per400 to CNY 1 540 perCNY1 540 per1 540 per540 per540 perper

tonne, middle and late indica (unmilled) from CNY 1 440, middle and late indica (unmilled) from CNY 1 440middle and late indica (unmilled) from CNY 1 440 (unmilled) from CNY 1 440(unmilled) from CNY 1 440CNY1 4401 440440440

to CNY 1 580 per tonne, and japonica (unmilled) fromCNY1 580 per tonne, and japonica (unmilled) from1 580 per tonne, and japonica (unmilled) from580 per tonne, and japonica (unmilled) from580 per tonne, and japonica (unmilled) fromper tonne, and japonica (unmilled) fromtonne, and japonica (unmilled) from fromfrom

CNY1 500 to CNY 1 640 Yuan/tonne;1 500 to CNY 1 640 Yuan/tonne;500 to CNY 1 640 Yuan/tonne;500toCNY 1 640 Yuan/tonne;CNY1 640 Yuan/tonne;1 640 Yuan/tonne;640 Yuan/tonne;640Yuan/tonne;Yuan/tonne;/tonne;

n Increasing input direct subsidies (farm machinery,Increasing input direct subsidies (farm machinery, input direct subsidies (farm machinery,inputdirect subsidies (farm machinery,directsubsidies(farmmachinery,

farm use of fuel and fertilizers) from 346 per hectare toand fertilizers) from 346 per hectare to fertilizers) from 346 per hectare toper hectare tohectare to

CNY600 per hectare;600per hectare;perhectare;hectare;

n Increasing seed subsidies by CNY 5 billion;Increasingseed subsidies by CNY 5 billion;seedsubsidiesbyCNY 5 billion;CNY5 billion;5billion;;

n Increasingfundsforfloodanddroughtpreparedness,Increasingfundsforfloodanddroughtpreparedness,fundsforfloodanddroughtpreparedness,,

and for agricultural infrastructure investment;for agricultural infrastructure investment;agriculturalinfrastructure investment;infrastructure investment;investment;

n Increasing subsidies for loan interest rates toIncreasing subsidies for loan interest rates to interest rates to rates to to

support large counties in the production, processing andin the production, processing and, processing andand

marketingof grain, vegetable oil, and meat;ofgrain,vegetableoil,andmeat;

n Increasing subsidies for animal inspection andIncreasing subsidies for animal inspection and subsidies for animal inspection andinspection and

quarantinesystems;;

n Waiving of transportation passing fees for freshWaiving of transportation passing fees for freshaiving of transportation passing fees for freshing of transportation passing fees for fresh transportation passing fees for fresh

agriculturalproducts;

n Strengthening controls on agricultural input andStrengthening controls on agricultural input andagricultural input and

output markets;markets;;

n Provision of better agricultural financial service andProvisionofbetteragricultural financial service andagriculturalfinancialserviceand

loans for agriculture development in middle and westerns for agriculture development in middle and western for agriculture development in middle and western

China.

Trade

After having removed the VAT export rebate on wheat,

rice, maize and soybeans in late 2007, the Government

introduced export duties of 20 percent on wheat,

buckwheat, barley andoats early this year. It alsoput in

placea25percentexportdutyonwheatflourandstarch,

aswellasa5percentdutyonrice,maize,sorghum,millet

andsoybeans,anda10percentoneonthefloursofmaize,

rice,andsoybeans.Chinahasalsoimposedexportquotas

onflourfromwheat,maizeandrice,andsteppedupwheat

andmaize sales fromstate reserves, topreventdomestic

pricerises.

easternareasborderingTajikistan,havecometoanend.While

wintervegetablecropshavebeendamagedintheworstaffected

areas,theextentofthedamagetowinterwheat,ifany,isnotyet

known.Thenormallydrysouthhasexperiencedanunusuallywet

winterthisyear,whilecentralareasofthecountryandwestern

highlandareashavereceivedlesssnowthanusual.Unlessthese

central and western areas receive good rains in the April-June

period,waterreservesforirrigatedcropsmaybecomeveryscarce.

Thiscouldalreadyhavesomeimpactonthisyear’smainirrigated

cropharvestfromMayfordownstreamfarmerswhoselandisfar

fromwaterreservoirs,butcouldhaveamorewidespreadimpact

at thetimeofpre-wintercultivation inAugust,Septemberand

Octoberof2008,therebyaffectingthe2009cropharvest.

Althoughitistooearlytoforecastthefullimplicationsofthis

winter’sanomalousweatherpatternoncropproduction,the2008

cerealharvestistentativelyexpectedtobeanabout-average4.6

milliontonnes,somewhat less thanthe2007crop.However,a

favourableharvestoutcomeisonlypossiblewithgoodandregular

rainfallfortheremainderofthegrowingseason,includinginthe

bulkoftherain-fedcropareasintheNorth.

InJordan,withbelownormalcumulativerains,theoutlook

for the 2008 winter grain crops due for harvest from May is

unfavourable, and output is estimated to be lower than last

year’s crop of about 60 000 tonnes. The Government has

recentlyimplementedaplantodealwithaseverewaterdeficit

estimatedatover500millioncubicmetersannually.Over the

pastfiveyears,thearrivalofabouthalfamillionrefugeesfrom

Iraqhasaggravatedwater shortages. Theplanenvisages that

theamountofwaterpumped to farmers for irrigationwould

bereducedbyatleast50percent,withonlycropsthatdonot

requirealargeamountofwatertobeallowed.Thequantityof

waterpumpedtohouseholdswillalsobereducedandrationed.

Thecountrydependsentirelyon rainwaterduring thewinter

season to meet demand. Last year, some parts including the

JordanValley–thekingdom’smainagriculturalarea–received

only60percentoftheexpectedrainfall.RecentlytheMinistry

of Planning has called for international help to alleviate the

problem of water scarcity and indicated that JOD430 million

(JordanianDinar)orUSD606millionareneededforprojectsto

increasewaterreserves.

No. 2 n April 2008 �1


Asian CISHigh international cerealpricesare resulting in largerplantings

ofcereals,particularlywheat,forthe2008harvestintheAsian

CIS countries. Chief amongst these is Kazakhstan, where the

areatobesowntowheat is to risebyover1millionhectares,

to13.2millionhectares. In theother countries,whichhave to

import expensive wheat, the area is also foreseen to increase:

Azerbaijan,Kyrgyzstan,TajikistanandTurkmenistan.InArmenia,

the Government is taking steps to significantly step up wheat

productionin2008/09,byimportingimprovedseed,subsidizing

the area sown to wheat and encouraging irrigated wheat

production.InAzerbaijan,thegovernmentispredictingasharp

22percent increase inwheatproduction in2008.At thisearly

stage,whenwintergrainshaverecentlyemergedfromdormancy

andspringgrainsarebeingplanted,theaggregate2008cereal

harvest in the subregion is tentatively estimated at an about-

average30milliontonnes,ofwhich25milliontonneswouldbe

wheat. Kazakhstan alone could account for almost 17 million

tonnesofgrains,including14milliontonnesofwheat.However,

theseestimatesdependcruciallyonnormalgrowingconditions

throughouttheperioduptotheharvestsinJuly-September.

In 2007, the cereal harvest in the subregion reached an

estimated33milliontonnes,includinganofficiallyestimated20

millioninKazakhstan.InUzbekistanthe2007harvestisofficially

putatarecord6.1milliontonnes,including5.7milliontonnesof

wheat. Despite estimates of larger production in Turkmenistan

(2.1milliontonnesincluding1.9milliontonnesofwheat)imports

haverisensharplythisyeartoensureadequatedomesticsupplies.

OutputinKyrgyzstanreached1.4milliontonnes,halfofwhich

iswheat.InGeorgia,thecerealharvestin2007recoveredfrom

the drought-reduced level of 2006, reaching 400000 tonnes,

butareassowntocerealscontinuetodecline,asthecountryhas

littlecomparativeadvantageforcerealproduction.InArmenia,

indications also point to a trend away from cereal production,

althoughgoodyieldsin2007ledtoanabove-averageoutputof

400000tonnes.

InTajikistan,thefoodsecuritysituationisparticularlydifficult.

Low purchasing power continues to limit access to expensive

wheat,vegetableoilandfuel.Undernormalconditions,mostof

thepopulation spendoverhalfof their incomeon food,while

the most vulnerable spend 70-80 percent. Since late last year,

thepricesofbread,oilandwheatbasedproductshavedoubled

whilethepriceofmanyotherbasicgoodshasincreasedbyhalf.

Anextremely coldwinter causedconsiderabledamage toherd

productivity and winter crops. Lack of heating and a shortage

ofwater(frozen) inJanuaryandFebruaryhasmeantthatmost

peoplespentmoreonfood,ate less,andthathousehold food

stocksarehistoricallylow.FoodSecurityClusteragenciesinthe

countryestimatethat550000peoplearemostseriouslyaffected,

ofwhomatleast260000needimmediatesupport.AUNAppeal

forUSD25million tohelpvulnerablepopulations remainsonly

one quarter funded. Meanwhile, with the onset of spring,

the population faces, further hardship related to avalanches,

mudslidesandflooding.

Latin America and the Caribbean

Central America and the CaribbeanHarvesting of the 2008 main winter wheat crop is about to

start in Mexico, virtually the sole producer in the subregion.

Earlyofficial forecastspointtoagoodproductionofabout3.4

milliontonnes,similartolastyear’sharvest.Theincreasereflects

and expansionof planted area andadequatewater availability

in the main reservoirs, especially in the northwestern irrigated

districtsofSonoraandBajaCaliforniastatesduringthegrowing

season. Planting of the 2008 main season coarse grains and

paddycrops isexpectedtostartatthebeginningofMaywith

the arrival of first seasonal precipitation in Mexico and other

CentralAmericanandCaribbeancountries.Aggregateplantings

inthesubregionaretentativelyforecastatarecord14.3million

hectares, including 10.4 million hectares of maize, 2 million

hectaresofsorghumand674000hectaresofpaddy.Assuming

average yields, the2008 aggregate cereal output is tentatively

forecasttoreacharecordlevel,slightlyabove42milliontonnes.

In Mexico, despite excellent maize production in 2006 and

2007,commercialimportsinmarketingyear2007/08(July/June)

Mexico• wheat (main): harvesting

Brazil • coarse grains: harvesting in south; planting in north-east• paddy: harvesting

Argentina• coarse grains: harvesting • paddy: harvesting

Uruguay • coarse grains: harvesting• paddy: vegetative


Central America• maize (main): planting

Bolivia • main season cereals: harvesting



areexpected tobea record9.5million tonnes, some600000

tonnesmorethanthealreadyhighvolumeofthepreviousyear.

Theincreaseisessentiallyduetotheimplementationofthelast

phaseofmarketliberalizationundertheNAFTAinJanuary,that

allowsduty-freeimportsofmaizefromCanadaandtheUnited

States,andtothepartialsubstitutionofmoreexpensivesorghum

imports with cheaper broken maize. In Cuba, harvesting of

sugarcane,themainagriculturalexport, isunderwayandearly

estimatespointtoanationaloutputofrawsugarof1.6million

tonnes, which positively reverts the trend of the last 15 years

whenproductiondeclinedfrom8milliontonnesin1990toonly

1.2milliontonnesin2007.

South AmericaHarvesting of the 2008 main season coarse grain crops is

underway. Preliminary estimates set aggregate production at

about95milliontonnes,anewrecord,some2percentabove

last year’s output and almost 20 percent above the average

ofthepastfiveyears.This ismostlyduetoanincreaseinarea

plantedinArgentinaandBrazil,themainproducingcountries,in

responsetohighinternationalprices.InArgentina,harvesting

ofmaizestartedinFebruaryandproductionisestimatedat20

milliontonnes,aboveaverage,butlowerthanthe2007record

level.Anincreaseofabout10percentinplantings,whichearlier

intheyearpointedtoalargeroutput,hasbeenmorethanoffset

byreducedyieldsinkeygrowingareasofBuenosAires,Córdoba

and La Pampa departments because of adverse weather. In

Brazil,harvestingofmaizeisalsounderwayand,despitesome

irregularprecipitationinwesternBahia,thecropisreportedto

be in generally good condition. If planting intentions for the

second season (safrinha) maize crop are confirmed, the 2008

aggregatemaizearea is expected tobewell above14million

hectaresandearlyforecastspointtoarecordproductionof55.6

million tonnes. InChile, a stateofagriculturalemergencyhas

been declared in about 40 percent of country’s municipalities

due to theworstdrought in the last50 years.Major affected

cropsarevegetables,avocadosandcitrusfruits,whiledamage

topasturelandisseverelyreducingmilkproduction.Harvesting

of the 2008 main rice crop is underway, and the subregion’s

aggregate production this year is tentatively forecast at an

averagelevelof22milliontonnes.

Adverse weather conditions associated with the “La Niña”

meteorologicalphenomenonhaveaffectedfoodandcashcrops

inseveralAndeancountries.InBolivia,intenserainfallsincethe

endof2007hascausedseverefloods ineasternandnorthern

departments.Lossesofthemainsummerseasoncrops,normally

harvestedfrommid-MarchtoMay,areprovisionallyestimatedat

about600000hectaresoffood(paddyandmaize)andcashcrops

(mainlysoybean).Atthesametime,importantlossesoflivestock

andreductioninpastureduetoexcesswaterarereportedinthe

DepartmentofBeni. InEcuador,asof20February,thewhole

countryhasbeendeclaredinastateofemergencyduetofloods.

Damage to housing, infrastructure and agriculture (paddy,

cocoa, bananas and vegetables) is reported, especially in the

departmentsofManabí,Guayas,LosRíosandElOroonthecoast

aswellasinAzuayandCañarinthehighlands.InPeru,torrential

rains have partially or totally damaged some 45000 hectares

of crops (mainly coffee, plantains, white maize, paddy and

potatoes)inthedepartmentsofTumbes,PiuraandLambayeque.

However, theabundantprecipitationshavegenerally improved

soilmoisturewithpositiveeffectsonplantingsof2008winter

crops,especiallywheat,thatareexpectedtostartinApril.

No. 2 n April 2008 ��


North America, Europe and Oceania

North AmericaIn the United States, the official Prospective Plantings Report

issuedattheendofMarchestimateswinterwheatplantingsat

about18.9millionhectares,some4percentupfromtheprevious

year’slevel,andslightlyhigherthanearlierexpectationsfollowing

larger than expected areas sown to Soft Red Winter wheat.

The winter wheat crop is reported to be mostly in satisfactory

condition,withgoodmoisturehavingbeenreceivedthroughout

theGreatPlainsduringthewinter.Themainexceptionhasbeen

westernpartsofthemainwinterwheatproducingstatesinthe

centralandsouthernPlains,whichremainedpredominantlydry

inthepastfewweeks;thismaytranslatetohigherabandonment

ratesthanearlierexpected.

Forspringwheat,plantingofwhichhasjuststarted,theareais

seentoincreasetonearly6.9millionhectares,almost10percent

up from the previous year’s level. This strong increase reflects

thecontinuinghighwheatpricesthatpointtogoodreturnsfor

this crop combined with favourable conditions for planting, in

particularadequateplantingmoisture.Thisisimportantforgood

emergenceandestablishment,andcanhaveanimportantimpact

onfinalyields.

Basedonofficialplanting indications,andassumingnormal

weatherfortheremainderoftheseason,FAOcurrentlyforecasts

theUnitedStates’totalwheatproductionin2008at60million

tonnes,almost7percentupfromlastyear,andthelargestcrop

since2003.

Inclement weather in late March hampered early maize

plantinginpartsoftheMidwestbuttheprecipitationwillhave

beenbeneficial in raising soilmoisture reserves for thecoming

growing season. The bulk of the maize planting is due to get

underwayinApril.AccordingtotheProspectivePlantingsReport,

farmers are expected to reduce the area of maize to about

35 million hectares, after last year’s exceptionally high level of

almost 38 million hectares, which was the largest area since

1944.However,althoughdownsignificantlyfromlastyear,this

remainsaveryhighlevel,reflectingthecontinuingstrongprice

outlookformaize.Theareacomingoutofmaizeisexpectedto

beshiftedbacktoothercropsbecauseofrotationalrequirements

and the prospect of equally good, if not better, returns from

somealternative crops.Themainalternative inmost caseswill

be soybeans, production of which was sharply reduced last

year in favourofmaize,but forwhich returnsareexpected to

bemore attractive this year, givenhigherprices and less input

costscomparedtomaize(seeFigure11).Thisisexpectedtobe

particularlythecaseineasternpartsoftheCornBeltwheresoils

are less suited tomaizeandobtaininghighmaizeyieldsneeds

perfectweatheraswellashigh inputs. Inthesepartssoybeans

areasureroption.Basedontheseearlyplantingindications,and

assumingnormalweatherfortheremainderoftheseason,FAO

forecasts theUnitedStatesmaizeoutputat300milliontonnes

in2008,10percentdownfromlastyear’srecordoutput,butstill

oneofthelargestcropsonrecord.

InCanada,plantingofthespringgraincropsisduetostart

inApril.Regardingwheat,themajorcrop,earlyindicationspoint

toan11percentincreaseinareacomparedtothepreviousyear’s

reducedlevel,whenlandwasdivertedoutofwheattooilseeds.

Currenthighwheatpricesareexpectedtobeastrongincentive

to recovery in the wheat area. However, rather than reversing

lastyear’sshift,afurtherexpansionon2007’salreadyrelatively

highoilseedsareaisalsoexpectedbecauseofattractivereturns

inthissector.Althoughsomeofthegaininwheatandoilseeds

areawillcomefromminorcoarsegraincropssuchasmaizeand


CIS in Europe• winter cereals: vegetative• spring cereals: planting.

Northern Europe• winter cereals: vegetative• spring cereals: planting.

Canada• land preparation for main cereal planting in May-June.

United States• winter wheat: vegetative• maize and other spring cereal: planting.

Centre-Southern Europe• winter cereals: vegetative-heading• spring cereals: planting.

Australia• sorghum, maize: maturing-harvesting• winter cereals: land preparation/planting



oats,thebulkisexpectedtocomefromsummerfallowthatwas

notinproductionlastyear.Thus,thetotalareaundercultivation

to grains and oilseeds is forecast to increase in 2008. Based

on the expected plantings and assuming a normal planted to

harvestedratioandabout-averageyields,the2008wheatcrop

isforecasttoreachsome25milliontonnes,about25percentup

from2007andsimilar tothegoodcropof2006.This forecast

assumesnormalweatherduringthegrowingseason.Asoflate

March itwas reported that soilmoisture levels in thecountry’s

southernandcentralgrainbeltwereparticularlylow.Theseareas

wouldbenefitfrommoresnoworrainbeforeplanting,otherwise

well-timedrainsduringthegrowingseasonwillbeallthemore

critical.

EuropeCerealproduction in the region isoncourse to recoversharply

from last year’s below-average crop, which had suffered from

unfavourableweatherinseveralparts.Whileassumingareturn

tonormalyieldsthroughouttheregion,theexpectedincreasein

outputalsoreflectsasignificantexpansionofareainresponseto

theprospectofcontinuinghighcerealpricesforthisyear’scrops.

Atthisearlystage,theaggregateregionalcerealoutputin2008

istentativelyforecastat439milliontonnes,almost13percentup

fromthepreviousyear.

In the EU, following the suspension of the compulsory 10

percentlandset-asiderequirementforthe2007/08croppingyear,

the total cereal area is forecast toexpandbyabout6percent.

Most of this expansion would be in wheat, the bulk of which

iswinterwheat andhas alreadybeen in theground since last

autumn.However, significant expansionsof areasunderbarley

andmaizearealsoexpected,aswellassmallincreasesformost

othercereals.Regardingtheconditionofthewintercropsalready

inthegroundandearlyprospectsfor2008yields,theoutlookis

favourablesofar.Thewinterhasbeencharacterizedbygenerally

mild conditions, especially in somenorthernparts, limiting the

likelihoodofwinterkillinareasthatarenormallythemostprone.

Soilmoistureconditionsarereportedtobemostlyadequateso

far. Parts of France and Spain that had been unfavourably dry

benefited from heavy rainfalls in late March, raising moisture

levels for developing wheat and improving prospects for the

springplantingseason.

Based on these early area indications, which are quite firm

withregardtowinterwheatbut lesssurefor thespringcrops,

the bulk of which are still to be sown, and assuming normal

weather for the remainderof theseason, theaggregatecereal

outputofthegroupin2008istentativelyforecasttoreach294

milliontonnes,some13percentupfromthepreviousyear.Table

12showsthecurrentwheatandcoarsegrainsoutputforecasts

forthemajorproducers.

Elsewhere,intheBalkan Peninsula,prospectsforthe2008

cereal crops also remain generally favourable and point to a

recoveryinoutputafterdroughtaffectedmanyareaslastyear.

IntheEuropean CIS, theearlyoutlookforthe2008cereal

harvestisfavourable.Wintergrainshaveover-winteredwelland

springgrainplantingisunderway.Theareasowntowintergrains

(mainly wheat and rye) has increased and indications are that

theaggregateareatobesowntospringcropswillalsoincrease.

Wheataccountsforthebulkoftheincrease,withfarmersinmost

countriesexpandingplantingsinresponsetointernationalwheat

prices.

20000

25000

30000

35000

40000

200820062004200220001998

000 hectares

Maize

Soybeans

Figure 11. U.S. maize and soybean planted areas(1998-2008)

No. 2 n April 2008 �5


IntheRussian Federation,theaggregateareatobesown

tograins in2007/08isexpectedtoexceed46millionhectares,

compared to 44.4 million hectares for the 2007 harvest. The

winter grain area rose by almost 10 percent to 15.6 million

hectares, and the spring grain area is forecast at 31 million

hectares.Theareasowntowheatisforecasttoreach26million

hectarescomparedto24.4millionhectareslastyear.Themaize

andspringbarleyareascouldalsoincreaseattheexpenseofsugar

beet.TheGovernmenthasrecentlysetexporttariffsonmineral

fertilizerstostimulateincreaseddomesticuse.Atthisearlystage,

andprovidedtheweatherremainsfavourableuntilharvests,the

2008 cereal output is tentatively forecast at around 82 million

tonnes,including50milliontonnesofwheat,31.6milliontonnes

ofcoarsegrains,andthebalanceinrice.

Exports of grain from the Russian Federation from July 2007

toFebruary2008havereachedalmost13milliontonnesandare

unlikelytoincreasesignificantlybeforetheendofthecurrentseason

inviewofthesteepexporttariffsimposedonwheatandbarley.If

the2008harvestforecastmaterializes,thesetariffsarelikelytobe

removedandthecountrywillremainamajorexporterofcereals.

InUkraine,over90percentoftheareasowntowintercrops

(8millionhectaresofwhich7.5isinwintergrains)isreportedto

beingoodtosatisfactorycondition.Earlyestimatespointtoan

increaseintheaggregateareaofgrainsforthe2008harvestof

15millionhectares, (compared to13.8million in2007)mainly

duetoanincreaseintheareassowntowheatandbarley.After

lastyear’sseveredrought,winterprecipitationhasprovidedample

soilmoistureforspringgrowthinmostareas,withtheexception

of the drier south and southeast. Provided weather conditions

remainfavourableduringtheremainderofthegrowingseason,

the 2008 output of cereals could be about 37 million tonnes,

almost10milliontonnesmorethanthereducedcropof2007.

Exportsfromthecountrysofarinthecurrent2007/08marketing

year have not yet exceeded 500000 tonnes so far, owing to

previousexportquotasandlicensingrestrictions.TheGovernment

has extended the operation of the export quota and licensing

systemuntil1Julyandhasraisedtheexportquotasto1.8million

tonnesofmaize, (from600000tonnes), to900000tonnesof

barley (from4000tonnes)andmarginally increasedthewheat

quotato203000tonnes.

InMoldova, the area sown towintergrains is reported to

have increased to some 400000 hectares. Spring sowing is

underway.Preliminaryindicationsarethatthe2008harvestwill

recovertoabout2milliontonnesfromthedrought-reducedlevel

of800000tonnesin2007.InBelarus,theaggregateareasown

tocerealcropsisthoughttobesimilartolastyear’sbutaspecial

effort isbeingmade to increase theareasandoutputofgrain

maize.Assumingnormalweather, cerealproduction in2008 is

tentativelyforecastat6.5milliontonnes,lessthantherecord7

milliontonnesharvestedin2007.

OceaniaIn Australia, harvesting of the minor summer coarse grain

crop(mostlysorghum)beganinMarchandabumperoutputis

expected.Averagetoabove-averagerainfallsinceOctober2007in

northernNewSouthWalesandsouthernQueenslandencouraged

largesorghumsowingsandbenefitedcropdevelopmentleading

togoodyieldprospects.Outputofsorghumisforecastatnearly



2.5milliontonnes,almost80percentupfromthepreviousyear.

Bycontrast,however,dueatoseverelackofprecipitationinrice

producingareas,thesummerricecrophasbeendevastatedand

outputisforecastatjust18000tonnes,comparedto161000in

thepreviousyear.

Earlyindicationsforthe2008wintercerealcrops,tobeplanted

fromAprilon,pointtopossiblerecordsowingsasproducersare

expectedtotryandincreaseproductiontotakeadvantageofhigh

globalprices,especiallyafterhavinglostrevenuein2007because

ofdrought.However,althoughproducers’intentionsmaypoint

tolargeplantings,thefinaloutcomewilldependonrainfallinthe

maingrowingareasfromAprilthroughJuly.EasternAustraliahas

alreadybenefited fromgood levelsofprecipitation throughout

thesummer,particularlyinFebruary,whichhashelpedtoestablish

good subsoilmoisture reservespre-planting,butmore rainwill

beneededatplantingtimeandduringcropdevelopment.Other

maingrainproducingareasarestillawaitingsignificantplanting

rains.Atthisstage,basedonthecurrentindicationsofproducers’

plantingintentionsandassumingnormalweatherfortheseason,

thecountry’swheatoutput in2008 is forecast to recover from

last year’s drought-reduced level, and reach almost 26 million

tonnes,closetotherecordcropof2003.Asignificantrecoveryin

barleyisalsoexpectedwithoutputforecasttorecovertoabout

9milliontonnes.


No. 2 n April 2008 ��

Statistical appendix

Table. A1 - Global cereal supply and demand indicators .................................................................................... .��

Table. A� - World cereal stocks .............................................................................................................................. .��

Table. A� - Selected international prices of wheat and coarse grains ................................................................ .�0

Table. A� - Estimated cereal import requirements of Low-Income Food-Deficit Countries �00�/0� or �00� .. .�1



No. 2 n April 2008 ��




No. 2 n April 2008 �1




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The Global Information and Early Warning System on Food and AgricultureGIEWS

No. 2 April 2008 Crop Prospects and Food Situation

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