FAO forecasts cereal production increase
help ease the current tight global cereal supply, according to
forecasts by the Food and Agriculture Organization (FAO).
The FAO's Crop Prospects and Food Situation report (No.2 April 2008) forecasts that world cereal production is to increase to a record 2 164 million tonnes in 2008. Wheat is forecast to represent the largest rise, following expansion in plantings in major producing countries. FAO also forecasts coarse grains' output to remain similar to last year while rice production is foreseen to increase slightly, following the introduction of production incentives in several Asian countries. The increase in cereal production, if it materialises, could have a major impact on the supply of cereals worldwide, which currently have very low reserves. Price increases According to FAO's forecast, world cereal stocks are expected to fall to a 25-year-low of 405 million tonnes in 2007/08. This is due to a number of factors including adverse weather conditions last year in Australia and other countries, including Europe, steady international demand, increased food demand from rapidly developing countries such as China and India, and the increased use of crops for biofuels. All these elements have resulted in sharp price rises of wheat, maize and rice, which represent staple foods in many countries. Export restrictions by major exporting countries have also contributed to price increases. The FAO's report shows that by the end of March, prices of wheat and rice were about twice their levels of a year earlier, while those of maize were more than one-third higher. This has resulted in social unrest in several countries in Asia, Africa and Latin America and the Caribbean, where food prices have sharply gone up. According to FAO's report, 37 countries worldwide face food crises as their cereal import bill is forecast to go up 56 per cent in 2007/2008. Hope The FAO's report gives hopes that the situation will improve on world markets. "Should the expected growth in 2008 production materialize, the current tight global cereal supply situation could ease in the new 2008/09 season," the report said. To prevent further rises, the FAO has urged governments of both cereal importing and exporting countries to take measures to limit the impact of higher international cereal prices on food consumption. The organisation's objective is to put in place a "coherent international policy to achieve sustainable growth on the long-term". At the moment, food crises in several countries have led to short-term responses from governments in both exporting and importing countries, which, according to the organisation, "risk exacerbating instability in world markets". It is important to ensure that market signals reach food producers to quickly stimulate appropriate supply response and thus increase food production and availability. The organisation could play an important role in this direction by enlarging its 'Food Market Information System' to monitor market developments and disseminate market information. FAO's Summit on 'World Food Security: the Challenges of Climate Change and Bioenergy', which is to be held at its headquarters from 3 to 5 June 2008, also aims to enable world leaders and the international community to "adopt policies, strategies and programmes to overcome the new challenges facing world food security."