no. 3 july 2008 crop prospects and food situationno. 3 n july 2008 crop prospects and food situation...

global information and early warning system on food and agricultureGIEWS

HIGHLIGHTS CONTENTS

No. 3 n July 2008

Crop Prospects and Food Situation

Countries in crisis requiring external assistance 2

Food emergencies update 4

Global cereal supply and demand brief 6

Policy measures taken by governments to reduce the impact of soaring prices 13

FAO global cereal supply and demand indicators 18

FAO Food Price Indices 20

Regional reviewsAfrica 22Asia 32LatinAmericaandtheCaribbean 36NorthAmerica,EuropeandOceania 38

Special features/boxesZimbabwe 31

Statistical appendix 41

n World cereal production in 2008 is forecast to increase 2.8 percent to a record 2 180 million tonnes.Mostoftheincreaseisinwheatfollowingsignificantexpansioninplantingsinallregions.CoarsegrainsoutputisexpectedaroundthebumperleveloflastyearbutlowerthanearlieranticipatedduetoseverefloodsintheUnitedStates,theworld’slargestproducerandexporter.Riceistentativelyforecasttoincreaseslightlyfromlastyear’sgoodlevel.

n Despite the anticipated increase in world output, cereal markets will remain tight in 2008/09.Totalcerealsupply(carry-instocksplusproduction)willbarelyexceedtheanticipatedutilizationandtheworldcerealreserveswillrecoveronlymarginallyfromthecurrentestimated30-yearlow.

n International cereal prices remain at high levels with tight maize supply in the United States underpinning prices of major cereals.Maizeexportpricesclimbedtonewrecordlevelsinrecentweeks,doubletheirlevelsayearearlier.Pricesofwheatweakenedonlymodestlydespiteseasonalharvestpressureandremainedabout40percenthigherthanayearearlier.AfterreachingapeakinMay,riceexportpricesfellinJuneandearlyJulyreflectinggreaterexportavailabilityinmainexportercountries;however,theywerealmostthreetimesabovethelevelofayearago.

n Cereal production of the LIFDC’s, as a group, in 2008 is forecast to increase at a slow rate growth of just 1.2 percent.Excludingthelargestcountries,ChinaandIndia,theincreaseoftheremainingcountriesisevenlowerandfollowsadeclineinoutputinthepreviousyear.

n InSouthern Africa,theoutcomeoftherecentmainseasoncerealharvestwasoverallfavourablewitharecoveryinproductioninSouthAfricaandgoodcropsinseveralothercountriesbutoutputfellwellbelowlastyearandtheaverageinZimbabwe.InEastern Africa,theoutlookisunfavourableforthecerealharvestsinseveralcountries,includingEthiopia,SomaliaandpartsofKenyaandUganda.InNorth Africa,Morocco’scerealproductionisexpectedtorecoverstronglyfromlastyear’sdrought-reducedlevel,butTunisiaisfacingasmallerharvest.

n InAsia,theregionalcerealoutputissettoremainclosetolastyear’sgoodlevelwithbumpercropsinChinaandIndiamorethanoffsettingreductionsexpectedinPakistanandtheIslamicRepublicofIran.FoodinsecurityisexpectedtoincreaseinAfghanistanandTajikistan.

n InSouth America,harvestingofthemainseasoncoarsegraincropsisunderwayandarecordoutputisexpectedfollowinglargerplantings,inresponsetohighinternationalprices.Prospectsforthewheatcroparemixed;plantingsincreasedinBrazilbutpolicyandweatherfactorsledtosmallerplantingsinArgentina.

200820072006

100

200

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1000

JJMAMFJDNOSAJJMAMFJDNOSAJ

Wheat

Rice

USD/tonne

Maize

Selected international cereal prices

No. 3 n July 2008�


Nature of food insecurity Main reason Changes from last report

AFRICA (21 countries) (April 2008)

Exceptional shortfall in aggregate food production/supplies Lesotho Lowproductivity,HIV/AIDSpandemic Somalia Conflict,adverseweather Swaziland Lowproductivity,HIV/AIDSpandemic Zimbabwe Deepeningeconomiccrisis,adverseweather Widespread lack of accessEritrea IDPs,economicconstraints Liberia Warrelateddamage Mauritania Severalyearsofdrought SierraLeone Warrelateddamage Severe localized food insecurityBurundi Civilstrife,IDPsandreturnees CentralAfricanRepublic Refugees,insecurityinparts Chad Refugees,conflict Congo,Dem.Rep. Civilstrife,returnees Congo,Rep.of IDPs Côted’Ivoire Conflictrelateddamage Ethiopia Insecurityinparts,localizedcropfailure Ghana After-effectsofdroughtandfloods Guinea Refugees,conflict Guinea-Bissau Localizedinsecurity Kenya Civilstrife,adverseweather,pests Sudan Civilstrife(Darfur),insecurity(southernSudan) Uganda IDPs

ASIA (11 countries)

Exceptional shortfall in aggregate food production/supplies Iraq Conflictandinsufficientrainfall

Widespread lack of access Afghanistan Conflictandinsecurity,inadequaterainfall Korea,DPR Economicconstraintsandeffectsofpastfloods Myanmar Cyclone

Severe localized food insecurity Bangladesh Pastfloodsandcyclone China EarthquakeinsouthwesternChina Nepal Poormarketaccessanddrought Philippines Typhoon SriLanka Conflict Tajikistan Wintercropdamage,poormarketaccess,locusts Timor-Leste IDPs,highfoodprices

LATIN AMERICA (1 country)

Severe localized food insecurity Bolivia Pastfloods

EUROPE (1 country)

Exceptional shortfall in aggregate food production/suppliesMoldova After-effectsof2007drought

Countries in crisis requiring external assistance1 (34 countries)

No. 3 n July 2008 �


Terminology1 Countries in crisis requiring external assistanceareexpectedtolacktheresourcestodealwithreportedcriticalproblemsoffoodinsecurity.Foodcrisesarenearlyalways

duetoacombinationoffactorsbutforthepurposeofresponseplanning,itisimportanttoestablishwhetherthenatureoffoodcrisesispredominantlyrelatedtolack

offoodavailability,limitedaccesstofood,orseverebutlocalizedproblems.Accordingly,thelistofcountriesrequiringexternalassistanceisorganizedintothreebroad,not

mutuallyexclusive,categories:

•Countriesfacinganexceptional shortfall in aggregate food production/suppliesasaresultofcropfailure,naturaldisasters,interruptionofimports,disruptionof

distribution,excessivepost-harvestlosses,orothersupplybottlenecks.

•Countrieswithwidespread lack of access,whereamajorityofthepopulationisconsideredtobeunabletoprocurefoodfromlocalmarkets,duetoverylowincomes,

exceptionallyhighfoodprices,ortheinabilitytocirculatewithinthecountry.

•Countrieswithsevere localized food insecurityduetotheinfluxofrefugees,aconcentrationofinternallydisplacedpersons,orareaswithcombinationsofcrop

failureanddeeppoverty.� Countries facing unfavourable prospects for current cropsarecountrieswhereprospectspointtoashortfallinproductionofcurrentcropsasaresultofthearea

plantedand/oradverseweatherconditions,plantpests,diseasesandothercalamities,which indicateaneedforclosemonitoringofthecropfortheremainderofthe

growingseason.

Countries with unfavourable prospects for current crops2

Country Main reason Changes from last report

AFRICA (April 2008)

Ethiopia Insufficientrainfall Kenya Insufficientrainfall,cropdiseases Somalia Adverseweather,conflicts

ASIA

Afghanistan Adverseweather,limitedsuppliesandhighfoodprices Iran Rainfalldeficit,limitedsnowmelt Iraq Generalizedinsufficientrainfall Jordan Insufficientrainfall SyrianArabRep. Insufficientrainfall Tajikistan Adverseweather Tunisia Insufficientrainfall Turkmenistan Adverseweather

Nochange Improving Deteriorating

No. 3 n July 2008�


Food emergencies updateInWestern Africa and Central Africa,highandrisingfoodprices

continue toaffect consumers’purchasingpowerandaccess to

foodacrossthesubregioninspiteofthevariousmeasurestaken

byGovernments.InOuagadougou(Burkina Faso)forexample,

thepriceofmillet,themajorstaple,hasincreasedby33percent,

inearlyJune2008comparedtothesameperiodlastyear,while

the price of imported rice was up 87 percent over the same

period.InCentral African Republic,thepriceofriceincreased

by71percentbetween Januaryand June.Pricesofother food

itemssuchascassava,oilandmeatmorethandoubledoverthe

sameperiod.Harvestingofthefirst2008maizecropisaboutto

startinthecoastalcountriesalongtheGulfofGuineainWestern

AfricaandinmuchofcentralAfrica,whichisexpectedtoease

theeffectsofrisinginternationalcommoditypricesonconsumers

inthesecountries.However,intheSahelcountrieswhichusually

experiencethepeakofthehungerseasoninJulyandAugust,the

upwardtrendincerealpricesislikelytocontinueuntilnewlocal

harvestscometomarketsinSeptember.

InEastern Africa, anincreasingnumberofpeoplecontinue

tobeinneedofemergencyfoodassistanceasaresultofpoor

crops,conflict,civilstrifeoracombinationofthese.InSomalia,

the food supply position is serious following three consecutive

poor crops, disruption of markets, a major devaluation of the

localcurrency,increasingfoodpricesandgrowingcivilinsecurity.

Since January2008 thepopulationmovement fromthecapital

increased by 20 percent, bringing the number of people who

haveleftMogadishusinceFebruary2007atatotalof860000.

Currentlythenumberofpeopleinneedofemergencyassistance

isestimatedat2.6million,anincreaseofmorethan40percent

sinceJanuarythisyear,whiletheinternallydisplacedareestimated

at1.1million.Moreover,asstatedbytheFoodSecurityAnalysis

Unit (FSAU) the situation coulddeteriorate further and,by the

endoftheyear,atotalof3.5millionpeople,abouthalfofthe

total population, could be in need of either livelihood support

or humanitarian assistance. Reflecting high food prices, civil

insecurity,andpoorperformanceofthe“belg’cropnowbeing

harvested, the number of people requiring emergency food

assistanceinEthiopia untilNovember2008iscurrentlyestimated

at 4.6 million, an increase of 2.6 million people compared to

theApril2008estimate.Furthermore, thisestimatecouldeven

increaseasanadditional8millionpeopleremainchronicallyfood

insecure.While theneedsof the4.6millionpeoplehavebeen

assessedatsome510000tonnesoffood,onlyabout118000

tonnes, - or 23 percent - are available or have been pledged.

Thus,additionalcontributionsareneededtoavoidaworsening

ofthefoodsupplypositionofthepeopleaffected.InDjibouti,

reliefassistanceisrequiredbypastoralpopulationandtheurban

poorasaresultofdecreasingfoodsecurityreflectingincreased

foodpricesandinadequaterains.Preventivehealthmeasuresare

alsoneededtoavoidoutbreaksofwaterbornediseases.Current

highfoodpricesandinflationinEritreacontinuetoaffectlarge

partofthepopulationwhilenewandcontinuingregionaltension

could lead to further massive displacement and humanitarian

needs.InKenya,highpricesforcerealsandotheressentialgoods,

conflict and animal diseases have destabilized the pastoralists’

recoveryfromdroughtandincreasedtheirfoodinsecurity.People

affectedbypost-election violence aswell as IDPswill continue

to require humanitarian and recovery assistance in the coming

months.HouseholdsintheeasternpartofsouthernSudanare

currentlyhighlyfoodinsecureduetofoodshortagesasaresult

ofcroplossesduetolastyear’sfloods.Inthenorth,displacement

andlossoflivelihoodsareexpectedtocontinueinDarfurwhere

an additional 180000 people have been displaced in the first

fivemonthsof2008.Limitedhumanitarianaccessduetosecurity

restrictions, shortage of food and water and overcrowding in

campswouldlikelyleadtoincreasedsufferingforthevulnerable

people. In Uganda, the food crisis is likely to continue in the

Karamojadistrict.Morethan700000peoplearefoodinsecure

and in need of emergency food aid as a result of prolonged

insecurity,localizedflooddamagein2007,fallinglivestockprices,

andinadequaterainsforthelastthreeyears.

In Southern Africa, vulnerable populations in several

countries,particularlyZimbabwe, LesothoandSwaziland,are

expectedtofacefoodinsecurityduringthe2008/09marketing

yearwhichbeganwithagenerallypoormainseasoncerealharvest

inApril. InZimbabwe,a joint FAO/WFPCropandFoodSupply

AssessmentMission(CFSAM)estimatedthenationalproduction

of main season maize in 2008 at 575 000 tonnes, some 28

percent lower than the production in 2007 (using the CFSAM

estimateof800000tonnes)whichinitselfwassome44percent

below 2006 government estimate. The Mission also estimated

thatabout2millionpeopleinruralandurbanareaswillbefood

insecurebetweenJulyandSeptember2008,risingto3.8million

peoplebetweenOctoberandDecemberandpeaking toabout

5million at theheightof thehungry seasonbetween January

andMarch2009.Thefoodinsecurepopulationwillrequirefood

assistance amounting to some 395 000 tonnes of cereals in

2008/09. InSwaziland, anotherCFSAMestimatedat about64

000tonnesthenationalmaizeharvestfor2008.Althoughthisis

morethantwicelastyear’sproduction,it’sstilllessthanforeach

of the preceding four years. In Lesotho, the total 2008 cereal

harvestisalmostthesameaslastyear’sdrought-affectedoutput

and some 18 percent below the average of the previous five

years.Severalotherimportdependentcountriesintheregionare

No. 3 n July 2008 �


alsoparticularlyvulnerabletothesoaringfoodandfuelpricesand

internationally.InLesotho andSwaziland widespreadpoverty

andtheimpactofHIV/AIDShaveledtoseriousfoodinsecurity.

IntheGreat Lakesregion,uncertainsecuritysituationinthe

north-easternpartsoftheDemocratic Republic of the Congo

continues to affect largenumbers of peoplewho require food

assistance.RecentpeaceagreementswouldhelpIDPstoresettle

buttheyneedsubstantialassistancetorestartfarmingactivities.

High food prices are negatively affecting large number of

householdsinBurundiandfoodandagriculturalaidisneeded,

especiallyforresettlingreturneesandIDPs.

InFar East Asia,CycloneNargisstruckMyanmaron2and

3May2008,causingmorethan130000peopledeadormissing

in 37 townships across Ayeyarwady and Yangon divisions. The

livesandlivelihoodsofanestimated2.4millionpeoplehavebeen

severelyaffected.Among them,1.3millionhavebeen reached

so far by international NGOs, the Red Cross and the UN. The

worstaffectedareasarethemostproductive inagricultureand

fisheries.The2008/09mainriceproductionseasonisthreatened

bya lackof seeds, fertilizers, farmmachinery,droughtanimals

and inadequate labour owing to the heavy casualties among

ricefarmingcommunities.Anearthquakeof8.0magnitudeon

May12rockedthesouth-westernprovinceofSichuaninChina.

Over69000peoplewereconfirmeddead,more than374000

peopleinjured,andover18457missing.Atotalof45.6million

peoplehavebeenreportedlyaffected,including15millionpeople

evacuated from their homes, including some 5 million people

living in temporary shelters. Some10million additional people

areofficiallyestimatedaslivingbelowthepovertylineasaresult

of the earthquake.Mostof the affectedpopulation is critically

dependentonagriculturefortheir livelihoodsandvulnerableto

foodinsecurity.TyphoonFengshenrippedthroughthePhilippines

archipelagointhelateJune,affecting11.2millionpeoplein38

provinces,destroyingordamagingsome300000hectaresofrice

cropsintheWesternVisayasregionand12otherprovinces..A

sharplyreducedcerealharvestin2007duetofloodshascaused

severefoodshortageinthe Democratic Peoples’ Republic of

Korea.Themain2008croppingseason (July-October)willalso

beseverelyaffectedbythelackofagriculturalinputs,especially

fertilizerandfuel.Thecountrywillhavetodependonexternal

assistanceas itscapacityto importcommerciallyremainshighly

constrained. More than 300000 people in nine districts of

far western and mid-western Nepal are facing a precarious

food situation as a result of crop failuredue todrought. FoodFood

insecurity continues to prevail insecuritycontinues to prevail ins toprevail ininTimor-Leste,, duetocountry’s

high dependence on cereal imports, social instability, and high

unemployment rate. Food assistance to Cyclone-affected

populationsinSouthern Bangladesh isongoing.Thepopulation

in the worst-affected districts has suffered a significant loss in

Amamcropproduction,themajorcropintheregion.TheWFP

emergencyoperationiscurrentlyassisting2.3millionbeneficiaries,

including117000children.

IntheNear East,inAfghanistan,insecurityandwidespread

lackofadequateaccesstofoodisbeingexacerbatedbydrought

affectingthe2008harvest.Poorcropsorcropfailureisreportedfor

numerousdistrictsofthenorthernandnortheasternprovinces.

In the Asian CIS, in Tajikistan, widespread poor access to

foodisbeingexacerbatedbydryconditionsthisgrowingseason.

In addition, extreme cold in the winter caused crop losses

amountinguptoabout40percentcomparedtotheaveragefirst

seasonfoodcropharvest.Inadditiontolossesofimportantstaple

cropssuchaswheatandpotatoes,vegetablecrops,fruitandvine

production have suffered and many households have reported

animaldeathsandabortions.Inruralareasalone,11percentof

households(halfamillionpeople)areseverelyfoodinsecureand

1.1millionpeoplearemoderatelyfoodinsecure.Inall,some1.68

millionruralpeopleareaffected.

InSouth America, humanitarianassistancehasbeenprovided

toabout20000vulnerable families inBoliviawhose livelihood

systemsweredisruptedby serious localized lossesof foodand

cashcropsfollowingfloodscausedbythe“LaNiña”phenomenon

duringthe2008maincroppingseason.

No. 3 n July 2008�


Global cereal supply and demand brief

Cereal markets remain tight in 2008/09Highercerealproductionin2008isexpected

tocontributetosomeimprovementinthe

global supply and demand balance for

cereals in the2008/09 season.However,

with total cereal supply (carry-in stocks

plus production) just barely exceeding

anticipated utilization, the recovery in

worldcerealreserveswillbelimited.Asa

confirmationofacontinuingtightsupply

situation in thenewseason, the ratioof

worldcerealstockstoutilizationisforecast

at 19.7 percent, up just marginally from

the low of 19.4 percent in 2007/08.

Against this background, international

cereal markets are likely to stay volatile

and export prices for most cereals could

remain historically high although below

the peaks of 2007/08. Among major

cereals, the maize situation remains a

concern given the large drop in output

expectedintheUnitedStates,theworld’s

largest producer and exporter. In recent

weeks, the combined impact of a sharp

reductioninmaizeplantingsandfloodsin

majormaizegrowingareasoftheUnited

States have pushed up maize prices to

record levels, lending support to prices

of other feedgrains aswell aswheat in

internationalmarkets.

PRODUCTIONCereal production prospects for 2008 remain favourableFAO’s latest forecast for world cereal

production in 2008 stands at a record

2180 million tonnes (including rice in

milled terms),up2.8percent from2007

butslightlylowerthanearlieranticipated.

The bulk of the increase is expected in

wheat, which is forecast at 658 million

tonnes, representing a significant (8.3

percent) increase from 2007. In the

northern hemisphere, where many of

the wheat crops are being harvested or

arealreadygathered,biggerharvestsare

expectedinallregionswiththeexception

ofAsia,wherealthoughdecliningslightly,

output will remain close to last year’s

recordhigh.

In North America, harvesting of a

significantly larger winter wheat area is

alreadyunderwayinsouthernpartsofthe

UnitedStatesandgoodyieldsareexpected

after generally favourable growing

conditions. Together with larger spring

wheatplantings, thecountry’saggregate

wheatoutput in2008 is foreseento rise

almost 18 percent to some 66 million

tonnes, the largest crop since 1998. In

Canada, a much larger wheat crop has

been sown and if the season is normal,

output could rise to almost 25 million

tonnes,about24percentupfrom2007.

InEurope,harvestingofwheatcropsin

somecentralandsouthernpartsisalready

underway. Reflecting a larger area and

better yieldprospects,especially in some

eastern parts of the region afflicted by

drought in 2007, the aggregate output

of the region is forecast to increase by

some 14 percent to 215 million tonnes.

Production in the EU-27 is forecast to

reach 138 million tonnes, nearly 15

percentupfrom2007’sdepressedoutput.

No. 3 n July 2008 �


In the European CIS countries, given an

anticipated sharp recovery in Ukraine

and another expected good crop in the

RussianFederation,theaggregateoutput

ofthesubregionin2008issettoriseto

a bumper level in excess of 73 million

tonnes.

In Asia, despite favourable prospects

for this year’s wheat crops in several

major producing countries, the region’s

total output could slip back a little from

last year’s record level, because of dry

conditionsaffectingsomecountriesinthe

AsianCISgroupandNearEastsubregion,

totheeastandsouthoftheCaspianSea.

Themost significantproducing countries

affectedare the IslamicRepublicof Iran,

and Kazakhstan where outputs may fall

by20percentand15percentrespectively

from last year’s bumper crops, although

theiroutputswouldstillbeacomparatively

goodcrop considering thepastfive year

average. Production is also estimated to

have declined 6 percent from last year’s

record inPakistan,becauseofa reduced

useof inputs and shortagesof irrigation

water supplies, but nevertheless remain

slightlyabovetheaverageofthepastfive

years.InIndia,wheretheharvestisalready

underway, theattainmentofgoodyields

hasresultedinamorefavourableoutlook

indicatingthatthisyear’scropcouldturn

out to be a record, close to 78 million

tonnes. In China (Mainland), despite

drought insomeeasternparts, increased

plantingsandhigheryieldexpectationsin

areasnotaffectedbydryconditionspoint

to another increase this year, reaffirming

the country’s upward trend in wheat

production.

InNorthAfrica,wheatcropprospects

are satisfactory in Egypt, the subregion’s

major wheat producer, and in Morocco,

where the wheat crop is expected to

recoverfromlastyear’sseverelydrought-

reducedlevel.

Inthesouthernhemisphere,the2008

wheat season is underway. In South

America, plantings have increased in

Brazilinresponsetoafavourableoutlook

for producer returns, and with the help

of government incentives. By contrast,

inArgentina,policymeasuresto increase

taxesonexportshaveeffectivelyreduced

farmers’ incentives to produce wheat,

which combined with unfavourable dry

weather,lookslikelytoresultinareduction

of thisyear’swheatareaandareturnto

an about-average crop after last year’s

bumperlevel.InAustralia,despitedelayed

and/orbelow-normalrainfallinsomemain

producing regions during the planting

period, a sharply larger wheat area is

expectedthisyear,reflectingtheincentive

ofstrongprices.Assumingrelativelynormal

weatherfortheremainderoftheseason,

wheatoutputisforecasttorecoversharply

in2008toabout24milliontonnes.

FAO’s forecast for the global coarse

grains output in 2008 has been revised

downwardslightlyinthepastfewweeks,

to1078milliontonnes,largelytoreflect

the impact of adverse weather during

the maize planting season in the United

States, the world’s largest producer.

Nevertheless, at the forecast level,world

production of coarse grains would be

virtuallyunchangedfromlastyear’srecord

high.InSouthAmerica,harvestingofthe

mainseasoncropsisunderwayandoutput

isexpectedtoincreasetoanewrecordof

some99.5milliontonnes,followingarea

increases in Argentina and Brazil, the

region’s largest producers, in response

to high international prices. In southern

Africa, despite far from ideal weather

conditions throughout the season, with

lateplantingrains,followedbyfloodsand

a subsequent return toexcessivedryness

inparts,theoveralloutturnforthemain

coarsegraincropsisjudgedtohavebeen

favourable, particularly in South Africa

whichwasaffectedbydroughtlastyear.

In thenorthernhemisphere, thebulk

ofthe2008coarsegrainshavenowbeen

sown. In the United States, the recently

completedmaizeplantingsdeclinedsharply

afterlastyear’sexceptionalhighleveland

difficulties endured during planting due

toexcessiverainsandfloodingcouldlead

to a lower planting/harvested ratio than

normal,andmostlikelyloweryieldsinthe

affectedareas.Basedonindicationsinlate

June,thecountry’smaizeoutputisforecast

atabout293milliontonnes,downnearly

40million tonnes from lastyear,but still

arelativelyhighlevelcomparedtorecent

history.

In Europe, coarse grains output is

forecasttorecoversharplyfromlastyear’s

reduced level when drought affected

crops in some of the main producing

countries in eastern parts of the region

such as Hungary, Romania and Ukraine.

This year’s coarse grains crop in Asia is

forecast to remain virtually unchanged

from lastyear’sgood level.Production in

China,byfarthebiggestproducerinthe

region, isexpected to remainwellabove

theaverageofthepastfiveyears.

The2008paddy seasonhas reached

a critical stage, as, by now, planting of

the main paddy crops in all the major

producing countries is underway or

already completed. Barring major shocks

inthecomingfewmonths,globalpaddy

production may rise by 1.4 percent to

666 million tonnes, (444 million tonnes

inmilledriceequivalent),9milliontonnes

above the excellent 2007 season results.

Unlike in 2007, when much of the gain

was concentrated in Asia, in 2008,

producersinallregionshaverespondedto

highmarketpricesinthefirsthalfofthe

yearbyincreasingricecultivation.

InAsia,significanttostrongproduction

increases are anticipated in several

countries,asproducershavealsobenefited

from intensified government support to

increaseproduction.Themainexceptions

arelikelytobeChina,whereonlyamarginal

rise inoutput isexpected in2008,partly

reflecting the impact of the devastating

earthquake inSichuanProvince,where7

percent of national output is produced,

and Myanmar, where, output may fall

in 2008, due to the passage of cyclone

Nargis through the most important rice

producingareaat thebeginningofMay.

Againstthebackdropofsoaringworldrice

No. 3 n July 2008�


prices,severalgovernmentsinAfricahave

renewed their commitments to achieve

riceself-sufficiencyinthenextfewyears.

However, regarding the current season,

moreremunerativericepricesandreduced

competitionfromimportsareencouraging

localproducerstoexpandtheareaunder

riceinallriceproducingpartsoftheregion.

Asaresult,widespreadincreasesinoutput

are currently foreseen in 2008, although

the final outcome will hinge on the

weatherpatterns in the comingmonths,

in particular the timing and distribution

ofprecipitationinthewesternpartofthe

region.InLatinAmericaandtheCaribbean,

riceproductionissettoexpandvigorously

in2008,sustainedbyfavourablegrowing

conditions in all the major producing

countries of South America. In Central

America and the Caribbean, where the

season is less advanced, a recovery in

Mexico and Nicaragua should sustain a

4percentexpansion in the subregion. In

therestoftheworld,riceoutputin2008

isexpectedtochangelittle intheUnited

States.Droughtresultedinlowerplantings

inSpain,which,togetherwithsomeshift

of Italian producers from rice to wheat

cultivation,isexpectedtocutproductionin

theEuropeanUnionbyalmost5percent.

By contrast, government assistance to

thesectorshouldboostproductioninthe

RussianFederation.

UTILIZATIONWorld cereal utilization will grow at a slower pace in 2008/09 on reduced feed useWorld cereal utilization in 2008/09 is

forecast to rise to 2167 million tonnes.

Growthinfoodconsumptionandindustrial

usageareamongthemainfactorsforthe

rise in total cereal utilization but high

prices are expected to cut into feed use

and slow down the overall expansion in

totalcerealutilizationto1.9percent,well

below the 3 percent growth observed

in 2007/08. Given the expected sharp

increase in wheat production, expansion

in wheat utilization is forecast to be

the most significant, rising by almost 3

percent from the previous season, to

635 million tonnes. Most of this growth

would be in feed use because of the

anticipated lower availabilities of maize.

After a contraction of around 8 percent

in 2007/08, total feed utilization of

wheat is likely to reboundto118million

tonnes in 2008/09, up 14percent from

the2007/08reducedlevel.Thestrongest

expansionsareexpectedintheEUandin

the United States. World wheat use for

human consumption is forecast to reach

455milliontonnes,1.6percentmorethan

in2007/08,whichwouldbesufficientto

maintain a steady consumption level of

roughly68kgpercaputonaglobalbasis.

By contrast, thegrowth inworldcoarse

grainsutilizationisforecasttoslowdown

in the new season as tighter supplies

would boost usage of wheat and non-

grain alternatives for animal feed. Total

coarsegrainsutilizationisforecasttorise

to1087milliontonnesin2008/09,up1.6

percent from2007/08. This compares to

astronggrowthofover5percent inthe

previous year. The forecast expansion in

theoveralluseofcoarsegrainsin2008/09

willbedrivenprimarilybyasteadyrisein

the use of maize for ethanol production

in the United States. Total utilization of

maize for production of ethanol in the

UnitedStates isputatabout102million

tonnes,up some23million tonnes from

theestimatedusein2007/08andalmost

twiceasmuchasin2006/07.Worldfeed

useofcoarsegrainsisforecasttodropto

624milliontonnes in2008/09,down17

million tonnes from theprevious season.

Mostofthisdecline isexpectedtooccur

in the EU and North America. Global

consumptionofrice, including foodand

non-fooduses,isforecastintheorderof

445milliontonnesin2009,upfroma439

milliontonnesin2008.Sincericeismainly

usedasafoodcommodity,thebulkofit,

or385milliontonneswouldbedestined

fordirecthumanconsumption.Thiswould

mean57.4kgofricepercaput,peryear,as

food,littlechangedfrom2008.Percaput

rice availability may increase somewhat

in Asia, to some 83.3kg, and in Latin

America and the Caribbean, to 29.6kg,

mainly sustained by production gains in

thoseregions,whileitmayremaininthe

orderof22.4kgand5.1kginAfricaand

Europerespectively.

STOCKSLarger wheat supplies help cereal stocks to increase marginallyForthefirst time inthreeseasons,world

cereal production is forecast to slightly

exceed total utilization, allowing for

a small recovery in global stock levels.

World cereal stocks by the end of crop

seasons ending in 2009 are forecast to

reach 425 million tonnes, up 5 million

tonnes from their low levels at the start

oftheseason.Thisrecoveryinthelevelof

world cereal stocks in 2009 may appear

lessmarkedthanreportedearlierbutthis

followsamajorupwardrevisiontoFAO’s

previous forecast forglobal cereal stocks

ending in 2008, from nearly 409 million

tonnes reported in May 2008, to 421

million tonnes, rather than a significant

change in the 2008/09 outlook. The

recent adjustment to the previous year’s

closinginventorieswasprimarilydrivenby

1750

1850

1950

2050

2150

20082006 2004200220001998

Million tonnes

Utilization Production

Figure 1. World cereal productionand utilization

No. 3 n July 2008 �


thelatestupwardrevisionsto2007cereal

production estimates in China which,

in turn, resulted in a significant upward

revisionofendingstocks in thatcountry.

Basedon the current forecasts, the ratio

ofworldcerealstockstoworldutilization

couldincreaseto19.7percentfrom19.4

inthepreviousseason.

World wheat stocks by the close of

the crop seasons in 2009 are forecast

to approach 169 million tonnes, up 17

milliontonnes,or11.5percent,fromtheir

lowopeninglevels.Thestronganticipated

increase in global wheat production in

2008ishelpingwiththisrecoveryinworld

inventories.Atthecurrentforecastlevels,

theworldwheatstocks-to-useratioforthe

newseasonisforecastat26.6percent,up

3percentfromthepreviousseason.Strong

demandforwheat,especiallyforfeeduse

as a result of tighter supplies of coarse

grains, is expected to prevent a more

pronounced expansion of wheat stocks,

thereforealsolimitingtherecoveryinthe

stocks-to-use ratio. In major exporting

countries, the anticipated rebound in

outputthisyearislikelytoleadtoamajor

recovery in stocks, to 35 million tonnes,

up10milliontonnes,or41percent,from

theirlowopeninglevels.Atthislevel,the

ratio of the major exporters’ stocks-to-

disappearance(definedastheiranticipated

exports plus domestic consumption) is

expectedtorecoverfromahistorical low

of only 10 percent in 2007/08 to 13.2

percentin2008/09.Wheatinventoriesin

allmajorexportingcountriesareexpected

to rise, in particular in theUnited States

and the EU. Wheat inventories in China

are also forecast to rise sharply, in view

of this year’s expected bumper harvest.

Similarly, driven by good production

prospects,stocksinIndiaareheadingfor

a substantial recovery, particularly those

heldbytheGovernment,whicharelikely

to fulfil the requirement for the Public

DistributionSystem.

Bycontrast,worldcoarse grainstocks

bythecloseofseasonsin2009couldfall

by as much as 8 percent, or 13 million

Low-Income Food-Deficit Countries (LIFDCs)6

No. 3 n July 200810


tonnes,to151milliontonnes.Mostofthe

anticipatedreductionreflectsthesituation

in the United States where this year’s

production (mainly maize) is forecast

to fall by nearly 40 million tonnes. Total

coarsegrains stocks in theUnitedStates

are forecast to fall to around 18 million

tonnes, down 22 million tonnes from

theiropening levelandthesmallest level

since the mid-1990s when they were at

justover14milliontonnes.Atthecurrent

forecast level, the world stocks-to-use

ratio for coarsegrains is expected to fall

to roughly 14 percent, down 1 percent

from the previous season. Because most

of the anticipated reduction in world

stocksofcoarsegrainsisforecasttooccur

in the United States, the world’s largest

exporter, the ratio of closing stocks to

major exporter’s total disappearance

(i.e. domestic consumption plus exports)

wouldfalltounder9percentfromnearly

12 percent in 2007/08 and well below

the 15percent during the early years of

this decade. Elsewhere, favourable crop

prospects inChina, theEU,Brazil, South

AfricaandUkraineareexpectedtoboost

stocklevelsinthosecountries.

Despiteexpectationsofalargerglobal

rice crop in 2008, the forecast output

would not be sufficient to cover the

anticipated world consumption, which

wouldrequireaslightdrawdowninglobal

ricereserves.Asaresult,basedoncurrent

forecasts, global rice inventories at the

closeofmarketingyearsending in2009

may decline marginally to 105.7 million

tonnes, down from an opening level

of 106.0 million tonnes. The reduction

wouldbeconcentrated in thedeveloped

countries, where inventories are forecast

tofallby11percenttotheir lowestlevel

inthedecade,whilevirtuallynochangeis

anticipated for the developing countries.

China, which is estimated to hold 56.9

milliontonnes,ormorethanhalfofworld

totalreserves,maycutinventoriesslightly

in2009,whileIndia,whichhasthesecond

largestriceinventory,isforecasttoendthe

seasonwithlargerstocks,mainlybecause

ofgovernmentactionstorestrictexports.

Fromatradestatusperspective,importing

countries, as a whole, are anticipated

to draw from their stocks for the third

consecutiveseason,while littlechange is

foreseenamongexporters.Basedon the

expected levels of stocks and utilization,

the stock-to-utilization ratiowouldbe in

theorderof23.9percentin2009,down

from23.8in2008.

TRADEInternational trade contracts in 2008/09 mostly on reduced imports by the EUWorld trade in cereals in 2008/09 is

forecast to fall to close to 255 million

tonnesin2008/09.Thisrepresentsasharp

decline of almost 12 million tonnes, or

4 percent, from the record in 2007/08.

Lower trade in maize, mainly driven by

the anticipated cut in imports from the

EUisthemainreasonbehindthisdecline.

Worldtradeofwheatandriceareinfact

forecast to increase in2008/09but their

combinedexpansionmaynotbesufficient

to offset the sharp expected decline in

tradeofcoarsegrains.

World wheat trade (exports) in

2008/09 marketing season (July/June)

is forecast to reach 112 million tonnes

in 2008/09, up 2 million tonnes from

2007/08. Among the different regions,

only Asia is expected to import more

than in the previous years. Most of the

anticipated increase in wheat imports in

Asia is likelytobedrivenbyasignificant

increase in imports required by several

countrieswheredomesticproductionhas

been affected by drought, in particular

the Islamic Republic of Iran, Iraq and

the SyrianArabRepublic. InAfrica, total

imports are forecast to decline slightly,

mainly reflecting reduced requirements

inMoroccofollowinganexpectedpartial

recoveryfromlastyear’sseveredrought.In

LatinAmericaandtheCaribbean,Brazilis

forecastto import lessbecauseofhigher

production. InEurope,asharpdecline in

wheat imports is anticipated in the EU

as a result of the expected recovery in

output. In June theEUagreedtoextend

the suspension of import tariffs on all

cereals(withtheexceptionofoats)tothe

2008/09marketingseason.

Export supplies of wheat in the

2008/09 marketing season are expected

to be more abundant than in 2007/08

due primarily to the anticipated strong

recovery in production in Australia, the

EUandUkraine.ExportsfromtheUnited

Statesareforecasttofallsharplybecause

of the strong domestic demand and

tighter competition. In Argentina, the

anticipated decrease in production may

further hamper sales which are already

affectedbytheongoingfarmdisputeover

export taxes. TheRussian Federationwill

havelargesuppliesforexportsthisseason

and is expected to eliminate its export

taxesinJuly(atleast105eurospertonne).

While Kazakhstan is expected to export

lessin2008/09comparedtotheprevious

season,thecountryhasannouncedthatit

willnotextendthebanonwheatexports

beyondSeptember2008.Amongsmaller

exporters, China is expected to increase

its wheat sales this season if current

production prospects materialize, but

much smaller shipments are expected

from Pakistan, due to lower production

andstrongdomesticdemand.

World trade in coarse grains in

2008/09 marketing season (July/June) is

likely to fall to 113 million tonnes from

nearly 127 million tonnes (record) in

2007/08. This expected sharp decline

is mainly due to lower requirements in

the EU given this year’s prospects for a

strong rebound in domestic supplies of

feed grains. Total coarse grains imports

(mostly maize and sorghum) by the

EU climbed to 20.5 million tonnes in

2007/08, representing a three-fold jump

fromthepreviousseason,butthegroup’s

imports in 2008/09 are likely to revert

to more normal levels, that is below 6

milliontonnes.AlsoinLatinAmericaand

theCaribbean, total importsare forecast

tobecutsignificantly,bynearly2million

No. 3 n July 2008 11


tonnes,mostlyduetosmaller importsby

BrazilandMexicobecauseoflargercrops.

Bycontrast,largerimportsareexpectedin

Asiawhereseveralcountriesareexpected

to increase foreign purchases of coarse

grainsduetoshortfallsinproductionand

strongdemandfromtheirdomestic feed

sectors.Imports(mainlybarleyandmaize)

by the Islamic Republic of Iran and the

Syrian Arab Republic are forecast to rise

to 4 million tonnes each, up by at least

1 million tonnes in each case. Larger

purchases are also forecast for Saudi

Arabia(maizeandbarley)andtheRepublic

of Korea (maize). Total imports (mostly

maize)inAfricaareexpectedtobeslightly

smaller than in the previous season as a

result of generally more favourable crop

prospects.Lowercoarsegrainspurchases

are forecast for Egypt (maize), Morocco

(barley)andtheRepublicofSouthAfrica

(maize).

Regarding coarse grains exports in

2008/09 marketing season, a sharp

contraction in exportable supplies in the

UnitedStates,theworld’slargestexporter,

coincideswithalargecontractioninworld

import demand. As a result the overall

exportsuppliesarelikelytoprovesufficient.

Amongtheothermajorexporters,smaller

exportsarealsoanticipatedfromCanada

and theEU,butArgentinaandAustralia

areexpected toexportmore than in the

previousseason.Amongothercountries,

smallermaizesalesareforecastforBrazil

and India but much larger exports are

expectedfromtheRepublicofSouthAfrica

(maize), the Russian Federation (barley)

andUkraine(barleyandmaize)reflecting

thisyear’simprovementinsupplies.China

(Mainland) is also likely to export more

maizethaninthepreviousseasoninview

ofanticipatedrecordproductionthisyear.

Basedoncurrentproductionprospects,

which are still provisional, international

trade in rice may increase slightly in

2009, after being constrained by export

restraintsin2008.AccordingtoFAO’sfirst

2009forecast,tradeinricemayreach30.0

milliontonnes,1percenthigherthanthe

currentestimateof29.7milliontonnesin

2008.Ricedeliveries toAfricancountries

may rebound in 2009, notwithstanding

efforts to boost production, reflecting a

sustainedexpansionindomesticdemand.

Imports by countries in Latin America

and the Caribbean are not anticipated

to change much compared with 2008,

with some decline in Brazil and Ecuador

compensated by increases in Colombia,

MexicoandNicaragua.Intheotherregions,

importsby theUnitedStatesandtheEU

areforecasttorise,partlytocompensate

for stagnating or falling production in

2008,whilearecoveryinAustraliawould

result in falling deliveries to the country.

However, lower imports are expected by

Bangladesh and the Philippines, given

positive expectations over production in

2008,muchofwhichwillbetradedand

consumedin2009.Ontheotherhand,the

IslamicRepublicofIran,Iraq,SaudiArabia

and the United Arab Emirates are likely

tostepupimports,tomeetconsumption

needsandtoreconstitutefoodreserves.

From an export perspective, the

recovery would be mainly driven by

larger shipments by India, largely on

the expectation that, by next year, the

government would have partly relaxed

theprovisions limitingnon-basmati rice

exports.PakistanandVietNammayalso

beinapositiontosellmoreabroad.Egypt

recently announced an extension of its

export ban till April 2009. If, by then,

exportsareallowedtoresume,theymay

rebound compared to the depressed

level expected in 2007. By contrast,

Cambodia, China and, especially,

Thailand may cut their sales below

the high volumes they are anticipated

to ship in 2008. Low rice inventories

and expectation of no output growth

in 2008 may also reduce sales by the

UnitedStatesnextyear.Overall,exports

in South America are unlikely to differ

muchfrom levelscurrently foreseenfor

2008, although lower expected prices

in2009maydepresssalesbyArgentina

and Brazil. Assuming at least a partial

recoveryofproductionin2009,exports

fromAustraliacouldreboundnextyear.

PRICESTight maize supply in the United States continues to underpin international prices of major cerealsInternationalmaizepriceshavecontinued

to move upward in recent weeks,

climbing to record high levels. The main

drivingfactorforthesurgehasbeenthe

devastatingimpactofrecentfloodsonthis

year’s maize crops in the United States,

theworld’slargestproducerandexporter.

In the first two weeks of July, US maize

(No. 2 Yellow, Gulf) averaged USD 292

pertonne,USD11pertonneupfromthe

June average and double the average in

July2007.TheweakerUSdollarandrising

crude oil prices have also contributed to

theincreaseinmaizeprices.Onthefutures

market,prices in early Julywere volatile.

SeptembermaizefuturesontheChicago

BoardofTrade (CBOT) fell sharplyat the

startofthemonthinreactiontonewsof

higherendingstocksandlargerplantings

thanearlier forecast in theUnitedStates

but, shortly after, had regained most of

the loss, climbing back to USD 298 per

tonne.

Internationalwheatpricesweakened

modestlyinearlyJulywithseasonalharvest

pressurefromgoodcropsbeinggathered

in the northern hemisphere starting to

influence markets, as well as improved

prospectsinArgentina,amajorsouthern

hemisphere producer where recent rains

were beneficial for developing crops. In

addition, the reopening of Argentina’s

export registry also contributed to the

decline in prices. In the first two weeks

ofJuly,USwheat(No.2HardRedWinter,

f.o.b.Gulf)averagedUSD349pertonne,

down USD9 per tonne from the June

average. However, this level is USD99

per tonne up from the July 2007 price,

with wheat prices remaining strongly

underpinnedbythemaizemarket.Strong

early season demand for feed wheat,

No. 3 n July 20081�


driven by the high cost of coarse grains

is providing support to wheat markets.

Partly influenced by the maize market,

wheat futures have also been volatile in

thepastfewweeks.Asharpdropatthe

startofJulycancelleda largepartofthe

overallgainmadeinJune.

After reaching a peak in May,

rice prices fell in June and early July,

reflectinggreaterexportavailabilities in

countriessuchasThailandandVietNam

and a relatively weak import demand.

TheThaiwhite rice100%Bquotation,

the world’s benchmark grade for rice,

was USD 849 per tonne in the first

weekofJuly,down12percentfromthe

exceptionally high May average. Until

the end of September 2008, Thailand

will be operating a new government

rice procurement programme at

exceptionallyhighpurchaseprice levels

ofaroundUSD425pertonneforpaddy

rice,correspondingtosomeUSD650per

tonneonamilledbasis.Thismeasureis

expected to sustainworld prices in the

next few months. Likewise, although

VietNamhasannounceditwouldallow

privatecontractsales toresume in July,

theimpositionofaminimumexportprice

ofUSD780per tonne (lowered froma

previousUSD800pertonne)shouldalso

keepworldprices fromdroppingmuch

belowthoselevels.

No. 3 n July 2008 1�


Policy measures taken by governments to reduce the impact of soaring prices

Note:Newpoliciesorchangestoexistingmeasuressincelastreport(CropProspectsandFoodSituation,April2008)areshown: ü¬,anddetailsareintheboxwhichfollows.

Asia: Details of policy interventions since last report

AfghanistanMay-08 Governmenttogovernmentcontractsbeingnegotiatedto

importwheatfromPakistanandKazakhstan.

AzerbaijanMay-08 Eliminatedcustomsongrainandriceimports.May-08 EliminatedVATonimportedgrain,riceandflourMay2008-

2009May-08 WheatproductionsubsidywillbeincreasedtoAZN50per

hectarefromAZN40perhectare.

BangladeshMay-08 Banonexportofallnon-aromaticricesasofMay7th,2008

forsixmonths.

Jun-08 Willraiseemergencyfoodstocksby300percentto3.2mil-liontonnesin2008/09.

ChinaMay-08 Officiallystartedthisyear’sminimumpricepurchaseprogram

forwheat.Thefour-monthprogramwilllastuntilSeptember30.ThethresholdpriceforwhitewheatisRMB1.54perkilogramme.ThethresholdpriceforredandmixedwheatisRMB1.44perkg.The2008purchasepricesrepresentincreasesof6.94percentforwhitewheatand4.35percentforredandmixedwheatcomparedto2007.

Jun-08 Reducedimportdutyfrom12percentto6percentonfrozenporkandfrom5percentto2percentonmeals(soybeanmeal,peanutmeal,etc).

Consumer oriented Producer oriented Trade oriented

Tax Social MarketProduction

supportMarket

managementImport Export

Taxes/customs

Foodassistance

Foodsubsidies

Safetynet&other

Pricecontrols

Releasestocks

Foodprocurement

&other

Producercredit&other

Minimumproducer

prices&other

Importtariffs&other

Quantitativeexport

controls

Exportpricecontrol&tax

measures

Asia

Afghanistan ü¬

Azerbaijan ü¬ ü¬ ü¬

Bangladesh ü ü ü¬ ü¬

Cambodia ü ü

China ü ü¬ ü¬ ü¬ ü¬

India ü¬ ü¬ ü

Indonesia ü ü ü¬ ü ü ü

Iran (Islamic Republic of) ü¬ ü

Jordan ü

Kazakhstan ü

Kyrgyzstan

Malaysia ü¬ ü¬ ü¬ ü¬ ü¬

Mongolia ü

Nepal ü¬ ü

Pakistan ü ü¬

Philippines ü ü ü ü

Republic of Korea ü

Saudi Arabia ü ü ü

Sri Lanka ü

Syrian Arab Republic ü¬

Thailand ü

Viet Nam ü¬

No. 3 n July 20081�


Jun-08 Exclusivesuppliesofdieselfuelwillbeavailableforfarmvehiclesduringthecerealharvest.

Jun-08 ExportstotheDemocraticPeople’sRepublicofKoreawillbealloweddespiteexportban.

IndiaMay-08 Removedbanonexportofnon-basmatirice,edibleoiland

pulsestoBhutan.Jul-08 SupportpriceforwheatincreasedtoIDR10000pertonne

forthe2008/09marketingyear,comparedwithIDR8500pertonnein2007/08.

Jul-08 BansexportofmaizeuntilOctober15.

IndonesiaJun-08 IncreasefertilizersubsidytoatotalbudgetofUSD1.8billion

(up240percent).

Iran (Islamic Republic of)Jul-08 Abolishedimportdutyonrice,potatoandkinnofromPaki-

stan.(Ricedutywas150%.)

KyrgyzstanJun-08 Exportdutiesintroducedonwheat,flour,vegetableoiland

someseeds.

MalaysiaMay-08 Monthlyreleaseofimportedrice(ST15)tomarkettobe

raisedby9000tonnesto20000tonnes.

May-08 Malaysia,theworld’ssecond-largestproducerofpalmoilafterIndonesia,announcedthatitisreadytoofferpalmoilinexchangeforrice.

Jun-08 Somericeimportstobesubsidized.Pricecapstobeimple-mentedonSuperSpecialTempatan5percentandSuperSpecialTempatan10percentatMYR2.8perkgandMYR2.7perkgrespectivelyfromJune.

Jun-08 GuaranteedminimumpriceforproducersraisedfromMYR650toMYR750pertonne.

Jun-08 Toincreasedomesticproduction,riceareawillbeincreasedintheeasternstatesofSabahandSarandak.

NepalMay-08 Increasingstateemergencyfoodstocksby15000tonnes.

PakistanMay-08 Theprivatesectorispermittedtoimportwheatandthe10

percentimportdutyiswaived.

Syrian Arab RepublicMay-08 Statesalarieswereraisedby25percent.

Viet NamJul-08 Riceexportbanislifted.

No. 3 n July 2008 1�




supportMarket


Taxes/customs

Foodassistance

Foodsubsidies

Safetynet&other

Pricecontrols

Releasestocks

Foodprocurement

&other


Minimumproducer

prices&other

Importtariffs&other

Quantitativeexport

controls


measures

Africa

Algeria ü¬

Benin ü ü

Burkina Faso ü

Cameroon ü

Congo ü¬

Egypt ü¬ ü¬

Ethiopia ü ü ü¬

Ghana ü¬ ü¬

Guinea ü

Kenya ü¬ ü¬ ü¬

Lesotho ü ü

Liberia ü ü¬

Malawi ü

Mauritania ü ü¬ ü¬

Niger ü

Nigeria ü ü¬

Rwanda ü¬

Senegal ü ü ü

South Africa ü

United Republic of Tanzania ü ü

Zambia ü¬ ü

Africa: Details of policy interventions since last report

AlgeriaJun-08 IncreaseddurumwheatpurchasepricetoDZD4500per

quintalfromDZD2100;softwheattoDZD3500perquin-talfromDZD1950;barleytoDZD2500perquintalfromDZD1500.ThesalepricetomillerswillbeDZD2280perquintalfordurum,DZD1285perquintalforsoftwheatandDZD1550perquintalforbarley.

CongoMay-08 Reductionfrom18to5percentintherateofVATlevied

onarangeofbasicimportedfoodstuffsandothergoodsdeemedessential.Theseincludedstaplessuchaswheat,sugar,rice,saltedfish,babyfoodandhouseholdproductssuchassoap.

EgyptMay-08 EgypthasopeneditsrationcardsystemuntilJune30and

doubledtheamountofricethatcardholdersreceive.Egypthadnotaddedtotherationcardregistrysince1988.Atotalof55millionpeopleoutofEgypt’spopulationof75millionarecoveredbythesystem.Thecardholdersareallowedtobuy2kgofrice(doubletheamountpreviouslyallowed)inadditionto2kgofsugar,1.5kgofoil,and50gramsofteaperpersoneverymonthforEGP15.

Jun-08 ExtensionofriceexportbanuntilApril2009.

EthiopiaMay-08 Governmenttoimport150000tonnesofwheatforstate

subsidizeddistributionschemeetc.

GhanaMay-08 Eliminatedallimportdutiesonrice,wheat,yellowcornand

vegetableoil.May-08 Excisedutiesandtaxonoilandfuelareremovedforthe

country’sfishermenandsubsidiesonfertilizerandfreetrac-torsaretobeavailableforfarmers.

KenyaMay-08 Upto270000tonnesofdutyfreemaizeimportsfrom

SouthAfricatobeallowed.Jun-08 Removessalestaxonriceandbread.Jun-08 Fundingtobeincreasedforexpansionofstrategicgrain

reservefrom4to8millionbagsofmaizeinthenexttwoyears.

Jun-08 Reducesimporttaxonwheatto10percentfrom35percent.

LiberiaMay-08 Banonallkindsoffoodexports.


No. 3 n July 20081�


Latin America and Caribbean: Details of policy interventions since last report

ArgentinaMay-08 Despiteacurrentbanonexports,theGovernmenthas

authorized100000tonnesofwheatexportstoBrazil.Jun-08 Tosetmonthlyexportquotasforwheat.

BrazilMay-08 ExtendstarifffreewheatimportsthroughJuly(tariffnormally

10percent).May-08 ThePIS/Cofinssocialcontributiontaxonwheat,wheatflour

andbreadreducedtozerofrom9.25percent.ThemeasurewillcostBRL500millioninlosttaxrevenueandwillbeeffec-tiveuntiltheendoftheyear.

May-08 Taxesonwheat,wheatflourandbreadarereduced.

EcuadorJun-08 Banonriceexports(except20000tonnestoVenezuela).

GuyanaMay-08 Floursubsidiesintroduced.May-08 Freedistributionofseedriceseeds.

HondurasMay-08 Publicstocksofmaizeandredbeanstobesoldatsubsidized

prices.

MexicoMay-08 250000tonnesofriceimportstobeallowedwithoutpay-

ingthe20percenttarifftax.May-08 Removedimporttariffsonwheat,rice,maize,sorghumand

fertilizers.May-08 Importof100000tonnesofbeansallowedwithouttariff.Jun-08 Pricesofabout150fooditemsfrozenuntiltheendof2008.

NicaraguaMay-08 Importtariffremovedforbeans.Reductionofimporttariffs

tozeroor5%forsometypesofvegetableoils.

PanamaMay-08 TheGovernmentwillbuythewholepaddyproductiontobe

soldtoconsumersatsubsidizedprices

MauritaniaMay-08 ImplementationofaSpecialPlanofInterventionforthenext

sixmonths,includingdistributionofinputsandcreditstofarmers.

May-08 Reductionofimporttaxesoncereals.

NigeriaMay-08 Tariffsonriceimportaresuspendedfor6months.

RwandaMay-08 339400headofcattletobedistributedtoatleast600000

familiesby2012.

ZambiaJul-08 RaisedfarmpriceofwhitemaizetoUSD14per50kgbag

fromUSD8.



supportMarket


Taxes/customs

Foodassistance

Foodsubsidies

Safetynet&other

Pricecontrols

Releasestocks

Foodprocurement

&other


Minimumproducer

prices&other

Importtariffs&other

Quantitativeexport

controls


measures

Latin America and Caribbean

Argentina ü¬

Bolivia ü ü

Brazil ü¬ ü ü¬ ü

Dominican Republic ü

Ecuador ü¬

Guyana ü ü¬ ü¬

Haiti ü

Peru ü ü

El Salvador ü

Honduras ü¬

Mexico ü¬ ü¬

Nicaragua ü¬

Panama ü¬


No. 3 n July 2008 1�


North America, Europe and Oceania: Details of policy interventions since last report



supportMarket


Taxes/customs

Foodassistance

Foodsubsidies

Safetynet&other

Pricecontrols

Releasestocks

Foodprocurement

&other


Minimumproducer

prices&other

Importtariffs&other

Quantitativeexport

controls


measures

North America, Europe and Oceania

Belarus ü¬

Moldova, Republic of ü ü

Republic of Serbia ü ü

Russian Federation ü ü ü¬ ü

Ukraine ü¬ ü¬

BelarusJun-08 Introduceda40-percentexporttaxonwheatandMeslin.

Russian FederationJul-08 Exporttaxesonwheatandbarleyremoved.

UkraineMay-08 Grainexportquotasarelifted.May-08 Cancelledquotarestrictionsongrainexports.Jun-08 Willincreaseallocationoffundstopurchasegrainforstate

reservebyUSD100million.


No. 3 n July 20081�


1 Thefirst indicatoristheratioofworldcerealendingstocksinanygivenseasontoworldcerealutilizationinthefollowingseason.Utilizationin2009/10isatrendvaluebasedonextrapolationfromthe1998/99-2007/08period.

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.

FAO’s global cereal supply and demand indicators

n As a strong evidence of thecontinuationofatightmarketsituationinthenewseason(2008/09)theratioofworldcerealendingstocksin2008/09tothetrendworldcerealutilizationinthe following season is expected toreachonly19.7percent,upmarginallyfrom the estimated 30-year low of19.4percentin2007/08.Amongthemajor cereals, market conditions forcoarsegrains (maize inparticular)areexpectedtobethetightest.Withtheanticipated total utilization exceedingworld production, the stock- to-useratio for coarse grains is forecast toplungeto13.9percent,thelowestin30years.Forrice,theratioisexpectedtoreach23.9percent,stillrelativelylowandnearlyunchangedfrom2007/08.However,thewheatratioisanticipatedto rebound, by almost 3 percent, to26.6 percent. The expected increaseinworldwheatproductionin2008isforecasttoresultinsomereplenishmentofstocksandimprovementsinsupply.

% %

10

14

18

22

26

30

10

14

18

22

26

30

08/0907/0806/0705/0604/05

Total cereals

Rice

Coarse grains

Wheat

forecastestim.

1. Ratio of world cerealstocks to utilization

% %

100

110

120

130

140

150

100

110

120

130

140

150

08/0907/0806/0705/0604/05forecastestim.

2. Ratio of major grain exporters supplies tonormal market requirements

% %

5

10

15

20

25

5

10

15

20

25

08/0907/0806/0705/0604/05

Total cereals

Rice

Coarse grains

Wheat

forecastestim.

3. Ratio of major exportsstocks to their total disappearance

n Inspiteoftheexpectationforastrongrecoveryingrainproductionin 2008 in those major exportingcountries which suffered productioncutbacks in 2007, the ratio of theiraggregate grain supplies comparedto normal market requirements in2008/09 is estimated to remainunchangedatarelativelylowlevelof118percent.Thisrepresentsasurplusofjust18percent.However,themainreasonforthisratiotoremain lowismaizeproductionintheUnitedStateswhichisforecasttodropsharplyfromthepreviousyear’srecordlevel.

n The ratio of the majorexporters’ ending cereal stocks totheir total disappearance in 2008/09is forecast to remain at the 30-yearlow of 12.7 percent and unchangedfrom2007/08.Forwheat,theratioisexpected to recover slightly to 13.2percent,whichrepresentsthesecondlowest ratio in three decades. Forcoarse grains, the ratio is expectedtodecreasesharplyfromthepreviousyear’salreadylowlevelto8.6percent,smallestsince1995/96.Theanticipateddropin2008maizeproductionintheUnited States against a rising use ofmaize forbiofuels is themain factorforthisdropintheratio.Theratioforrice isexpectedtodeclineslightly,to16.3percent.

No. 3 n July 2008 1�


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

20082007200620052004

4. Year-to-year changein world cereal production

Percentage

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

2004

2005

2006

2007

2008

LIFDCs

LIFDCs less China Mainland and India

Percentage

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

estim.

forecast

-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 World cereal productionis estimated to be up 2.8 percentin 2008, which would representanother relatively strong increaseafter lastyear’s recordcrop,and isawelcome development in the faceof the tight global supply/demandsituation. However, with the coarsegrainseasonsfarfromcompletion insomemajorproducingcountriesandthemain rice seasonsataveryearlystage in Asia, this forecast remainsvery tentativeand thefinaloutcomewilldependonweatherconditionsinthecomingmonths.

n WhilecerealproductionoftheLIFDCsisforecasttoincreasefurtherin2008,therateofgrowth,at just1.2percent,wouldrepresentadeclineforthe third consecutive year. However,contrary to 2007, China (Mainland)and India, which account for sometwo-thirds of the aggregate cerealoutput, excluding, production in therestofLIFDCsisestimatedtoincreasethisyearby0.7percent,thismarginalimprovementisapositivefeatureafterlastyear’sdecline.However,thelimitedgrowthinthesecountries’productionthisyearmeanstheywillcontinuetorelyheavilyon importstocovertheirconsumptionneeds in2008/09,at atimewheninternationalcerealpricesremainatveryhighlevels,puttinganexceptionalburdenon theirfinancialresourcesforanotheryear.

n With cereal productionfalling short of total utilization in2007/08and stocks falling,pricesofmost cereals rose sharply and someare still increasing or remain at highlevels despite improved productionprospects in 2008. Because of thesurge in international wheat prices,the wheat index jumped by 90percentin2007/08marketingseason(July/June) from 2006/07. This sharpincreasefolloweda25percentrisein2005/06. Themaize index increasedby35percent in2007/08marketingseason (July/June) and this after ajumpofnearly45percentjumpinthepreviousseason.Sincethestartoftheyear (January to June 2008) the riceindexhasaveraged90percentabovethecorrespondingperiodin2007.Therice index in 2007marketing season(January-December)hadalreadyrisenby17percentcomparedto2006.

No. 3 n July 2008�0


FAO’s Food Price Indices

n The FAO Food Price Indexaveraged216 in June2008, virtuallyunchangedfromMayasreductionsinmeatanddairypriceswereoffsetbyincreasesinexportpricesofcerealsaswell sugarandvegetableoils. At itsJune2008value,theFAOfoodpriceindex was below its peak in March,butstillbe30percentabovetheJune2007level.

n The FAO Cereal Indexaveraged274inJune,slightlyhigherthan in May, driven by record maizeprices, following reports of cuts inplantings and flood damage in theUnited States, the world’s largestproducerandexporterofmaize.Themaize price strength also pushed upwheat prices while rice quotationstendedtoweakenasnewcropswere

110

140

170

200

2302008

2007

20062005

1998-2000=100

FAO Food Price Index

DNOSAJJMAMFJ100

150

200

250

300

350

2007/08

1998-2000=100

Dairy

Oils and Fats

Cereals

Sugar

Meat

Food Commodity Price Indices

MFJDNOSAJJ JMA

harvestedinexportingcountries.Theindex has gained 13 percent sinceJanuaryandisnow43percentabovethevalueinJunelastyear.

n The FAO Oils/Fats Indexaveraged 283 in the second quarterof2008,respectively76percentand151percentabovethecorrespondingvalues in 2007 and 2006. Steadyexpansion in the demand forvegetableoilsandfatscombinedwithslow production growth has led toa tightening of global supplies, thuspushing up prices. After a relativestabilization in April and May 2008,the index resumed growth in June,reachinganewrecordof293points,asprospectsforamarkedrecoveryinglobaloilseedproductionin2008/09have diminished. New price hikes

for maize and crude oil are alsocontributing to the strengtheningin prices for oilseeds and derivedproducts.

n TheFAO Meat Indexhasrisenconsiderably since the beginning of2008butshowedsignsofweakeningbetween May and June when it fellto 135. While strong demand andhigh feeding costs have contributedto the rise in meat prices, increasedslaughteringratesareexpectedtoputprices under pressure at least in theshort-term.

n The FAO Dairy Indexaveraged 263 in June, which is 4percent higher than in June 2007,but down 13 percent from itspeak in November 2007, reflectinga weakening of import demandfollowing production increases intraditional importing countries.Uncertainty remains concerning theexport supplies fromOceania,whichiscontainingthedropinmilkproductprices.

n TheFAO Sugar Indexinthefirstsixmonthsof2008averaged161,up25percentfromthecorrespondingvalue in 2007. After increasingthrough February,prices camedownconsiderably in April and May, butregained some momentum in Junemainly because of the anticipatedlower world sugar production in the2008/09season.

No. 3 n July 2008 �1


FAO Food Price Index

Food Price Index 1

Meat 2 Dairy 3 Cereals 4 Oils and Fats 5

Sugar 6

2000 92 100 106 85 72 105 2001 94 100 117 87 72 111 2002 93 96 86 95 91 88 2003 102 105 105 99 105 91

2004 114 118 130 108 117 92 2005 117 121 145 105 109 127 2006 127 115 138 123 117 190

2007 156 121 247 169 174 129 2007 June 150 120 252 156 170 119 July 155 120 277 157 175 131 August 161 123 287 168 181 126 September 170 124 290 192 190 125 October 174 122 297 198 202 128 November 180 126 302 200 221 130 December 186 123 295 220 226 137 2008 January 196 126 281 236 250 154 February 215 128 278 279 273 173 March 218 132 276 278 285 169 April 215 132 266 279 276 161 May 216 141 265 271 280 155 June 216 135 263 274 292 156

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 with 1998-2000 as base.

No. 3 n July 2008��


Regional reviews

North Africa • small grains: harvesting• rice: vegetative

Southern Africa: • winter cereals (secondary season): early vegetative stage

Sudan•coarsegrains:planting

Note:CommentsrefertosituationasofJuly.

Kenya, Somalia: • cereals (main season): reproductive to maturing

Uganda• main cereal crop: maturing to harvesting

Western Africa Sahel:• coarse grains, rice (main season): plantingcoastal countries: • coarse grains,rice (main season): reproductive

Central Africa - northern parts• maize (main season): harvesting• millet, sorghum: planting• rice: planting- DRC• maize (main season): planting• sorghum, millet: reproductive

Eritrea• grains: plantingEthiopia: • maize, sorghum: reproductive•small grains: planting•Belg grains (minor): harvestingBurundi, Rwanda

• main season crop: harvesting

Africa

North AfricaIn North Africa, harvesting of the winter grains (mainly wheat

andbarley),whichmakeup thebulkof the subregion’s cereal

crop,isunderwayandFAO’slatestforecastsputthesubregion’s

aggregateoutputofwheat(themaincrop)atnearly16million

tonnes,18percentupfromthepreviousyear’sdrought-reduced

level,whilethatofbarleyisputatsome3milliontonnes,about

7 percent up from 2007. The outlook is favourable in Egypt,

the largest producer of the subregion, where wheat output is

expectedtobeabout12percentupfromlastyearand9percent

above the recent average. In Algeria, the wheat crop is also

forecastaboveaveragebyabout7percent. InMorocco, latest

forecastspointouttoasubstantialrecoveryincerealproduction

from last year’s drought-reduced crop, although output would

remainbelowaverage.Thewheatharvestisforecastat3.7million

tonnes,morethandoublelastyear’spoorlevelbutstillabout15

percentbelowtheaverage.Bycontrast,inTunisiaprospectsare

lessfavourableandsmallercropsareexpectedthisyear,mainly

as a consequence of insufficient soil moisture at planting and

subsequenterratic rains in themaingrowingareas. In spiteof

governmentincentivestofarmerstoincreaseproduction,wheat

output is provisionally forecast todecrease from last year’s 1.4

milliontonnestosome870000tonnes.Abelow-averagebarley

outputisalsoanticipated.

NorthAfricancountrieshavebeenseriouslyaffectedbyhigh

international cereal prices due to their high dependence on

imports.Governmentshaveimplementedaseriesofmeasures

aimedatoffsettingthesharpincreaseinworldprices,including

the waiving of tariffs, price controls and subsidies, which

have put a considerable strain on public finances. In Algeria

for example the bread subsidy system is estimated to cost

the Government about USD50 million each month. In spite

of thesemeasures inflationcontinues toaccelerateacross the

subregion: InEgypt, theyear-on-yearrateof inflationreached

16.4percent inApril 2008up from6.9percent inDecember

2007,drivenmainlybypriceincreasesinthefoodsectorwhere

the year-on-year rateof inflation jumped from8.6percent in

December 2007 to 22 percent in April 2008. The anticipated

increaseinwheatproduction,notablyinMoroccoandEgypt,is

expectedtoeasetheeffectsofrisinginternationalcommodity

prices on access to food in these countries. Even in Tunisia

whereproductionisforecasttodeclinesignificantly,consumer

priceinflationdeceleratedforthefirsttimeinalmostayearto

5.3percentinMay.Thearrivalofthenewlocalharvesttothe

marketpushedfoodpriceinflationdownto7.1percentinMay

from8.1percentinApril.

Western AfricaHigh and rising food prices continue to affect consumers’

purchasing power and access to food across the subregion in

spiteofthevariousmeasurestakenbygovernments.InDakar,the

capitalofSenegal,thepriceofimportedrice,themostimportant

staplefood,was20percenthigherinApril2008comparedtothe

sameperiodlastyear.Inthesamecountry,thisnumberreached

43.1 percent in Diourbel and 47.1 percent in Tambacounda.

In the central and eastern part of the subregion, which is less

dependentoncereal importsfromtheinternationalmarketthe

situationisnotbetter:InOuagadougou(Burkina Faso),Bamako

(Mali)andNiamey(Niger),thepriceofmillet,themajorstaple

inthesecountries,hasincreasedby33percent,33percentand

24percentrespectivelyinearlyJune2008comparedtothesame

periodlastyear.Overthesameperiodthepriceofimportedrice

wasup87percent,39percentand13percentrespectively.The

upwardtrendincerealpricesislikelytocontinueuntilnewlocal

harvestscometomarkets.

The evolution of the food situation in the short term will

depend heavily on the output of the cropping season which

has just started.Area is likely to expand significantlydrivenby

highprices and variousmeasures taken to improveproduction

including provision of seed and fertilizer subsidies. However,

rainfall isstillthemajordeterminantofyieldduetothelimited

extentofirrigatedland.

No. 3 n July 2008 ��


100

200

300

400

500

AMFJDNOSAJJMAMFJDNOSAJJMAMFJ

CFA Franc BCEAO (XOF)/kg

Maize

Cowpea

Gari

Figure 2. Retail prices of selected commoditiesin Cotonou, Benin

5000

10000

15000

20000

JMAMFJDNOSAJJMAMFJDNOSAJJMAMFJ

Figure 3. Locally produced millet pricesin selected Western Africa markets

CFA Franc BCEAO (XOF)/100kg

Mali(Bamako)

Niger(Niamey)

BurkinaFaso(Ouagadougou)

20000

25000

30000

35000

40000

45000

JMAMFJDNOSAJJMAMFJDNOSAJJMAMFJ

CFA Franc BCEAO (XOF)/100kg

Mali(Bamako)

Niger(Niamey)

Burkina Faso(Ouagadougou)

Figure 4. Imported rice prices in selectedWestern Africa markets

150

200

250

300

AMFJDNOSAJJMAMFJ2007 2008

Millet

Rice (imported)

CFA Franc BCEAO (XOF)/kg

Figure 5. Rice and millet prices in Senegal

Althoughrainshavebeenerraticsofaracrossthesubregion,

precipitations are expected to improve in the coming months

according to theAfricanCentreofMeteorologicalApplications

for Development (ACMAD) and the Agrhymet Centre in their

annual climate prediction exercise. For the Sahelian region,

whichreceivesabout80percentofitsannualprecipitationinthe

monthsJuly-September,thereisanincreasedprobabilitythisyear

ofnormal toabove-normal rainfall. For coastal countriesalong

theGulfofGuinea,nearnormalrainfallisforecast.Inthelatter

countries,therainyseasonisnowwellestablished,andthemain

seasonmaizecropisdevelopingsatisfactorilyinthesouthandthe

centrewhilethesingle-seasonmilletandsorghumareemerging

inthenorth.Inshort,overallearlycropprospectsarefavourable

inWestAfricaandthecurrenttightfoodsituationisexpectedto

easesomewhatfromSeptemberon.

Central AfricaIn Central Africa, in spite of measures taken by Governments

to cushion the impact of high international commodity prices,

No. 3 n July 2008��


food prices continue to climb on domestic markets, seriously

eroding the purchasing power of consumers. In the Central

African Republic, the price of rice increased by 71 percent

between January and June. Pricesof other food items such as

cassava,oilandmeatmorethandoubledoverthesameperiod.

In Cameroon, where the Government recently increased the

salariesofcivilservantsby15percentandwaivedimporttariffs

onasetoffoodstuffs,foodpricescontinuetoincreaseaswell.

In both countries, rains have been adequate since the

beginningofthecroppingseasoninAprilandharvestingofthe

first2008maizecropisabouttostart.Thisisexpectedtoease

theeffectsofrisinginternationalcommodityprices.IntheCentral

AfricanRepublic,however,agriculturalrecoverycontinuestobe

hampered by persistent civil unrest and inadequate availability

of agricultural inputs, notably in northern parts where nearly

300000peoplehavereportedlybeenuprootedfromtheirhomes

overthepasttwoyears.ContinuinginsecurityinbothChadand

the Darfur region of Sudan threaten to further destabilize the

situationinnorthernpartsofthecountry.

Eastern AfricaUnfavourable outlook for 2008 cereal crops in several countriesHarvestingofthe2008mainseasoncerealcropsisunderwayor

due to start soon in Somalia, Tanzania,Uganda andKenya. In

Ethiopiatheharvestofthesecondary“belg”cropisinprogress.

AlthoughtheimportantMarch-Mayrainsimprovedtowardsthe

end of the period, cumulative totals remain below normal in

largeareasofEthiopia,Somalia,partsofwesternKenyaandin

theKaramoja regionofUganda. Thus, cropprospects in these

500

1000

1500

2000

2500

3000

3500

4000

MAMFJDNOSAJJMA

ERN/100 kg bag

Maize

Wheatflour

Sorghum

Figure 6. Retail market price trends in Eritrea

No. 3 n July 2008 ��


countriesremaingenerallypoor.Plantingofthe2008maincoarse

graincropshasstartedinSudan.

InEritrea, sowings areunderway for the“Kiremti” cereal

crops due for harvest from November. The vegetation Index

(NDVI)islowinNorthRedSearegionreflectingbelow-average

rainsduringthefirstmonthsof2008.Inthecentralhighlands

growing conditions are reported normal following adequate

rainfall.Reflectinggenerallyfavourableweatherandamarginal

increaseintheareaplantedtosorghum,themaincerealgrown,

the aggregate 2007 cereal production is estimated to have

increasedbysome60000tonnesto462000tonnes.However,

despite significant increases in the last few years, domestic

cerealproductionisinadequatetocovertherequirementsand

largequantitiesofcerealshavetobeimported.Foodpricesin

theAsmaramarkethavebeenonanupward trend since July

2007,withseriousimplicationsforalargenumberofvulnerable

people.

In Ethiopia, notwithstanding moderate rains in May, the

cumulativetotalfortheMarchtoMayseasonwasbelownormal,

resultingindroughtconditionsacrossanextensiveareaofthe

country,includingthesecondary“belg”cropareas.Asaresult,

theoutputfromthiscrop,nowbeingharvested,isexpectedto

be severely reduced compared to thebumperharvestsof the

lastfewyears.Decreasedwateravailabilityisreportedinseveral

regionswithAfar,SomaliandthelowlandsofOromiyathemost

severelyaffected.Bycontrast,westernEthiopiahasexperienced

abundantandwelldistributedrainssincetheseasonstartedin

lateMarch.TheMayrainswerebeneficialforthegrowingofthe

earlysownmain“meher”crop,theoutputofwhich,however,

willlargelydependonweatherconditionsuntiltheharvestdue

fromOctober.

InKenya,below-averageMarchtoMayrainsinNorthernRift

ValleyandNorth-westernprovinceshavefurtherreducedwater

availability,whichwasalready inadequateasa resultofapoor

October-December2007season.Maizeoutputinthekeygrain-

producingdistrictsintheNorthRiftregionlikeTrans-Nzoia,Uasin

GishuandLugariisexpectedtobedrasticallyreduced.Inaddition

to thedisplacementof farmersand irregularweatherpatterns,

the factorsbehind thedecline inproduction include rising fuel

andagriculturalinputspricesandhighcostoflabour.Following

adequate rains in thebimodalareasofSouthRiftandwestern

Kenya,themaizecropisreportedingoodconditionandafew

farmersinsomeoftheearlyplantedareastheSouthRiftValley,

have reported the harvesting of green/fresh maize suggesting

thatharvesting intheseareascouldstarttimely inAugust.The

MinistryofAgriculturehasestimatedthe longrainsproduction

ofmaizethisyearat2.16milliontonnes,about20percentlower

thanin2007/08and15percentbelowtherecentaverage.Inan

efforttoincreasecerealproductiontheGovernmenthasinitiated

a number of projects which include diversification of crops,

interventionintheinputsupplywithprovisionoffertilizers,seeds,

tractorsforhireandacreditfacilityforthefarmers.

InSomalia, themainGucereal crop,due forharvest from

nextmonth,islargelyanticipatedtobeafailure asaresultofa

latestartandpoorperformanceoftherainsinmostpartsofthe

country.Crops inmany southernareashadalreadywiltedand

driedbytheendofMayandalthoughlightrainsinearlyJuneled

toareplenishmentofwaterresources,theyarrivedtoolateto

100

200

300

400

500

600

USD/tonne

Maize

Wheat

Teff

Source: Ethiopian Grain Traders

Figure 7. Selected cereal prices in Addis Ababa,Ethiopia

30

60

90

120

150

AMFJDNOSAJJMAMFJDN

SDG/90 kg bag

Millet

Wheat

Sorghum(Feterita)

Figure 8. Monthly wholesale prices of staplecereals in Khartoum, Sudan

No. 3 n July 2008��


benefitthecrop.Recentheavyrainshavecausedsomeflooding

inMogadishu.Dryconditionshaveprevailedalso inthecentral

pastoral regions of Galagadud and Hiran as well as in several

pastoralareasofthenorth.Cropconditionsareextremelypoorin

bothsorghumandmaizeareasandthevegetationindexofmaize

inLowerShabelleatthistimeoftheyearisthelowestrecorded

overthelasttenyears.

In Sudan, theoutputfromtheirrigatedwheatcropharvested

earlier in the year is estimated at 587000 tonnes, above the

5-year average but 16 percent below the bumper 2007 crop.

Planting of the 2008 coarse grain crops, mainly sorghum and

millethasstarted.Theavailabilityofagriculturalinputsisreported

asnormaltoabove-normal.RainsfromJulytoSeptemberwillbe

crucialfortheestablishmentanddevelopmentofthecrops,the

bulkofwhicharedueforharvestfromNovember.

IntheUnited Republic of Tanzania,harvestingofthemain

coarsegraincrops,mostlymaize,willbecompletednextmonth.

Reflectingnormalrains,theoutputisexpectedtobeupfromlast

yearandabovethe5-yearaverage.Paddyproductionislikelyto

bemarginallyhigherthanlastyear’scropof1.4milliontonnes.

Thegoodharvestisexpectedtomeetnationalfoodrequirements

and result in a decline of wholesale cereal prices as already

reportedfromMbeyaDistrict.

In Uganda, harvesting of the main coarse grain crops is

underway.Normalrains inmostofthecountry’sgrowingareas

suggestnormalcropandlivestockproduction.Incontrast,below-

normalrainsintheKaramojaregionwillresultinpooroutputsfor

thesecondconsecutiveyear.

Numbers of people requiring emergency assistance continue to increase in the subregionIn Somalia, the failure of the 2008 Gu crop, which follows

twobelow-averageseasons(Gu2007andDeyr2007/08),has

resulted in a critical food supply position. The humanitarian

situation is rapidly deteriorating due to a combination of

increasingfoodprices,asignificantdevaluationoftheSomali

Shilling,disruptionofinternalmarketsandinternaltrade,and

mounting civil insecurity. Currently, 2.6 million people are

estimated to be in need of assistance – about one-third of

the total population - an increase of more than 40 percent

sinceJanuary2008.Thenumberofinternally-displacedpeople

areestimatedat1.1million. Populationmovement from the

capital increased by 20 percent since January 2008 bringing

thenumberofpeoplewhohavefledMogadishusinceFebruary

2007 to a total of 860000. According to the FSAU (Food

Security Analysis Unit) the humanitarian situation is likely to

continuetodeteriorate in thecomingmonthsanda totalof

3.5millionpeople,abouthalfofthetotalpopulation,couldbe

inneedofeitherlivelihoodsupportorhumanitarianassistance

bytheendoftheyear.

In Ethiopia drought conditions are reported across an

extensive area of the country, including those where the

secondary“belg”cropisproduced.Althoughthiscropaccounts

foronlyasmallportionofthetotalnationalcerealproduction,in

AmharaandTigrayregions,wheretheoutputisseverelyreduced,

aboutonemillionpeopledependonthiscropforabouthalfof

theirannualfoodconsumption.Recently,theGovernmentand

humanitarianpartnersestimatedarequirementofsome510000

tonnesofcerealstomeetemergencyfoodassistanceneedsfor

4.6millionpeopleuntilNovember2008.This estimateof the

numberofpeopleinneedrepresentsanincreaseof2.6million

people compared to the April 2008 estimate. Moreover, this

figurecould increasefurtherasanadditional8millionpeople

remainchronicallyfoodinsecure.Outofatotalrequirementof

598000 tonnes, only about 130000 tonnes, or 30 percent,

are available or have been pledged. Thus, to avoid a further

worseningofthefoodsupplypositionoftheaffectedpeople,

there is an immediate need for contributions to the food aid

pipeline.

WFPhasannounced that,due to funding shortfalls, ithas

been forced to reduce food assistance to tens of thousands

beneficiaries indrought-affectedareasand that,withoutnew

contributions,maynotbeabletofullyrespondtotheincreasing

foodaidrequirementsresultingfromthedrought.Inaneffort

toreducetheimpactof20percentinflationonpoorpeople,the

Government decided to cancel the value-added and turnover

taxesonfoodgrainsandflour-whichconstitutemorethanhalf

ofthecountry’sfoodconsumption-aswellasalltypesoftax

imposedoncookingoil,andsurtaxonsoap.TheGovernment

has also set up measures which include provision of direct

and indirect subsidies, and has spent ETB372 million (USD

38 million) to subsidise wheat and ETB3.52 billion (USD366

million) to subsidise fuel. The current monthly distribution of

25kgofwheat for low-incomeurbandwellers, introduced in

March2007,willbemaintainedaswellasdistributionofedible

oilandotherproducts.

Relief assistance will be required by pastoral population

andtheurbanpoorinDjibouti asaresultofdecreasingfood

securityreflectinginadequaterainsandincreasingfoodprices.

Directandindirectresourcetransfers,includingmarketsubsidies

and provision of food and water are needed to support the

rising number of food insecure households. Preventive health

measures are also needed to avoid outbreaks of waterborne

diseases.

InEritrea,currenthighfoodpricesandinflationcontinue

toaffectalargenumberofvulnerablepeoplewhilenewand

continuing regional tension could lead to further massive

displacement and increased humanitarian needs. Disease

outbreaks including cholera and malaria remain a concern

as a result of the ongoing rainy season. This condition will

No. 3 n July 2008 ��


befurtheraggravatedby inadequatesafewater sourcesand

sanitationfacilitiesandotherendemicdiseases,suchasyellow

feverandmeningitis.

Adequate rains in Kenya since the season begun in

March, over most of the pastoralist areas, have improved

the availability of pasture and water, promoting livestock

productivity andmilk output.However, conflicts, highprices

forcerealsandotheressentialgoods,animaldiseaseslikePeste

des Petits Ruminants (PPR) currently widespread in northern

areas, have minimized the extent to which pastoralists can

benefit from the rains,haveundermined their recovery from

drought,andincreasedtheirfoodinsecurity.Overallthefood

securitysituationislikelytodeteriorateduetodrought,food

productionlossesduetoanimalandcropdiseases,increasing

pricesforfoodandagriculturalinputs,aswellasdisruptionof

markets.Morethan500000peopleaffectedbypost-election

violence,including113000IDPssettledin134camps,aswell

asabout230000IDPs inMountElgondistrictswillcontinue

to require humanitarian and recovery assistance in coming

months.AsteadyinfluxofrefugeesfromSomaliaisreported

inthenorth-easternprovince.

Households in the eastern parts of southern Sudan are

currentlyhighlyfoodinsecureduetofoodshortagesasaresult

ofcroplossesafterlastyear’searlyandabove-normalflooding.

These shortages are compounded by the isolation from

markets, due to inadequate or lack of roads, and insecurity.

FoodsupplypositioninRubkinaandRuwengcoulddeteriorate

inthecomingmonthsduetoanescalationoftheconflictover

theborderbetweennorthernandsouthernSudanthatstarted

in December 2007. The estimated 50000 people internally

displaced,asaresultofthecivilunrestinMayinAbeyei,are

expected to return to theirhomes in thenext fewweeks. In

thenorth,displacementandlossoflivelihoodsareexpectedto

continueinDarfurwhereanadditional180000peoplehave

been displaced in the first five months of this year. Limited

humanitarianaccessduetosecurityrestrictions,overcrowding

incamps, limitedwater resourcesandapoorcerealharvest,

would likely lead to increased hardship for the vulnerable

people.

The food crisis in the north-eastern Karamoja district of

Uganda is likely to continue. It is estimated that more than

700000peoplearefoodinsecureandinneedofemergencyfood

aidasaresultofflooddamagein2007,prolongedinsecurity,

inadequaterainsforthelastthreeyears,fallinglivestockprices,

andasevereattackofhoneydewonsorghum.TheGovernment

hasprovidedsomefarmimplementsandseedstofarmers,but

thepopulation still needs food relief tobridge suppliesup to

thenextharvest.Adequatefoodstocksandmarketsuppliesare

ensuringconstant foodsecurity inotherbimodalareasof the

country.

Cereal prices still high although harvest season is in progressInEritrea,reflectingwidespreadincreaseoninternationalmarkets,

pricesforfoodinAsmarahavesteadilyincreasedsinceJuly2007.

TheretailpriceforwheatflourinMay2008,quotedatENR3700

per100kg,wasalmost9percenthigherthanthepreviousmonth

andmorethandoublethepriceprevailinginMay2007.Similarly,

theretailmaizepricereachedERN2700per100kginMay2008,

morethandoubletheJuly2007price.InEthiopia,grainprices

continuedtoincreasein2008afterweakeningslightlyattheend

of2007.Thepriceofwheat inAddisAbaba inApril increased

toUSD438pertonnefromUSD426pertonneinMarch.Maize

inthesamemarketwasquoted inAprilatUSD324per tonne

compared toUSD160per tonneayearearlier.Withprevailing

highprices,poorhouseholdsareexpectedtofinditmoredifficult

tosecureaccesstoadequatefoodsupplies.

InKenya,reflectingthesharplyreducedmaizecropinthe

keymaize-producingdistrictsintheNorthRiftregion,theprice

of maize in the Nairobi market - which fluctuated between

USD199pertonneandUSD222pertonneintheperiodMay

2007andJanuary2008–hadincreasedtoUSD387pertonne

byMay2008. InSomalia, lowcerealsupplies,asa resultof

two consecutive poor harvests, a significant increase in the

prices of imported commodities and growing demand from

IDPs,haveresultedinfurtherincreasesinfoodprices.Overall,

sorghumpriceshave increased in theSorghumBeltbymore

than 60 percent since January 2008. In April, the highest

sorghumpriceswereinBeletweynemarket(SOS7500perkg)

andHudur(SOS7250perkg).Thelowestpriceswerereported

100

150

200

250

300

350

400

MAMFJDNOSAJJMAMFJDNOSAJ2006 2007 2008

USD/tonne

UgandaKampala

Tanzania U.R.Dar-es-Salaam

KenyaMombasa

KenyaNairobi

Source: Eastern AFrica Regional Agricultural Trade Intelligence Network

Figure 9. Maize prices in selected Eastern Africamarkets

No. 3 n July 2008��


inBarderaandBaidoawheresorghumwasquotedSOS3600

perkgandSOS5150perkg,respectively.InSudan,sorghum

andmilletpricesinallmajormarketsarestableatahighlevel.

This year, the seasonal downward trends in prices, which

normally occur during the immediate post-harvest period,

were less marked than previous years. The wholesale price

ofsorghuminKhartoum,whichfluctuatedbetweenSDG40

andSDG47per90kgbagintheperiodNovember2007and

February 2008, had increased to SDG 82 per 90kgbag by

April.Wheatprices,ataroundSDG100per90kgbaginthe

OctobertoDecemberperiod,reachedSDG140per90kgbag

inApril.

In the United Republic of Tanzania, reflecting a

governmentexportbanonagriculturalcommodities, imports

oflargequantitiesofmaize,andfavourableprospectsforthe

maizecropnowbeingharvested,wholesaleprices inDar-es-

Salaamdeclinedoverthepastmonths,theMayprice,atUSD

289pertonne,wasUSD46belowthepeakreachedinJanuary.

In Uganda, in spite of a normal crop forecast the price of

maizehadrisentoUSD370pertonneinMay,someUSD200

pertonnemorethanjustfourmonthsearlierinJanuary.

5000

10000

15000

20000

25000

30000

2008forecast

20072006200520042003

Figure 10. Southern Africa - cereal production

Southern Africaexcl. South Africa

South Africa

Southern Africa

000 tonnes

Southern Africa excl. South Africa2003-2007 average

No. 3 n July 2008 ��


Southern AfricaOverall good 2008 cereal output in the subregion but mixed results at country levelThe subregion’s aggregate 2008 cereal production

(including forecasts for small amounts of wheat from the

secondary season currently underway in a few countries)

isestimatedat27.3milliontonnes,upbysome17percent

from2007,andthehighest level since2000 (seeTable5).

This is primarily due to a bumper season in South Africa,

whereoutputofmaizeandothercerealsrecoveredsharply

fromlastyear’spoorlevel.OutputsinSwaziland,Botswana

and Mozambique also increased from last year’s mostly

poor levels, while Zambia, Malawi, Angola and Zimbabwe

gathered smaller crops than in 2007. Regarding maize,

the main staple crop in the subregion, aggregate output

is estimated at 20 million tonnes, 25 percent higher than

last year’s less than satisfactory outcome. Excluding South

Africa, theaggregateoutputof the remainingcountries is

downcomparedto lastyear,butabovethe5-yearaverage

(Figure10).

Plantingofthe2008wheatcropinSouth Africa,which

accountsforabout90percentofthesubregion’stotalwheat

production, and other secondary season crop planting,

has been carried out in May-June in southern and central

growingareas.Earlyestimatesputtheareaupbyabout19

percent from theprevious year, in response to the current

highdomesticandinternationalprices.

Import requirements for 2008/09Basedon thebumper crop in SouthAfrica, FAOestimates

a lower cereal import requirement for the subregion as a

wholeinthe2008/09marketingyearcomparedto2007/08.

However, excluding South Africa, the aggregate cereal

import requirement of the other countries is expected to

increase by 11 percent, while for maize, the increase is

expectedtobeevenmorepronouncedatoverathird(Table

6andFigures11and12).Asaresultofthesignificantdrop

in per caput domestic cereal availability, combined with

significant reduction incommercial import capacitydue to

the prevailing high food and fuel prices, demand on food

aidisestimatedtoincreasesubstantiallyinthesubregion.

No. 3 n July 2008�0


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

2006/07 2007/08

2007/082006/07

0

500

1000

1500

2000

2500

10

20

30

40

50

60

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 M A 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

2008/09

2008/09

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

2008/09

2008/09

Figure 13. Prices of white maize and rice in selected markets

South Africa, Maize - Randfontein spot price

Mozambique, Maize - 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, Maize - local market price - Lilongwe ZAR/tonne MWK/tonne

MZN/kg MGA/kg

0

1000

2000

3000

4000

5000000 tonnes

Figure 11. Southern Africa (excluding South Africa)maize imports

2008/09 forecast

2007/08 estimate

Average2003/04-2006/07

Food aidCommercialTotal0

1000

2000

3000

4000

5000000 tonnes

Figure 12. Southern Africa (excluding South Africa)total cereal imports

2008/09 forecast

2007/08 estimate

Average2003/04-2006/07

Food aidCommercialTotal

No. 3 n July 2008 �1


Assessment of Current Food Security in Zimbabwe

AjointFAO/WFPCropandFoodSupplyAssessmentMission(CFSAM)wasundertakenattherequestoftheGovernmentof Zimbabwe from 29 April to 23 May 2008. The Missionestimatedtotaldomesticcerealavailabilityfor2008/09 isat840000tonnes,about40percentbelowlastyear’sdomesticsupply. National production of 2008 main season maize isestimatedat575000 tonnes, some28percent lower than2007 output. The 2007 harvest was itself already some 44percentbelow2006production.Thecountryneedsabout2.1milliontonnesofcerealsincluding1.9milliontonsfordirecthumanconsumption.

Average agricultural production and productivity havedeclinedover the last sevenor eight years.Newly resettledfarmers cultivate only about half of the total arable landallocatedtothemowingtoshortagesofdraughtpower,fuelandlowinvestmentininfrastructure.Large-scalecommercialfarmsproducelessthanone-tenthofthemaizetheyproducedin the1990s. Theproductivityof the communal farms thatused to produce the bulk of maize in the country has alsodecreasedtoone-fourthinabout10years.

According to the Mission, Zimbabwe’s cereal importrequirement fromApril 2008 toMarch2009will be at 1.2milliontonnes,ofwhichthestaplefoodmaizeaccountsforabout one million tonnes. Total commercial cereal importscouldreach850000tonnes, leavingashortfallof380000tonnes.Requiredfoodassistancecouldamountto395000tonnesofcerealsfromJuly2008toMarch2009.

The situation has been exacerbated this year by severeeconomic constraints, arising from hyperinflation and thecontinuing balance of payment crisis, the untimely deliveryof seeds, shortages of fertilizer, unprofitable cereal prices,deteriorating infrastructure and a prolonged dry spellfollowing excessive rains. There seems to be little incentiveforfarmerstoproducebeyondtheirsubsistenceneeds,giventhe lackofalternativemarketingchannelandpricecontrolswith inflexible procurement prices inanenvironmentofhyperinflation(seeFigure1).Pricesofmaizeandofseveralotherkeycommoditiesarecontrolledby GMB by setting the buying pricefor farmers and the selling price formillers (andtheirpriceofmaizemealto consumers), for vulnerable groupsandothercommercialusers(mostlyasanimalfeed).Maizeis,however,tradedinsmallquantitiesbyfarmers(socalled“farmer-to-farmer” sales) and pettytradersat informalandoftenhidden,markets.TheGMBprocurementprice,which is uniform across the country,has increased in discrete steps, andhasgenerallyremainedwellbelowtheparallelmarketretailprice.Eventhoughthe rise in the currentpriceofmaizelagsbehindthedizzyinggeneralpriceinflation,pricesinUSdollarequivalentarekeepingtheupwardtrendduetothedismalharvestthisyearandrisingpricesintheinternationalmarket.

Further, rural labour markets arelargely dysfunctional and inefficientduetoimperfectinformationongoingwage rates and labour surplus/deficitpockets especially in an escalating

inflationary environment. High transport costs and physicalseparation of surplus areas (generally associated with thecommunallocalities)andhighdemandareas(typicallyinlarge-scale commercial and A2 farming areas) have exacerbatedsupplyproblems.

Zimbabwe’s economy has shrunk by about 45 percentbetween 1998 and 2007, with an annual inflation rateestimated at over 350 000 percent for March 2008, thehighest worldwide. This has dramatically eroded people’spurchasingpower, limiting their access to themeagre localfoodsupplies.

Household food security analysis shows that about 2millionpeopleinruralandurbanareasarelikelytobefoodinsecure between July and September 2008, rising to 3.8millionpeoplebetweenOctober andDecember,peakingatabout5millionattheheightofthehungryseasonbetweenJanuaryandMarch2009.Thefoodinsecurepopulationwouldrequirefoodassistanceamountingtosome395000tonnesofcerealsin2008/09.Additionalfoodssuchasoil,legumesandsupplementswouldalsoberequiredtoaddressthebasicneedsofmostvulnerablegroups.

Tohelpimproveshortandmediumtermfoodsecurityinthecountry,theMissionrecommended:n Anurgentprovisionofqualityseedsandfertilisersby

thegovernmentandtheinternationalcommunity.Appropriatemaizeandsmall-grainseedvarietiesshouldbedeliveredwellinadvanceofthenextplantingseasonstartinginOctober.n Opening up of the grain marketing system to the

privatesectorinordertoensurethatcerealscanbeimportedandmovedquicklytotheareasofneed.n That the international community and the

governmententerintoapolicydialogueinordertopromotesustainable food production and overall food security byinvestinginfarmmechanizationandinfrastructure.

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

2007/082006/07

0

110

220

330

440

550

0

50

100

150

200

250

Maize prices

Million Zimbabwe Dollar (ZWD) per bucket (17.5 kg)

Nominal retail price, Harare

Real price index, Harare(May 2007=100)

Real price index/ USD per tonne

GMB Producer price

Nominal retail price, HarareUSD equivalent

Source: WFP/VAM, Harare, and GMB price converted from price per tonne; USD price based on the parallel market rates

No. 3 n July 2008��


Post-harvest cereal prices remain highPricesofthemaincerealsremainhigheratthestartofthisnew

marketing year than at the same time last year due to strong

internationalandregionaldemand(Figure13).InSouth Africa,

following abumperharvest, thepriceofmaizehasweakened

somewhatsincethestartoftheseasonbutremainswellabove

the correspondingprices last year. Forexample, theMay2008

priceofwhitemaize(Randfonteinspot)atZAR1784pertonne

was8percenthigherthanayearearlier. InMozambique, the

maize price in June 2008 (Maputo wholesale) of MZN8.57

(Mozambique Metical) per kilogramme was 57 percent higher

thanforthecorrespondingmonthin2007.InMalawi,theretail

maizepriceinLilongwehasbeenrisingsinceMay2007;thespike

inthepriceinApril2008,seemstobetheexaggeratedreaction

ofthemarketduetotheuncertainandconflictingearlyforecast

ofthecurrentharvest.InMadagascar,thepost-harvestriceprice

hasstartedtogoupinJune,earlierthanusual.


Asia (CIS): • small grains: harvesting• maize: reproductive

Southeastern Asia: • rice (main): vegetative• maize: vegetative to harvesting

Near East: • grains: harvesting

China: • wheat (winter), maize (south): harvesting• wheat (spring), maize (north): vegetative to reproductive• early rice: harvesting• intermediate: vegetative• late rice: planting

South Asia: • rice (main): planting• coarse grains: planting

India: • maize (rabi): harvesting• rice (kharif): planting to vegetative

Asia

Far EastBumper grain crops in China and India but bad harvests in Pakistan and the Islamic Republic of IranHarvestingofthe2007/08winterwheatandfirst

rice crops is almost complete throughout the

subregion,whilelandpreparationandplantingof

themainriceandcoarsegraincropshavestarted

withthegenerallytimelyarrivalofmonsoonrains.

Incountriesaroundtheequatorialbelt, themain

riceseasoniswelladvanced.

In China, harvesting of the 2008 winter

crop, which accounts for about 95 percent of

China’stotalwheatproduction,hasvirtuallybeen

completedinthemajorproducingprovinces.The

country’s2008aggregateoutput,which includes

some5.1million tonnesof springwheat, isnow

tentatively estimated at a record 112.5 million

tonnes, 2.4 percent above the previous high set

lastyear.Thisincreaseisaresultofgovernmentsupporttowheat

production(directsubsidesandincreasedprocurementprice)and

favourable weather in the major producing regions. A record

maizeproductionisalsoexpected,at154milliontonnes,some2

milliontonnesabovetheprevioushighoflastyear.

InIndia,harvestingofthe2008wheatcropisalmostcomplete

andoutputistentativelyestimatedatarecord78milliontonnes,

thehighest in the last8yearsand2.2milliontonnesabovethe

previous record set last year, reflecting favourable weather and

increasedinputsusedduringthemaingrowingseason.Thislevelof

productionisexpectedtocoverallthecountry’sdomesticdemand

in2008/09.Thecountryimportedsome6.7milliontonneswheat

in 2006/07 (April/March) and imports were reduced to some 2

milliontonnesin2007/08duetothegoodharvestin2007.

Sowing of the main Kharif coarse grains and rice crops,

for harvest from September, has begun. The early outlook is

favourablewiththetimelyarrivalofthesouthwestmonsoonand

highgrainprices. However, theoutcomeofKharif seasonwill

stilldependgreatlyonthesouthwestmonsoonrainsinJulyand

August.

IncontrasttotherecordgrainproductioninChinaandIndia,

elsewhereinthesubregion,inPakistanandthe Islamic Republic

of Iran smaller cropsare expected. Pakistan’swheatoutput in

2008isnowestimatedat21milliontonnes,1.5milliontonnes

lower than last year, reflecting a reduced area due to sowing

delays,lessavailabilityofirrigationwater,substandardseeds,and

highfertilizerprices.Harvestingofwheatinthe Islamic Republic

of Iranhasjuststartedandthe2008wheatoutputisforecastto

fallbysome3milliontonnesto12milliontonnesfromlastyear’s

recordbecauseofdryconditions.Withthisreducedproduction,

wheatimportsin2008/09(April/March)mayrisetomorethan2

milliontonnes.Thiswouldrepresentthelargestlevelofimports

infiveyearsduringwhichtimethecountryremainedlargelyself-

sufficientinwheat.

Basedonearlyindications,paddyproductioninthesubregion

mayreacharecordinexcessof600milliontonnesin2008,1.2

No. 3 n July 2008 ��


percentabovethepreviousrecordsetlastyear.Majorgainsare

expectedallacrosstheregion,asproducersrespondtoattractive

prices.HarvestingofthebororicecropinBangladeshisalready

completedandabumper crop is estimated. The season in the

southernhemisphere countries iswell advanced. InSri Lanka,

the main 2008 Maha rice crop, planted in October-November

2007,hasbeenharvested.Thepaddyproductionofthisseason

isestimatedat2.12milliontonnes,some149000tonnesabove

lastyear’scrop.Similarly,agoodharvestofthemainpaddyriceis

alsoreportedinIndonesia.

Food supply difficulties persist in several countries due to disasters, reduction in cereal production, and rising food pricesCyclone Nargis struck Myanmar on 2 and 3 May 2008 with

windsupto200kmperhour,sweepingthroughtheAyeyarwady

(Irrawaddy)deltaregionandthecountry’smaincityandformer

capital. Official figures put the number of dead or missing at

more then 130 000. More than 2.4 million people have been

severelyaffected,andofthese,over750000peopleareinneed

ofimmediatefoodassistance.ThedivisionsofAyeyarwadi,Bago,

Mon,KayinandYangonhavebeenthehardest-hitareas.Many

families lost their crops, food stocks, livestock, fishing ponds

and/orotherproductiveassets.Thefoodsecuritysituationinthe

country,whichwasalreadysevere,isexpectedtobecomefarmore

acutewiththecyclonehittingthe“FoodBowl”inthesouthern

partofthecountry.Asof23June,foodassistanceamountingto

some17000 tonneshasbeendelivered to the affected areas.

InChina, thestrongestearthquake in thepast30years struck

the south-westernprovinceof Sichuanon12May.Asof early

June, the death toll stood at over 69000 people, while more

than374000werereportedinjured.However,withsome18000

personsstillmissingthesenumberscouldincrease.Atotalof45.6

millionpeopleareestimatedtohavebeenaffected,including15

million people evacuated from their homes, of whom some 5

millionpeopleare livingintemporaryshelters.Some10million

additionalpeopleareofficiallyestimatedtobe livingbelowthe

povertylineasaresultoftheearthquake.Mostofthepopulation

affectedbytheearthquakeiscriticallydependentonagriculture

fortheirlivelihoodsandmanyarevulnerabletofoodinsecurity.In

theDemocratic People’s Republic of Korea,transplantingof

rice,themostimportantcurrentfarmingactivityinthecountry,

isinfullswing.Alackoffertilizerisreportedlythemosturgent

problemforcropproductionthisyear.Thefoodsupplysituation

remainsprecariousbecauseoffloodsthatdevastatedcropslast

year.Thecerealdeficitforthe2007/08marketingyear(November/

October)isestimatedtobeabout1.66milliontonnes.AsofMay

2008,thepriceofrice inPyongyanghad increasedtoarecord

of3000wonperkg,aroundfour timesthepriceat thesame

month last year. The price of maize is around 1500 won per

kg,five timeshigher than theprice inMay2007. The country

has to depend on external assistance as its capacity to import

commerciallyremainslimitedbypooreconomicperformanceand

recentincreaseinworldfoodprices.TheUnitedStatespledgedto

provide500000tonnesoffoodaidtothecountryinthecoming

months, and the first shipments have just arrived. More than

300000peopleinninedistrictsoffarwesternandmid-western

Nepalfaceaprecariousfoodsituationasaresultofcropfailure

No. 3 n July 2008��


duetodrought.Theseareasarealreadychronicallypoorregions

ofthecountryduetolowproductivityandpoormarketaccess.

Withrisingfoodprices,foodinsecurityintheseareasislikelyto

deteriorateandthesituationwillbecomesevereduringthelean

seasonfromJuneonwards.Theproblemhasbeenexacerbated

by the rising food prices throughout the country. Typhoon

Fengshen ripped through the Philippines archipelago in the

lateJune,affecting11.2millionpeoplein38provinces.Damage

to buildings and infrastructure, including at least 111454

houses, isexpectedtoexceedUSD24.1million.Some300000

hectaresofricecropsintheWesternVisayasregionand12other

provincesarereportedtohavebeendamagedordestroyed.Food

insecurity is expected to continue in Timor-Leste, due to the

consequencesoftherecurrentinstabilityaswellasthecountry’s

highdependenceoncerealimports.Thecountryisfacinggrowing

difficulties insecuringsufficientquantitiesofriceontheglobal

markettomeetimportrequirementsduetothehighprices.The

numberofpeoplewhoarefoodinsecureorhighlyvulnerableto

foodinsecurityhasincreasedsignificantlyduetothecivilunrest

of2006,whichcausedthedisplacementof100000people,of

whichabout70000fledfromDilitoseekrefugeinruraldistricts

hostedbytheirrelatives.Thehighunemploymentrate,especially

intheruraldistricts(80percent),representsanadditionalfactor

of social instability and food insecurity. In Bangladesh, large-

scalehumanitarianreliefoperationsarestillongoingtoassist8.9

millionpeoplebymostaffectedCycloneSidr,whichhitupto30

districtson15November.Thereductionin2007paddyproduction

and rising food prices since 2007 (Figure 14) are significantly

impacting the food security of the vulnerable groups in both

urbanandruralareas.InSri Lanka,thecountry’sfoodsecurity

hascontinuedtobeaffectedbytheresurgenceofcivilconflict,

aswellasrisingcerealprices(Figure15).Sincethebeginningof

2008,some5000peoplehavebeenreportedlykilledinfighting

andthesecuritysituationhasfurtherdeteriorated.Riceandwheat

flourpricesinJune2008inColomboincreasedby67percentand

75percent,respectively,comparedtothesameperiodin2007.

Near EastInIraq,the2008wheatharvest,whichhasjustbeengathered,

isestimatedat1.5milliontonnes,36percentdownfrom2007

andthelowestlevelinmanyyears,aftergenerallyunfavourable

10

15

20

25

30

35

JMAMFJDNOSAJJMAMFJDNOSAJ2006/07 2007/08

Wheat

Rice

Taka (BDT)/Tonne

Figure 14. Wheat and rice retail prices in Bangladesh

30

40

50

60

70

80

JMAMFJDNOSAJJMAMFJ2007 2008

Wheat flour

Rice (white)

Sri Lanka Rupee (LKR)/kg

Figure 15. Wheat flour and rice retail pricesin Colombo, Sri Lanka

10000

15000

20000

25000

30000

Figure 16. Wheat flour retail prices in selectedmarkets in Pakistan

Lahore

Quetta

Peshawar

Rupee(PKR)/Tonne

2005 2006 2007 2008

Multan

Karachi

No. 3 n July 2008 ��


growingconditionsthroughouttheseason.Thereductionofthe

almost entirely rain-fed barley crop is even more pronounced,

with output put at just 450000 tonnes a reduction of some

60 percent compared to 2007. Imports of wheat in 2008/09,

expectedtoremainstrongonaccountofthelowlevelofdomestic

production,areforecastatsome3.8milliontonnes,comparedto

3 million tonnes in 2007. Following some improvement in the

securitysituation,IraqirefugeesintheSyrianArabRepublicand

Jordan continue to return to theirhomes, although large-scale

movementshavenotyetbeennoted.Itisestimatedthataround

45000individuals livinginSyriahavereturnedtoIraqin2007.

More than4.2million Iraqishavefled theirhomessince2003.

Ofthese,about2millionareIDPswhiletheremainderareliving

asrefugeesinneighbouringcountries,mainlySyriaandJordan.

The Government has recently announced that it had allocated

USD195 million to encourage IDPs and refugees to return to

theirhomes; thismoney ismostly for travelexpensesfor those

outsideIraq,andforfinancialhelpandcompensationforthose

whosepropertiesweredamagedduringtheirabsence.

In Afghanistan, the outlook for the 2008 rain-fed harvest

currently underway, and the irrigated crop later this year is

not good. Precipitation across most of the country was below

normalintheperiodOctober2007-May2008.Centralareasof

thecountryandwesternhighlandareasreceivedlesssnowthan

usualwhilethenormallydriersouthhasexperiencedanunusually

wetseasonthisyear.Afteraperiodofextremecoldconditionsin

JanuaryandFebruary that causedwinterwheat losses.Above-

normaltemperaturesacrossmostofthecountryaggravatedthe

lowmoisturesituation,bymeltingsnowearlierandevaporating

morewater thannormal. It isalsopossible that thesubstantial

snowfallandraindeficiencythisseasonwillleadtoascarcityof

irrigation water, affecting the pre-winter cultivation season in

August,SeptemberandOctoberof2008,andtherebyaffecting

the2009harvest.

At this early stage, the 2008 cereal harvest is tentatively

expectedtoreachonly4milliontonnes,nearly15percentless

thanthe2007harvestof4.5milliontonnes.Thecereal import

requirementin2008/09isestimatedtoriseto1.2milliontonnes

including foodaid.Anagricultural regenerationplanhasbeen

drawnupfortheshort,mediumandlongterm.Intheshortterm,

improvedseedandfertilizersaretobedistributedto3.4million

farmers in November and December. Also to be distributed is

fodder, tooverhalf amillion farmers and insecticides to cover

450000hectares. It isalsoenvisaged toestablishandhelp25

companiestoimproveseeds.

Asian CISProspects are mixed for the 2008 cereal harvest. Winter

precipitationhasbeenbelownormal inCentralAsia, adversely

affectingthewintercropsandraisingconcernovertheadequacy

of spring crop irrigation reserves throughout the region,

which normally come from snowmelt in the central highlands.

Kyrgyzstan, Tajikistan and Turkmenistan are particularly

affected. The crops in Tajikistan also suffered from extreme

coldwintertemperaturesandlocustattackslaterintheseason.

Pendinganassessmentoflocustdamage,the2008cerealharvest

in Tajikistan is tentatively estimated at 660000 tonnes, nearly

20percentbelowaverageandlessthanlastyear’salreadypoor

harvest.Bycontrast,growingconditions this seasonhavebeen

goodinArmenia,AzerbaijanandGeorgia.InUzbekistan,where

rainfallwasalsolimited,outputisexpectedtobebarelyaverage

comparedtolastyear’sbumpercrop.InKazakhstan,wherethe

areasowntowheatincreasedby1millionhectares,thecropis

officially forecast tobeonlyabout14milliontonnescompared

to last year’s recordof16.5million tonnes.However,wheat in

Kazakhstan is spring sown and the crop will not be harvested

untilSeptember.PlantingsweredelayedbycoldweatherinMay

andbelownormalrainfallintheregionthiswinter.Theaggregate

harvestinKazakhstanisforecasttoapproach17milliontonnes;

with coarse grains accounting for 2.5 million tonnes, provided

normalweatherprevailsuntilcompletionoftheharvest.

A difficult food supply situation prevails in Kyrgystan,

where prices of basic foodstuffs have risen sharply between

December 2007 and May 2008, for example: flour by 81

percent;butterby100percent;eggsby59percent,meatby22

percentandvegetableoilby20percent.Aspricesofwheatand

breadplayanimportantpartinthefoodsecurityofthecountry,

the Government has reached an agreement with Kazakhstan

to import wheat, despite the country’s export ban. However,

Kazakhstan’sexportsofsunflowerandvegetableoil,onwhich

Kyrgyzstandependsforovertwo-thirdsofitsneeds,arebanned

20

30

40

50

60

70

80

Mar. 2008Jan. 2008Jan. 2007Jan. 2006

Rice

Bread

Afghani (AFN)/Kg

Figure 17. Bread and rice prices in Kabul,Afghanistan

No. 3 n July 2008��


until 1 October, exacerbating the tight supply situation in

Kyrgystan.

InTajikistan,thereducedfoodcropproductionexpectedthis

year,inthecurrentenvironmentofhighfoodandfuelprices,will

exacerbatethebasicfoodsecurityproblemof lackofaccessto

anadequateandbalanceddiet. The losses inwheatandbasic

foodcropsmeanthattheaffectedpopulationwillhavetoresort

tomarketpurchasesearlierthanusual,whenfamiliesarealready

reportedtobespendingupto81percentofhouseholdincome

Mexico• coarse grains (summer crop): planting• paddy crop (summer crop): planting

Brazil • maize (secondary season): harvesting (centre-southern states) • winter wheat: planting

Argentina• winter wheat: planting

Uruguay • winter wheat, barley: planting

Note:CommentsrefertosituationasofJuly..

Central America• maize (main season): planting

Latin America and the Caribbean

Central America and the CaribbeanUnderfavourabledryweatherconditions,harvestingofthe2008

main irrigatedwinterwheatcrop iswelladvanced inMexico’s

keyproducingstatesofSonora,Guanajuato,BajaCaliforniaand

Michoacan.Seasonaloutput isexpectedatarecord3.4million

tonnes.

Plantingofthe2008firstseason(mainlyrain-fed)coarsegrain

andbean crops is underway in allCentralAmerican countries.

InMexico,bymid-June,significantrainshadarrivedinwestern

and central growing areas of the southern plateau, boosting

soilmoisture forplantingafter a fewweeksofdryness. In the

Caribbean, planting is still underway in Cuba, but harvesting

hasalreadystaredinHaitiandtheDominican Republicwhere

production prospects are favourable following well-distributed

precipitation throughout thewholegrowing season. The2008

aggregatecoarsegrainareaisexpectedtoreachtheunprecedented

levelof12.9millionhectares,some3percentabovetheprevious

recordset lastyear,mostly reflectinghigherplanting intentions

for the first season maize crop in Mexico, in response to high

internationalprices.Plantingof the2008mainsummerseason

paddycropisunderwaythroughoutthesubregionandplanting

intentionspoint toanareaofabout693000hectares, slightly

abovetheplantingprogramofsameseasonin2007.

Based on the results of harvests already underway and

assuming normal conditions and average yields for the crops

justbeingsown,thesubregion’saggregatecerealproductionis

tentatively forecast at a record42.7million tonnes,1.9million

tonnesmorethantheprevioushighachievedlastyearandabout

14percentabovetheaverageofthepastfiveyears.

South AmericaHarvestingofthe2008mainseasoncoarsegrainandricecrops

is well advanced and record or above-average production is

expectedinmostcountries.Attheaggregatelevel,preliminary

estimatesputthesubregion’scoarsegrainoutputatarecord

99.5 million tonnes, about 5.8 million tonnes above the

on food and unsustainable coping practices, such as taking

childrenoutofschooloreatingseedsupplies.Pricesofstaples

have risensharply.BetweenMarch2007andMarch2008, the

priceofwheatroseby100percent,breadby86percent,mutton

by 38 percent; vegetable oil by 137 percent and pulses by 68

percent.Reflectingthepoorharvestthe2008/09,cerealimport

requirementisestimatedatahigh556000tonnes,mostlywheat.

Thecountryishavingdifficultiesmobilizingsuppliescommercially

andfoodaidwillbenecessarytobringrelieftothepoor.

previous recordof last year. This is due to a combinationof

a4.6percentincreaseinmaizeplantingsinresponsetohigh

international prices and to above-average yields following

favourable weather conditions throughout the growing

season.

InBrazil,outputof thefirstseasonmaizecrop isofficially

forecastatarecord40milliontonnes,some10percentabove

the previous high last year. The increase is essentially due to

higheryieldsfollowinggoodweatherconditionscoupledwith

wideruseofselectedseedsandbetterfertilizationlevels.Inthe

stateofParana, responsibleofaboutaquarteroffirstseason

maizecropproduction,averageyieldsareestimatedforthefirst

timetoreach7tonnesperhectare,about25percentabovethe

averageofthepastfiveyears.InCentre-Weststates,currentdry

weatherconditionsarefavouringharvestingofthe2008second

No. 3 n July 2008 ��


season(safrinha)wintermaizecropthatwillbecompletedby

theendofJuly.Outputfromthesecondseasonisalsotentatively

forecastatarecordlevelat18.4milliontonnes;mainlyreflecting

highinternationalpricesatplantingtime,whichledfarmersto

increasetheareasownto5millionhectares, from4.6million

hectares in 2007. In addition, despite some delay at planting

timedueto latecompletionofthesoybeanharvest,yieldsfor

the safrinha maize crop are also expected to be well above

average,reaching3.7tonnesperhectare,duetowelldistributed

precipitationsandtimelyapplicationoffertilizers.InArgentina,

harvesting of the 2008 maize crop is virtually completed and

5000

10000

15000

20000

25000

30000

35000

40000


Figure 18. Selected retail prices in Managua,Nicaragua

Beans (red)

Rice

Maize (white)

Cordoba Oro (NIO)/tonne

1000

2000

3000

4000

5000

6000

7000

8000

9000


Figure 19. Monthly average wholesale prices of selected commodities in Santa Cruz, Bolivia

Potatoes

Wheat flour

RiceBoliviano (BOB) per tonne

Source: SIMA - Servicio Informativo de Mercados Agropecuarios

preliminaryofficialestimatespointtoaproductionofabout21

million tonnes, some 1million tonnes less than the previous

year’s level,when record yieldswhereobtained. InUruguay,

reducedrainfallandfrostsinApril-Mayhavenegativelyaffected

yieldsof2008summerseasonmaizecropand,althoughofficial

estimatesarenotyetavailable,theexpectedproductionrecord

of440000 tonnesneeds tobedownward revisedbyat least

15percent.

Thesubregion’saggregateproductionofpaddyistentatively

estimated at 23.8 million tonnes, about 8 percent above the

output obtained in 2007 following larger crops in Argentina,

No. 3 n July 2008��


Northern Europe• small grains: maturing to harvesting

Centre-Southern Europe• small grains: maturing to harvesting• maize: reproductive

CIS in Europe• small grains: maturing to harvesting• maize: reproductive


Australia• cereals (winter): vegetative

Canada• small grains: reproductive• maize: vegetative

United States• small grains: reproductive to maturing (north), harvesting (south)• maize: reproductive

Brazil,Colombia,Uruguay andVenezuelawhereharvesting is

virtuallycompleted.

Plantingofthe2008 winter wheatcrop,tobeharvested

by the end of the year, is well advanced in key growing

areas of Brazil and Paraguay, while some delay is reported

inArgentinaandUruguayduetolowsoilmoisturelevels.In

Argentina,themainwheatproducerofthesubregion,official

wheat planting intentions have been gradually reduced

sinceMay (witha reductionofhalf amillionhectares) as a

consequenceofdryweatherconditions,coupledwithhigher

costsforagrochemicalsandfuelshortagesthathavecaused

farmers to shiftaway fromwheat. InBrazil,plantedarea is

North America, Europe and Oceania

North AmericaIn the United States, winter wheat harvesting was well

underwayinthesouthernstatesasoflateJune,butprogressing

a little behind average pace because of some heavy rainfalls.

Althoughthereissomeconcernthattheadverselywetconditions

mayhavesomenegativeimpactongrainquality,especiallyinthe

majorproducingstateofKansas,sofartherearenoindications

ofquantitativelosses.Thelatestofficialforecastputsthewinter

wheatoutputatsome49milliontonnes,nearly20percentup

fromthepreviousyear.Latestindicationsalsocontinuetopoint

to a larger spring wheat harvest, with the bulk of the crop

reportedtobe ingoodtoexcellentcondition in lateJune,and

theareaestimatedtobeupbeabout9percentcomparedtolast

year.Thus,aggregatewheatoutputisforecasttoreachsome66

million tonnes, up 10 million tonnes on the previous year and

expected to increase by some 22 percent compared to the

previousyearinresponsetogoodprospectsforreturnsgiven

anincrease intheGovernment’sguaranteedminimumprice

coupledwithArgentina’s (a traditional supplierofwheat to

Brazil)exportban.Basedonlatestindications,thesubregion’s

aggregateplantedarea is tentatively forecast at8.8million

hectares,some6percentabovethepreviousyear’sleveland

verysimilar to the last five-yearaverage.However, thefinal

area will still depend on weather conditions through the

remainderoftheplantingseason,especiallyinArgentinaand

Uruguay,whereplantingprogresshasbeenhamperedbydry

conditions.

the largestcropsince1998.Regardingcoarsegrains,prospects

have deteriorated considerably in the past few weeks due to

persistent heavy rains delaying maize planting in many major

growingareas, causing the lossofcropsalready in theground

throughflooding.AccordingtotheofficialUSDAAcreageReport

of30June,whichalreadyattemptedtofactorintheaffectofthe

adverse rains througha special last-minute survey in late June,

the harvested maize area in 2008 could turn out to be about

31.9millionhectares, down from35millionhectares in 2007.

Althoughalargepartofthedeclinewasalreadyexpecteddueto

smallerplantingintentionsthisyear,theadverseconditionscould

resultinadeclineintheharvested/plantedratio,withsomelost

cropsnotbeingreplantedorbeingreplanted,ormoreareabeing

turnedovertoothercropssuchassoybeanthathaveashorter

growingcycle.Givensomelikelyreductioninyieldprospectsfor

cropssownlateordamagedbyexcessivewater,theUnitedSates

totalmaize crop in2008 is now forecast at about293million

No. 3 n July 2008 ��


tonnes,butmuchwillstilldependonweatherconditionsinthe

comingmonths.

In Canada, prospects for the 2008 grain crops remain

favourable.Inresponsetostrongprices,farmershaveincreased

thetotalwheatareabyabout16percentafteraswitchinfavour

ofoilseedslastyear.Theareaindurumwheatinparticular,which

generally offers thebest returns, is reported tohave increased

sharplybynearly27percent.However, contrary to thenormal

patternofrotationalshifts inrecentyears,betweenwheatand

oilseedscultivation,thisyear’slargewheatareahasnotcomeat

theexpenseofoilseeds,andthecanolaareaforthe2008harvest

hasalsoincreasedtoarecordlevel,reflectinggoodpriceprospects

for this crop also. While some of the increased area of wheat

andcanolahascomefromadrop in landplanted to themain

feedgrainsbarleyandoats,theincreasehasalsobeensupported

bybringingintoproductionlandareastraditionallydedicatedto

summer fallow,which in thePrairieprovinceshavedeclined to

record low levels in recenthistory.Assumingnormalconditions

throughthegrowingseason, thecountry’s2008wheatcrop is

forecasttoreach24.8milliontonnes,about24percentupfrom

2007.

EuropeProspects for the 2008 cereal crops in the European Union

remain favourable. The aggregate cereal output of the 27

countries is forecastatnearly296million tonnes,13.6percent

up from theprevious year.Mostof the increase is expected in

easternpartsamongthenewestmemberstates,wheregrowing

conditionshavebeenparticularlygoodthisyearandyieldsand

outputaresettorecoversharplyfromlastyear’sdrought-reduced

levels.However,amongthecentralandnortherncountries,where

the compulsory land set-aside requirement was removed for

the2007/08productionseason, increasedplantingsandbetter

expected yields are also contributing to the group’s increased

harvestthisyear.Ofthetotalcerealforecast,wheatisexpected

toaccountfor138milliontonnes,almost15percentupfromlast

year,whileoutputofcoarsegrainsisseentoriseto155million

tonnes,nearly13percentupfrom2007.

IntheBalkanregionamongthenon-EUcountries,theoutlook

forthe2008cerealharvestisalsosatisfactoryandoutputissetto

recoverwellfromthedrought–reducedlevelof2007.InSerbia,

good yields have partially offset a reduction in the area sown

to wheat and output is estimated at 1.7 million tonnes. This

wouldbeenoughtocoverdomesticneedsbutleavelittlesurplus

available forexport.Bycontrast,outputofmaize is forecast to

risefrom4to6milliontonneswhich,ifmaterializedcouldleave

anexportablesurplusofabout1milliontonnes.

In theEuropean CIS, the springgrainplantingsaremostly

completeandearlyharvestingofthewintercropsplantedin2007

isunderway.Throughouttheregion,winterwheat,barleyandrye

haveover-winteredwell andmoisture supplies for springgrain

developmentareadequate.Reflectinghighcerealpricesin2007,

theaggregateareasowntowheatisestimatedtohaveincreased

by2.4millionhectaresto33.8millionhectares.Reflectinggood

growing conditions both through the winter and the spring/

summertodate,theaggregateoutputofwheatinthesubregion

isforecasttoriseto73milliontonnes,13percentabovethegood

harvest in2007.Similarly, theoutlook forcoarsegrains,which

No. 3 n July 2008�0


are still developing, is good. The area sown increased by 1.6

millionhectares,andprovidednormalweatherprevailsuntilthe

completionoftheharvest,indicationsarethataverageyieldswill

recover sharply form last year’s drought-affected levels.Coarse

grainoutputistentativelyforecasttoreach59.5milliontonnesor

18percentmorethanlastyear.

IntheRussian Federation,thesubregion’slargestproducer,

theaggregategrainareaforthe2008harvestisforecastatnearly

46millionhectares,2.6millionhectaresmorethanin2007.Wheat

output isforecastatabumper51milliontonnes,whilethatof

coarsegrainscouldreachalmost32milliontonnes.Grainexports

in theperiod1 July 2007 to30May2008have reached13.2

milliontonnes,1milliontonnesmorethanintheprecedingyear

(2006/07July/June),andmoreorlessaccountingforthecountry’s

estimated export surplus in 2007/08. The high export duties

introducedon29 January2008 (after thebulkof surplus from

the2007harvesthadbeensold)havebeenrepealedwitheffect

1July.Ifthe2008harvestforecastmaterializes,thecountrywill

againhaveasubstantialsurplusoverexpecteddomesticneeds,

althoughsomeof thiswillbeneeded to replenishgovernment

intervention stocks. In Ukraine, harvesting has started and

providedweatherconditionsremainnormaltothecompletionof

theharvestthe2008aggregatecerealoutputisforecastatsome

40milliontonnes,46percentabovelastyear’sdrought-reduced

crop.Wheatproductioncouldreach20milliontonneswithcoarse

grainsmakingupthebulkofthebalance.Thecountry’sexportsin

2007/08(July/June),fromthe2007harvest,areestimatedatsome

3million tonnes, less than theestimatedsurplusandcarryover

stockshaveincreasedsignificantly.However,exportquotashave

beenliftedandthecountrycouldhaveanexportablesurplusof

12milliontonnes in2008/09. InbothUkraineandtheRussian

Federationgrainpriceshaveweakenedsignificantly in thepast

fewweeksinviewoftheupcominggoodharvests.

OceaniaThe prospects for the 2008 winter cereal crops in Australia

weregenerallyfavourableasoflateJune,althoughtheplanting

seasondidnotprogressaswellashadbeenhopedearlier.With

theexceptionofWesternAustralia,mostofthecountry’smain

wintercroppingregionsreceivedbelow-averageautumnrainfall,

whichmeantmanycropsweresownindryconditionsorafter

theoptimumplantingwindowwhere farmerswaited for rain

before starting fieldwork. However, despite the difficulties of

theplantingperiod,theareasowntowheatisforecasttoriseby

13percenttoarecord14millionhectares,reflectingrelatively

strongprices,encouragingfarmerstomaximiseplantings,also

by taking land out of pasture, to try and improve short-term

cashflowaftertwodroughtyears.Basedonthisareaforecast,

andassumingnormalweatherfortheremainderoftheseason,

theofficialABAREforecastinmid-Juneputsthecountry’stotal

wheatproduction in2008at23.7million tonnes,an increase

of some80percent fromthepreviousyear’sdrought-reduced

crop. Barley output is also seen to increase sharply after last

year’sdrought,recoveringtoalmost8milliontonnesafterjust6

milliontonnesproducedin2007.Outputofthe2008summer

graincrop(mostlysorghumandmaize),whichhasalreadybeen

gathered,isestimatedtohaveincreasedsharplybutriceoutput

fell sharply reflecting lack of irrigation water reserves in the

mainproducingarea.


No. 3 n July 2008 �1

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 ................................................................ .��

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

No. 3 n July 2008��


No. 3 n July 2008 ��


No. 3 n July 2008��


No. 3 n July 2008 ��


No. 3 n July 2008��


NOTE:ThisreportispreparedbytheFAO’sGlobalnformationandEarlyWarningService,withinformationfromofficialandunofficialsources.Noneoftheinformationin

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notimplytheexpressionofanyopinionwhatsoeveronthepartoftheFoodand

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