Cereal harvests - meeting global needs now... and in the future ?

Global fertilizer consumption forecast 1998/99... some uncertainties

Global cereal production for 1998 is expected to be 29 Mt below last year's record harvest of 1906 million tonnes. Is this a minor blip in an otherwise upward trend? And if cereal yields recover, will they be sufficient to meet the expected demand over the next couple of decades, especially when taking into account an increasing conversion of cereals into meat? What will be the impact on the fertilizer market? To add to the uncertainty, FAO forecasts for the current year a further decline to 1850 Mt as announced by K.G. Soh and K.F. Isherwood in a paper presented at the IFA Annual Conference in Manila, May 1999 (Figure 22). Rapid movement of capital to regions where economic prospects are most promising has left those in greatest need without the capital injection that is required for recovery. Globalization, in agricultural commodities and fertilizers, as well as finance, has meant that no region is unaffected by the economic fortunes or misfortunes of others.

Figure 22: Global cereal production and cereal stocks
Production million t	stocks % Consumption
production   stocks
E: Estimated; F: Forecast

Lower production in 1998/99 at 1877 Mt, about 1.5% below last year's record, comes primarily from setbacks in the Former Soviet Union, doubtless as a result of under-supply with plant nutrients. In contrast, production in developing countries showed an increase, with production at 1019 Mt, although this is still below the record level of 1027 Mt in 1996/97. China and India had very favourable wheat and rice harvests although coarse grain production in China fell by 21 Mt.

Globally, grain stocks of 17.4% remain in the safety range of 17-18% of consumption but whereas in developed countries stocks have been rebuilt to well over 22%, in developing countries, they have slipped to under 14% of consumption. Per capita consumption of grain is estimated to remain steady in developing countries at 172 kg/year and in developed countries to increase slightly to 129 kg/year (Source: FAO). Grain prices generally are below the 5 year average; compared with a year ago, cereal prices have fallen quite substantially, wheat and maize down 13% and rice down 22%.

In the short term, developing countries are expected to recover some of their shortfall of last year but, in the Former Soviet Union, decreases in production are expected to continue. In the longer term, according to figures presented by IFPRI, global cereal production should rise by 1.5% each year to reach 2.68 billion t by 2020. However, taking into account the expected increase in demand for meat, and therefore an even greater pro-portion of cereal production going into animal feed, demand is expected to reach 3.4 billion t in 2020. On present trends cereal production will reach only 2.22 billion t in 2020, a shortfall of about 500 Mt against predicted demand. To meet this demand, current average yields of 2.87 t/ha would have to increase to almost 5 t/ha.