World cereal production is forecast to reach a record high in 2007, but food analysts anticipate that total supplies will be barely adequate to meet increased demand, boosted by a rapidly expanding biofuels industry and continued growth in the food and feed sectors. Over the past several years, grain harvests have consistently fallen short of consumption, reducing carryover stocks--our only buffer against unanticipated crop failure--to their lowest levels since the 1980s. At the same time, international cereal prices have soared to their highest levels in a decade, creating concern for low-income food deficit countries and hunger hotspots such as Sub-Saharan Africa.
Cereal Production by Region in 2006 and 2007*
*2007 estimates are forecast
Source: EarthTrends 2007, using data from the FAO 2007.
Trends in World Grain Demand
Growth in world grain demand has been traditionally driven by population growth and rising incomes. Although population growth is anticipated to slow over coming decades, incomes will continue rise, thus increasing demand for so-called "luxury" food commodities such as milk, meat, and other livestock products that require large grain inputs. As a result, increases in grain demand will outpace population growth.
Biofuels production has now added yet another dimension to world grain markets. U.S. demand for corn-based ethanol has been particularly influential, explaining why this year's anticipated 4.8 percent increase in cereal production is largely attributable to North American maize harvests. In addition, biofuels markets have caused a sharp increase in the price of maize, which indirectly boosts the prices of other cereals, particularly wheat.
U.S. Corn Use For Fuel Ethanol as Percent of National Production
Source: EarthTrends 2007, using data from the USDA
Low-Income Food Deficit Countries Face a Difficult 2007
As a whole, low-income food deficit countries (LIFDCs) are expected to maintain a similar level of production as last year. In reality, however, most countries will actually face declining harvests, a trend masked by anticipated growth in China and India. When coupled with high international prices, this indicates that cereal import bills will rise by 25 percent for most LIFDCs. Drought, civil conflict, and economic crisis are by far the dominant drivers of agricultural decline in these countries, and food aid will likely be required to ensure food security in 2007. Of the 33 countries worldwide currently requiring external food assistance, 25 are in Africa, seven are in Asia, and one is in Latin America.
RELATED LINKS:
FAO Crop Prospects and Food Sitatuation (May 2007)
Global Information and Early Warning System on Food and Agriculture
State of Food Insecurity in the World 2006
EarthTrends
Agriculture and Food searchable database
Carniverous Cravings: Charting the World's Protein Shift
Inexhaustible Appetites: Testing the Limits of Agroecosystems
March 2007 Monthly Update: Global Biofuel trends
September 2006 Monthly Update: Can a Green Revolution Catalyze African Development?
