Regional reviews

Africa

 

North Africa

Harvesting of the 2008 winter cereal crops is due to start from June in most countries of the subregion. Crop prospects are generally favourable especially in Morocco, where a strong recovery in output from last year's drought-reduced crop is expected, provided normal weather prevails in the coming months. Morocco’s aggregate wheat and barley area is estimated at about 4.9 million hectares, up 7 percent from last year and yields are expected to recover significantly. The outlook is also favourable in Egypt, the largest producer of the subregion, where the wheat area is estimated to have increased by about 12 percent pointing to significant increase in production, as crops are largely irrigated and yields remain relatively constant. By contrast, in Tunisia, in spite of government incentives to increase domestic production to mitigate the negative impact of high international prices on consumers, prospects are less favourable and smaller crops are forecast this year. The expected decrease is mainly a consequence of insufficient soil moisture at planting time, causing an area reduction, and of erratic rains throughout the growing season in the main producing areas, which will likely lead to poor yields. FAO forecasts the aggregate output of wheat in the subregion at some 16 million tonnes, 21 percent up from the previous year's drought-reduced level, while that of barley is put at almost 4 million tonnes, an increase of nearly 35 percent, both results being similar to the recent average.

North African countries have been seriously affected by high international cereal prices due to their high dependence on imports. However, the anticipated increase in wheat production in Morocco and Egypt this year is expected to ease the effects of rising international commodity prices on these countries’ import bills.

Western Africa

Land preparation is underway in the coastal countries for planting of the 2008 main season cereal crops, while in the Sahel, planting is scheduled for June.

High and rising food prices which are reported across the subregion, are having a negative impact on consumers’ purchasing power and access to food. Already since the time of the last harvest, in September 2007, significant increases in grain prices have been observed across the subregion, raising serious concerns over the food security outlook. However, the extent of the price rise has varied from region to region and from country to country, reflecting a diversity of driving forces.

According to the results of the inter-agency^1/ Food Market Assessment Mission that visited key cereal markets in several West African countries from mid-February to mid-March (see Box: Joint inter-agency Market Assessment Mission to Benin, Niger and Nigeria), the highest increases in prices have occurred in the eastern part of the subregion, notably in Niger and Nigeria. In Dawanau International Grains Market in Kano (Nigeria), the biggest in the subregion, the price of sorghum, the most traded cereal in Nigeria, jumped from NGN 2750 (Nigerian Naira) per bag in September 2007 to NGN 5300 per bag in February 2008, an increase of 92 percent in 5 months. Over the same period millet price increased by 116 percent, while the price of maize in February 2008 was 96 percent above its level in August 2007. The same trend has been observed on all markets surveyed in Benin, Niger and Nigeria. For maize for example, price increases in February 2008 compared to the same period in 2007 range from 3 percent in Malanville, northern Benin to 165 percent in Minna in north central Nigeria.

The causes of the price rises in these countries are mostly regional. Although imports of cereals by Nigeria are forecast to remain above 4.5 million tonnes in 2008 (mostly wheat and rice), this represents only 15 percent of the country’s total domestic cereal utilization. The cereal import dependence rate is even lower for Benin and Niger, around 5 percent. Moreover, both the CFA Franc^2/ (Benin and Niger) and the Naira (Nigeria) have appreciated significantly in recent years, and domestic oil is subsidized in Nigeria, reducing the transmission of high international prices to the domestic economies. The impact of high international wheat, maize and rice prices on the domestic markets of these countries is, therefore, limited, although some substitution may have occurred. Domestic cereal prices are driven mainly by regional supply and demand, themselves determined:

- on the supply side, by lower production due to irregular rains (across the subregion), high fertilizer prices (mostly in Nigeria), and low grain prices in the past two years offering little incentive to produce. Moreover, the restrictive trade policy in Nigeria limits food imports from international markets increasing the pressure on the domestic market.

- on the demand side by, to a large extent, food processing industries and the poultry sector, which has recovered significantly although it has not reached its pre-crisis level yet. The excess liquidity generated by high oil prices is also contributing to higher demand in Nigeria.

In the western part of the subregion including Cape Verde, Guinea-Bissau, Mauritania and Senegal, food prices are driven mainly by international market trends due to the high dependence of these countries on wheat and rice imports from the international market. Senegal’s domestic production, for instance, covers only about half of the country’s cereal utilization requirements, so its rice and wheat imports amount to an average of about 900 000 tonnes per annum, from the international market. Both rural and urban consumers were affected last year by high food prices, following a poor domestic harvest in 2006 and increasing cereal prices on the international market. Although the Government has implemented a series of measures aimed at offsetting the impact of the continuing sharp increase in world prices during this season, including subsidizing the purchase of wheat flour by 40 percent, waiving of import tariffs and price controls, another low domestic production in 2007 in the context of the tight international market is exacerbating inflationary pressure on the domestic food market, which will further erode the purchasing power of urban and rural consumers. Mauritania also relies heavily on coarse grain (millet and sorghum) imports from neighbouring Senegal and Mali, and on wheat imports from the international market. Consequently, food prices are a key determinant of access to food for the majority of Mauritanians. The prices of both coarse grains and wheat remained relatively high in 2007, reflecting the poor harvest in Senegal and high international prices. Food prices continue to climb in 2008 due to another poor harvest in Senegal and the persisting high international wheat prices. In February 2008, wheat and sorghum prices were 96 percent and 56 percent higher respectively, compared to February 2007.

Central Africa

Planting of the 2008 cereal crops has just started. In Cameroon, although an above-average cereal harvest was gathered in 2007, soaring international food prices have pushed up domestic prices of several basic foodstuffs including rice, oil, milk, etc, which has recently caused serious social unrest. As a result, the Government has taken a number of measures including increasing the salaries of civil servants by 15 percent, waiving import tariffs on a set of foodstuffs, and reviewing the pricing of fuels. In the Central African Republic, farming activities continue to be hampered by persistent insecurity with large-scale population movements both within the country and to neighbouring countries, notably in the north, where nearly 300 000 people have reportedly been uprooted from their homes over the past two years. Continuing insecurity in both Chad and the Darfur region of Sudan threaten to further destabilize the situation in northern parts of the country.

Joint inter-agency3/ Market Assessment Mission to Benin, Niger and Nigeria

A joint inter-agency Food Market Assessment Mission visited key cereal markets in Benin, Niger and Nigeria from 14 February to 9 March to assess the current stock and price levels, as well as trade flows within and between countries and to analyze the food security implications in more vulnerable countries. Main findings: Food production, stocks and prices Agricultural production in 2007 was negatively affected in all three countries by an early cessation of rains in September. This was compounded in Nigeria by a lack of access to fertilizers. Cereal outputs declined from the previous year in Nigeria and Niger, and traders’ stocks are low in all three countries so cereal prices have risen steeply. In Dawanau International Grains Market in Kano (Nigeria), the biggest in the subregion, real prices of maize and sorghum jumped by over 80 percent and 54 percent respectively between August 2007 and January 2008. As a result, average inflation in Nigeria, which was estimated to have fallen to 5.4 percent in 2007 due to lower food prices and improved monetary policy, has started picking up. The year-on-year rate of inflation was estimated at 8.6 percent in January 2008, driven mainly by price increases in the food sector where year on year rate of inflation jumped from -0.10 percent in January 2007 to 12.60 percent in January 2008. Food prices are a major factor in the rate of inflation, with a very high weight in the consumer price index across the subregion. Whereas in Benin and Niger demand for cereals is driven mainly by households’ effective demand and consumption, in Nigeria demand by the poultry and food processing industries, and breweries is high. In the southern and north central parts of Nigeria, demand for maize and sorghum from processing companies, poultry feed companies, and breweries was reported to be very high from October to December. Demand for maize by producers of animal feed was particularly high, pointing to a significant recovery in the poultry industry. Trans-border trade and food security prospects Food markets are strongly integrated in Western Africa with price levels in several countries determined to a large extent by developments in some key regional markets. In a normal year, Nigeria and Benin export cereals to neighbouring Niger’s deficit areas. In years of low output, however, Benin and Nigeria utilize a larger share of their domestic production and sometimes import grains from Niger, exacerbating the deficit in the latter country. Parity prices of imports from regional markets are, therefore, a key determinant of food supply in these countries. Although prices increased significantly across the subregion, this varied from market to market and from country to country, leading to significant changes in trade patterns. While millet prices have increased in Matameye and Maradi border markets (in Niger) by 23 percent and 32 percent respectively in February-March 2008 compared to the same period in 2007, the price of the same commodity has risen by 78 percent in Dawanu regional market in northern Nigeria, leading to unfavourable import parity prices in Niger. Moreover, much higher prices in central and southern Nigeria meant that southward trade within Nigeria became more attractive, limiting trade flows between Niger and Nigeria. Imports of cereals continue to take place from northern Benin to south-western Niger, reflecting lower grain prices in northern Benin. As a result, the central and eastern parts of Niger, which depend more on imports from Nigeria, are hardest hit by grains shortfall and high prices. The lowest cereal prices in Niger are currently recorded in Gaya region (West), while eastern Zinder and Diffa regions are experiencing the highest prices.   In northern Nigeria, some farming households, which normally produce enough food may, therefore, face shortages before the next harvest, due to poor rainfall. With high prices, access to food by vulnerable people, notably in the Far North, is expected to be difficult. However, the production of root and tuber crops was not seriously affected which allows for some substitution. Moreover, if the Government price stabilisation intervention targets the northern states and vulnerable populations, and if prices decline as expected, the food security impact of the food shortage should be limited. In Niger, although livestock prices have remained relatively high, the central and eastern parts of the country may experience acute food insecurity if the upward trend in food prices continues. From April on, the eastern regions will be most affected, unless timely targeted actions are taken. In view of the current food supply situation and unfavourable prospects for imports from Nigeria, the situation is seen as both serious and likely to deteriorate in these parts of Niger. Conclusions: - There is a need to increase access to food by poor and vulnerable populations through targeted food distribution by Governments in the subregion. Other safety net interventions, such as sales at subsidized prices, food for work or cash for work activities, are also recommended, depending on the extent of food supply in specific areas. - Distribution of inputs such as seeds and fertilizer is also needed to enable farmers to produce enough food during the next cropping season. - In each country, market and price conditions and the situation of vulnerable groups, need to be closely monitored in order to provide assistance as soon as it is necessary.

Eastern Africa

Delayed rains affecting secondary cereal crop in Ethiopia

The aggregate output of the 2007 cereal crop in the subregion is estimated at 34.2 million tonnes slightly lower than the previous year but still 20 percent above the average of the past five years. This total includes a preliminary estimate for the secondary “belg” season crop in Ethiopia, which will be harvested from June 2008 and for which the outlook is uncertain due to a delayed onset of rains.

In Eritrea, the output of the 2007 main season cereal crops, harvested late last year was estimated to be normal, reflecting generally favourable weather conditions. However, domestic cereal production in the country covers only about one-fifth of total consumption requirements and large quantities have to be imported every year. Current high food prices continue to affect large number of vulnerable people.

In Ethiopia, the prospects for the current secondary “belg” season crops for harvest from next June, are uncertain due to a delayed start of the rains. The National Meteorology Agency (NMA) of Ethiopia has forecast below-normal March to May rains in most parts of the country. These poor rains would extend existing drought conditions, in southeastern parts resulting from the poor performance of the 2007 main and second rain seasons, and have negative impacts on already highly food insecure households.

In Kenya, planting of the 2008 main season cereal crop is about to start. The yields of the recently harvested 2007/08 secondary “short rains” cereal crop, were reduced reflecting October-December inadequate and poorly distributed rains in several northern and eastern pastoral areas, agro-pastoral, coastal and eastern marginal agricultural regions. This poor rainfall performance has interrupted three consecutive seasons of improvement in the food security status of most households in these areas. Post election political unrest has further disrupted markets, leading to increased food prices and impaired agricultural production through increased costs of inputs in the mixed farming regions in Rift Valley, Western and Central Provinces. The combination of displacement and high production costs threatens to reduce the land under cultivation in these areas by up to 30 percent, with a potential negative impact on food availability and access countrywide. About half of agricultural land in North Rift, the key maize producing area, has not yet been prepared for the planting season this month.

In Somalia, planting of the main 2008 “gu” cereal crop is underway. According to the Climate Outlook Forum for the Greater Horn of Africa, the April to June rains for most of the country are forecast to be normal to below-normal. These rains are essential for the replenishment of water sources, regeneration of pasture and for the production of the crops that are harvested from August in central and southern areas. In these areas many pastoral and agro-pastoral households already face high to extreme food insecurity due to multiple recent shocks, including floods, conflicts, hyper-inflation and drought.

In Sudan, the outlook for the irrigated wheat crop, now being harvested, is favourable, reflecting adequate irrigation water supplies and relatively low temperatures. The output from this crop is preliminary estimated at some 800 000 tonnes, about 15 percent higher than last year’s above average crop. The sorghum crop, harvested in November-December last year, is estimated at 3.9 million tonnes, one million tonnes less than previous year’s bumper crop, but well above the average for the previous five years. The 2008 coarse grains crop, mainly sorghum, is due for planting from June.

In the United Republic of Tanzania, the main coarse grain crop, now in the ground, is due for harvest from May while the harvesting of the 2007/08 short rainfall “vuli” season crops is over. This crop accounts for some 30 percent of annual food supplies. The performance of the season was below average due to poor rains, particularly in Kilimanjaro, Arusha, and Tanga regions. The 2007/08 coarse grains production, estimated at 4.0 million tonnes, compares with 4.2 million tonnes in the previous year. The food supply situation is generally satisfactory throughout the country with the exception of areas in the region of Arusha and Iringa where food shortages, mainly due to a volcano eruption on Mount Oldongai and fire disaster, where reported.

In Uganda, the sowing of the 2008 main season coarse grain crops has just been completed. The output from the second season crop, recently harvested, is estimated to be about average, except in the flood hit eastern districts where crops were destroyed. It is estimated that about half of the production will be available for the market. Eastern and Northern Uganda experienced heavy rains during the three months of July, August and September 2007 that resulted in severe floods in many locations, including Amuria and Katawi districts of Teso subregion, where crop losses were particularly high.

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

In Somalia, the food security situation continues to deteriorate for more than 2 million people who are in need of basic humanitarian assistance and livelihood support for at least six months. Intensive conflict in Mogadishu continue to force an average of 20 000 people to live their home each month. This, coupled with record high food prices, hyper-inflation and droughts in large parts of country, is leaving communities struggling to survive. In many pastoral and agro-pastoral areas, households already face high to extreme food insecurity due to multiple recent shocks which include floods, conflicts and drought. The humanitarian situation has particularly deteriorated in the Shabelle, Hiran and Central regions.

In Ethiopia, notwithstanding a bumper cereal harvest for the second year in a row, 8 million chronically food insecure people, and 2 million people affected by civil insecurity, high food prices and localized unfavourable weather, will require emergency relief in the form of cash transfers and other assistance. In an effort to reduce the impact of 20 percent annual inflation on poor people, the Government has recently decided to cancel the value-added and turnover taxes on food grains and flour - which constitute more than half of the country’s consumption – as well as all types of taxes imposed on cooking oil and on soap. Earlier, the Government had devised measures which include provision of direct and indirect subsidies, and had spent ETB 372 million (Ethiopian Birr) or USD 38 million to subsidise wheat and ETB  3.52 billion (USD 366 million) to subsidise fuel. The current monthly distribution of 25 kg of wheat for low-income urban dwellers, introduced in March 2007, will be maintained as well as distribution of edible oil and other products. The Government has also announced the imports of a large quantity of sugar (1.5 million tonnes), wheat and cooking oil.

In Kenya, the Special Programmes Ministry reports that over 60 000 people in Taita-Taveta district alone face starvation following a crop failure caused by erratic rains in the last two seasons. Post election political unrest has also damaged the livelihoods of the IDPs, most of whom were farming families, traders and generally food secure with high resilience. Some 207 000 living in camps are under humanitarian emergency. An additional 130 000 are integrated with host families.

In Sudan, conflicts between Missarya nomads and southern security forces in northern Bahr el Ghazal are spreading to Abyei County and northern Unity State, causing market disruptions and posing high risk to food security. In the north, displacement and loss of livelihoods are expected to continue in Darfur where malnutrition rates are likely to deteriorate in the coming months.

Eastern and northern Uganda experienced heavy rains during the three months of July, August and September 2007 that resulted in severe floods in many locations including Amuria and Katawi districts of Teso subregion, where crop losses were particularly high. The effects of the floods are still severe as they compromised food security in these areas. Karamoja is next in need of assistance, but not primarily because of flood damage. Here, food security problems stem mainly from prolonged insecurity, drought in 2006, a late start to the 2007 cropping season, falling livestock prices and a severe attack of honeydew on sorghum, the main staple. The entire Karamoja population of one million people is food insecure and in need of emergency food aid. The Government has provided some farm implements and seeds to farmers, but the population still needs food relief to bridge consumption up to the next harvest in June.

Cereal prices continue to increase

In Ethiopia, grain prices have again increased in February and March after a slight decrease in the previous three months. Wheat in Addis Ababa in March increased to ETB 432 per quintal (USD 46.55) from ETB 349.75 per quintal (USD  37.67) in February. Mixed Teff in the same market was quoted in March at ETB 519 per quintal (USD 55.90) compared to ETB 405 per quintal (USD 45.80) a year earlier. With prevailing high prices, poor households are expected to find it more difficult to secure access to adequate food supplies.

The factors behind this unusual behaviour of increasing prices despite successive good crops, include: increased overall economic activity, especially construction of roads and housing in urban areas, increased liquidity in the economy due to partially cash based assistance in the safety net programmes, which in turn reduce in-kind food aid; the spread of the credit repayments by farmers throughout the year rather than immediately after harvest; budgetary support at district level which increased effective demand through salary payments; increased formal and informal cross-border trade in grains; local purchases cooperatives and relief agency.

In Kenya, due to soaring import prices, reduced secondary season crop and post election disturbances, the price of maize in the Nairobi market - which fluctuated between USD 210 per tonne and USD 223 per tonne in the period October 2007 and January 2008 - increased to USD 257 per tonne in March.

In Somalia, the disruptions of the Bakara market in Mogadishu (the main marketplace in southern Somalia) have intensified the rise in stable food prices which had been rising since May 2007. The increase in prices of basic commodities has been even more pronounced in the northern-eastern region (Puntland) because of crippling inflation linked to an influx of currency. Businessmen in Bossaso, the region’s commercial capital report that the price of 50 kg of wheat flour had almost tripled, in a year, from an equivalent of USD 12 to USD 33 or SOS 900 000 (Somalia Shillings). This increase in prices, coupled with the depreciation of Somali shilling and increased fuel and transport costs, are causing serious problems of food access for the poor population.

In Sudan, as reported by the Ministry of Agriculture and Forestry sorghum and millet prices in all major markets are stable at a high level during the usual immediate post-harvest time (February-March). The expected seasonal downward trends, in prices that normally occur during the harvest and immediate post-harvest periods, were less marked than previous years. The wholesale price of sorghum in Khartoum is 6 percent lower than the 2002-2006 average for this time of the year, and in the producing area of Gedaref it is only 2 percent lower than the average. However, this relatively low level of prices is expected to end in the coming months when private and government stocks lessen. By contrast, wheat prices have steadily increased since June 2007, following widespread increases on international markets. February wheat prices in Khartoum increased by some 6 percent compared to the previous month, and were 90 percent higher than the February 2007 prices.

In the United Republic of Tanzania, in response to lower production, increased transport costs from rising fuel prices and a government campaign for standardization of grain weights at the farm gate, wholesale food prices in all markets are higher than normal for this time of the year. Wholesale maize prices in Dar-es-Salaam - quite low in mid-2007, averaging USD 120 per tonne - began to increase sharply since August 2007, to reach USD 325 per tonne in January 2008. In February, prices started to decline and were quoted at USD 298 per tonne in March. In an effort to limit the price increases, and to mitigate the effects of the localized food shortages, the Government authorized the imports of about 300 000 tonnes of maize duty-free and imposed an export ban on agricultural commodities.

In Uganda, prices of maize that had been declining since the beginning of last year, reaching their low levels of USD 121 per tonne in September 2007, increased sharply to USD 151 in October and averaged at USD 182 per tonne in December 2007. In March 2008, prices reached USD 231 per tonne.

Southern Africa

Prospects for the 2008 cereal crops in Southern Africa are generally favourable except in Zimbabwe and southern parts of Mozambique

In Southern Africa, the 2007/08 agricultural season is approaching harvest. Although the planting rains started later than usual, excessive precipitation persisted during December and January throughout the region causing serious flooding in many low-lying areas, especially along the river basins in Mozambique, Zambia, Zimbabwe, Malawi and Madagascar. Since February rains have diminished, and unfavourably dry weather has returned to some countries including most of Zimbabwe, parts of eastern Botswana, southern Malawi, southern Mozambique, eastern Swaziland and central Zambia. However, despite these weather vagaries, overall prospects for the subregion as whole are considered favourable, marking a recovery from last year’s drought-affected season in several countries. However, significant rises in international prices of fuel and fertilizer have affected the use of these key inputs in agriculture, dampening yield prospects somewhat.

The area planted to maize this season in South Africa is officially estimated at about 3.2 million hectares, 10 percent up from last year, largely reflecting high maize prices and above-average and well-distributed rainfall in the primary maize growing areas (the maize triangle). Output is forecast to reach a bumper level of 11 million tonnes, an increase of about 50 percent over last year’s drought-reduced crop. Large input subsidy schemes were again implemented in Zambia and Malawi, enabling small farmers to use quality seed and fertilizer. This is expected to have a significant positive effect on their total maize harvest later this year. On the contrary, a long dry spell of about 3 to 4 dekads in southern and central parts of Zimbabwe and southern parts of Mozambique is expected to lower this season’s harvest. In Zimbabwe, farmers were faced with additional problems such as shortages and high prices of key inputs such as fertilizer, seed, fuel, and tillage power, further compounded by severe flooding in several districts.

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

Available figures by late March 2008 show that only 82 percent of import requirements of all cereals have been received and/or contracted/pledged since the beginning of the marketing year in April 2007 (see Figure 6). Imports have picked up during the last few months, in spite of high import prices. However, wheat and rice imports were slower than those of maize because of relatively higher price increases for these commodities. Given that the marketing year is almost completed, very little additional imports would come in within this marketing year ending by March or April.

 

Current cereal prices remain high but mostly stable in the region

Prices of main cereals this marketing year have been much higher than at the same period last year due to strong international and regional demand and weak supplies. Current prices of maize, the most important staple foodstuff in most countries of the subregion, including Malawi where significant exportable surplus exists, are well above their corresponding levels a year earlier (see Figure 7). In South Africa, the region’s main exporting country, the March 2008 price (Randfontein spot) was 13 percent higher than at the beginning of the marketing year in May 2007, at ZAR 1 873 (South Africa Rand) per tonne. In Mozambique, the price in March (Maputo wholesale) of MZN 8.57 (Mozambique Metical) per kilogramme was 43 percent higher than for the corresponding month in 2007. The April 2007 to March 2008 average price of rice, the main staple in Madagascar, has been about 12 percent higher than the average for the same period a year ago. Prices have stabilized in recent months and are expected to decline with the arrival of the new harvest starting in April-May. The trend in the current (February-March) prices in various countries reflects expectations regarding the upcoming harvests.

 

Asia

Far East

 

Favourable outlook for the 2008 winter grain crops

The outlook is generally favourable for the developing winter wheat crop throughout the subregion, but based on latest indications, output is likely to turn out a little short of last year’s record. In China, the winter wheat crop, which accounts for about 95 percent of China’s total wheat production, was planted on an estimated 21.5 million hectares last autumn, unchanged from the record of the previous year. Winter wheat output is expected a little lower than last year’s record, reflecting extreme dry conditions that persisted in northern and northeast regions from January until late March before much-needed rains arrived. The winter wheat in some provinces in southern China was also marginally impacted by extreme heavy snow and cold weather. However, a larger spring wheat crop is expected to offset the winter crop decline and aggregate output is forecast to remain at last year’s record level. In India, weather conditions for this year’s winter wheat crop have been generally favourable and output for 2008 is officially forecast at some 74.8 million tonnes, compared to a near record production of 75.8 million tonnes last year. This year’s smaller crop forecast reflects a decline at 500 000 hectares in planted area and unfavourable weather at planting time in some major producing provinces. However, this output is still 6.3 percent above the five year average. Similarly, a smaller wheat crop is expected in Pakistan this year. Output is forecast at one million tonnes less than last year’s record, reflecting a reduced area due to sowing delays, less availability of irrigation water and high fertilizer prices. However, output could still be 5.3 percent higher than the five-year average. The price of wheat in Pakistan remains lower than in neighbouring countries, so that wheat (flour) is being smuggled out of the country; domestic food prices are increasing as a result.

 

Based on the latest information, 2007 paddy production of the subregion is estimated at a record of 584.6 million tonnes, up about 8 million tonnes from the previous year, while 2007 aggregate cereal output is estimated at a record of 1 022 million tonnes, some 20 million tonnes above the previous year, mainly reflecting bumper crops in China, India, and Indonesia.

Food supply difficulties persist in several countries due to reduced 2007 cereal crops and rising food prices

In the Democratic People’s Republic of Korea, the 2007 cereal harvest is officially estimated at some 3 million tonnes (rice in milled terms), some 1 million tonnes lower than the record of the previous year and 750 000 tonnes below the five-year average. With this low 2007 production, the cereal deficit for the 2007/08 marketing year (November/October) is estimated at 1.66 million tonnes (see Box). Over four months after Cyclone Sidr hit up to 30 districts in Bangladesh on 15 November 2007, large-scale humanitarian relief operations are still ongoing in the country to assist the most affected 8.9 million people. Food and non-food items are being distributed in 13 cyclone-affected districts. The reduction in 2007 paddy production and rising food price since 2007 (Figure 9) are significantly impacting the food security of vulnerable populations in both urban and rural areas. In Sri Lanka, the country’s food security continues to be affected by the resurgence of civil conflict, natural disasters (recent floods), as well as rising cereal prices (Figure 10). Since the beginning of 2008, more than 2 500 people have reportedly been killed in fighting and the security situation has deteriorated. Rice and wheat flour prices in March 2008 in Colombo city were higher by 77 percent and 72 percent, respectively, compared to the same period in 2007. Heavy rains in March affected more than 340 000 people and displaced some 7 000 families; crop damages were also reported in northwestern region, especially in the Mannar district. The food security situation has also continued to deteriorate in the past months in Timor-Leste and Nepal as a result of political instability and rising food prices. In Timor-Leste, a state of emergency, declared soon after the February 11 attacks, was extended for another month, to April.

 

 

Some 20 provinces of southern China suffered from disastrous cold, ice, and snow in January and February and some 100 million people are officially estimated to have been affected. The most severely impacted crops and agricultural products include rapeseed, vegetables, fruits, forest products, and livestock products. According to China’s Ministry of Agriculture, the affected rapeseed area is estimated at 3.26 million hectares (410 000 hectares of which are completely lost) accounting for 48.4 percent of national rapeseed area. Direct economic losses are estimated at CNY 100 billion (Yuan) or USD 13.8 billion. Similarly, unusually cold weather in Viet Nam has been sweeping through the upland areas near the Viet Nam-China border since 14 January, making it a record-long cold spell. About 150 000 hectares of rice were destroyed and about 90 000 head of livestock died, of which 75 percent were young calves and young buffaloes.

In Indonesia, the avian influenza situation remains critical despite containment effects undertaken by national authorities and the international community. Avian influenza has reportedly become deeply entrenched in the country with 31 out of 33 provinces being infected. The avian influenza situation in Bangladesh is also serious with 47 of Bangladesh’s 64 districts affected, and more than 1.5 million birds reportedly killed since March of last year.

Near East

In Afghanistan, the extreme cold conditions in January and February, which caused hardship and crop losses, notably in eastern areas bordering Tajikistan, have come to an end. While winter vegetable crops have been damaged in the worst affected areas, the extent of the damage to winter wheat, if any, is not yet known. The normally dry south has experienced an unusually wet winter this year, while central areas of the country and western highland areas have received less snow than usual. Unless these central and western areas receive good rains in the April-June period, water reserves for irrigated crops may become very scarce. This could already have some impact on this year’s main irrigated crop harvest from May for downstream farmers whose land is far from water reservoirs, but could have a more widespread impact at the time of pre-winter cultivation in August, September and October of 2008, thereby affecting the 2009 crop harvest.

Although it is too early to forecast the full implications of this winter’s anomalous weather pattern on crop production, the 2008 cereal harvest is tentatively expected to be an about-average 4.6 million tonnes, somewhat less than the 2007 crop. However, a favourable harvest outcome is only possible with good and regular rainfall for the remainder of the growing season, including in the bulk of the rain-fed crop areas in the North.

In Jordan, with below normal cumulative rains, the outlook for the 2008 winter grain crops due for harvest from May is unfavourable, and output is estimated to be lower than last year’s crop of about 60 000 tonnes. The Government has recently implemented a plan to deal with a severe water deficit estimated at over 500 million cubic meters annually. Over the past five years, the arrival of about half a million refugees from Iraq has aggravated water shortages. The plan envisages that the amount of water pumped to farmers for irrigation would be reduced by at least 50 percent, with only crops that do not require a large amount of water to be allowed. The quantity of water pumped to households will also be reduced and rationed. The country depends entirely on rain water during the winter season to meet demand. Last year, some parts including the Jordan Valley – the kingdom’s main agricultural area – received only 60 percent of the expected rainfall. Recently the Ministry of Planning has called for international help to alleviate the problem of water scarcity and indicated that JOD 430 million (Jordanian Dinar) or USD  606 million are needed for projects to increase water reserves.

Asian CIS

High international cereal prices are resulting in larger plantings of cereals, particularly wheat, for the 2008 harvest in the Asian CIS countries. Chief amongst these is Kazakhstan, where the area to be sown to wheat is to rise by over 1 million hectares, to 13.2 million hectares. In the other countries, which have to import expensive wheat, the area is also foreseen to increase: Azerbaijan, Kyrgyzstan, Tajikistan and Turkmenistan. In Armenia, the Government is taking steps to significantly step up wheat production in 2008/09, by importing improved seed, subsidizing the area sown to wheat and encouraging irrigated wheat production. In Azerbaijan, the government is predicting a sharp 22 percent increase in wheat production in 2008. At this early stage, when winter grains have recently emerged from dormancy and spring grains are being planted, the aggregate 2008 cereal harvest in the subregion is tentatively estimated at an about-average 30 million tonnes, of which 25 million tonnes would be wheat. Kazakhstan alone could account for almost 17 million tonnes of grains, including 14 million tonnes of wheat. However, these estimates depend crucially on normal growing conditions throughout the period up to the harvests in July-September.

In 2007, the cereal harvest in the subregion reached an estimated 33 million tonnes, including an officially estimated 20 million in Kazakhstan. In Uzbekistan the 2007 harvest is officially put at a record 6.1 million tonnes, including 5.7 million tonnes of wheat. Despite estimates of larger production in Turkmenistan (2.1 million tonnes including 1.9 million tonnes of wheat) imports have risen sharply this year to ensure adequate domestic supplies. Output in Kyrgyzstan reached 1.4 million tonnes, half of which is wheat. In Georgia, the cereal harvest in 2007 recovered from the drought-reduced level of 2006, reaching 400 000 tonnes, but areas sown to cereals continue to decline, as the country has little comparative advantage for cereal production. In Armenia, indications also point to a trend away from cereal production, although good yields in 2007 led to an above-average output of 400 000 tonnes.

In Tajikistan, the food security situation is particularly difficult. Low purchasing power continues to limit access to expensive wheat, vegetable oil and fuel. Under normal conditions, most of the population spend over half of their income on food, while the most vulnerable spend 70-80 percent. Since late last year, the prices of bread, oil and wheat based products have doubled while the price of many other basic goods has increased by half. An extremely cold winter caused considerable damage to herd productivity and winter crops. Lack of heating and a shortage of water (frozen) in January and February has meant that most people spent more on food, ate less, and that household food stocks are historically low. Food Security Cluster agencies in the country estimate that 550 000 people are most seriously affected, of whom at least 260 000 need immediate support. A UN Appeal for USD 25 million to help vulnerable populations remains only one quarter funded. Meanwhile, with the onset of spring, the population faces, further hardship related to avalanches, mudslides and flooding.

Latin America and the Caribbean

Central America and the Caribbean

Harvesting of the 2008 main winter wheat crop is about to start in Mexico, virtually the sole producer in the subregion. Early official forecasts point to a good production of about 3.4 million tonnes, similar to last year’s harvest. The increase reflects and expansion of planted area and adequate water availability in the main reservoirs, especially in the northwestern irrigated districts of Sonora and Baja California states during the growing season. Planting of the 2008 main season coarse grains and paddy crops is expected to start at the beginning of May with the arrival of first seasonal precipitation in Mexico and other Central American and Caribbean countries. Aggregate plantings in the subregion are tentatively forecast at a record 14.3 million hectares, including 10.4 million hectares of maize, 2 million hectares of sorghum and 674 000 hectares of paddy. Assuming average yields, the 2008 aggregate cereal output is tentatively forecast to reach a record level, slightly above 42 million tonnes. In Mexico, despite excellent maize production in 2006 and 2007, commercial imports in marketing year 2007/08 (July/June) are expected to be a record 9.5 million tonnes, some 600 000 tonnes more than the already high volume of the previous year. The increase is essentially due to the implementation of the last phase of market liberalization under the NAFTA in January, that allows duty-free imports of maize from Canada and the United States, and to the partial substitution of more expensive sorghum imports with cheaper broken maize. In Cuba, harvesting of sugar cane, the main agricultural export, is underway and early estimates point to a national output of raw sugar of 1.6 million tonnes, which positively reverts the trend of the last 15 years when production declined from 8 million tonnes in 1990 to only 1.2 million tonnes in 2007.

South America

Harvesting of the 2008 main season coarse grain crops is underway. Preliminary estimates set aggregate production at about 95 million tonnes, a new record, some 2 percent above last year’s output and almost 20 percent above the average of the past five years. This is mostly due to an increase in area planted in Argentina and Brazil, the main producing countries, in response to high international prices. In Argentina, harvesting of maize started in February and production is estimated at 20 million tonnes, above average, but lower than the 2007 record level. An increase of about 10 percent in plantings, which earlier in the year pointed to a larger output, has been more than offset by reduced yields in key growing areas of Buenos Aires, Córdoba and La Pampa departments because of adverse weather. In Brazil, harvesting of maize is also underway and, despite some irregular precipitation in western Bahia, the crop is reported to be in generally good condition. If planting intentions for the second season (safrinha) maize crop are confirmed, the 2008 aggregate maize area is expected to be well above 14 million hectares and early forecasts point to a record production of 55.6 million tonnes. In Chile, a state of agricultural emergency has been declared in about 40 percent of country’s municipalities due to the worst drought in the last 50 years. Major affected crops are vegetables, avocados and citrus fruits, while damage to pastureland is severely reducing milk production. Harvesting of the 2008 main rice crop is underway, and the subregion’s aggregate production this year is tentatively forecast at an average level of 22 million tonnes.

Adverse weather conditions associated with the “La Niña” meteorological phenomenon have affected food and cash crops in several Andean countries. In Bolivia, intense rainfall since the end of 2007 has caused severe floods in eastern and northern departments. Losses of the main summer season crops, normally harvested from mid-March to May, are provisionally estimated at about 600 000 hectares of food (paddy and maize) and cash crops (mainly soybean). At the same time, important losses of livestock and reduction in pasture due to excess water are reported in the Department of Beni. In Ecuador, as of 20 February, the whole country has been declared in a state of emergency due to floods. Damage to housing, infrastructure and agriculture (paddy, cocoa, bananas and vegetables) is reported, especially in the departments of Manabí, Guayas, Los Ríos and El Oro on the coast as well as in Azuay and Cañar in the highlands. In Peru, torrential rains have partially or totally damaged some 45 000 hectares of crops (mainly coffee, plantains, white maize, paddy and potatoes) in the departments of Tumbes, Piura and Lambayeque. However, the abundant precipitations have generally improved soil moisture with positive effects on plantings of 2008 winter crops, especially wheat, that are expected to start in April.

North America, Europe and Oceania

 

North America

In the United States, the official Prospective Plantings Report issued at the end of March estimates winter wheat plantings at about 18.9 million hectares, some 4 percent up from the previous year’s level, and slightly higher than earlier expectations following larger than expected areas sown to Soft Red Winter wheat. The winter wheat crop is reported to be mostly in satisfactory condition, with good moisture having been received throughout the Great Plains during the winter. The main exception has been western parts of the main winter wheat producing states in the central and southern Plains, which remained predominantly dry in the past few weeks; this may translate to higher abandonment rates than earlier expected.

For spring wheat, planting of which has just started, the area is seen to increase to nearly 6.9 million hectares, almost 10 percent up from the previous year’s level. This strong increase reflects the continuing high wheat prices that point to good returns for this crop combined with favourable conditions for planting, in particular adequate planting moisture. This is important for good emergence and establishment, and can have an important impact on final yields.

Based on official planting indications, and assuming normal weather for the remainder of the season, FAO currently forecasts the United States’ total wheat production in 2008 at 60 million tonnes, almost 7 percent up from last year, and the largest crop since 2003.

Inclement weather in late March hampered early maize planting in parts of the Midwest but the precipitation will have been beneficial in raising soil moisture reserves for the coming growing season. The bulk of the maize planting is due to get underway in April. According to the Prospective Plantings Report, farmers are expected to reduce the area of maize to about 35 million hectares, after last year’s exceptionally high level of almost 38 million hectares, which was the largest area since 1944. However, although down significantly from last year, this remains a very high level, reflecting the continuing strong price outlook for maize. The area coming out of maize is expected to be shifted back to other crops because of rotational requirements and the prospect of equally good, if not better, returns from some alternative crops. The main alternative in most cases will be soybeans, production of which was sharply reduced last year in favour of maize, but for which returns are expected to be more attractive this year, given higher prices and less input costs compared to maize (see Figure 11). This is expected to be particularly the case in eastern parts of the Corn Belt where soils are less suited to maize and obtaining high maize yields needs perfect weather as well as high inputs. In these parts soybeans are a surer option. Based on these early planting indications, and assuming normal weather for the remainder of the season, FAO forecasts the United States maize output at 300 million tonnes in 2008, 10 percent down from last year’s record output, but still one of the largest crops on record.

 

In Canada, planting of the spring grain crops is due to start in April. Regarding wheat, the major crop, early indications point to an 11 percent increase in area compared to the previous year’s reduced level, when land was diverted out of wheat to oilseeds. Current high wheat prices are expected to be a strong incentive to recovery in the wheat area. However, rather than reversing last year’s shift, a further expansion on 2007’s already relatively high oilseeds area is also expected because of attractive returns in this sector. Although some of the gain in wheat and oilseeds area will come from minor coarse grain crops such as maize and oats, the bulk is expected to come from summer fallow that was not in production last year. Thus, the total area under cultivation to grains and oilseeds is forecast to increase in 2008. Based on the expected plantings and assuming a normal planted to harvested ratio and about-average yields, the 2008 wheat crop is forecast to reach some 25 million tonnes, about 25 percent up from 2007 and similar to the good crop of 2006. This forecast assumes normal weather during the growing season. As of late March it was reported that soil moisture levels in the country’s southern and central grain belt were particularly low. These areas would benefit from more snow or rain before planting, otherwise well-timed rains during the growing season will be all the more critical.

Europe

Cereal production in the region is on course to recover sharply from last year’s below-average crop, which had suffered from unfavourable weather in several parts. While assuming a return to normal yields throughout the region, the expected increase in output also reflects a significant expansion of area in response to the prospect of continuing high cereal prices for this year’s crops. At this early stage, the aggregate regional cereal output in 2008 is tentatively forecast at 439 million tonnes, almost 13 percent up from the previous year.

In the EU, following the suspension of the compulsory 10 percent land set-aside requirement for the 2007/08 cropping year, the total cereal area is forecast to expand by about 6 percent. Most of this expansion would be in wheat, the bulk of which is winter wheat and has already been in the ground since last autumn. However, significant expansions of areas under barley and maize are also expected, as well as small increases for most other cereals. Regarding the condition of the winter crops already in the ground and early prospects for 2008 yields, the outlook is favourable so far. The winter has been characterized by generally mild conditions, especially in some northern parts, limiting the likelihood of winterkill in areas that are normally the most prone. Soil moisture conditions are reported to be mostly adequate so far. Parts of France and Spain that had been unfavourably dry benefited from heavy rainfalls in late March, raising moisture levels for developing wheat and improving prospects for the spring planting season.

Based on these early area indications, which are quite firm with regard to winter wheat but less sure for the spring crops, the bulk of which are still to be sown, and assuming normal weather for the remainder of the season, the aggregate cereal output of the group in 2008 is tentatively forecast to reach 294 million tonnes, some 13 percent up from the previous year. Table 12 shows the current wheat and coarse grains output forecasts for the major producers.

Elsewhere, in the Balkan Peninsula, prospects for the 2008 cereal crops also remain generally favourable and point to a recovery in output after drought affected many areas last year.

In the European CIS, the early outlook for the 2008 cereal harvest is favourable. Winter grains have over-wintered well and spring grain planting is underway. The area sown to winter grains (mainly wheat and rye) has increased and indications are that the aggregate area to be sown to spring crops will also increase. Wheat accounts for the bulk of the increase, with farmers in most countries expanding plantings in response to international wheat prices.

In the Russian Federation, the aggregate area to be sown to grains in 2007/08 is expected to exceed 46 million hectares, compared to 44.4 million hectares for the 2007 harvest. The winter grain area rose by almost 10 percent to 15.6 million hectares, and the spring grain area is forecast at 31 million hectares. The area sown to wheat is forecast to reach 26 million hectares compared to 24.4 million hectares last year. The maize and spring barley areas could also increase at the expense of sugar beet. The Government has recently set export tariffs on mineral fertilizers to stimulate increased domestic use. At this early stage, and provided the weather remains favourable until harvests, the 2008 cereal output is tentatively forecast at around 82 million tonnes, including 50 million tonnes of wheat, 31.6 million tonnes of coarse grains, and the balance in rice.

Exports of grain from the Russian Federation from July 2007 to February 2008 have reached almost 13 million tonnes and are unlikely to increase significantly before the end of the current season in view of the steep export tariffs imposed on wheat and barley. If the 2008 harvest forecast materializes, these tariffs are likely to be removed and the country will remain a major exporter of cereals.

In Ukraine, over 90 percent of the area sown to winter crops (8 million hectares of which 7.5 is in winter grains) is reported to be in good to satisfactory condition. Early estimates point to an increase in the aggregate area of grains for the 2008 harvest of 15 million hectares, (compared to 13.8 million in 2007) mainly due to an increase in the areas sown to wheat and barley. After last year’s severe drought, winter precipitation has provided ample soil moisture for spring growth in most areas, with the exception of the drier south and southeast. Provided weather conditions remain favourable during the remainder of the growing season, the 2008 output of cereals could be about 37 million tonnes, almost 10 million tonnes more than the reduced crop of 2007. Exports from the country so far in the current 2007/08 marketing year have not yet exceeded 500 000 tonnes so far, owing to previous export quotas and licensing restrictions. The Government has extended the operation of the export quota and licensing system until 1 July and has raised the export quotas to 1.8 million tonnes of maize, (from 600 000 tonnes), to 900 000 tonnes of barley (from 4 000 tonnes) and marginally increased the wheat quota to 203 000 tonnes.

In Moldova, the area sown to winter grains is reported to have increased to some 400 000 hectares. Spring sowing is underway. Preliminary indications are that the 2008 harvest will recover to about 2 million tonnes from the drought-reduced level of 800 000 tonnes in 2007. In Belarus, the aggregate area sown to cereal crops is thought to be similar to last year’s but a special effort is being made to increase the areas and output of grain maize. Assuming normal weather, cereal production in 2008 is tentatively forecast at 6.5 million tonnes, less than the record 7 million tonnes harvested in 2007.

Oceania

In Australia, harvesting of the minor summer coarse grain crop (mostly sorghum) began in March and a bumper output is expected. Average to above-average rainfall since October 2007 in northern New South Wales and southern Queensland encouraged large sorghum sowings and benefited crop development leading to good yield prospects. Output of sorghum is forecast at nearly 2.5 million tonnes, almost 80 percent up from the previous year. By contrast, however, due a to severe lack of precipitation in rice producing areas, the summer rice crop has been devastated and output is forecast at just 18 000 tonnes, compared to 161 000 in the previous year.

Early indications for the 2008 winter cereal crops, to be planted from April on, point to possible record sowings as producers are expected to try and increase production to take advantage of high global prices, especially after having lost revenue in 2007 because of drought. However, although producers’ intentions may point to large plantings, the final outcome will depend on rainfall in the main growing areas from April through July. Eastern Australia has already benefited from good levels of precipitation throughout the summer, particularly in February, which has helped to establish good subsoil moisture reserves pre-planting, but more rain will be needed at planting time and during crop development. Other main grain producing areas are still awaiting significant planting rains. At this stage, based on the current indications of producers’ planting intentions and assuming normal weather for the season, the country’s wheat output in 2008 is forecast to recover from last year’s drought-reduced level, and reach almost 26 million tonnes, close to the record crop of 2003. A significant recovery in barley is also expected with output forecast to recover to about 9 million tonnes.

1.  CILSS, FAO, FEWSNET, SIMA and WFP

2.  The CFA Franc is pegged to the Euro (XOF 655.955 = 1 Euro) and the Euro has appreciated dramatically against the US Dollar in recent years.

3.  CILSS, FAO, FEWSNET, SIMA and WFP