World foodgrain output set to be up 5.3%, says FAO report

Written by Commodities Bureau | Chennai, Nov 12 | Updated: Nov 14 2008, 05:23am hrs
World foodgrain production in 2008-09 is expected to increase by 5.3%, reaching 2.24 billion tonne, and consumption is anticipated to grow 3.3% to 2.19 billion tonne, the United Nations Food and Agriculture Organisation (FAO) has said in the latest issue of Food Outlook.

Among the major cereals, the most significant production expansion is forecast for wheat, up 11%. Production of coarse grains is estimated to be up at least 3%, and rice more than 2%. A combination of exceptionally high prices, which encouraged plantings, and generally favourable weather conditions contributed to the boost in world cereal production this year, the FAO report says.

World cereal utilisation is anticipated to grow by 3.3% from 2007-08, to 2 197 million tonne in 2008-09, reflecting higher all round use: of food, feed and industrial utilisation, the report adds.

Food use, which represents nearly one-half of total cereal utilisation, is forecast to reach 1,023 million tonne in 2008-09, up 1.3% from the previous season. This would allow average per person consumption to remain steady at around 153 kg. Feed utilisation is forecast at 766 million tonne, some 2% above the previous season.

FAOs latest forecast for world wheat output in 2008 stands at 677 million tonne, a very substantial (11%) increase from the previous year. Accounting for a large part of this years strong growth have been the major producing countries in Europe, where latest estimates now point to a significant (25%) increase in production in 2008 following larger plantings and generally above-average yields.

The 2008 paddy season is approaching the critical year-end period, when major rice producing countries harvest their main crops. With the progressing of the season, prospects have greatly improved from the early assessment made in June and global paddy production is now set to reach 674 million tonne (equivalent to 450 million tonne of milled rice), 16 million tonne or 2.4% above the excellent performance of 2007. Favourable growing conditions and improved economic incentives, which have encouraged farmers to expand plantings, lie largely behind the expectations of strong gains. It is important to note, however, that the full 2008 paddy season will only be concluded when the 2008 secondary crops are gathered in the northern hemisphere, around May next year.

Asian countries are set to drive production up this season, as they are expected to reap 611 million tonne of paddy (408 million tonne of milled rice), about 13 million tonne more than in 2007. Large gains are anticipated in all the leading producing countries, such as Bangladesh, Mainland China, India, Indonesia and Vietnam, and also in Cambodia, Pakistan, the Philippines, Sri Lanka and Thailand.

FAOs latest forecast for world production of coarse grains in 2008 now stands at an all-time high of 1 114 million tonne, 3.3% above the record of last year. Output of maize, the major coarse grain, is now set to reach 798 million tonne, up almost 2% from 2007. The increase is attributed mostly to a strong recovery in Europes production after drought in 2007, although larger crops are also estimated in all other regions with the exception of North America.

However, the Rome-based UN agency cautioned that farmers from developing countries burdened by rising cost of agricultural inputs might be unable to keep up with the production next year. FAO noted that most of the recovery in cereal production took place in developed countries, where farmers were in a better position to respond to high prices. Farmers in developing countries, on the other hand, were limited in their capacity to respond to high prices by supply side constraints on their agricultural sectors.

Concepcion Calpe, one of the reports main authors, stressed that the increase in cereal production should not create a false sense of security. Calpe said: for example, if the current price volatility and liquidity conditions prevail in 2008-09, plantings and output could be affected to such an extent that a new price surge might take place in 2009-10, unleashing even more severe food crises than those experienced recently.