World grain production in 2007 is at a record level of 2.316 billion tonne, a jump of 95 million tonne from the previous year, thanks to near-perfect weather in major growing areas, an estimated 5% jump in fertiliser use and a boost in average yield. However, commodity analysts estimate that voracious global demand will consume all of this increase and prevent governments from replenishing cereal stocks that are at their lowest level in 30 years. The low stocks and strong demand have pushed up prices. Developing countries are likely to spend $52 billion on import of cereals in 2007, says a report from the World Watch Institute.
Despite the record harvest, the low stocks and strong demand combined to push prices of all cereals to new heights. At harvest time, the US corn export price was up about 70% from the previous year, while the American hard wheat price averaged 65% more than a year earlier. Wheat prices in Argentina, another major exporter, doubled since 2006. Important wheat exporters like Ukraine and Russia have imposed export restrictions to ensure a sufficient domestic supply. Major importers, like Egypt, the European Union, Yemen, and Iraq, have reacted to high prices by purchasing grain early, which has further tightened supplies and boosted prices.
As such increases ripple through the food chain, people around the world have been greeted with higher prices for bread, beer, corn flour, and other basic foods. Developing countries are likely to spend a record $52 billion on imports of cereals in 2007, up 10% from 2006. This follows a 36% hike in the previous season.
In 2007, a 200-million-tonne jump in the global coarse grains was responsible for nearly all of the increase in the total grain harvest. Production of coarse grains that include corn, barley, sorghum, and other grains, fed mainly to animals, increased 10%, from 985 million tonne in 2006 to 1,080 million tonne in 2007. Wheat harvests increased modestly, by 2%, to 605 million tonne, with near-perfect weather nurturing strong harvests in India, the EU, and the United States. Australia, however, normally the source of one third of world exports, faced lower crop prospects and depleted exportable supplies. And unfavourable weather meant a reduced harvest in China, the world?s second largest producer.
The global rice harvest was up slightly to 633 million tonne, matching the record 2005 harvest, as conditions returned to normal in China, India, and across Asia, which accounts for 90% of world production.