Monitor Vol 39 08_Final_Nov08.pdf - tips

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Figure 1: World cereal production, 2000–2007 (million tons) 1,200 2,000 Million tons 900 600 300 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Wheat Coarse grains rice Total (right scale) 1,600 1,200 800 Total million tons 87 Trade & Industry Monitor Note: Data for 2007 are forecasts. Source: Data from FAO 2003, 2005, 2006b, and 2007b. Figure 2: World cereal stocks, 2000–2007 700 600 Million tons 500 400 300 200 100 Total stocks China 0 2000 2001 2002 2003 2004 2005 2006 2007 Note: Data for 2007 are forecasts. Source: Data from FAO 2003, 2005, 2006b, and 2007b. wheat and maize production in the European Union and the United States decreased by 12 to 16 percent. On the positive side, coarse grain production in China increased by 12 percent and rice output in India increased by 9 percent (based on data from FAO 2006b and 2007b). In 2007, world cereal production is expected to rise by almost 6 percent due to sharp increases in the production of maize, the main coarse grain. In 2006, global cereal stocks—especially wheat—were at their lowest levels since the early 1980s. Stocks in China, which constitute about 40 percent of total stocks, declined significantly from 2000 to 2004 and have not recovered in recent years (Figure 2). End-year cereal stocks in 2007 are expected to remain at 2006 levels. 2 The World Food Situation: new driving forces and required actions
Food Policy 88 Trade & Industry Monitor As opposed to cereals, the production of high-value agricultural commodities such as vegetables, fruits, meat, and milk is growing at a fast rate in developing countries (Figure 3). Climate-change risks will have adverse impacts on food production, compounding the challenge of meeting global food demand. Consequently, food import dependency is projected to rise in many regions of the developing world (IPCC 2007). With the increased risk of droughts and floods due to rising temperatures, crop-yield losses are imminent. In more than 40 developing countries—mainly in Sub-Saharan Africa—cereal yields are expected to decline, with mean losses of about 15 percent by 2080 (Fischer et al. 2005). Other estimates suggest that although the aggregate impact on cereal production between 1990 and 2080 might be small—a decrease in production of less than 1 percent—large reductions of up to 22 percent are likely in South Asia (Table 3). In contrast, developed countries and Latin America are expected to experience absolute gains. Impacts on the production of cereals also differ by crop type. Projections show that land suitable for wheat production may almost disappear in Africa. Nonetheless, global land use due to climate change is estimated to increase minimally by less than 1 percent. In many parts of the developing world, especially in Africa, an expansion of arid lands of up to 8 percent may be anticipated by 2080 (Fischer et al. 2005). World agricultural GDP is projected to decrease by 16 percent by 2020 due to global warming. Again, the impact on developing countries will be much more severe than on developed countries. Output in developing countries is projected to decline by 20 percent, while output in industrial countries is projected to decline by 6 percent (Cline 2007). Carbon fertilization 3 could limit the severity of climate-change effects to only 3 percent. However, technological change is not expected to be able to alleviate output losses and increase yields to a rate that would keep up with growing food demand (Cline 2007). Agricultural prices will thus also be affected by climate variability and change. Temperature increases of more than 3ºC may cause prices to increase by up to 40 percent (Easterling et al. 2007). The riskier climate environment that is expected will increase the demand for innovative insurance mechanisms, such as rainfall-indexed insurance schemes that include regions and communities of small farmers. This is an area for new institutional exploration. 1.3. Globalization and Trade A more open trade regime in agriculture would benefit developing countries in general. Research by the International Food Policy Research Institute (IFPRI) has shown that the benefits of opening up and facilitating market access between member countries of the Organisation for Economic Cooperation and Development (OECD) and developing countries—as well as among developing countries—would bring significant economic gains. However, large advances in poverty reduction would not occur except in some cases (Bouet et al. 2007). Multilateral discussions toward further Figure 3: Annual growth rate of 2004–2006 (percent) 5 Average production growth (%) 4 3 2 1 0 4.0 4.0 2.9 3.0 0.6 0.2 0.2 0.3 Vegetables Fruits Meat Milk Developed countries Developing countries Source: Data from FAO 2007a.
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