World Coarse Grains Outlook
May 01, 1997
by Teresa Acklin
Healthy global economy to fuel higher coarse grains consumption and trade, demand model predicts.
Fueled by widespread economic growth, global coarse grains consumption should increase by 1.5% annually in the next decade to reach 980.5 million tonnes by 2005-06, according the U.S. Feed Grains Council's 1997 Demand Forecast.
The forecast, released in early February at the Council's annual meeting, also predicted a 5% per year increase in coarse grains trade over the same period, which would bring exports to 128.5 million tonnes by 2005-06 compared with 82.7 million in 1996-97.
The report attributes much of these increases to what is described as a “new economic structure” in world food markets. For the first time since World War II, economic growth should accompany population growth in most areas of the world, providing a dual stimulus to consumption, the report forecast.
Until recently, demand for high-value foods including commercially produced meat, eggs and poultry was confined mostly to the industrialized economies, where mature markets and small rates of population growth tempered significant consumption increases. At the same time, coarse grains use in developing economies, where population growth was greatest, was constrained by high inflation, debt and stagnant living standards.
In centrally planned economies, coarse grains use was dictated by official policies. And after those economies entered the transition to more open systems, severe economic declines and market inefficiencies slashed use.
But economic conditions have changed in virtually all of these sectors, the report says.
“Not only have the industrial economies entered a period of sustained growth, but many of the developing countries have become 'economic miracles' in the 1990s,” the report notes, adding that the worst of the adjustment declines in the transition economies appeared to be past. Consequently, prospects for a solid expansion in demand for coarse grains are strong, the report says.
The report also estimates that production will nearly double in the next decade, to about 175 million tonnes in 2005-06. The forecast calls for little change in harvested area, instead predicting that technology, including genetics and production management, will result in higher yields.
The evolution of open markets with historically less government intervention should enable producers to respond to market signals. Consequently, stocks are expected to expand from recent extremely tight levels to assure adequate supplies through the period.
The report cautions that, as with any forecast, variables play a role and could change the outlook. These consist of weather, political hostilities, actual economic performance and other factors.Importers
Not surprisingly, the biggest future influence on global consumption and trade will be China, the report says. The country already has moved from a net exporter 10 years ago to a net importer, and its imports are predicted to expand each year, reaching 23.5 million tonnes, representing18% of world trade, by 2005-06.
Although China's coarse grains production should increase by 21%, consumption is predicted to jump by 43%. An increasingly urban, affluent population will spark high-value food demand, requiring imports to satisfy needs as well as to keep food price inflation under control.
Imports by Japan, currently the world's largest coarse grains importer by far, will remain relatively flat. Use will remain stagnant because trade liberalizations will allow market access for competitively priced high-value processed food.
During the past 10 years, imports by South Korea, Mexico and Saudi Arabia have increased steadily. That trend should persist except in Saudi Arabia, where imports should expand only modestly. South Korean imports should increase by more than 35%, while Mexico's imports should jump by 39%.
Imports by Taiwan, the fourth largest importer in 1996, were forecast to increase by about 20% over the period. But the forecast was made before the outbreak of foot-and-mouth disease in Taiwan's hog herds that has devastated the industry and could reduce imports for at least two years (seeWorld Grain News in this issue). The longer term effects currently are undetermined.Exporters
The United States will remain the world's primary supplier of coarse grains over the next decade, with U.S. exports expected to rise by 46% to nearly 86 million tonnes. But the U.S. share of world trade is estimated to remain nearly constant, at around 67%.
A few changes should occur in the market shares of other exporters. Argentina, currently the world's second largest exporter, will see its shipments increase by about 29%. But its share of exports, excluding U.S. shipments, is likely to decline to 29% by 2005-06 from 33% in 1995-96. The export shares of Australia and Canada also are projected to decline as emphasis in those countries becomes more focused on wheat and oilseeds.
In the early 1990s, declining grain stocks re- lated to policy reforms pushed E.U. exports lower. But through the next decade, production is expected to outpace domestic demand, leading to increased exports.
The most significant turnaround in trade status is expected in Eastern Europe and Ukraine. As economic progress continues in these areas, structural reorganizations in marketing and production capacity should enable them to compete effectively on world markets and capture a greater share of trade.