A combination of smaller harvests in key producing countries and increasing use of grain to create industrial products such as biofuel will drive world food stocks in 2007 to their lowest level in more than three decades, the United Nations Food and Agriculture Organization predicts.
In a report on the world food situation in 2006-07 issued July 19, the FAO said by next year food reserves will represent little more than 10 weeks of supply. For coarse grains, stocks will fall below eight weeks of supply.
“Taking into account the new season’s production and consumption prospects, world cereal stocks by the close of the season’s ending in 2007 are forecast at just 417 million tonnes, down 45 million tonnes or 10 percent from the start of the season,” said the report.
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“At this level, the ratio of world cereal stocks to expected utilization in the following season is forecast to drop to 20 percent, down from the estimated 22.5 percent in 2005-06.”
The last time food stocks were so low was during the food crisis of the mid-1970s that led to the 1974 World Food Summit in Rome where world leaders promised action to increase food supplies to deal with a growing population and growing hunger in many areas of the world.
The Rome-based FAO projects that cereal production in 2006 will fall almost one percent, or 18 million tonnes, in large part because of smaller harvests in North America and Australia.
At the same time, demand will grow, it said, particularly the demand for feed grain as animal and poultry food.
“In addition, the growing demand for ethanol is likely to boost industrial use of coarse grains (mainly corn) again in 2006-07, especially in the United States and in China.”
The FAO said tightening stocks will likely mean higher prices during the next year.
That means low-income countries with food shortages will have to spend more of their limited cash on imports. The FAO predicts demand for food imports will increase by as much as three percent during the next year.
Tightening stocks also could mean there is less grain available for food aid donations. Already, the FAO is reporting that food aid donations are well below what is needed and below what major donor countries have pledged.
In the report, it cites North Korea as an example. Most of its import requirements are met by food aid donations and this year, 800,000 tonnes are required. So far, donor countries have pledged or donated less than half of what is needed.
