UN predicts rise in global cereal output but says increase will not meet demand

The United Nations Food and Agricultural Organization (FAO) today released new statistics on global cereal production, predicting increases in this year's output but warning that supply will still not meet demand.

According to the FAO Food Outlook, global cereal production could increase by almost 2 per cent in 2001 from the previous year's below average output. World cereal output this year is forecast at 1,889 million tonnes -- 35 million tonnes up from 2000 and close to the average of the past five years.

The report warns, however, that "as growth in cereal usage is anticipated to continue in the coming 2001/2002 season, output at this level would be insufficient to meet global utilization for the second year in succession, leading to a further reduction in world cereal stocks."

In the current season, world cereal reserves are forecast to fall by 48 million tonnes, or 4 per cent, to 645 million tonnes, according to FAO. This dip in stocks is not, however, expected to result in a rise in prices, because countries which export cereal still have plenty in store. "International cereal prices remain generally depressed, largely as a result of ample exportable supplies and slack demand," the report notes.

Global feed usage of cereals is now forecast at 686 million tonnes in the current season -- a slight increase from the 682 million tonnes used in the previous year. The report does not raise alarm about reports concerning livestock diseases and contamination. "In spite of the concerns about the contamination of animal feed with BSE infected meat and bone meal and, more recently, the foot-and-mouth disease, global feed usage is not likely to be significantly affected in the short-run from these animal diseases."

At the same time, FAO paints a complex picture of the possible impact of these illnesses. If consumers eat less beef, the demand for feed could actually increase, as farmers would have to keep larger cattle inventories than normal. If consumers shift preferences to other meats -- chicken and pork -- that would also increase the demand for livestock feed.

In the long term, however, feed demand could go down, according to the report. "While emergency slaughtering to-date accounts for less than one percent of total inventories in the United Kingdom, it is unclear how long the problem will persist or how many animals will be involved. A large reduction in total animal numbers to control the disease will ultimately result in reduced feed demand."