As cereal stocks fall, world production to rise next year – UN food agency

Driven mostly by wheat and rice, global cereal production is forecast to increase next year to deal with falling stocks and rising export prices, the United Nations food agency said in a report issued today.

According to Food Outlook, prepared by the Food and Agriculture Organization (FAO), cereal production in 2004 is expected to rise to 2,130 million tonnes – or 2 per cent more than last year and 3 per cent up on the average of the past five years.

Most of the increase will come from wheat, although the FAO forecasts that rice production will also jump substantially. Production of coarse grains may fall slightly, it added in the report, which offers tentative estimates assuming normal weather conditions.

The FAO expects export prices for wheat could start to fall in the coming months with the approach of the harvest in the northern hemisphere. It does not anticipate, however, an immediate slide in prices for rice or coarse grains.

The FAO described the overall increase in production as “a very welcome development for [the] global food supply.” Since the 1999-2000 season, cereal stocks have diminished every year, forcing up the prices of such grains as wheat, maize and rice.

This year, global stocks are tipped to drop by 18 per cent, or 89 million tonnes, led by substantial reductions in China, India, the Russian Federation, Ukraine and the European Union.

Strong demand for cereal grains for feed and industrial use, particularly in the United States, has been helping to push demand ahead of existing production. The FAO said this has occurred despite sharply rising cereal prices and major outbreaks of animal disease in the latter half of the 2003-04 season.