A new report from the Worldwatch Institute projects global grain production for 2012 to reach a record-high level of 2.4 billion tons, an increase of 1 percent over last year.
Citing data from the United Nations Food and Agriculture Organization (FAO), the report’s authors say production of grain for animal feed, up 2.1 percent this year, is growing faster than production of grain for direct human consumption, which is up 1.1 percent over 2011.
As we know, severe drought significantly reduced grain production in the United States this year, especially affecting the corn crop, which likely will decline by about 13 percent from last year. Nevertheless, the report projects 2012 global corn production up 4.1 percent from that in 2011.
In August, USDA projected total world course grain supplies for the 2012-2013 marketing year at 1.3 billion tons, down 2 percent from a year ago and down a half percent from 2010-2011.
According to the Worldwatch report, global rice production is up by 2.6 percent while 2012 wheat production will decline 3.6 percent from 2011.
The authors note that wheat, corn and rice account or two-thirds of global food energy intake and grains provide the majority of calories in diets worldwide, ranging from a 23 percent share in the United States to 60 percent in Asia and 62 percent in North Africa. The authors also note that introduction of high-yielding varieties has helped global grain production increase 269 percent and grain yield has increase 157 percent since 1961, while the grain harvest area increased only 25 percent.
Production needs to continue increasing to meet the demand of growing world populations, and even if this year’s production is up slightly, food prices are likely to increase.
A report from Rabobank International last week projects the FAO Food Price Index, which serves as a proxy for prices consumers around the world pay for food, will rise by 15 percent from August 31, 2012 through June 30, 2013.
The Rabobank report notes, however, that commodities used primarily for feed, such as corn and soybeans, account for most of the shortages this year, in contrast with shortages of staple-food commodities such as wheat and rice in 2008.
Global wheat stocks will end this season with 90 days of use, according to the Rabobank report, compared with 76 days in 2007-2008. Rice stocks will finish the marketing year with 81 days of use compared with just 69 days in 2007-2008.
In contrast, soybean stocks will fall to 73 days of use and corn stocks will finish the marketing year at 51 days of use, compared with 83 days for soybeans and 62 days for corn in 2007-2008.
Rabobank analysts project global stocks of core food staples such as rice and wheat will account for 61 percent of total grain supplies, compared with 53 percent in 2007-2008, resulting in wheat and rice prices about 30 percent lower than their 2008 peaks.
The implication of these trends is that corn and soybean prices will increase more than those for wheat and rice. As a result, livestock production will decline and meat prices will rise. While U.S. consumers will generally accept higher meat prices and continue eating meat, consumers in developing nations will temporarily shift consumption away from expensive meat and substitute more grains. Short supplies of rice and wheat, which serve as staple foods around the world, would have a more direct impact on global hunger, as happened in 2008.
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