July 5, 2007
Biofuel surge to hike world grain production
Soaring prices of grains and active participation of developing countries in increasing global feed demand will push grain production in the next decade, according to a major study by the Organization for Economic Cooperation and Development (OECD) and the United Nations' Food and Agriculture Organization (FAO).
The study said current low stocks and high prices, grain output forecast seen at 1.2 billion tonnes of coarse grains by 2016, including 673 million tonnes of wheat.
Supported by a boom in the biofuel sector and the incentive of currently higher prices, world grain output was projected to recover from the recent deficits which made countries draw down their stocks, now projected at their lowest levels in 30 years.
The report said beyond the initial years of the outlook, much of the growth in output is expected to stem from area productivity gains as world prices decline from current highs.
The bulk of wheat and coarse grains production would continue to come from the largest producers - the United States, the EU and China, along with India for wheat - dominating over half of the total world output, it said.
The rise would also lead to a rebound in global grains trade after exports were substantially cut in recent years in several large producing countries due to adverse weather conditions.
In its 2007/2016 agriculture outlook the OECD-FAO pegged the global cereal trade to grow at close to 1.5 percent annually.
The European Union is seen to surpass Canada and Australia to become the second largest wheat exporter after the United States.
However, the recuperation of traditional export sources will be supplemented by export expansion in Russia, Ukraine and Argentina and in Brazil for coarse grains, while Chinese exports of both cereals are expected to diminish, the study said.
Import demand for wheat was seen growing in India, Brazil and Egypt as well as other developing countries, notably due to rising per capita incomes and expanding food markets.
