Grains Handbook Commodities and Export Projections Division Economic Analysis and Projections Department S WEIGHTS, MEASURES AND CONVERSION FACTORS Bushel ueights: 1,000 kilograms Wheat & soybeans - 60 lbs. 36.7437 bushels %heat or soybeans Corn, sorghum & rye - 56 lbs. 39.3679 bushels corn, sorghum, or rye Barley (grain) o 48 lbs.: malt - 34 lbs. 45.9296 bushels barley Oats * 32 lbs. 68.R944 bushels oats Bushels to metric tons: Area: Wheat & soybeans - bushels x .027216 1 Acre - .404694 hectares Barley - bushels x .021772 1 Hectare - 2.4710 acres Corn, sorghum, rye - bushels x .025400 Oats - bushels x .014515 Yields: 1 Metric ton equals: Wheat - bushels per acre x 0.6725 - quintals per hectare 2204.622 lbs. Rye, corn - bushels per acre x 0.6277 - quintals per hectare 22.046 hundredfeight Barley = bushels per acre x 0.5380 = quintals per hectare 10 quintals Oats - bushels per acre x 0.3587 - quintals per hectare April 1982 TABLE OF CONTENTS Page No. I. INTRODUCTION... ....................................... I - 1 II. THE PRODUCT.. ......................... ....... .*...... II -1 A. Characteristics of the Products...................... II - 1 B. Cultivation.. . ............... .......... ..... . *... II - 2 C. Harvesting ........... .. . .................. ...... II - 3 D. Handling and Processing........................... - 3 III. PRODUCTION... ............................. *................... III - 1 A. Production...... ...........*4...........*.........*...... I B. Yields............................................... . III - 3 C. Area Harvested..... ........... .. ........ . ... . ........ III - 12 D. Production Response and Supply Elasticities.......... III - 14 IV. CONSUMPTION...................... ............. IV - 1 A. Geographical Distribution........................... IV - 1 B. Price and Income Elasticities of Demand.............. IV - 6 V. INTERNATIONAL TRADE... ... *.* ............. V - 1 A. Trade Patterns................................. ..... V - 1 B. Stocks................... 0 ......... ... V - 7 C. Government Intervention........................ V - 12 D. Grain Prices.. .............. ................ V - 19 APPENDIX I.............. .. . . .............. ........ V - 26 April 1982 List of Tables and Figure Page No. Tables III-1 Wheat - World Production by Main Countries and Economic Regions...#........................ III1 2 111-2 Maize - World Production by Main Countries and Economic Regions ... .................. ...* ........ II ....-1 4 111-3 Total Coarse Grains - World Production by Main Countries and Economic Regions........ ....... III - 5 111-4 Coarse Grains (Excluding Maize) - World Production by Main Countries and Economic Regions .... . .................... 4 4..... ...... III1 6 111-5 Wheat - Area Harvests and Yields by Main Countries and Economic Regions......................... III - 7 111-6 Maize - Area Harvests and Yields by Main Countries and Economic Regions ............... ....... III - 9 111-7 Total Coarse Grains - Area Harvests and Yields by Main Countries and Economic Regions................... III - 10 111-8 Coarse Grains (Excluding Maize) - Area Harvests and Yields by Main Countries and Economic Regions ........... . . . . . . .......................... III - 11 111-9 United States - Harvested Irrigated Cropland and Pasturage ..................................... III - 13 IV-1 Wheat - Utilization by End-Use, Selected Countries, 1972/74 Average............................ IV - 2 IV-2 Coarse Grains - Utilization by End Use, Selected Countries, 1972/74 Average.............................. IV - 3 IV-3 Wheat - World Consumption by Main Countries and Economic Regions......... .................. IV - 4 IV-4 World Wheet Consumption Per Capita................ IV - 5 IV-5 Coarse Grains - World Consumption by Main Countries and Economic Regions.......... ............. IV - 7 IV-6 World Coarse Grains Consumption Per Capita............... IV - 8 IV-7 Maize - World Consumption by Main Countries and Economic Regions......... ...... . .................... IV - 9 IV-8 Wheat - Elasticities of Supply and Demand................ IV - 11 April 1982 List of Tables and Figure Page No Tables IV-9 Coarse Grains - Elasticities of Supply and Demand........ IV - 12 IV-10 Expenditure Elasticities fcr Cereals and Cereal Products in Developing Countries......................... IV - 13 V-1 Wheat - World Imporcs by Main Countries and Economic Regions ....... ................. ................... V - 2 V-2 Wheat - World Exports by Main Countries and Economic Regions...............................**....* V - 4 V-3 Maize - World Imports by Main Countries and Econormtic Regions . ................... . ............. V - 5 V-4 Maize - World Exports by Main Countries and Economic Regions ......................... .......*.*.** V - 6 V-5 Coarse Grains - World Imports by Mal- Countries and Economic Regions ......... . ............. V - 8 V-6 Coarse Grains - World Exports by Main Countries and Economic Regions ..................... ...... . ........ V - 9 V-7 Total World Ending Stocks................................ V - 10 V-8 Wheat - World Ending Stocks by Main Countries............ V - 11 V-9 Coarse Grains - World Beginning Stocks by Main Countries. ....................... ................. V - 15 V-10 Wheat Export Market Share of Major Exporting Countries .......o..o.. o.................... ..... .... V - 16 V-11 International Wheat Prices ($/mt)....................... V - 21 V-12 International Coarse Grain Prices....................... V - 22 V-13 Correlation Matrix of Grain Prices....................... V - 23 Figure III-1 Variations in World, USSR, and China Grain Imports. Variations in World Grain Stocks and Prices.............. III - 16 April 1982 I- 1 I. INTRODUCTION Wheat and coarse grains are staple foods for most of the world, as well as being major inputs into meat and dairy production, commercial sweet- ners and many other products. On average they supply directly and indirectly nearly 40 percent of the world's calories - a far higher proportion than any other group of foods. Wheat and grains in some form or another have been under cultivation ever since the beginning of recorded history. Evidence suggests that present day cultivated wheat is the offspring of a type of wild grass native to the arid pastures of southeastern Europe and Asia Minor. Cultivation began roughly 6000 years ago in the Syria-Palestine area before spreading into Egypt, Iran, China, Russia and Europe. Today virtually all countries produce some wheat and coarse grain. Many countries are "self sufficient" in one or more of the grains. Other coantries, for climatic and other reasons, import grain from the four major exporting regions. North America is the only consistent exporter of both . wheat and coarse grains. April 1982 II - 1 II. THE PRODUCT A. Characteristics of the Products When referred to in this handbook, coarse grains include maize, sorghum, rye, oats, and barley; millet is excluded unless otherwise specified. Wheat and coarse grains are used in a great variety of forms. Wheat may be milled into flour for bakery products and pastas or consumed as a whole grain by humans or animals. Wheat also accounts for roughly 15 percent of all grain consumption as animal feed. Maize is used primarily as a livest- ock feed though large amounts are used for human consumption in the form of flour or grits; it is also used in the manufacture of fuel alcohol, pet foods, beer and commercial sweeteners. The rest of the grains are consumed in the same variety of forms. Overall, 40 percent of total world grains are consumed as feed; 60 percent of grain consumed in industrial countries is consumed as feed. While wheat and coarse grains are often considered as two groups of rather homogenous products there is, in fact, considerable variability in each of the products and only limited substitutability between them. This is true for both the production side and the consumption side. For example, in the US wheat can be separated into five major classes accordire' to its protein con- tent, each with a different end use. Duram wheat, grown mainly in North Dakota and Montana, has over 12 percent protein content and is used in making pastas. Hard Red Spring wheat, also only grown in the Northern Great Plains, and Hard Red Winter wheat, grown in the central plains from Texas to Montana, have protein contents of 11-17 percent and 8-15 percent respectively and are used in bread making. Soft Red Winter wheat, grown east of the Mississippi River mainly in Indiana and Ohio, has under 12 percent protein and is used in bakery products such as cakes and crackers. Finally, white wheat, grown in the Pacific Northwest and New York, has under 11 percent protein content and its major use is for quick-breads, pastries and noodles. These generaliza- tions in terms of type and end-use hold throughout most of the world. An exception is that "french bread", that is, the long, thin loaves of bread which originated in France but which is baked throughout much of the world, uses soft wheat. Other wheat producing countries have different names for * their wbeat varieties but their end-use is determined by hardness and protein content (among other things). Some countries have inappropriate environmental conditions for producing a high quality (hard) bread wheat. In such cases April 1982 II - 2 they often blend the local wheat with a high quality imported wheat to meet a minimum quality standard. Examples of such countries are New Zealand and the United Kingdom. For coarse grains similar differentiating characteristics exist that preclude the complete substitution of one grain for another in either produc- tion or consumption. On the production side, corn requires more moisture than sorghum, which in turn requires more than barley. Within corn varieties there are three major types grown. Yellow corn, common in the US, is used mainly as an animal feed. White corn, commonly grown in South Africa and Brazil, lacks cazotene, which must consequently be added as a supplement to animal formula feeds. Sweet corn, the third type, is used as a fresh or processed vegetable. Likewise, the barley variety used in the brewing industry differs in culture and grain characteristics (and price) from that of feed barley. B. Cultivation In most parts of the world grains are grown as an extensive field crop on large land-holdings which are cultivated, planted, and harvested by mechanical means. Farms where wheat and barley are grown may be up to a thousand hectares in size and many are even larger, although an average sized wheat operation is considerably smaller than this. Maize, the major coarse grain, is typically grown on smaller holdings. Mechanization is common in developing as well as developed coun- tries. But it is also still quite common to see small farms, where Lhe wheat is hand harvested, hand threshed and moved by ox-cart, operating alongside a large mechanized enterprise. Such a scene is not uncommon in parts of India. Barley can grow in areas of lower rainfall than can wheat. Maize requires considerably more moisture than either and for this reason is often irrigated. Since barley and wheat are often grown in semi-arid regions they are often planted in autumn. Taking advantage of the autumn rains, the crop germinates then goes into a dormant state over winter when, ideally, it will be covered with snow. In spring the plant begins growth using the moisture accumulated over winter. Ideally grains should have a period of hot weather for some weeks prior to harvest in order to ripen and dry the grain. If the grain has a high moisture content when it is harvested it will not store. It must therefore be dried artificially, a time consuming and expensive process. April 1982 II - 3 C. Harvesting Harvesting of coarse grains and wheat is done nearly year round around the world, starting in Australia and New Zealand in January, India in March, China in May, the US, Canada, and the EEC from May until August, the USSR from August to October, and Argentina in December. D. Handling and Processing The level of mechanization and bulk handling that is found on most grain farms continues from the farm gate to the final user. From the grain "combines", machines so named because they harvest and thresh grain in a combined action, grain flows into deep-sided trucks that are moving through the fields at the same speed as the combine (some combines store the grain in a hopper then empty their hopper into trucks waiting at the end of the field). The trucks then move the grain to a grain "elevator" or storage facility. From here it is often loaded onto rail or barge facilities to be taken to the mill or to a port. It is loaded, unloaded, stored and shipped in bulk. There are numerous variants on this stream of events. In some cases (countries or areas of limited production) the grain is bagged as it leaves the combine. In some cases farmers will store their own grain for on-farm use or for sale at a later time. Wheat destined for human consumption arrives at a flour mill from the grain elevators and is grcund into flour. It is then distributed to end users (mainly bakers). Coarse grains and wheat destined for animal consump- tion go to compounding mills where they are coarsely ground and blended with other feed ingredients to produce "formula feed" for poultry and livestock. This product is typically handled in bulk in developed countries and is bagged in developing countries. Coarse grains destined for various industrial processes (breakfast cereals, starch production, sweetner production, beer, etc.) are transported in bulk to those facilities. April 1982 III - 1 III. PRODUCTION A. Production At present production of wheat and coarse grains is dcminated by the largest centrally planned economies, and several of the industrial countries. Russia and China produce 35 percent of totil world wheat, and 21 percent of coarse grains. The United States is the lacgest producer of the industrial countries, which together produce 33 percent of wheat and 48 per- cent of the coarse grains. The centrally planned economies continue to expand production of cereals in an attempt to attain self-sufficiency. At the same time more and more developing countries are also attempting to increase domestic cereal production in order to free themselves from costly food imports. The CPEs and developing countries are the largest importers of wheat for food, so there is considerable incentive for them to increase domestic production. The shares of overall production among the developed and centrally planned countries have remained remarkably constant over the last twenty years, whereas among the developing countries, India, Brazil, Argentina, South Africa, and Thailand appear to be the fastest growing producers. World production of wheat and coarse grains is expected t continue to expand at an average per annum growth rate of 3 percent as a result of generally solid demand. In industrial countries, government policies are expected to slow the rate of growth of production, but considerable expansion is possible if warranted by global demand. Currently governments in the US, Canada and Australia have the power to restrict output in order to maintain farm prices and incomes. For example, if world prices rise, acreage currently held out of production in the US can be readily brought back into Vse; supply elasticities for cereals tend to be quite high. Wheat: The USSR and China together produce over 35 percent of total world wheat output; together and individually they produce more wheat than any other region or country (Table III-1). The industrial countries produce 33 percent of world wheat, with roughly 40 percent of that being produced by the United States alone. The other major producers are Canada, France and Australia. Of the developing countries, India, Argentina and Pakistan are the largest producers. World wheat production reached a high of 425 million metric tons in 1979, exhibiting a 3.3 percent annual growth since 1961. Much Table 111-1: WHEAT - WORLD PRODUCTION BY MAIV COUNTRIES AND ECONOMIC REGEONS World Wheat Production Share In World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 --------------------------('000 metric tons)------- -------(percent)------ ------(% per annum)------- Industrialized Countries 79,070.1 100,113.1 91,534.6 137,971.9 127,050.6 141,889.8 34.6 32.5 33.3 2.3 4.2 2.6 United States 33,539.0 35,805.0 36,7840 58,306.5 55,420.4 5R,289.4 14.7 14.2 13.7 2.9 4.3 3.5 EC-10 27,441.0 36,627.0 35,7042 40,961.8 30,488.8 47,722.7 12.0 10.1 11.2 2.3 2.0 2.3 France 9,573.5 14,760.0 12,649.0 16.126.0 17.350.1) 19,393.0 4.2 4.4 4.6 2.7 3.2 3.0 Canada 7,713.0 17,674.0 9,024.3 23,587.2 19,861.6 17,746.2 3.4 5.1 4.2 1.4 7.1 1.6 Australia 6,727.2 7,067.1 7,889.9 11,825.0 9,370.3 16,100.0 2.9 2.4 3.8 3.2 9.2 3.0 Others 3,649.9 2,940.1 2,132.2 3,291.3 2,909.4 2,031.5 1.6 0.7 0.5 -2.1 -0.9 -1.3 Developing Countries 52L675.5 62,802.1 76,362.0 110,588.3 97,206.2 109,059.3 23.0 24.9 25.6 3.6 3.5 3.9 India 10,997.0 12,257.0 20,093.3 28,846.3 29,009.9 34,982.2 4.4 7.4 8.2 6.6 4.9 7.2 Argentina 5,725.0 6,079.0 4.920.0 11,000.0 5,300.0 7,80-.0 2.5 1.4 1.8 -2.0 4.0 0.6 Pakistan 3,814.0 4,5910 7,294.0 8,690.7 9,143.9 9,944.1 1.7 2.3 2.3 6.9 3.9 5.5 Iran 2,869.0 3,648.0 4,004.0 6.044.0 5,517.0 5,000.0 1.3 1.4 1.2 S.8 4.1 4.3 Mexico 1,401.9 1,658.7 2,676.5 3,363.3 2,455.8 2.272.0 0.6 0.6 0.5 4.7 2.5 3.4 South Africa 873.0 669.0 1,396.0 2,239.0 1,860.0 2.220.0 0.4 0.5 0.5 6.2 3.2 6.5 Southern Euro-q 14,291.1 17,667.4 19,734.0 27,955.7 26,870.A 26,659.7 6.3 6.9 6.3 2.8 3.4 2.9 Othere 12,704.5 16,232.0 17,244.2 22,449.3 17,048.9 20,181.4 5.6 4.4 4.7 2.2 1.5 2.2 Centrally Planned Economies 96,770.8 104,650.0 150,489.1 176,183.7 166,440.4 174,529.0 42.3 42.6 41.0 5.2 2.2 3.6 U.S.S.R. 66,483.0 59.686.0 99,734.0 96,882.0 92,165.0 90,100.0 29.1 23.6 21.2 5.0 0.1 2.4 China 16,544.2 26,023.5 31,003.7 50,001.2 45,001.3 60,003.0 7.2 11.5 14.1 5.6 6.9 6.0 Others 13,743.6 18,940.5 19,751.4 29,300.5 29,274.2 24,426.0 6.0 7.5 5.7 5.6 2.4 4.4 WORLD TOTAL 228,531.0 267,578.9 318,385.7 424,743.9 390,697.3 425,478.1 100.0 100.0 100.0 3.8 3.2 3.3 Source: PAO Production Yearbook. a a 0 April 1982 III - 3 of the growth was the result of tiew higher yielding varieties of wheat rather than increased area harvested, and better production techniques. Maize: Roughly 43 p reent of all maize is produced by the United States; it is by far the largest producer in the world (Table 111-2). The industrial countries account for 55 percent of world maize production, with other major producers besides the US being France and increasingly Canada. This is the result of high demand for maize as a feed in the developing coun- tries. The developing countries produce roughly 24 percent of total world maize; Brazil, Mexico, Argentina and South Africa -re the major producers. The centrally planned economies produce 17 percent of world maize, with China being the major producer; maize is an important food and feed in China, although it is being supplanted by wheat to an increasing degree in the USSR. Total world maize production reached 394 million metric tons in 1979 with an annual growth rate of 3.4 percent since 1961, again largely the result of increased area irrigated, and increased yield; demand for maize is expected to remain strong in the coming years. Coarse Grains: The industrial countries produce more than 45 per- cent of world ccarse grains including maizs (Table 111-3, 111-4). The largest producers are the United States (with o r 30 percent of world coarse grain production), France, and Canada, as the result of high demand for coarse grains as feed in the industrial countries. The centrally planned economies produce 30 percent of world coarse grains, with the USSR and China producing 75 percet of that. Among the developing countries, India, Brazil, Argentina, and Mexico are the major producers. World production of coarse grains reached 700 million metric tons in 1979 of which well over half was maize production alone. The annual growth rate of the coarse grains including maize has been 2.7 percent since 1970, largely the result of the new high yield varieties of maize, while the growth rate of coarse grains, excluding maize, was only 1.8 percent over t!.e same period; this trend is expected to continue. B. Yields Wheat: Wheat yields vary greatly between countries and over time, but the industrial countries exhibit the highest yields with France producing over 4 tons of wheat per hectare and the United States producing over 2 tons of wheat per hectare, as a result of better production techniques and fertili- zation (Table 111-5). In the developing countries yields average Table II-2: mAzi - WORLD PRODUCTION BT MAIN COUNTRIES AND ECONOMIC REGIONS World Maize Production Share in World Total Growth Rates Country/Iegione 1961 196 1970 1976 1977 1979M1961 1977 1979 196140 1970-79 19Fa-7w ------- ----('000 metric tone)----.- - -(percent)-- -- (2 per suae-- Industrialized Count ies 99,064.3 113,090.6 121,822.6 175,767.2 184,619.5 221,258.3 48.1 53.3 56.1 3.4 4.9 4.2 United States 91.388.0 104,216.9 105,471.1 159,171.8 163,213.0 197,207.5 40.1 42.1 46.0 2.8 5.1 3.9 EC-10 6,670.6 7,132.4 13,279.4 11,967.6 16,073.1 17,878.3 2.9 4.1 4.2 8.2 1.9 6.3 Prance 2,480.0 3,467.8 7,491.0 5,625.0 8,505.0 10,293.0 1.1 2.2 2.4 13.2 0.9 8.5 Canada 741.9 1,511.3 2,633.7 3,755.0 4,196.6 4,963.3 0.3 1.1 1.2 13.4 7.1 9.6 Others 263.8 230.0 438.4 872.9 1,136.8 1,209.2 0.1 0.3 0.3 6.6 10.6 10.0 Developing Countries 57,745.7 67,547.9 86,306.7 92,136.9 100,654.9 97,118.7 25.4 25.9 22.6 4.4 1.6 3.0 Brazil 9,036.2 12,111.9 14,216.0 17,751.1 19,255.9 16,308.9 4.0 5.0 3.6 4.8 1.8 3.5 Mexico 6,246.1 8.936.4 8,879.4 8,017.3 10,137.9 9,255.0 2.7 2.6 2.2 4.0 0.9 1.7 Argentina 4,850.0 5,140.0 9,360.0 5,855.0 8,300,0 8,700.0 2.1 2.1 2.0 7.0 -0.5 3.4 South Africa 5,275.0 4,490.0 6,132.0 7,312.0 9,630.0 8,240.0 2.3 2.5 1.9 1.5 3.1 3.6 India 4,312.0 4,823.0 7,485.6 6,361.2 5,973.3 5,000.0 1.9 1.5 1.2 5.1 -1.2 1.7 Thailand 598.3 1,021.3 1,938.2 2,675.2 1.676.5 3,300.0 0.3 0.4 0.8 13.8 4.6 8.4 Sout..ern Europe 7,277.8 8,462.7 10,453.4 12,404.2 13,530.9 14,144.4 3.2 3.5 3.3 4.3 2.3 3.1 Others 20.150.3 22,562.6 27,842.1 31,760.9 32.150.4 32,170.3 9.8 9.3 8.2 3.7 2.2 2.7 Centrally Planned Economies 49,235.1 ",767.8 54,244.2 64,894.0 60,952.5 75,854.0 21.6 15.7 17.7 1.2 3.0 2.0 U.S.S.R. 17,113.0 8,030.0 9.428.0 10.138.0 10,979.0 8,400.0 7.5 2.8 2.0 -5.8 -0.9 -1.9 China 19,527.1 25.541.1 29,057.4 31,614.2 27,595.0 40,620.0 8.6 7.1 9.5 3.7 3.2 2.5 *. Others 12,595.0 13.196.7 15,758.8 23.141.8 22,378.5 26,834.0 6.1 6.5 6.8 3.1 4.6 3.8 WORLD TOTAL 206,126.4 227,465.2 262,373.5 332,798.1 346,226.9 394,231.1 100.0 100.0 100.0 3.2 3.6 3.4 Source: PAO Production Yearbook. 0A Table iIt-3: TOTAL COARSE GRAINS - ORLD PRODUCTION BY MAIN COUNTRIRS AND F.CONOMIC REGIONS World Coarse Grains Production Share in World Total Crowth Rates Country/Regions 1461 1965 1q70 1976 1977 1979 1961 1977 1979 1961-70 1970-79 196-79 ----------------------------('000 metric tons)------------------------ ------(percent)----- -------(% per annum)-------- Industrialized Countries 183,070.9 211,838.4 229,921.4 280,648.6 303,940.4 336,541.9 45.0 45.5 48.1 3.1 2.9 3.1 United States 127,491.4 144,202.1 146,105.4 193,876.3 203,845.0 234,509.9 31.3 30.5 33.5 2.5 3.7 3.0 EC-lO 37,466.8 44,613.1 52,587.6 51,961.6 64,742.1 67,344.0 9.2 9.7 9.6 4.1 1.7 2.9 France 10,849.3 13,824.6 18,211.1 16,164.9 21,388.4 23,906.0 2.7 3.2 3.4 6.3 1.2 4.0 Canada 7,739.3 12,886.1 17.448.2 19,540.0 20,704.4 16,925.9 1.9 3.1 2.4 6.2 -0.4 3.7 Australia 2,274.5 2,431.5 4,725.2 5,183.6 4,484.8 6,462.0 0.6 0.7 0.9 6.1 2.9 5.6 Others 8,098.9 7,705.5 9,055.0 10,087.2 10,164.1 11,300.2 2.0 1.5 1.6 2.7 2.2 2.5 Developing Countries 9 110,626.3 135,624.3 1599.6 163,738.1 158,689.2 24.3 24.5 22.7 3.4 2.3 2.8 India 15,160.0 14,925.0 18,306.8 20,077.2 20,381.4 17,120.8 3.7 3.0 2.4 1.9 1.8 1.1 Brazil 9,098.5 12,179.2 14,290.5 18,141.9 19,832.1 16,621.2 2.2 3.0 2.4 4.8 2.0 3.6 Argentina 8,336.7 7,327.5 14,336.1 12,642.3 16,123.0 15,974.4 2.0 2.4 2.3 5.7 1.8 4.6 Mexico 6,779.3 9,956.8 11,907.0 12.640.9 14,929.8 13,725.0 1.7 2.2 2.0 6.6 2.5 3.8 South Africa 5,773.1 5,072.5 6,635.0 7,744.1 10,162.0 8,825.0 1.4 1.5 1.3 1.4 3.0 3.4 Thailand 598.3 1,094.3 2,073.2 2,823.6 1.806.8 3,540.0 0.1 0.3 0.5 13.4 4.8 8.8 Southern Europe 15,414.5 17,573.5 19,908.3 26,456.7 28,318.0 28,706.1 3.8 4.2 4.1 3.2 3.6 3.2 Others 37,739.0 42,497.5 48,167.5 56,073.0 52,185.0 54,176.7 9.3 7.8 7.7 2.6 1.8 2.0 Centrally Planned Economies 124,700.7 130,852.5 169,110.1 226,024.3 200,507.4 204,442.5 30.7 30.0 29.2 3.8 2.8 3.3 U.S.S.R. 56,127.0 50,809.0 74.829.0 111,938.0 90,690.0 76,600.0 13.8 13.6 10.9 3.2 2.5 3.6 China 32,881.8 43,948.6 57,065.0 63,824.8 60,303.5 74,736.2 8.1 9.0 10.7 6.4 3.0 3.3 Others 35,691.9 36,094.8 37,216.1 50.261.4 49,513.9 53,106.3 8.8 7.4 7.6 1.8 2.8 2.6 WORLD TOTAL 811.2 453,470.0 534,996.7 663,743.2 668,696.9 700,288.6 100.0 100.0 100.0 3.4 2.7 3.1 Source: PAO Production Yearbook. * Coarse Grains include Maize, Barley, Oats, Rye and Sorghum. Table 11-4: COARSE GRAI41, (EXCL11tNG MA17E) - WORLD PRODUCT[IN BY MA1I COUNTRIES AND ECONOMIC RECIONS World Coarse Grains Production (Excluding tize) Share in World Total Crowth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 --------------------------(COOO metric tons) ---------------- --------(percent)------- -( per annum)------ Industrialized Countries 84,06.6 98,747.9 108,098.3 104,81.4 119,320.9 115,283.6 41.9 37.0 37.7 2.8 0.1 1.5 United States 36,103.4 39,985.2 40,634.3 34,704.5 40,632.0 37.302.4 12.0 37.0 37.7 1.7 -1.5 0.0 EC-10 30,796.3 37,480.A 39,308.2 39,994.0 48,669.0 49,465.7 15.3 15.1 16.2 3.2 1.6 2.0 France 8,369.3 10,356.9 10,720.1 10,539.9 12,883.4 13,613.0 4.2 4.0 4.4 3.6 1.4 2.1 Canada 6,997.4 11,374.9 14,R14.5 15,785.0 16,507.8 11.962.6 3.5 5.1 3.9 5.4 -2.2 2.7 Others 10,109.5 9,907.0 13.341.9 14.398.0 13.512.0 16.552.9 5.0 4.2 5.4 3.2 2.0 3.1 Developing Countries 41,153.6 43,07R.4 49,317.6 64,462.7 63,083.2 61,570.4 20.5 19.6 20.1 2.0 3.3 2.5 India 10.848.0 10,102.0 10,821.2 13.716.0 14,408.1 12,120.8 5.4 4.5 4.0 0.3 3.4 0.8 Argentina 3,4867 2,187.5 4,976.1 6,787.3 7,821.0 7,274.4 1.7 2.4 2.4 3.6 5.0 6.4 Mexico 533.2 1,020.4 3,027.6 4,623.6 4,741.9 4,470.0 0.3 1.5 1.5 2.2 6.3 13.0 South Africa 498.1 582.5 503.0 432.1 532.0 585.0 0.2 0.2 0.2 0.3 1.1 1.9 Thailand .1 73.0 135.0 144.4 130.3 240.0 0.0 0.0 0.1 83.4 4.5 36.5 Brazil 62.3 67.3 74.5 390.8 576.2 312.2 0.0 0.2 0.1 2.7 22.4 12.7 Southern Europe 8,136.7 9,110.8 9,454.9 14,052.4 14,787.1 14,561.7 4.1 4.6 4.8 2.1 4.7 3.3 Others 17,588.6 19.934.8 20,325.4 24,312.0 20,034.6 22,006.3 8.8 6.2 7.2 1.1 1.3 1.0 Centrally Planned Economies 75,465.6 84,084.7 114,865.8 161,130.3 139,554.9 129.558.5 37.6 43.3 42.0 5.3 2.6 3.9 U.S.S.R. 39.014.0 42,779.0 65,401.0 101,800.0 79,711.0 68,200.0 19.4 24.7 22.3 5.5 3.0 4.7 China 13.354.7 19,407.6 29,007.6 32,210.6 32,708.5 34,116.2 6.7 10.1 11.1 9.5 2.7 4.3 0' Others 23,096.9 22,898.2 21,457.2 27,119.7 27,135.5 26,272.S 11.5 8.4 8.6 0.9 1.5 1.8 WORLD TOTAL 200,684.8 226,004.8 272,623.2 330,945.1 322,470.0 306,057.5 100.0 100.0 100.0 3.6 1.8 2.7 Source: FAO Production Yearbook. *** * Table ItI-5: WHEAT - AREA HARVESTS AND YIELDS BY MAIN COUNTRIES AND ECONOMIC REC[ONS Wheat Area Harvests ^rowth Rates Wheat Yields Crowth Rates Country/Regions 1961 1975 17 19170 10 1961-§969 i40 9 --------- ('000 hectares) -------- -----------( per annum)--------- -------(kg./ha.)------ ------(% per annum)------- Industrialized Countries 49,773.2 57,625.9 59,306.8 -0.2 3.7 0.A 1,588.6 2,234.5 2,392.5 2.5 0.5 1.8 United States 20,870.0 2R,081.1 25,333.0 0.2 4.3 1.9 1,607.0 2,057.1 2.300.9 2.6 0.0 1.6 EC-10 12,019.7 11,203.6 11,702.0 -0.6 -0.2 -0.5 2,283.0 3,524.5 4,078.2 2.9 2.3 2.A France 3,997.3 3,875.9 4,063.0 -1.0 1.0 -0.2 2,395.0 3,873.4 4,773.1 3.7 2.3 3.2 Canada 10,245.0 9,478.7 10,500.4 -3.9 6.1 -0.8 '52.9 1,801.8 1,690.0 5.3 1.0 2.5 Australia 5,958.1 8,555.0 11.580.0 3.9 5.5 2.1 1,129.1 1,400.6 1,390.3 -0.7 2.6 0.7 Developing Countries 57,277.2 70,616.7 73,523.3 1.5 1.0 1.4 919.7 1,330.1 1,483.3 2.1 2.6 2.4 India 12,927.0 18,010.3 22,220.1 2.2 2.6 3.3 850.7 1,338.4 1,574.3 4.4 2.2 3.9 Argentina 4,420.9 5,270.6 4,564.0 0.5 1.8 -0.4 1,295.0 1,626.0 1,709.0 -2.5 2.2 1.0 Pakistan 4,639.0 5,812.3 6,695.9 3.2 1.0 1.7 822.2 1,320.2 1,485.1 3.7 3.0 3.8 Ira,% 3,400.0 5,993.0 4,550.0 6.4 -1.7 2.4 A43.A 929.4 1.098.9 -0.6 5.8 1.9 Mexico 836.5 778.2 628.0 -0.2 -0.3 -0.6 1,675.8 3.595.6 3.617.8 4.9 2.7 4.0 South Africa 1,129.0 1,788.0 1,400.0 1.3 4.1 3.1 773.3 1,002.2 1,168.4 4.9 -0.9 3.4 Southern Europe 14,502.9 14,205.1 13,776.8 0.1 -0.8 -0.4 985.4 1,720.6 1,935.1 2.6 4.2 3.3 Centrally Planned Economies 95,820.6 103,528.3 105,892.7 0.7 0.7 0.3 1,009.9 1,323.3 1,648.2 4.4 1.5 3.3 U.S.S.R. 63,000.0 61,985.0 57,682.0 0.2 -0.6 -0.7 1,055.3 1,068.4 1,562.0 4.8 0.8 3.2 China 24.621.8 32,801.3 40,001.3 1.8 3.6 2.4 671.9 1,402,5 1,500.0 3.7 3.2 3.6 4OPLD TOTAL. 202,886.3 231,771.0 238,722.9 0.8 1.5 0.8 1,126.4 1,551.9 1,782.3 3.1 1.7 2.6 Source: PAD Production Yearbook. April 1982 II - 8 around 1.4 tons per hectare, with Mexico having the largest yields. Yields in the USSR and China exhibit a very high degree of variability; in the USSR they often change by over 60 percent from year to year because of the variability of weather patterns and the greater use of marginal lands. World wheat yields grew at an annual rate of 3.1 percent from 1961 to 1970, and at the much slower rate of 1.7 percent over the 1970-79 time period, after the more pro- nounced effects of the "green revolution" had largely run their course. Among the developing countries, Mexico, India, Pakistan and South Africa had the highest rate of growth of yields, and of the centrally planned economies China exhibited the highest rate of growth in yields. Maize: The industrial countries have maize yields two to three times higher than those of the rest of the world, again the result of better irrigation and fertilizer techniques. The United States has, by far, the highest yields producing over 6.5 tons of maize per hectare (Table 111-6). In the centrally planned economies, yields are roughly half of those in the industrial countries with yields in the USSR being the highest at well over 3 tons per hectare. Among the developing countries Argentina and Thailand have the highest yields. The annual world growth rate of maize yields from 1961 to 1979 was 2.2 percent; the United States and France had the highest growth rate of yields among the industrial countries, while in the developing coun- tries Argentina experienced the greatest growth in yields. Maize yields tend to be much less variable than those of wheat, especially in the centrally planned economies, in part because maize is often irrigated whereas wheat is not. Coarse Grains: Yields of coarse grains (excluding maize) are regu- larly less than one half of the yields of maize. Maize has been excluded from this analysis for the purpose of demonstrating the great disparities in pro- duction and yields between the older "well established" grains and the newer maize which has received the bulk of research and development expenditures. Yields of coarse grains (excluding maize) in the United States are around 2.5 tons per hectare, (Tables 111-7 and 111-8). Brazil is the sixth largest producer of coarse grains among the developing countries preceeded by India, Argentina, Mexico, South Africa and Thailand, with India producing more than twice as much of other coarse grains as of maize (Table 111-4). Yields of coarse grains in the USSR average around 1.5 tons per hectare, while the production of coarse grains is roughly six times that of maize. 0 et Table 111-6: MAIZE - AREA HARVESTS AND YIELDS BY MAIN COUNTRIES AND ECONOMIC REGIONS Maize Area Harvests Growth Rates Maize Yields Crovth Rates Country/Regions 1961 75 1979 1961-70 1970-79 1961-79 961 1975 1979 1961-70 1970-79 1961-79 > --------- ('000 hectares)--------- ----------(2 per annum)--------- -------(kg./ha.)------ ------(% per annum)------- Industrialized Countries 25,844.4 31,158.9 32,955.2 0.2 2.3 1.7 3,R33.1 5,367.5 6,713.9 3.2 2.5 2.6 United States 23,323.0 27,317.9 28,725.8 -0.1 2.4 1.5 3,918.4 5,419.9 6,865.2 2.9 2.7 2.5 EC-10 2,376.9 3,090.8 3,186.5 1.3 0.3 2.3 2,806.4 4,724.0 5,610.6 6.9 1.6 4.0 Trance 980.6 1,962.0 2,003.0 4.0 1.0 5.1 2,529.1 4.184.0 5,138.8 9.1 -0.2 3.4 Canada 161.9 634.9 890.3 11.8 6.0 8.7 4,582.2 5,740.5 5,574.9 1.6 1.1 0.9 Developing Countries 49,302.7 63.455.1 65,129.7 2.7 0.7 1.4 1,171.2 1,513.6 1,491.2 1.7 0.9 1.5 Brazil 6,885.7 10,854.7 11,313.6 3.9 1.5 2.6 1,312.3 1,504.8 1,441.5 0.9 0.2 0.9 Mexico 6,287.7 6,694.3 7.148.0 1.7 -0.3 0.0 993.4 1,262.1 1,294.8 2.2 1.3 1.7 Argentina 2,744.4 3,070.0 2,A00.0 4.2 -5,0 -0.1 1,767.2 2,508.1 3.107.1 2.8 4.4 3.4 South Africa 3,910.0 5,700.0 6,000.0 3.6 1.7 2.2 1,349.1 1,603.5 1,373.3 -2.2 1.4 1.3 India 4,507.0 6,030.7 5,500.0 3.5 -0.3 1.5 956.7 1,203.1 909.1 1.6 -0.9 0.2 Thailand 298.1 1,180.0 1,466.0 9.3 6.5 8.5 2,007.0 2,426.4 2,251.0 3.4 -1.7 0.0 Southern Europe 4,161.2 3,839.4 3,671.3 -0.3 -1.2 -0.8 1,748.9 3,360.9 3,852.8 4.6 3.5 3.8 Centrally Planned Economaes 23,157.7 20,122.3 22,455.1 -1.8 0.7 -0.2 2,126.1 3,056.8 3,378.0 +3.0 2.3 +2.2 U.S.S.R. 7,145.0 2,652.0 2,667.0 -9.2 -3.5 -4.2 2,395.1 2,763.2 3,149.6 3.5 2.6 2.4 China 9,015.3 11,049.7 13,050.0 2.1 1.6 1.5 2,166.0 2,863.2 3,112.6 1.7 1.6 1.0 WORLD TOTAL 98,365.1 114,736.3 120,540.0 1.1 1.2 1.2 2,095.5 2,830.8 3.270.5 2.1 2.4 2.2 Source: FAO Productin Yearbook. Table tlf-7: TnTAt (nARnv t'RAP1* - ARPA HARWVST AND YlMIrI BY 'AIX CIC*KTRfrl 1 MINOk1C REC.Inm; Coarie nratn% krea ,Harve.ta Growth Rates Coarse Gralns Yleld Crowth Rates countrv/Region 1961 1975 1979 961-70 !976-79 1961-79 196 1975 1979 1961-70 1970-79 1961-79 ---------000 Herrares) ------- -----------(T per annual ------- -----(ki./ha. ----- ------(2 per annum) ------ Indusftriallzod C^untrie. 69,480.3 73,065.0 71,439.5 0.2 0.5 2,634.9 3,786.7 4,710.9 2.9 2.1 2.6 'nite., tatex 43,241.6 4?,577.6 41,353.2 -0. 0.5 0.1 ?,949.4 4.346.6 5,670.9 3.3 3.2 2.9 C-10 14,824.2 15,827.9 15,947.3 0.9 0.0 0.5 2,527.4 3,715.6 4.?22.9 3.2 1.7 2.4 France 4,950.1 5.569.7 5.605.0 1.1 0.0 0.9 2.191.7 3,603.2 4,265.1 5.2 1.1 3.1 Canada 6,083.4 7.834.1 6,483.5 2.1 -2.3 1.1 1,272.2 2,317.3 2,60.6 4.2 1.9 2.6 Australta 2,420.9 3,894.1 4,479.0 5.9 1.3 3.7 934.5 1.376.6 1.442.7 0.2 1.6 1.9 DevelopIng Countrien 106.466.9 123,155.3 124,076.6 1.5 0.6 0.A 42R.9 1,278.6 1,279.0 1.9 1.6 1.9 India 25.961.0 25,007.9 22,A36.1 0.5 -0.9 -0.6 5R4.0 795.5 749.7 1.4 2.6 1.7 RrazIl 6,971.9 11,030.R 11,556.6 3.9 1.7 ?.7 1,305.0 1.506.9 1,438.2 0.9 0.3 0.9 Argentina 5,563.8 6,156.4 5,770.9 3.1 -2.9 1.0 1,49.4 2,252.4 2.768.1 2.6 4.8 3.6 Mexico 6,722.1 A,485.2 A,996.0 2.9 0.5 1.0 1,008.5 1,544.1 1,525.7 3.7 1.9 2.8 South Africa 4,469.6 6,378.0 6,590.0 3.5 1.5 2.0 1,291.6 1,533.0 1.339.2 -2.1 1.5 1.4 Thailand 29M.1 1,310.0 1,6R6.0 10.2 7.5 9.2 2,007.0 2.371.9 2,099.6 3.2 -2.8 -0.4 Southern Furope 12,290.9 12,550.7 12,298.4 -0.3 0.4 0.1 1,254.1 2,224.9 2,334.1 3.5 3.2 3.1 Centrally Planned Eonomies 90,722.9 108,620.9 114,625.7 1.0 2.0 1.4 1,374.5 1,644.2 1,783.6 2.8 0.8 1.8 U.S.S.R. 48,848.0 55,393.0 58,467.0 -1.3 3.1 1.4 1,149.0 1.169.8 1,310.1 4.5 -0.5 2.2 China 22,019.1 36,357.4 38,805.7 6.6 1.4 2.9 1,493.3 1,756.4 1,925.9 -0.2 1.6 0.4 WORLD åOTAL 266,18.7 305,201.0 310,721.8 1.0 1.0 1.0 1,524.7 2,008.8 2,253.7 2.4 1.7 2.1 Source: FAO Production Yearbook. * Total Coarse Gralns tnclude: Maize, Barley, Oato, Rye and Sorghum. Table 111-8: COARSE GRAINS* (EXCLUDING MAIZE) - AREA RARVESTS AND YIELDS BY MAIN COUNTRIES AND ECONOMIC REGIONS Coarse Grains Area Harvests Growth Rates Coarse Grains Yields Growth Rates Country/Regions 1961 1975 1979 1961-70 1970-79 1961-79 1961 1975 1979 1961-70 1970-79 1961-79 '0 ----- (000 hectares)----- --------(kg./ha)---------- ---- ( per annum)------- --------(2 per annum)----- Industrialized Countries 43,635.9 41,906.1 38,484.3 0.2 -1.4 -0.3 1,925.2 2,611.3 2,995.6 2.6 1.5 1.8 United States 19,918.6 15,259.6 12,627.4 -1.7 -2.8 -1.9 1,812.6 2,425.1 2,954.1 3.4 1.3 1.9 EC-10 12,447.3 12,737.1 12,760.7 0.8 -0.1 0.1 2,474.1 3,470.9 3,876.4 2.3 1.7 1.9 France 3,969.5 3,607.7 3,602.0 0.2 -0.4 -0.5 2,108.4 3,287.3 3,779.3 3.4 1.8 2.6 Canada 5,921.5 7,199.1 5,593.2 1.7 -3.2 0.6 1,181.7 2,015.4 2,138.8 3.7 0.9 2.1 Developing Countries 57,164.2 59,700.2 58,946.9 0.3 0.6 0.3 719.9 1,028.7 1,044.5 1.6 2.7 2.2 India 21,454.0 18,977.2 17,336.1 -0.3 -1.0 -1.1 505.6 666.0 699.2 0.6 4.4 1.9 Brazil 86.2 176.1 243.0 0.3 15.6 7.5 722.6 1,636.8 1,284.8 2.5 6.7 5.2 Argentina 2,819.4 3,086.4 2,970.9 2.0 -1.0 2.1 1,236.7 1,998.0 2,448.6 1.6 6.0 4.2 Mexico 434.3 1,791.0 1,848.0 13.8 4.7 8.5 1,227.6 2,598.4 2,418.8 8.5 1.6 4.5 South Africa 559.6 628.0 590.0 2.3 -0.4 0.4 890.1 893.3 991.5 -1.9 1.5 1.5 Thailand 0.0 130.0 220.0 79.1 19.2 37.0 0.0 1,876.9 1,090.9 121.5 -14.7 38.3 Southern Europe 8,129.7 8,711.3 8,627.1 -0.3 1.2 0.5 1,000.9 1,724.2 1,687.9 2.4 3.6 2.8 Centrally Planned Economies 67,565.2 88,498.6 92,170.6 1.8 2.3 1.9 1,116.9 1,323.1 1,395.1 3.5 0.3 2.0 U.S.S.R. 41,703.0 52,741.0 55,800.0 -0.3 3.5 1.9 935.5 1,089.7 1,222.2 5.8 -0.5 2.8 China 13,003.8 25,307.7 25,755.7 9.0 1.2 3.7 1,027.0 1,273.1 1,324.6 0.5 1.5 0.5 WORLD TOTAL 168,453.6 190,464.7 190,181.8 0.9 0.9 0.8 1,191.3 1,513.6 1,609.3 2.7 0.9 1.8 Source: PAO Production Yearbook. * Includes: Barley, Oats, Rye and Sorghum. April 1982 III - 12 The world growth per annum of coarse grain yields from 1961 to 1979 was 1.8 percent, far less than the 2.2 percent growth of maize yields over the same period. The growth rate fell precipitously from 2.7 percent, from 1961 to 1970, to less than 1 percent from 1970 to 1979. This can be explained by the fact that the less popular coarse grains are, on the whole, not irrigated crops while maize is irrigated. In the United States the irrigated acreage of maize has increased while that of wheat and the coarse grains has decreased or remained steady (Table 111-9). It is difficult to determine if these same trends are true of the rest of the world, but they are, at the least, indica- tive of the increased emphasis on maize production over that of the rest of the grains. It is likely that the increasing demand for maize has led to greater expenditures on the irrigation of maize, and greater research and development expenditures on maize, which have in turn led to increasing maize yields. C. Area Harvested Wheat: There has been relatively little change in the area harves- ted of wheat over the last twenty years (Table 111-5). In the industrial countries, area harvested grew by just under 1 percent per annum from 1961 to 1979 and now stands at over 55 million hectares. In the developing countries it has grown by 1.4 percent from 1961 to 1979, with the largest growth taking place in India, South Africa and Iran. Among the centrally planned economies the growth in area harvested has been at an annual rate of only 0.3 percent since 1961. World area harvested has grown by less than 1 percent per annum from 1961 to 1979 and now stand at 239 million hectares; most good and easily available production land is now under cultivation. Maize: Area harvested of maize has increased by slighly more than that of wheat since 1961 because of increased demand for maize as feed (Table 111-6). Among the industrial countries the area harvested of maize has grown by 1.7 percent per annum since 1961, with significant increases taking place in the United States. In the developing countries it has increased by 1.4 percent per annum, with the largest increases occuring in Brazil, South Africa and Thailand. Several of the developing countries, including Argentina, Mexico and India, have experienced declines in maize area harvested since 1970. Also, area harvested has declined slightly in the centrally planned economies since 1961. World area harvested now stands at roughly 120 April 1982 III - 13 TABLE 111-9: United States - Harvested Irrigated Cropland and Pasturage Share in Type of Grain Irrigated Acreage Total Grains Change 1974 1978 1974 1978 --('000 acres)--- --(Percent)- Wheat 3,232.1 3,011.0 22.9 17.2 -5.7 Maize 6,673.2 10,099.2 47.4 57.7 10.3 Coarse Grains 4,179.1 4,378.1 29.7 25.1 -4.6 Sorghum 2,649.9 2,167.7 18.8 12.4 -6.4 Oats 176.0 238.0 1.3 1.4 0.1 Barley 1,339.8 1,967.7 9.5 11.3 1.8 Rye 13.4 4.7 0.1 0.0 -0.1 Total Grains 14,084.4 17,488.3 100 100 - Source: USDA, ERS; "Census of Agricultural Data". April 1982 III - 14 million hectares, following a modest growth rate of 1.2 percent per annum since 1961. Coarse Grains: The area harvested of coarse grains (excluding maize) has increased only slightly since 1961 (Tables 111-7 and 111.8). In the centrally planned economies the harvested area of coarse grains (excluding maize) has increased by just under 2 percent per annum since 1961, with large increases having taken place in the USSR since 1970. The area of coarse grains harvested now stands at 92 million hectares in the centrally planned economies, largely because of the increased demand for meat and dairy products in the USSR. The developing countries have experienced a very modest growth of 0.3 percent per annum since 1961 with the largest increases occuring in Brazil, Mexico, Argentina and Thailand. There are now 59 million hectares devoted to coarse grains in developing countries. Area harvested in the indus- trial countries fell by 0.3 percent in the period 1961-79, and by a larger 1.4 percent in the period 1970-79. Total world area harvested of coarse grains, excluding maize, now stands at over 190 million hectares, after a modest growth rate of less than 1 percent per annun since 1961. Demand for coarse grains is shifting towards maize, and away from oats and sorghum in particu- lar. D. Production Response & Supply Elasticities In general the production response of the cereals is quite high as marginal lands are converted from grazing to crops when cereal prices increase. From Tables IV-8 and IV-9 it can be seen that the own price elasti- city of supply tends to be high, especially among the developed countries. The supply elasticities of wheat range from 0.15 in some African and Asian countries to over 2.0 in North America. A similar range is found in the supply elasticities of the coarse grains. Supply elasticities are higher among the developed than the develop- ing countries largely because of better irrigation techniques and greater availability of fertilizers and pesticides. Also many developing countries tend to hold marginal lands under production in an attempt to increase domes- tic self-sufficiency. However, overall world grains prices and supply remain quite variable as a result of the great supply variability of the grains in the centrally planned economies. As in the developing countries, the centrally planned economies tend to maintain more marginal land under production, so April 1982 III - 15 that weather patterns have a larger overall effect on production and supply in those countries. Transport facilities for grains are quite responsive to changing world patterns of demand. Ever since some Initial shortages of grain when the USSR began importing large quantities in 1972, grain traders and shippers have become better at minimizing supply disruptions. From Figure III-I it can be seen that the large draw down of stocks which occured as a result of large grain imports by the USSR in 1972 and 1973 had largely been rectified by 1977 even though the Centrally Planned Econosies continue to import large quanti- ties of grain. Shortages of large ocean going transports, and especially high speed port loading and off-loading facilities are slowly but steadily being rectified; large grain storage and loading facilities have recently been completed in the United States, Australia, and Argentina, while the USSR and China plan to push ahead with better grain receiving facilities. This is not to say that the grain distribution system is going to be problem-free in the future. Already distribution systems in the hinterlands of several major grain trading countries (e.g., US, Canada, India) are reaching full capacity utilization and considerable capital investment is required to upgrade them. April 1982 III - 16 FIGURE III-I VfIATIONS IN WORLD,USSR, AND CHINA GRAIN IMPORTS tymmjsm ar firmle 1=3 g 70 71 72 73 749 75 76 7 78 79 TIME VARIRTIONS IN WORLD GRRIN STOCKS AND PRICES 0w~ MlI R-01R1 ci C3 o 10 70 71 72 7 3 7 75 76 7'7 78 79 TIME (Pft«Z5if O 700JtW J -fX5 W mumoj 90 U.T mmfts. olA.ffixa 07 $mnufeIs April 1982 III - 17 References 1. G.K. Boon, "Alternative Techniques of Production, Five Methods of Producing Grain", The Economic Institute, Rotterdam, 1961. 2. Food and Feed Grain Institute, "Food Grain Drying, Storage, Handling a-id Transportation", Report No. 23, Kansas State University, Kansas, 1971. 3 V.A. Johnson, "Genetic Improvement of Productivity and Nutritional Quality of Wheat", The Agency for International Development, Washington, D.C., 1977. 4. S. Matz, Cereal Science, The AVI Publishing Co. Inc., Connecticut, 1969. 5. Y. Pomeranz (editor), Advances in Cereal Science and Technology, American Association of Cereal Chemists Inc., Minnesota, 1976. 6. W. Roenigk, J. Lopes, D. Phillips, "Growth Potential of Corn Production in Western Europe Through 1975 and 1980", USDA, ERS, Washington, D.C., 1973. 7. R. Schatzer, R. Roberts, E. Heady, K. Gunjal, "An EconometrIc Simulation Model to Estimate Input Stocks and Expenses, Supply Response, and Resource Demand for Several U.S. Agricultural Commodities", CARD Report 102T, The Center for Agricultural and Rural Development, Iowa State University, Iowa, 1981. April 1982 IV - 1 IV. CONSUMPTION A. Geographical Distribution Grains are utilized in three major forms: as- food, feed, or seed. Among the grains, wheat is the most predominant food grain; on ave- ge 76.6 percent of wheat is utilized as food compared to 39.6 percent of cne coarse grains (Tables IV-1 and IV-2). On the other hand 13.8 percent of wheat is utilized as feed compared with 48.5 percent of the coatse grains. Thus an understanding of cereal consumption will revolve around an understanding of demand for the cereals as food, and demand for meat and meat products, and the cereals as feed. A high proportion of wheat is used in making bread products of various sorts, and in the manufacture of pastas, while some is used in a whole or partially cracked form, especially in the developing countries. Yet in the USSR, Eastern Europe, Canada, and the United States a significant proportion of the wheat crop is channeled into livestock feed because of the greater demand for meat products. Poorer quality wheat also tends to be used for livestock feeds. China and the developing countries use much of their wheat for food, with the notable exception of Argentina and Mexico who channel some wheat supplies to livestock feed. Coarse grains, and especially maize, tend to be used primarily for feed in the developed countries, USSR, Brazil and Argentina. China and India, two of the larger producers of coarse grains, consume the majority of those grains as food, along with most other developing countries. Maize is an important component in the diet of Central Americans, and millet is a staple food in parts of Africa. The majority of coarse grains consumed as food in the industrial countries is consumed in the form of beer or liquor, breakfast cereals (corn flakes, oatmeal, etc.), and commercial sweetners. In general the industrial countries and the USSR are expected to consume increasing amounts of coarse grains and wheat as feed, as their income increases. The developing countries and China are expected to consume increa- sing amounts of wheat as food instead of coarse grains, while channeling more of their coarse grains to the livestock industry. In general as income rises, so will consumption of wheat as food, and coarse grains as feed. Wheat: Whe-.t consumption has nearly doubled since 1961 increasing most rapidly in the developing countries, in particular in Egypt, Bangladesh and Korea (Table IV-3), although consumption per capita has actually declined April 1982 IV - 2 Table IV-1: WHEAT - UTILIZATION BY END-USE, SELECTED COUNTRIES, 1972/74 AVERAGE Total Percent /c Use Feed /a Food /b Seed Feed Food Seed ---------------('000 tons)----------- United States 20,999 3,679 15,101 2,215 17.5 71.9 10.5 Canada 5,166 1,921 2,340 856 37.2 45.3 16.6 Great Britain 8,581 3,229 5,034 222 37.6 58.7 2.6 W. Germany 8,402 3,674 4,199 278 43.7 50.0 3.3 Denmark 446 138 269 22 30.9 60.3 4.9 Australia 3,060 753 1,663 544 24.6 54.4 17.8 Japan 5,538 680 4,720 4 12.3 85.2 0.0 Argentina 4,454 427 3,384 500 9.6 76.0 11.2 Brazil 4,338 0 4,003 205 0.0 92.3 4.7 Mexico 2,707 268 2,242 76 9.9 82.8 2.8 Nigeria 355 0 347 0 0.0 97.8 0.0 Egypt 3,422 0 3,071 97 0.0 89.7 2.8 Morocco 2,668 0 2,294 188 0.0 86.0 7.0 India 27,970 293 24,376 1,892 1.1 87.2 6.8 Pakistan 8,241 0 7,596 389 0.0 92.2 4.7 Thailand 81 0 81 0 0.0 100.0 0.0 Indonesia 568 0 563 0 0.0 99.1 0.0 USSR 97,771 34,331 39,102 2,335 35.1 40.0 2.4 P.R. China 40,993 1,228 35,326 3,070 3.0 86.3 7.5 /a Includes wheat used in the manufacture of formula feed. /b Includes wheat used directly, in the manufacture of foods, and in brewing. /c Percentages do not add to 100 because of :he exclusion of waste and industrial non- food/non-feed categories. Source: FAO, Provisional Food Balance Sheets, 1972/74, Rome, 1977. April 1982 IV - 3 Table IV-2: COARSE GRAINS /a - UTILIZATION BY END-USE, SELECTED COUNTRIES, 1972/74 AVERAGE Food /c incl. manu- Total factured goods Percent /d Use Feed /b and beverages Seed Feed Food Seed -----------------('000 tons)------------------ United States 146,000 128,911 13,362 1,654 88.3 9.2 1.1 Canada 15,049 12,653 1,477 706 84.1 9.8 4.7 Great Britain 14,080 9,772 3,033 425 69.4 21.5 3.0 W. Germany 17,094 11,201 4,883 553 65.5 28.6 3.2 Denmark 6,360 5,498 374 294 86.5 5.9 4.6 Australia 2,491 1,611 550 297 64.7 22.1 11.9 Japan 13,054 11,242 1,789 6 86.1 13.7 0.1 Argentina 8,222 6,730 635 543 81.9 7.7 6.6 Brazil 15,398 10,129 2,569 1,554 65.8 16.7 10.1 Mexico 12,692 4,247 6,620 188 33.5 52.2 1.5 Nigeria 7,389 20 6,451 182 0.3 87.3 2.5 Egypt 3,538 651 2,355 50 18.4 66.6 1.4 Morocco 2,699 901 1,379 218 33.4 51.1 8.1 India 25,852 705 22,320 1,291 2.7 86.3 5.0 Pakistan 1,455 78 1,241 63 5.4 85.3 4.3 Thailand 267 76 100 25 28.5 37.5 9.4 Indonesia 2,716 63 2,513 79 2.3 92.5 2.9 USSR 89,949 58,740 11,285 9,773 65.3 12.6 10.9 P.R. China 76,563 29,805 35,635 3,453 38.9 46.5 4.5 /a Coarse grains included are corn, barley, oats, rye, sorghum and millet. /b Includes grains used in the manufacture of formula feed. /c Includes grains used directly, in themanufacture of foods, and in brewing. /d Percentages do not add to 100 because of the exclusion of waste and industrial non- food/non-feed categories. Source: FAO, Provisional Food Balance Sheets, 1972/74, Rome, 1977. Table TV-3: WHEAT - WORLD CONSt'MPT1N BY NAI% CUt'NTRIS AND ECONOMI< REGIONS World Wheat Connumpt Inn Share in World Total Crowth Rates Cnuntry/ReglIons ------ IW- > _ CutyRtos1061 1965 107> 1976 1977 1970 1061 1977 - 1979 16-7 19-9 16-9 -------000 metri tns)-------------- - - - ------------- ------(r--ent)-- --------------( per annum)-------- Industrialtzed _Countr_es 61,101.7 73,903.1 67.278.9 99,634.2 88,184.1 96,727.9 26.8 27.7 22.5 2.7 3.2 1.8 United Stateq 16,559.2 18,126.3 19,382.8 31,792.5 31,629.7 24,915.4 7.3 8.1 5.8 5.8 2.3 2.6 RC-10 37,842.9 42,152.6 41,994.1 42,516.9 42,613.2 49,001.? 16.6 11.0 11.4 1.0 0.7 1.3 ltaly 10,751.8 10,701.9 10,207.6 11,914.6 9,312.9 12,012.4 4.7 2.4 2.R 1.2 1.1 1.1 United KinRdLm 6,445.1 8,578.9 9,213.9 8,456.7 8,943.3 9,617.2 2.8 2.3 2.2 2.2 0.1 1.5 Japan 4,413.0 4,932.6 5.158.1 6,049.4 5,911.7 6,365.8 1.9 1.5 1.5 2.6 2.0 2.1 O)ther, 2,286.7 8,691.5 743.8 19,275.4 8,129.5 16,445.5 1.0 2.1 3.8 -2.7 31.3 2.1 Oe E-ng_Co_ntr6es 6,244.2 74193 9,012 13,847.2 117,282.0 136,663.4 29.1 30.2 31.8 3.5 3.9 4.1 India 14,087.4 18,829.3 23,680.0 35,134.6 29,770.7 34,628.2 6.2 7.7 8.1 5.6 3.9 5.2 Pakistan 4,892.5 6,087.7 7,415.6 9,876.3 9,641.2 12,180.6 2.1 2.5 2.8 5.1 5.1 5.0 Braztl 2,426.2 2,461.7 3,813.6 6,643.9 4,690.2 6,578.? 1.1 1.2 1.5 4.5 7.6 5.3 Egypt 2,096.6 2,501.5 2,369.7 4,891.5 5,045.0 5,464.6 0.9 1.3 1.3 2.0 8.7 5.4 Korea, Rep. of 616.3 776.1 1,396.7 1,868.6 2,f34.4 1,737.3 0.3 0.5 0.4 8.2 0.9 6.7 Bangladesh 284.5 272.6 1,166.2 1,267.4 882.5 1,617.2 0.1 0.2 0.4 13.7 2.4 9.3 Southern Europe 17,507.3 19,940.8 20,679.8 29,669.4 27,871.9 28,046.4 7.7 7.2 6.5 1.1 2.8 2.2 Others 24,333.5 23.579.4 31,491.1 49,495.5 37,346.1 46,411.0 10.7 9.6 10.8 3.2 3.7 4.0 Centra11j'Planned Ecnnomies 100,278.4 119,028.4 157,728.6 189,211.8 182,563.5 195,726.2 44.1 47.0 45.6 4.7 2.R 3.7 U.S.S.R. 62,338.3 64,398.5 96,728.4 102,754.9 96,603.0 96,750.0 27.4 24.9 22.5 4.9 1.2 3.0 China 19,311.8 31,649.9 36,586.7 52,599.7 52,578.6 68,954.2 8.5 13.5 16.1 5.2 6.7 5.5 Others 18,628.2 22,980.0 24,413.4 13,857.1 33,381.9 30,021.9 R.2 8.6 7.0 3.8 1.9 3.5 WORLD TOTAL 227,636.7 267,382.4 317,020.2 427,693.1 _388,129.6 429,117.5 100.0 100.0 100.0 3.9 3.2 3.4 Source: Derived from FAO Productton and Trade Yearbooks. 0 Table TV-4: WORLD WIEAT CONSUMPTION PER CAPITA (kg/capita) Growth Rate Countries 1961 1970 1975 1977 1979 1961-79 (% per annum) 286.5 398.4 285.7 373.1 367.6 1.6 Southern Europe* 195.6 201.Q 232.9 243.4 237.3 0.5 Italy 215.5 190.2 201.0 164.9 211.1 0.2 PC-10 156.4 161.4 153.7 158.7 181.6 0.6 United Kingdom 122.0 166.3 141.3 160.1 172.1 1.2 Pakistan 51.7 64.9 128.3 128.8 152.6 -0.9 Egypt 78.9 71.1 134.4 130.1 133.3 -1.2 U.S.A. Q0.1 95.1 125.6 145.8 113.2 3.8 China 28.2 45.1 56.8 58.3 71.4 0.8 Brazil 33.7 41.2 36.6 41.8 55.4 -1.2 Japan 46.5 49.4 52.8 51.9 54.9 0.6 India 32.1 43.9 52.1 47.6 53.2 1.4 Korea, Rep. of 24.2 43.3 45.8 55.8 46.2 3.4 Source: FAO Production and Trade Yearbooks, World Bank, Economic and Social Data Division, EPD. * Southern Europe includes: Cyprus, Israel, Malta, Portugal, Spain, Turkey, Yugoslavia. April 1982 IV - 6 in Egypt, Brazil and Pakistan (Table IV-4). Consumption per capita has increased rapidly in the United States largely because of the increase in demand for wheat for feed. The centrally planned economies consume nearly one half of all wheat, with the largest consumers in the world being the USSR (which accounts for roughly 25 percent of world consumption), China, the EC- 10, India, and the United States. In the developing countries well over 80 percent of all wheat is used for food, little is used for feed except in the USSR. In the industrial countries just over half of all wheat is consumed as food, the bulk of the remainder is used as feed. Coarse Grains: Consumption of coarse grains has increased by roughly 60 percent since 1961, growing most quickly in the centrally planned economies, and in particular in the USSR (although the USSR has actually experienced a decline in consumption per capita since 1961), largely the result of increased demand for meat (Tables IV-5 and IV-6). Among the develo- ping countries consumption per capita has increased most rapidly in Thailand, Mexico and Brazil, while India, the largest developing country consumer of coarse grains, has actually experienced a decline in consumption per capita of coarse grains, and an increase in consumption per capita of wheat. Consump- tion per capita among the industrial nations has increased most quickly in Japan and the United States. The United States is the largest coarse grains consumer in the world accounting for roughly 25 percent of world consump- tion. In the developing world coarse grains are used primarily as feed grains by Argentina and Brazil. Mexico, Nigeria, Egypt, Morocco, India, Pakistan and Indonesia consume over 50 percent of their coarse grains as food. Maize: Consumption of maize has grown by nearly 3.5 percent per annum since 1961. The United States alone accounts for nearly 50 percent of world consumption of maize, while China, the EC-10, the USSR and Southern Europe are the other major consumers (Table IV-7). In the developed countries maize is used almost exclusively for feed, and indeed a high percentage of maize is used for feed around the world, except in Latin America where it is an important source of food. B. Price & Income Elasticities of Demand Domestic demand for the cereals is fairly price and income elastic, largely because many of the cereals are, to some extent, substitutes for one another, especially in the developing countries where the coarse grains tend Table IV-5: COARSE GRAINS - WORLD CONSUMPTION BY MAIN COUNTRIES AND ECONOMIC REGIONS World Coarse Grains Consumption Share in World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 --------------------- ('000 metric tons)-------------------------- ------(percent)---- ------(Z per annum)------- Industrialized Countries 185,476.2 213,610.0 232,748.8 255,645.0 285,154.4 292,157.9 45.6 42.9 41.8 3.1 1.5 2.3 United States 117,105.9 123,100.4 126,901.8 142,730.2 155,834.3 168,675.9 28.8 23.4 24.1 2.3 1.4 1.8 EC-10 48,974.4 61,823.7 66,400.7 70,795.5 84,276.7 77,039.7 12.0 12.7 11.0 3.0 1.3 2.2 France 8,436.6 12,178.0 12,895.1 11,833.1 19,240.5 16,896.7 2.1 2.9 2.4 4.0 2.8 3.1 Japan 4,363.5 7,089.9 11,542.1 14,918.5 16,627.0 19,124.5 1.1 2.5 2.7 11.3 6.2 8.0 Australia 1,152.5 1,681.d 3,799.9 2,005.9 1,120.2 3,851.9 0.3 0.2 0.6 10.0 1.8 2.9 Others 13,880.0 19,914.2 24,104.2 25,194.9 27,296.2 23,465.9 3.4 4.1 3.4 4.8 0.0 2.5 Developing Countries 96,468.0 107,337.3 129,805.7 157,281.0 168,294.7 169,790.5 23.7 25.3 24.3 3.4 3.3 3.3 India 15,253.5 15,149.9 18,345.8 20,463.2 20,417.8 17,119.0 3.8 3.1 2.5 2.2 1.7 1.0 Brazil 9,143.0 11,680.6 12,896.2 16,774.7 18,396.5 18,229.9 2.2 2.8 2.6 3.8 3.5 3.8 Mexico 6,870.8 8,755.5 12,672.0 13,639.4 17,348.2 15,869.6 1.7 2.6 2.3 5.7 4.1 5.0 South Africa 4,603.5 4,571.5 5,561.9 5,465.4 8,315.7 6,492.5 1.1 1.3 0.9 2.3 2.2 3.4 Argentina 5,808.2 3,452.0 6,633.5 5,932.5 6,001.8 5,773.1 1.4 0.9 0.8 3.9 -2.0 3.0 Thailand 31.1 236.0 622.4 252.9 150.3 1,390.2 0.0 0.0 0.2 12.4 1.1 13.2 Southern Europe 16,076.1 20,169.1 23,190.2 32,497.3 35,805.6 38,666.6 4.0 5.4 5.5 4.3 4.8 4.4 others 38,651.8 43,322.8 49,883.7 62,255.5 61,858.7 66,249.5 9.5 9.3 9.5 2.7 3.6 3.0 Centrally Planned Economies 124,421.7 130,785.4 171,530.4 249,657.7 210,884.5 235,927.4 30.6 31.7 33.8 4.0 3.9 4.0 U.S.S.R. 53,451.3 48,129.7 74,149.5 125,205.2 93,199.0 92,265.0 13.1 14.0 13.2 3.8 4.0 4.7 China 34,177.0 43,894.7 57,903.5 66,101.8 62,920.9 80,899.1 8.4 9.5 11.6 6.2 3.5 3.6 Others 36,793.4 38,761.0 39,477.5 58,350.7 54,764.6 62,763.2 9.1 8.2 9.0 1.6 4.1 3.3 WORLD TOTAL 406,503.6 451,868.0 534,425.8 663,031.9 664,A40.7 698,490.8 100.0 100.0 100.0 3.4 2.7 3.1 Source: Derived from PAO Production and Trade Yearbooks. Table IV-6: WORLD COARSE GRAINS CONSUMPTION PER CAPITA (kg/capita) Growth Rate Countries 1961 1970 1975 1977 1979 1961-79 (% per annum) U.S.A. 637.5 622.6 680.0 718.5 766.4 1.8 U.S.S.R. 245.7 305.4 277.7 359.9 350.5 -0.2 France 182.8 254.0 291.0 362.5 315.9 1.4 Southern Europe 179.6 226.4 318.4 312.7 327.2 1.1 EC-10 202.4 255.1 274.6 313.9 285.6 0.9 South Africa 280.5 247.5 243.9 308.7 228.0 1.2 Mexico 184.4 250.0 278.2 268.6 228.7 0.7 Australia 109.2 303.8 178.2 79.6 267.1 0.7 Argentina 287.0 279.3 302.3 230.3 216.0 -0.2 Brazil 127.1 139.4 145.9 163.9 153.6 0.3 Japan 46.0 110.6 120.3 146.0 165.1 3.5 China 49.9 71.4 74.6 69.7 83.8 1.1 0D India 34.8 34.0 33.5 32.6 26.3 -1.0 Thailand 1.1 17.1 19.9 3.4 30.1 4.2 Source: FAO Production and Trade Yearbooks, World Bank, Economic and Social Data Division, EPD. Table IV-7: MAIZE - W1RLD CONSUMPTION BY MAIN COUNTRIES AND ECONMIC REGIONS World Maize Consumption Share in World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 - ------------------------- ('000 metric tons)-------------------------- ------(percent)----- -------( per annum)------- Industrialized Countries 102,363.2 115,037.8 125,443.0 155,790.0 169,835.5 185,242.8 49.7 49.4 47.2 3.3 2.8 3.1 United States 83,966.1 89,082.0 91,146.1 114,856.5 122,798.3 197,242.0 40.8 35.7 50.3 2.5 4.5 3.1 EC-10 14,521.2 19,739.8 24,419.4 27,705.7 32,848.1 29,820.6 7.1 9.6 7.6 5.0 2.4 3.8 Italy 5,664.4 7,793.2 8,962.8 9,901.6 10,422.1 9,630.9 2.8 3.0 2.5 5.2 1.0 2.7 France 2,016.4 3,574.1 5,497.7 4,507.6 8,898.3 7,916.0 1.0 2.6 2.0 9.3 4.6 7.3 Japan 1,946.3 3,508.8 6,050.1 8,394.5 9,076.1 11,412.7 0.9 2.6 2.9 12.0 7.9 8.9 Australia 158.9 174.5 191.8 121.3 113.3 154.2 0.1 0.0 0.0 0.1 -4.4 -2.1 Others 1,770.7 2,532.7 3,635.6 4,712.1 4,999.7 4,000.0 10.9 1.5 1.0 6.8 2.6 5.0 Developing Countries 54,946.6 64,549.5 81,396.3 93,468.6 104,792.9 106,399.0 26.7 30.5 27.1 4.4 3.3 3.7 Mexico 6,277.1 7,600.7 9,640.1 8,929,7 11,892.5 9,999.0 3.0 3.5 2.5 3.2 2.1 2.9 India 4,425.2 4,998.0 7,491.1 6,377.1 6,014.9 5,010.2 2.1 1.7 1.3 4.8 -1.2 1.6 Argentina 3,119.9 2,337.7 4,127.3 2,774.7 2,869.3 2,741.0 1.5 0.8 0.7 6.0 -3.6 2.1 Nigeria 725.1 841.1 1,307.9 1,309.9 1,386.8 1,611.0 0.4 0.4 0.4 7.7 5.7 3.9 Korea, Rep. of 37.2 40.6 277.1 1,013.2 1,360.7 2,828.4 0.0 0.4 0.7 19.2 24.1 26.2 Southern Europe 7,388.5 10,320.4 12,622.9 17,058.0 19,012.8 21,982.3 3.6 5.5 5.6 6.2 4.9 5.0 Others 32,973.6 38,410.9 45,929.9 56,006.0 62,255.8 62,227.1 16.0 18.1 15.9 3.8 3.5 3.7 Centrally Planned Economies 48,443.0 46,753.8 55,049.1 82,978.9 69,188.3 100,481.2 23.5 20.1 25.6 1.6 5.7 3.6 U.S.S.R. 16,713.5 7,472.3 9,432.9 21,351.2 14,902.0 22,731.8 8.1 4.3 5.8 -4.8 8.9 3.4 China 19,542.4 25,424.6 29,670.2 33,345.3 29,534.8 45,601.9 9.5 8.6 11.6 3.9 4.0 3.1 Others 12,187.1 13,856.9 15,946.1 28,282.3 24,751.4 32,147.5 5.9 7.2 8.2 3.2 6.2 5.0 WORLD TOTAL 205,829.9 226,381.7 261,888.4 332,237.4 343,816.7 392,123.0 100.0 100.0 100.0 3.2 3.6 3.4 Source: Derived from FAO Production and Trade Yearbooks. April 1982 IV - 10 to be used fcr food instead of feed, and because meat and meat products are substituted for grains to an increasing degree. Availability of substitutes tends to dampen domestic grain price movements. The own price elasticity of demand (see Table IV-8) for wheat is negative in nearly every case, and ranges from a low of -0.1 in Argentina to a high of -0.6 in Indonesia, largely because of plentiful rice supplies. Simi- larly, in the case of the coarse grains, the price elasticities are negative and range from -0.1 in Thailand, where maize alone is utilized as feed for a growing beef industry, to -0.5 in Japan, where rice is the major substitute (Table IV-9). The price elasticities for the coarse grains tend to be higher in the industrial countries than the price elasticity of wheat, primarily because wheat utilized as food has fewer substitutes than the coarse grains utilized for feed. However the reverse tends to be true for the developing countries where there are plentiful substitutes for the coarse grains when utilized as food, especially in the case of the Asian countries where rice is a freely available food substitute for grains. The income elasticities for wheat in the industrial countries and Argentina are all negative as a result of the consumer preference for meat over the grains as income increases. Nevertheless the income elasticities for the coarse grains in the industrial countries and Argentina are positive, because the greater demand for meat products as income rises increases the demand for the coarse grains which are the primary feed grains in these coun- tries. In the case of the developing countries the expenditure elasticities (as opposed to the income elasticities, see Table IV-10) for the cereals are nearly all positive. They range from a low of 0.3 in Hungary to a high of 1.55 in the Korhogo region of the Ivory Coast. Thus as income increases in these countries the demand for the cereals increases. Note that the FAO study presents the income elasticities for cereals by individual countries, whereas the USDA reports the income elasticities for the individual grains, but only over aggregate world regions. The USDA study indicates that the income elasti- cities for wheat are almost universally higher than the elasticities for coarse grains in the developing countries. Thus as income increases the grains continue to be consumed as food but demand shifts away from the coarse grains toward wheat. AgAin note that as income increases and demand shifts Table IV-8: WHEAT - ELASTICITIES OF SUPPLY AND DEMAND Country or Region Own Price Elasticity Income Elasticity Own Price Elasticity of Demand of supply o North America -0.5 -0.25 2.5 /a European Community -0.2 -0.1 0.8 Australia -0.15 -0.25 0.5 Japan -0.45 0.2 0.3 Other Developed Countries -0.2 0.1 0.5 Argentina -0.1 -0.1 0.5 Other Latin America -0.25 0.3 0.65 North Africa/Middle East: High Income -0.25 0.25 0.15 North Africa/Middle East: Low Income -0.35 0.05 0.15 Other Africa -0.3 0.35 0.15 India -0.4 0.7 0.4 Other South Asia -0.4 0.4 0.15 Thailand -0.05 0.2 0.0 Indonesia -0.6 0.55 0.0 Other East Asia -0.3 0.25 0.4 /a This is an export supply elasticity. Source: Alternative Figures for World Food in 1985, Economics, Statistics and Cooperative Service, USDA, Agricultural Economic Report No. 146, 1978. Table IV-9: COARSE GRAINS - ELASTICITIES OF SUPPLY AND DEMAND /a Country or Region Own Price Elasticity Income Elasticity Own Price Elasticity of Demand of Supply North America -0.4 -- 2.4 /b European Community -0.4 0.1 0.9 Australia -0.3 -- 0.9 Japan -0.5 0.2 0.25 South Africa -0.3 -- 0.6 /b Other Developed -0.35 0.1 0.5 Argentina -0.3 0.2 0.5 Brazil -0.4 0.1 0.5 Other Latin America -0.3 0.1 0.1 North Africa/Middle East: High Income -0.2 0.1 0.1 North Africa/Middle East: Low Income -0.2 0.1 0.1 Other Africa -- 0.2 0.1 India -0.4 0.2 0.2 Other South Asia -0.2 0.2 0.1 Thailand -0.1 0.2 0.2 Indonesia -0.3 0.2 0.2 Other East Asia -0.3 0.2 0.2 /a Elasticities of demand are calculated separately for food use and feed use. Elasticities here are averages of the two weighted by the proportion of coarse grains used in food and feed by each country or region. /b These are export supply elasticities. Source: Alternative Futures for World Food in 1985, Economics, Statistics and Cooperative Service, USDA, Agricultural Economic Report No. 146, 1978. Table IV-10: EXPENDITURE ELASTICITIES FOR CEREALS AND CEREAL PRODUCTS IN DEVELOPING COUNTRIES Country Elasticity Country Elasticity Argentina 0.07 Peru (continued) Ceylon 0.26 Iquito 0.39 Chile 0.14 Philippines 0.46 Cyprus -0.05 Rural 0.44 Honduras Urban 0.37 Rural 0.84 Poland 0.05 Urban 0.61 Saudi Arabia Hong-Kong 0.39 Riyadh 0.22 Hungary 0.03 Sudan India 0.43 Rural 0.77 Rural 0.55 Urban 0.74 Urban 0.21 Taiwan 0.35 Indonesia 0.95 Thailand Rural 1.06 Southern -0.24 Urban 0.67 Central -0.29 Iran Eastern 0.12 Urban 0.33 Tunisia 0.46 Israel 0.17 Uganda Ivory Coast Gulu 0.70 Korhogo Region 1.55 Jinja -0.06 Rural 0.54 Venezuela 0.16 Kenya -0.09 Vietnam, Rep. of Korea, Rep. of Rural 0.69 Urban 0.20 Yugoslavia -0.09 Malawi 0.60 Pakistan 0.33 Urban 0.07 Peru Lima 0.48 Arequipa 0.61 Huancayo 0.76 Source: FAO, Income Elasticities of Demand for Agricultural Products, Rome, 1972. April 1982 IV - 14 toward meat products, the demand for wheat and maize will shift towards feed 0 end uses. While there have been many studies on elasticities recently the results are often contradictory, especially with regard to the developing countries. We prefer the results reported in Tables IV-8 and IV-9 by the USDA for two reasons. First, they are consistently estimated over various coun- tries and regions giving a more complete, though aggregated, set of figures. Secondly, the estimation procedure includes cross-product terms such that the usual upward bias from omission of variables does not occur. 0 April 1982 IV - 15 References 1. M. Bredahl, W. Meyers, K. Collins, "The Elasticity of Foreign Demand for U.S. Agricultural Products: The Importance of Price Transmission Elasticity", American Journal of Agricultural Economics, 61, February 1979. 2. Cargill Inc., Grain Exports in Focus, 1981. 3. Collins, "Price and Exchange Rate Transmission", Agricultural Economics Research, 32, October 1980. 4. Food and Agricultural Organization, "The Cereal Economy of the USSR-- Trends and Prospects", Committee on Commodity Problems: Intergovernmental Group on Grains, CCP: GR. 80/4, CCP: GR. 80/5, Rome, 1980. 5. R. Friend, "Use of Wheat in the European Economic Community with Projections to 1975", USDA, ERS, Washington, D.C., 1971. 6. International Food Policy Research Institute, "Grain Supply and Policy Developments", Washington, D.C., 1976. 7. P. Johnson, "The Elasticity of Foreign Demand for U.S. Agricultural Pro- ducts", American Journal of Agricultural Economics, 59, November 1977. 8. D. Regier, O.H. Goolsby, "Growth in World Demand for Feed Grains", Economic Report No. 63, USDA, ERS, Was gton, D.C., 1970. 9. D. Regier, "Growth in Demand for Feed Grains in the EEC*, USDA, ERS, Washington, D.C., 1967. 10. A. Rojko, F. Urban, J. Naive, "World Demand Prospects for Grain in 1980", USDA, ERS, Washington, D.C., 1971. 11. W. Sinclair, "Amazing Grain", The Washington Post, Five part series, Washington, D.C., June 7-11, 1981. 12. L. Tweeten, "The Elasticity of Foreign Demand for U.S. Agricultural Pro- ducts: Comment", American Journal of Agricultural Economics, 59, November 1977. April 1982 V - 1 V. INTERNATIONAL TRADE A. Trade Patterns A common aim of many countries is to increase grain production in order to reduce their dependence on imports. Accordingly, most of the interna- tional trade in grains is residual, so that small changes in production or consumption in the major producing countries can have a disproportionate effect on trade volumes and prices. Until the early 1970's, large stocks held in the industrial exporting countries, primarily the US and Canada, helped to keep world grain prices relatively stable. In 1972, 1973 and 1976 to the present large grain purchases by the USSR and China have generally increased price and quantity variations, but since 1978 these variations have begun to decrease as suppliers and traders become more accustomed to sudden large orders by the centrally planned economies. Increased stock holdings since 1977 on the part of the major exporters (the United States, Canada, France, Australia and Argentina) have also helped dampen trade quantity and price variations (see Figure III-1). Wheat: International trade in wheat has averaged around 68 million metric tons since 1976. This market is dominated by four or five major grain trading :ompanies. Trade is increasingly being carried on between governments through negotiated agreement rather than between private individuals, although the large trading companies still act as market intermediaries. This trend may be viewed as an attempt to introduce greater certainty in terms of grain availability for importers and guaranteed markets for exporters. The United States, Canada, Australia, Argentina, and increasingly France are the major exporters of wheat in the world, and together they control nearly 50 percent of world stocks of wheat. Major wheat importers are the EC-10, the USSR, China, Japan, Brazil and Egypt (Table V-1). Imports to the Soviet Union have grown by over 14 percent per annum since 1961. Imports to the industrial countries have grown by 4.4 percent per annum since 1961, while imports to India have fallen dramatically by over 16 percent per annum since 1970; India is currently very nearly self sufficient in wheat, and there is every indication that this can continte. Imports to developed countries have grown by just under 2 percent per annum since 1961, while imports to the largest world importer -- the EC-10 -- have actually declined since 1970. Table V-1: WHEAT - WORLD IMPORTS BY MAIN COUNTRIES AND ECONOMIC REGIONS World Wheat Imports Share in World Total Crovth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 -------------------- ('000 metric tons)----------------------- - ------(percent)--- ------(2 per annum)---- Industrialized Countries 15,027.9 14,202.0 17,535.3 ?t644.6 16,827.4 17,118.8 39.0 26.2 22.5 2.4 -0.1 1.8 EC-10 11,077.4 9,427.0 11,789.3 10,983.5 10,470.5 10,199.6 28.8 16.3 13.4 2.0 -0.1 1.3 United Kingdom 3,831.1 4,409.6 4,983.6 3,802.3 3,845.6 2,612.0 9.9 6.0 3.4 2.2 -5.3 -1.4 Italy 2,451.5 930.7 1,164,2 2,452.1 2,987.1 2,934.4 6.4 4.7 3.9 6.3 11.0 9.0 Japan 2,631.0 3,645.1 4,684.5 5,827.0 5,675.7 5.925.8 6.8 8.8 7.8 6.4 2.3 4.4 Othere 1,319.5 1,129.9 1,061.5 834.1 681.2 993.3 3.4 1.1 1.3 -6.0 -1.8 -3.4 Developing Countries 14,759.7 19,322.9 18,349.1 31,762.5 26,789.8 33,517.8 38.3 41.7 44.1 3.0 6.5 4.4 India 3,090.4 6,572.4 3,586.9 6,289.4 851.1 300.0 8.0 1.3 0.4 1.4 -16.4 -10.6 Brazil 1,881.3 1,876.3 1,969.3 3,428.1 2,624.1 3,654.6 4.9 4.1 4.8 1.2 8.6 2.5 Egypt 661.1 1,230.4 850.7 2,930.0 3,346.0 3,608.6 1.7 5.2 4.7 5.6 14.6 8.8 Korea, Rep. of 336.3 476.2 1,178.1 1,787.0 1,989.7 1,695.3 0.9 3.1 2.2 12.9 2.3 9.9 Pakistan 1,078.9 1,515.6 228.6 1,185.6 497.5 2,236.5 2.8 0.8 2.9 -22.1 16.7 2.2 Bangladesh 252.0 241.1 1,061.5 1,049.2 623.0 1,123.2 0.7 1.0 1.5 14.2 -0.5 8.4 Southern Europe 3,248.3 2,273.4 2,073.4 1,723.0 1,603.1 2,081.1 8.4 2.5 2.7 -11.4 1.1 -2.3 Others 4.211.5 5,137.4 7,400.6 13,370.2 15,255.2 18,818.4 10.9 23.7 24.7 8.8 8.3 9.1 Centrally Planned Economies 8,721.2 16,399.8 12,901.5 16,268.2 20,69.6 25,402.6 22.6 32.1 33.4 0.6 5.4 3.9 U.S.S.R. 655.9 6.375.1 1,846.3 6,686.0 6,500.0 9,250.0 1.7 10.1 12.2 0.0 13.1 14.5 China 2,889.0 5,626.4 5,583.1 2,598.5 7,577.3 8,951.2 7.5 11.8 11.8 2.6 5.0 2.2 Others 5,176.3 4,398.3 5.472.1 6,983.7 6,542.3 7,201.4 13.4 10.2 9.5 0.1 1.2 1.4 WORLD TOTAL 38,511.2 49,927.2 48,785.9 65,675.3 64,236.9 76,039.2 100.0 100.0 100.0 2.2 4.2 3.5 Source: PAO Trade Yearbook. April 1982 V - 3 0 World wheat exports are dominated by the US, Canada, Australia, Argentina, and France (within the EC-10) (Table V-2). The United States alone supplies over 40 percent of total world exports of wheat, and the growth rate of US exports has exceeded 6 percent per annum since 1970. The Soviet Union is either a major importer or exporter of wheat depending on the size of its harvests. This, coupled with the fact that good information on Soviet harvests is nearly unavailable, has thrown a tremendous amount of price and stock instability onto world markets. The share of total world wheat exports held by each of the major exporters (except France) has remained remarkably constant since 1961 with the US supplying about 40 percent, Canada 20 percent, Australia 10 percent, and Argentina 5-6 percent of total wheat exports. Maize: International trade of maize reached levels equal to that of wheat for the first time in 1979. The United States is by far the major supplier of maize in the world, exporting over 59 million metric tons in 1979, which accounts for over 75 percent of world exports of maize. The demand for maize is a derived demand; it is dependent on the demand for meat, poultry and their products in the industrial and centrally planned economies because the majority of maize is consumed as a feed in those countries. The industrial countries account for nearly 40 percent of world maize imports, with the EC-10 and Japan being the largest importers (Table V- 3). The USSR and China together account for over 25 percent of maize imports, with the growth rate of imports to the USSR exceeding an average value of 85 percent per annum since 1961 as a result of the increased emphasis on, and demand for meat in Soviet markets. Among the developing countries Korea is now the largest maize importer, with imports growing by over an average rate of 35 percent per annum since 1961 along with the expansion in Korean meat produc- tion. The United States is the largest exporter of maize (Table V-4). US exports have grown from 50 percent of world exports of maize in 1961 to over 75 percent in 1979; this has been accompanied by a per annum growth rate of over 15.9 percent since 1970. Exports of maize from the Soviet Union have fallen by nearly 8 percent per annum since 1961. Argentina, South Africa, Thailand, and Brazil all show great potential as maize suppliers with an aggregate annual growth rate of maize exports of well over 4 percent since 1961. Argentina is currently the second largest exporter of maize in the world followed by France, South Africa, and Thailand. Table V-2: WHEAT - WORLD EXPORTS BY MAIN COUNTRIES AND ECONOMIC REGIONS World Wheat Export Share In World Total Growth Rates Country/Regiona 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 --------------------------- -000 metric tons)------------------------ ------(percent)------- -------(Z per annum)------- Industrialized Countries 32,996.2 40,412.0 41,791.1 55,982.4 55,594.0 62,280.6 83.7 83.2 86.0 1.4 4.3 3.8 United States 17,168.5 17,700.6 17,444.3 26,536.6 23,826.0 33,379.0 43.6 35.7 46.1 -1.0 6.5 4.0 Canada 9,964.0 11,882.4 10,746.3 10,717.7 14,822.1 11,696.4 25.3 22.2 16.2 -1.3 0.9 1.3 Australia 4,163.8 5,714.7 6,886.1 7,558.7 7,945.1 6,823.7 10.6 11.9 9.4 3.4 1.4 3.0 France 1,048.5 4,046.0 3,446.4 7,336.1 5,919.5 7,247.4 2.7 8.9 10.0 12.9 6.8 8.4 Others 651.4 1,068.4 3,268.0 3,833.2 3,081.3 3.134.0 1.7 4.6 4.3 16.9 6.2 11.0 Developing Countries 1,191.1 7,675.8 2,698.4 3,503.7 6,714.0 5,913.7 3.0 10.1 8.2 5.2 12.2 2.0 Argentina 1,065.5 6,660.6 2,301.8 3,154.6 5,634.6 4,294.5 2.7 8.4 5.9 3.0 10.2 0.6 Others 125.5 1,015.2 396.6 349.1 1,079.4 1,619.2 0.3 1.6 2.2 13.2 13.4 5.0 Centrally Planned Economies 5,213.7 2,021.4 5,662.0 3,240.1 4,496.5 4,205.5 13.2 6.7 5.8 5.2 -8.0 0.2 U.S.S.R. 4,800.6 1,662.6 4,851.9 813. ?.062.0 2,600.0 12.2 3.1 3.6 3.2 -16.8 -4.0 Others 413.1 358.8 810.1 2,427.0 ,')4.5 1,605.5 1.0 3.6 2.2 18.8 9.9 10.7 WORLD TOTAL 39,405.5 50,123.7 50,151.4 62,726.1 66,804.5 72,399.8 100.0 100.0 100.0 2.0 3.7 3.3 Source: FAO Trade Yearbook. Table V-3: MAIZE - WORL) IMPORTS BY MAIN COUNTRIES AND ECONOMIC REGIONS World Maize Imports Share in World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 - ------------------ ('000 metric tons)--------------------------- ------(percent) ---- -----( per annum)------ Industrialized Countries 11,461.0 18,979.8 21,611.9 30,218.7 29,998.9 28,498.1 83.6 54.5 38.1 5.8 3.7 4.4 EC-10 8,555.8 14,449.4 14,718.0 21,152.6 20,897.4 16,965.9 62.4 37.9 22.7 4.8 2.3 3.4 Italy 1,729.6 5,152.6 4,216.2 4,583.3 3,975.0 3,376.4 12.6 7.2 4.5 8.4 -2.7 1.6 United Kingdom 3,206.9 3,252.9 3,116.7 3,761.9 4,111.1 3,145.4 23.4 7.5 4.2 -1.4 1.5 -0.4 Japan 1,830.7 3,433.5 6,017.9 8,383.5 9,068.1 11,407.7 13.3 16.5 15.3 12.6 8.0 9.2 Others 1,074.5 1,096.9 8760 682.6 33.3 124.5 7.8 0.1 0.2 -4.2 -73.9 -29.3 Developing Countries 1,541.2 3,281.1 5,368.2 11,402.0 15,169.0 20,226.5 11.2 27.5 27.1 13.3 15.2 12.8 Egypt 101.3 136.6 73.3 458.9 590.9 493.9 0.7 1.1 0.7 -11.6 32.2 6.3 Korea, Rep. of 21.0 .7 214.2 943.6 1,278.0 2,728.4 0.2 2.3 3.6 18.9 26.2 36.8 Nigeria .1 .1 8.9 9.9 36.8 111.0 0.0 0.1 0.1 30.9 38.9 41.6 Southern Europe 487.6 1,910.3 2,474.9 5,114.6 5,815.9 7,862.5 3.6 10.6 10.5 19.3 11.6 12.4 Others 931.2 1,233.4 2.597.0 4,875.1 7,447.3 9,030.6 6.8 13.5 12.1 9.6 16.3 12.9 Centrally Planned Economies 711.4 1,688.6 1,966.8 20,050.6 9,909.4 26,027.9 5.2 18.0 34.8 6.5 23.6 18.8 U.S.S.R. 22.6 0 303.8 11,376.0 4,100.0 14,494.8 0.2 7.4 19.4 138.2 34.2 87.2 China 45.6 128.1 614.7 1,861.1 1,995.8 5,023.9 0.3 3.6 6.7 21.5 17.5 24.0 Others 643.2 1,560.5 1,048.3 6,813.5 3,813.6 6,509.2 4.7 6.9 8.7 0.4 17.6 11.1 WORLD TOTAL 13,713.6 23,949.5 28,946.9 61,671.3 55,077.2 74,752.4 100.0 100.0 100.0 6.9 10.2 8.3 Source: FAO Trade Yearbook. Table V-4: MAIZE - WORLD EXPORTS BY MAIN COUNTRIES AND ECONOMIC REGIONS World Maize Export Share in World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79- --------------------- ('000 metric tons)---------------- (percent)---- -------(% per annum)----- Industrialized Countries 8,162.2 17,032.6 17,991.5 50,195.9 44,782.8 64,513.6 58.3 77.9 83.9 7.4 13.8 10.4 United States 7,452.5 15,158.8 14,408.7 44,361.6 40,481.2 59,242.5 53.2 70.4 77.1 5.7 15.9 10.1 France 697.0 559.6 2,455.4 2,046.5 873.4 3,059.1 5.0 1.5 4.0 24.2 -6.2 11.0 Others 12.7 1,314.2 1,127.4 3,787.8 3,428.2 2,212.0 0.1 6.0 2.9 30.1 12.0 19.9 Developing Countries 4,340.3 6,279.5 10,278.6 10,070.4 11,031.0 10,946.2 31.0 19.2 14.2 8.6 1.2 4.0 Argentina 1,730.1 2,802.3 5,232.8 3,080.4 5,430.7 5,959.0 12.3 9.4 7.8 8.5 1.6 4.4 South Africa 1,071.2 326.6 1,201.0 2,224.6 1,900.0 2,152.1 7.6 3.3 2.8 -3.7 5.6 6.3 Thailand 567.2 804.4 1,371.5 2,388.2 1,517.9 1,980.7 4.0 2.6 2.6 11.9 3.0 7.1 Brazil 4.4 559.7 1,470.6 1,418.0 1,420.0 9.9 0.0 2.5 0.0 93.8 -33.4 18.1 Others 967.2 1,786.5 1,002.7 959.2 762.3 844.4 6.Q 1.3 1.1 10.8 -3.8 -1.5 Centrally Planned Economies 1,503.5 1,702.6 1,161.9 1,965.7 1,673.6 1,400.7 10.7 2.9 1.8 -6.5 4.9 -1.0 U.S.S.R. 422.1 557.7 298.9 162.8 177.0 163.0 3.0 0.3 0.2 -15.3 -6.7 -7.8 Others 1,081.4 1,144.9 863.0 1,802.9 1,496.6 1,237.7 7.7 2.6 1.6 -3.0 7.2 0.8 WORLD TOTAL 14,01G.1 25,033.0 29,432.0 62,232.0 57,487.4 76,860.5 100.0 100.0 100.0 6.8 10.4 8.2 Source: FAO Trade Yearbook. April 1982 V - 7 Coarse Grains: Trade in coarse grains was well over 100 million tons in 1979; over 70 percent of this was trade in maize alone. The majority of coarse grains are utilized as feed especially in the industrial and centrally planned economies; as the demand for meat and hence grains grows with the growth of incomes, in the developing countries they should become more important importers. The structure of imports of coarse grains is very similar to that for maize. The industrial countries import over 40 percent of coarse grains traded, with the EC-10 and Japan being the first and second largest respec- tively (Table V-5). The centrally planned economies import over 30 percent of traded coarse grains, with the USSR being the third largest coarse grains importer. Growth of coarse grains imports has been at an annual rate of 7.2 percent since 1961, with the majority of the growth taking place since 1970. Coarse grains imports to industrial countries have grown by 4 percent since 1961, while imports to the developing and centrally planned economies have exceeded an average 10 pere at per annum growth rate. The industrial countries account for over 80 percent of coarse grains exports, with the United States being the largest single exporter ac- counting for over 60 percent of total world exports of coarse grains (Table V- 6). The EC-10 and Argentina are the second and third largest exporters respec- tively. The shars of the developing and centrally planned economies in coarse grains exports has fallen from 36 percent in 1961 to under 17 percent in 1979, while the share of the United States has increased from 40 percent in 1961 to over 60 percent in 1979. B. Stocks World ending stocks of wheat have grown by only 0.57 percent per annum since 1961 while wheat production has grown by over 3 percent per annum over the same period. Thus the holdings of grain stocks relative to the amount of grain production has fallen significantly (Table V-7). On the average, total grain stocks now amount to jurt over one year's supply of total grain trade at any given time. Roughly one half of total grains stocks are held by just five countries: the United States, Canada, Australia, France, and Argentina. Wheat: World ending wheat stocks have averaged around 83 million metric tons since 1976, of which over 30 percent was held by the United States alone (Table V-8). World wheat stocks have exhibited an annual growth rate of only 0.57 percent since 1961 as compared with a 3.3 percent growth in Table V-5: COARSE GRAINS - WORLn IMPORTS BY MAIN COUNTRIES AND REGIONS World Coarse Grains Imports Share in World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 T961 l977 1979 1961-70 1970-79 1962-79 ------------------------ ('000 metric tons)-------------------------- ------(percent)------ -------(2 per annum)------ Industrialized Countries 19,428.1 30,013.0 35,557.0 46,895.4 46,103.6 42,698.6 73.5 56.8 41.4 5.2 2.8 4.1 EC-10 14,962.1 21,893.5 22,385.2 30,187.7 2R,477.7 22,730.7 56.6 35.1 22.0 2.7 1.4 2.4 Japan 2,100.7 5,641.8 10,873.8 14,673.8 16,392.9 18,722.5 7.9 20.2 18.1 17.5 6.6 10.8 Others 2,365.3 2,477.7 2,297.9 2,034.0 1,233.0 1,245.4 8.9 1.5 1.2 -15.0 -5.2 -9.1 Developing Countries 3,249.8 5,163.9 7,872.8 15,652.8 21,125.1 27,114.4 12.3 26.0 26.3 10.6 13.3 11.2 Mexico 91.7 145.7 809.0 1,001.0 2,469.5 2,144.6 0.3 3.0 2.1 -7.6 27.0 21.0 Korea, Rep. of 171.1 106.6 225.1 982.5 1,625.3 2,R49.3 0.6 2.0 2.8 -2.6 23.3 20.6 Egypt 111.7 154.0 73.3 458.9 590.9 493.9 0.4 0.7 0.5 -12.5 32.2 5.9 Southern Europe 1,143.1 2.848.0 3,683.9 7,075.1 8,004.5 10,054.4 4.3 9.9 9.7 14.8 9.6 10.7 Others 1,732.2 1,909.7 3,081.5 6,135.4 8,434.8 11,572.3 6,6 10.4 11.2 9.7 14.0 10.6 Centrally Planned Economies 3,753.8 3,915.7 4,762.0 26,688.1 13,923.0 33,342.5 14.2 17.2 32.3 -1.1 17.9 13.8 U.S.S.R. 22.6 0.0 303.8 13,942.0 4,210.0 15,869.8 0.1 5.2 15.4 71.2 32.3 57.0 China 1,327.9 201.1 857.7 2,460.5 2,710.9 6,249.4 5.0 3.3 6.1 -4.5 16.6 15.6 others 2,403.3 3,714.6 3,600.4 10,285.5 7,002.1 11,223.2 9.1 8.6 10.9 -0.9 12.5 8.5 WORLD TOTAL 26,435.7 39,094.1 48,191.8 89,244.3 81,151.6 103,155.5 100.0 100.0 100.0 5.4 8.1 7.2 Source: PAO Trade Yearbook. Table V-6: COARSE GRAINS - WORLD EXPORTS BY MAIN COUNTRIES AND ECONOMIC REGIONS World Coarse Grains Exports Share in World Total Growth Rates Country/Regions 1961 1965 1970 1976 1977 1979 1961 1977 1979 1961-70 1970-79 1961-79 00 --------------------------- (000 metric tons)------------------------- -----(percent)----- -------(2 per annum)------ Industrialized Countries 17,022.8 28,241.3 32,729.6 71,899.0 64,889.5 87,082.7 63.7 76.3 83.0 5.8 10.1 8.6 United States 10,933.5 21,343.4 19,574.5 51,414.9 48,302.4 66,046.3 40.9 56.8 62.9 4.2 13.8 8.5 EC-10 3,454.5 4,682.9 8,572.1 11,353.7 8,943.1 13,035.0 12.9 10.5 12.4 12.7 3.5 8.8 France 2,666.7 2,377.4 5,811.8 5,362.0 3,540.8 7,800.9 10.0 4.2 7.4 14.5 -1.9 7.3 Others 2,634.8 2,215.1 4,583.0 9,130.4 7,644.0 8,001.4 9.9 9.0 7.6 2.7 3.0 9.6 Developing Countries 5,681.1 8,452.9 13,691.4 14,971.3 16,568.5 16,013.1 21.2 19.5 15.3 7.9 3.1 4.6 Argentina 2,531.3 3,880.3 7,703.6 6,709.8 10,121.3 10,201.6 9.5 11.9 9.7 8.5 5.1 6.2 South Africa 1,180.5 507.7 1,297.4 2,306.3 1,931.6 2,358.2 4.4 2.3 2.2 -3.2 5.2 5.4 Thailand 567.2 858.4 1,451.0 2,571.6 1,656.9 2,150.0 2.1 1.9 2.0 12.7 3.2 7.5 Others 1,402.1 3,206.5 3,239.4 3,383.6 2,858.7 1,303.3 5.2 3.4 1.2 10.8 -5.5 -0.7 Centrally Planned Economies 4,032 8 3,982.7 2,341.6 3,054.6 3,545.8 1,857.6 15.1 4.2 1.8 -7.2 0.2 -2.4 WORLD TOTAL 26,743.3 40,696.1 48,762.8 89,955.7 85,007.8 104,953.3 100.0 100.0 100.0 5.2 8.2 7.1 Source: PAO Trade Yearbook. April 1982 V - 10 Table V-7: TOTAL WORLD ENDING STOCKS /a Year /d Wheat Stocks Coarse Grain Stocks /b Total Grain Stocks /c Shara in World Total Total Wheat Coarse Grains (million at) -----(million at)--- ----(million at)---- ---------(percent)-------- 1960/61 79.3 109.7 189.0 42.0 58.0 100.0 1961/62 67.5 94.7 162.2 41.6 58.4 100.0 1962/63 71.9 92.7 164.6 43.7 56.3 100.0 1963/64 65.3 97.9 163.2 40.0 60.0 100.0 1964/65 73.4 90.9 164.3 44.7 55.3 100.0 1965/66 55.3 75.1 130.4 42.4 57.6 100.0 1966/67 82.1 76.1 158.2 51.9 48.1 100.0 1967/68 90.5 85.2 175.7 51.5 48.5 100.0 1968/69 114.8 89.2 2t)4.0 56.3 43.7 100.0 1969/70 97.6 89.2 186.8 52.2 47.8 100.0 1970/71 74.1 72.2 146.3 50.6 49.4 100.0 1971/72 81.1 85.8 166.9 48.6 51.4 100.0 1972/73 62.6 68.2 130.8 47.9 52.1 100.0 1973/74 70.4 63.5 133.9 52.6 47.4 100.0 1974/75 63.9 57.3 121.2 52.7 47.3 100.0 1975/76 62.8 56.7 119.5 52.6 47.4 100.0 1976/77 98.8 75.6 174.4 56.7 43.3 100.0 1977/78 81.5 84.2 165.7 49.2 50.8 100.0 1978179 100.9 90.3 191.3 52.8 47.2 100.0 1979/80 80.0 91.2 171.2 46.7 53.3 100.0 1980/81 /e 75.0 80.2 155.2 48.3 51.7 100.0 1981/82 /F 81.4 108.8 190.2 42.8 57.2 100.0 Growth Rate 1961-1981 0.57 -0.76 -0.14 /a Stock figures do not include the PRC and certain Eastern European countries. /b Coarse grains include: corn, barley, sorghum, oats, rye, millet, and mixed grains. /c Total grains include wheat and coarse grains. /d All data is in crop year. /e Preliminary If Projection Source: USDA, FAS circulars Table V-8: WHEAT - WORLD ENDING STOCKS BY MAIN COUNTRIPS Share in World Growth World Ending Stocks Total Stocks Rate Country 19771 197/76 1979/80 1980/81 /A h 197 Till77 1979/80 1980/81 1971-81 Untted States 22.4 18.1 24.5 26.9 30.4 30.2 30.6 35.9 10.1 Canada 20.0 8.2 10.7 8.3 10.1 27.0 13.4 11.1 -13.5 European Community - 7.7 8.0 8.8 9.0 - 10.0 11.7 5.6 /c Australia 1.7 2.7 4.4 2.4 2.6 4.9 5.5 3.2 -8.2 krgentina 0.7 0.7 0.4 0.4 0.4 0.9 0.5 0.5 -16.8 VORLD TOTAL 74.1 62.8 80.0 75.0 81.4 100.0 100.0 100.0 3.7 /a Preliminary /b Projections Ic Growth Rate: 1975-81 Source: USDA, FAA circulars April 1982 V - 12 production. Stockholdings of the five major countries have remained fairly constant since 1973 with the US holding roughly 25 percent, Canada 9.3 per- cent, the European Community 8.4 percent, Australia 3.0 percent, and Argentina 0.5 percent of total ending stocks. The stock holdings of India and the USSR have been much more variable, depending largely on their harvests and recently on imports. China and several eastern European countries do Got report stock levels. Accordingly, stock figures should not be construed as representing world stock levels at a fixed point in time but rather they are indicative of annual increases or decreases in total stocks. Coarse Grains: World ending coarse grain stocks have averaged around 84 million metric tons since 1976, of which the United States alone held over 50 percent (Table V-7 and V-9). World coarse grain stocks as a percentage of total coarse grains production were only 13.7 percent in 1979. Coarse grains stocks have fallen by 0.76 percent per annum since 1961, while consumption and production have grown by over 3 percent over the same period of time. Since 1973 the United States has held roughly 43 percent, Canada 9 percent, France 2.5 percent, Australia 1 percent, and Argentina 1 percent of total coarse grain stocks. As is the case with wheat, coarse grain stock holdings of India and the USSR have been extremely variable. United States stocks as a percentage of world production have grown by 9 percent since 1973, along with positive growth rates in both India and Australia; but the stock holdings of every other major country have declined proportionately. In 1979 the US, Canada, France, Australia, and Argentina had stock holdings equal to 8.9 percent of total coarse grains production. C. Government Intervention 1. The Structure of the Marketing System The grain marketing system includes: (a) the primary collection system of county or country primary elevator delivery points; (b) the inland or port terminal systems which receive, store, clean, grade and ship grain; (c) the transformation system (mills, packaging houses, etc.); and (d) the transportation system that moves the grain through the rest of the system. This is clearly the physical grain marketing system; it may be influenced, or even controlled by government and private trade and grading policies. Any point within this system is theoretically subject to monopoly control. How- ever, in the major grain exporting countries there is little vertical April 1982 V - 13 integration in the chain from farmer to final consumer; this will differ from country to country depending on the amount of state buying or control, but it is generally true. The farmers sell their grain to middlemen, commercial grain elevatois, or cooperatives. They in turn may then wholesale the grain directly, or trade it to another middleman who wholesales it or exports it. It is generally believed that these grain marketing systems operate competitively within individual countries with no single firr or groups controlling a signi- ficant proportion of inland or port terminals, grain elevators or transportation facilities. This is not to say that market control is impossible, indeed there has been periodic concern in both Canada and the US about the degree of control that individual firms have or may have over signi- ficant parts of the grain marketing chain. But several authors have suggested that such centralized control of the grain marketing system is both reasonable and good as a result of significant scale economies both in mechanized operations and information that results. While domestic operations are generally competitive, by far the vast majority of grain marketed overseas is controlled by government grain trading monopolies (in Canada, Australia, Europe, and the centrally planned economies) and just four or five major private grain trading companies. Thus interna- tional grain trading does seem to entail some degree of oligopoly control at present. Indeed many authors suggest that there is considerable evidence of collusion on stockholding policies and price selling schemes among the three major grain exporting countries (the US, Canada, and Australia). Most duopoly or triopoly price setting models consider Canada to be the primary price- setting country whose pricing leads will, in general, he followed by the US and Australia. Canada and Australia are considered to desire to maximize exports or export revenues, while the US, in the role of a reaidual supplier, is interested only in maintaining market share. These models do not include concessional sales of grains such as the US Public Law 480 grain sales. Although there is significant evidence for colltsion among the major grain trading companies, there is also a significant body of evidence that does not support that conclusion such as the occurrence of price wars between the three major exporters in the late 1950's and early 1970's (prior to the enormous imports of the USSR in 1972 and 1973), a steady decline in real Lain prices over the last twenty years, increases of concessional grain sales during periods of low prices and sluggish demand, and stock holding policies April 1982 V - 14 that would seem to indicate an attempt on the part of the major exporting countries to promote price and trade stability rather than non-competitive market control. Finally Table V-10 indicates that the United States moved quite effectively to gain a significant share of the wheat export market during the period of large supply and demand instability caused by USSR grain imports in the early seventies. Indeed from 1973 to 1979 the United States has gained an average of 7 percent of the wheat export market at the expense of all major exporters except France. Such competitive activity is not at all consistent with the hypothesis of the US as a residual supplier that operates only to maintain some pre-arranged share of the market. Therefore although the export markets may contain some oligopolistic elements, the evidence generally seems to support the theory of competitive markets. And, in the international markets as in the domestic markets, such oligopolistic elements may be explained by the presence of significant mechanical and informational scale economies. Boch the domestic and international grain marketing systems tend to be arranged around centralized groupings of activity such as major inland ports and grain elevators, and major export terminals. And many countries are attempting to control the secretive activity of the large private grain marketing companies by controlling or monopolizing major production and export decisions so as to be in a better position to pursue domestic interests in the agricultural sector. These factors may be taken as evidence of significant market control and the pursuit of domestic interests at the expense of inter- national grain trade, but most of the evidence suggests that such activity tends to be more competitive than not, while taking advantage of many fairly obvious informational and mechanical scale economies that exist. Table V-9: COARSE GRAINS* - WORLD BEGINNING STOCKS BY MAIN COUNTRIES World Coarse Grains Beginning Stocks** Share in World Total Share in World Total Growth Production Rate Country 1973 1977 1978 1979 1973 1977 1979 1973 1977 1979 T7171 -------------' 000 metric tons)------------- (percent) ------(percent)------ (1 per annum) United States 31,733.0 30,017.0 40,204.0 51,116.0 55.0 40.9 53.1 5.1 4.5 7.3 9.1 Canada 5,874.0 5,087.0 7,579.0 6,688.0 10.2 6.9 7.0 0.9 0.8 1.0 -0.3 France 1,773.0 846.0 1,220.0 2,046.0 3.1 1.2 2.1 0.3 0.1 0.3 -7.1 Australia 510.0 788.0 791.0 1,092.0 0.9 1.1 1.1 0.1 0.1 0.2 8.6 Argentina 903.0 338.0 324.0 626.0 1.6 0.5 0.7 0.1 0.1 0.1 -20.3 India 2,000.0 5,077.0 5,842.0 8,422.0 3.5 6.9 8.8 0.3 0.8 1.2 21.8 U.S.S.R. 6,000.0 8,000.0 2,000.0 3,500.0 10.4 10.9 3.6 1.0 1.2 0.5 -17.4 WORLD TOTAL 57,691.0 73,477.0 82,067.0 96,200.0 100.0 100.0 100.0 9.3 11.0 13.7 7.2 Source: USDA, PAS Circular. * Coarse Grains Include: Corn, Barley, Sorghum, Oats, Rye, Millet, and Mixed Grains. ** All Data is in Crop Year. April 1982 V - 16 Table V-10: WHEAT EXPORT MARKET SHARE OF MAJOR EXPORTING COUNTRIES Wheat Export Share United States Canada France Australia Argentina ------------------------(percent)---------------------------- 1961 43.6 25.3 2.7 10.6 2.7 1962 37.2 21.2 4.4 14.6 7.5 1963 40.7 25.0 6.1 9.6 4.3 1964 39.7 26.3 5.7 13.3 7.2 1965 35.3 23.7 8.1 11.4 13.3 1966 39.7 25.7 6.4 9.1 8.9 1967 37.3 20.3 4.4 13.9 4.4 1968 34.2 19.6 9.8 13.8 5.1 1969 28.4 15.7 14.0 11.5 5.5 1970 34.8 21.4 6.9 13.7 4.6 1971 31.1 24.7 6.4 17.5 1.6 1972 35.9 23.5 9.7 14.2 2.8 1973 49.7 16.4 9.3 7.2 3.9 1974 42.5 17.2 12.5 8.7 2.9 1975 45.9 16.6 9.3 11.7 2.6 1976 42.3 17.1 11.7 12.1 5.0 1977 35.7 22.2 8.9 11.9 8.4 1978 44.9 19.0 8.4 14.4 2.1 1979 46.1 16.2 10.0 9.4 5.9 Averages: 1961 to 1972 36.5 22.7 7.0 12.8 5.6 1973 to 1979 43.9 17.8 10.0 10.8 4.4 Source: Derived from FA0 Yearbooks. April 1982 V - 17 2. Barriers to Trade There are numerous barriers to trade in wheat, a commodity which is heavily protected because of its importance as a major staple food. Moreover, grain trade is controlled because it is a major source or use of foreign exchange for many countries. Policies of trade restraint are often implemen- ted for the purpose of defending domestic food policies. Trade restraint policies are often supplemented with stock control policies to reduce the adverse effects of supply and price fluctuations. There are several major types of domestic and/or international trade barriers in effect: (i) price policies used to achieve self-sufficiency of domestic production by establishing minimum floor prices, fixed price schemes, or the use of direct subsidies; (ii) indirect-price policies used to expand production by subsidizing inputs, e.g., fertilizers or research into new high yield varieties, subsi- dized transport, or tax exemptions; (iii) price and non-price policies used to limit domes- tic production to avoid over-supply stemming from the price supports; (iv) utilization policies used to reduce or increase consumer prices or support producer prices by April 1982 V - 18 subsidizing consumption of grains as food or feed; (v) export and import trade policies used to encour- age or limit trade; (vi) stock control policies used to exercise market control or limit damaging effect of price and/or supply instability. Information on the range and type of policies in effect in several of the major importing and exporting countries can be found in Appendix I. This information has been obtained from "National Grain Policies", CCP:GR 75/7, FAO, August 1975. Though somewhat dated, this information does give a general indication of existing policies. 3. The International Wheat Agreement At present negotiations are pending for the purpose of preparing a new arrangement to replace The International Wheat Agreement of 1971 (as extended). The goals of this new arrangement will be largely the same as those of the old agreement, i.e., to promote cooperation in, and expansion of trade of wheat and grains, to encourage market stability, and to develop a system of food aid for developing countries. The important addition to the new agreement is the development of a buffer stock scheme to ensure stable supplies of food grains at "reasonable" and stable prices. It would develop a mechanism for the accumulation of grain stocks, as well as a trigger price mechanism to trigger pre-arranged responses to supply short-falls or surpluses. The fine points of this arrangement have not yet been agreed on to the satisfaction of all parti- cipants, nor does it seem likely that these negotiations will be successfully concluded in the near future because of the present situation of abundant grain supplies. A new food aid convention has been sucessfully completed. It secures at least 10 million metric tons of good quality wheat for distribution to developing countries each year. The grain will be contributed by the indus- trial countries in pre-arranged amounts. This food aid convention will go into effect upon the sucessful completion of the new international wheat agreement. A related policy development was the Tokyo Round of Multilateral Trade Negotiations (MTN) in Geneva under the auspices of GATT. A "framework of understanding" has been reached between many countries to improve market access for agricultural products and greater discipline regarding the use of export subsidies and non-tariff barriers. Of particular importance to agricul- April 1982 V - 19 ture are the codes regarding domestic agricultural subsidies and counter- vailing measures, and the framework for dairy and meat agreements which may affect world coarse grain trade. Despite this understanding, many industrial countries are not yet prepared to honor international commitments when conflicts arise with national policies. The effect is to disrupt the free operation of markets and to deny market access to products from developing nations. Two current examples are to be found in France and Japan. EC price supports for grains have produced a surplus in France requiring subsidized exports and the curtailment of manioc imports from Thailand. Recent discus- sions have centered on the imposition of import controls and import levies on Thai manioc imports, rather than examining the possibility of structural changes within EC agriculture. In Japan, the successful rice production pro- gram and diminishing human consumption have generated unwanted rice stocks of over 5 million tons. As a result, Japan is using subsidies to divert rice into alternativt uses such as exports formula feed, brewing and flour supplement. This is displacing imports of grain with a concommittant impact on interna- tional grain prices. D. Grain Prices 1. Internaticnal Prices Grain prices in the international market are quite stable relative to those of other primary commodities. The average percentage deviation from a five-year moving average is approximately 6 percent for grains compared to 15 percent for rice and vegetable oils, 10 percent for beef and beverages, and 30 percent for sugar. The reason for this relative price stability can be attributed to the grain policies of the US and Canada where stockholding and production restraints tend to cushion short term production changes in the rest of the world. International prices of wheat for major exporters are given in Table V-10. The exception is the price series for France where wholesale prices are presented. Because of the EC policy of supporting domestic prices while paying a subsidy on exports to bring them to competitive world levels, the French wholesale price should not be construed as having any relationship to the French export price of that wheat. April 1982 V - 20 In constant price terms, prices of wheat from 1966 to 1969 were higher than they have been over the most recent four year period. In fact, with the exception of the "shock" years of 1973 to 1975, wheat prices in constant price terms have declined from levels prevailing in the 1960's. International coarse grain prices are given in Table V-11. As with wheat prices these have declined in constant terms since the 1960's and are now (1978-80) 43 percent less than in the period 1963-66. The table demon- strates the price differentials for different types of coarse grains, showing that generally maize is priced above sorghum, which, in turn, is priced above barley. April 198-V - 21 Table V-11: INT'*RNAI-WA. WI(FAT PRifl!S (Sot) Year Canadian 01 CW* 11.S. Hari Park Argentina Australia** Canadian nurm* i,q. %oft French** VInter* Semi-4ard* Red Stater* 1966 70.16 - 69.75 - - 1967 9.40 61.73 - - 74.19 61.33 106.14 1968 64.76 55.95 - - 66.73 5R.70 111.20 1969 64.15 54.36 - - 68.08 56.13 106.27 1970 6?.69 54.5R 54.89 - 58.99 56.92 106.95 1971 64.10 58.79 63.15 - 59.02 62.25 111.14 1972 71.37 65.34 73.75 3A.00 67.28 69.11 128.07 1973 147.21 111.54 110.31 44.00 189.68 116.57 151.32 1974 2nA.75 174.14 158.25 95.00 264.76 174.02 152.60 1975 11.20 145.50 149.75 100.00 240.51 138.40 172.41 1976 149.13 127.13 140.66 85.00 152.02 122.72 176.58 1977 115.77 9S.53 101.26 73.00 116.8a 98.72 187.65 1979 134.80 117.56 12.31 73.00 141.93 124.87 - 1979 172.20 146.97 158.12 A9.00 189.61 156.10 - 1980 190.80 15R.71 205.98 109.00 746.71 168.38 - 1981 196.40 192.R0 112.00 154.60 Canadian 01 CW :1 CV Red Spring Wheat it.q. Hard Dark Winter No. 2 Hard Dark Winter Wheat, Wholesale Price, Xansas City. Argentina Seml-Hard Seml-HIard Wheat, Export Price, f.o.b. Buenos Aires. Australia : tport Price Index (Wheat) 1975*100. Canadian TDurum :o. 3 Amber Durum, in Store, Thunder Bay. U.S. Soft Red Winter Soft Red Vinter Wheat, f.o.h. Atl. Prt. French : DomeAtle wheat, Wholesale Price. * Source: The World Rank, FS Data Fund. **Source: 1'.N. Monthly Rulletin of Statistics. April 1982 V - 22 Table 9-12: INTERNATIONAL COARSE GRAIN PRICES ($/st) Year U.S. Maise U.S. Maize Argentina U. . Sorghum U.S. Barley** Canada Barley** Australia #2* 03* Mate Plata* #2* Barley" 1957 47.64 64.48 - 43.30 - - 1958 47.64 57.32 - 43.30 - - 1959 46.06 58.70 - 37.90 - - 1960 43.31 57.32 - 37.70 - - 1961 45.92 55.12 - 42.56 - - - 1962 51.39 54.06. - 45.51 - - - 1963 54.71 60.83 - 48.61 - - - 1964 55.84 61.45 - 48.22 - - - 1965 55.03 64.58 - 47.21 - - - 1966 59.38 65.52 - 51.71 - - - 1967 49.88 62.47 64.14 50.40 - - - 1968 49.10 56.04 57.81 46.51 - - - 1969 53.85 61.43 63.29 50.05 - - - 1970 58.40 71.43 68.91 51.80 41.o9 48.49 35.00 1971 58.40 65.55 66.70 55.70 44.46 51.40 44.00 1972 55.80 66.81 71.63 56.20 45.19 52.43 42.00 1973 97.82 117.47 118.82 93.39 74.22 89.39 55.00 1974 132.06 154.92 158.85 120.95 129.70 180.77 86.00 1975 119.63 128.95 153.92 t1t.87 139.62 122.32 100.00 1976 112.37 131.97 136.87 105.22 112.43 109.23 110.00 1977 95.34 - 113.50 88.52 89.29 86.23 114.00 1978 100.74 - - 93.84 84.51 87.22 90.00 1979 115.42 - - 108.11 97.00 99.29 84.00 1980 125.25 - - 128.86 116.11 112.38 118.00 1981 130.80 126.40 144.70 U.S. Maize #2 : Maize #2, f.o.b. Gulf. U.S. Maize #3 Maize #3, c..f. U.K. Argentina Maize Plata Maize Plata, c.i.f. RTR. U.S. Sorghum #2 : No. 2 Yellow Sorghum, f.o.b. Culf. U.S. Barley : Barley, Wholesale Australia Barley : Export Price Index, 1975 - 100 * Source: The World Bank, IFS Data Fund. ** Source: U.N. Monthly Bulletin of Statistics. Table V-I)* CORRELATION M4ATRIX OF GRAIN PRICS /a Canadian US Hard Argentins Canadian its Soft French US Mae. U8 Maine Argentina ItS Sorghum US Canad Australia # T.C.W. Dark Winter Seml-flard Australia Durum Red Winter 02 #3 Maite Plata 02 Barley Barley Barley rjnadian 01 C.. 1.00000 ItS Hard Dark Winter 0.9966 1.00000 Argentina Semi-Hard 0.8873 0.8635 1.00000 Australia 0.8390 0.7608 0.9147 1.00000 Canadian Durse 0.9712 0.9651 0.8052 0.7288 1.00000 US Soft Red Winter 0.9640 0.9860 0.AS76 0.7345 0.363 1.00000 Prench 0.2999 0.2173 0.4125 0.6179 0.1531 0.1748 1.00000 11 Maze #2 0.9824 0.9784 0.8885 n.92s 0.4961 0.9194 0.%214 1.00000 US Maire #3 0.9804 0.9847 0.9567 0.8073 0.8988 0.9508 0.6980 0.9939 1.00000 Argentina Maie Plata 0.9866 0.9823 0.9813 0.8864 0.9085 0.8998 0.5027 0.9960 0.09865 1.00000 US Sorghum 62 0.9797 0.9713 0.9494 0.9100 0.8997 0.9272 0.5078 0.9892 0.9851 0.9943 1.0000 US Barley 0.9267 0.8962 0.7622 0.9021 0.71274 0.7284 0.5628 0.9493 0.8726 0.4630 0.9321 1.00000 Canada Barley 0.9127 0.9108 0.6291 0.6889 0.8752 0.8044 0.2146 0.8998 0.9217 0.8959 0.8635 0.8940 1.00000 Australia Barley 0.7082 0.6727 0.7137 0.8411 0.3477 0.3712 0.9428 0.8065 0.7431 0.6098 0.8184 0.8240 0.6126 1.00000 )j Correlations are calculated from the longest series available. In moat casea this spans the years 1967 to 1980. although In a fet cases such as for US Naite #3, the period is only 1972-1976. April 1982 V - 24 References I. M. Alouze, A. Watson and N. Sturgess, "Oligopoly Pricing in the World Wheat Market", American Journal of Agricultural Economics, 60, May 1978. 2. , "Oligopoly Pricing in the World Wheat Market: Reply", American Journal of Agricultural Economics, 61, August 1979. 3. M. Bale, "Market Prospects for Grains (Wheat and Coarse Grains)", The World Bank, Economic Analysis and Projections Department, January 1980. 4. J. Bieri, A. Schmitz, "Market Intermediaries and Price Instability: Some Welfare Implications", American Journal of Agricultural Economics, 56, May 1974. 5. J. Binkley, M. Revelt, "The Role of Transportation in International Agri- cultural Trade", University of Indiana, 1981, The Department of Agricultural Economics, Purdue. 6. B. Carter, A. Schmitz, "Import Tariffs and Price Formation in the World Wheat Market", American Journal of Agricultural Economics, 61, February 1979. 7. R. Caves, "Organization, Scale, and Performance of the Grain Trade", Food Research Institute Studies, XVI, 3, Washington, D.C., 1977-78. 8. T. Cohn, "The 1978-79 Negotiations for an International Wheat Agreement: An Opportunity Lost?", The International Journal, 35, Winter 1979/80. 9. Food and Agricultural Organization, "National Grain Policies", Committee on Commodity Problems: Intergovernmental Group on Grains, CCP: GR. 75/7, Rome, 1975. 10. T. Greaves and P. Johnson, "Oligopoly Pricing on the World Wheat Market: Comment", American Journal of Agricultural Economics, 61, August 1979. 11 J. Kennedy, "Optiral Buffer Stock Policies for Wheat at the World Level", The Australian Journal of Agricultural Economics, 23, December 1979. 12. A. McCalla, Alex and Andy Schmitz, "Grain Marketing Systems: U.S. versus Canada", American Journal of Agricultural Economics, 61, May 1979. 13. A. McCalla, A. Schmitz and G. Storey, "Australia, Canada, and the U.S.: Trade Partners or Competitors", American Journal of Agricultural Economics, 61, December 1979. 14. A. McCalla, "Structural Characteristics of International Grain Markets", submitted to USDA, Office of General Sales Manager, Washington, D.C., 1979. April 1982 V - 25 15. A. McCalla and T. Josling (editors), International Agricultural Trade and Imperfect Markets, Allenheld, Osman and Co., New Jersey, 1981. 16. D. Morgan, Merchants of Grain, The Viking Press, New York, 1979. 17. M. Ryan and M. Bale, "Wheat Protein Premiums and Price Differentials", American Journal of Agricultural Economics, 59, August 1979. 18. M. Ryan and M. Bale, "An Analysis of Prices of High Protein Wheat", USDA, ERS, Washington, D.C., 1976. 19. M. Ryan and M. Bale, "An Ana.,vsis of the Relationship between U.S. Wheat Exports and Montana Farm Pric-s", Montana Agricultural Experiment Station, Montana State University, Bozeman, 1976. 20. A. Zwart and K. Meilke, "The Influence of Domestic Pricing Policies and Buffer Stocks on Price Stability in the World Wheat Industry", American Journal of Agricultural Economics, 61, August 1979. April 1982 V - 26 Appendix I AUSTRALIA Policy Objectives. Promote a balanced development of agricultural resources by increasing production and production efficiency or limit produc- tion having regard to the ability of producers to market their output in domestic and export markets at remunerative prices: to stabilize returns for farm products, to market such products successfully and to improve farm incomes. Price Policy. Under the current Plan the concept of "guaranteed" price has been replaced by a "stabilization" price designed to allow domestic producer pricers to follow international price levels with a lag and without fluctuations being as large. Depending upon the relationship of international prices to the stabilized price level contributions are made to producers or to the Stabilization Fund with producer and Government participation. Limits are set as to the degree to which the Government is required to underwrite the Plan and to the level to which producers must contribute. Rome consumption Price: A uniform consumption price is set annually for ASW wheat and adjusted for other qualities. Non-price Policy. Research by Government and producer organizations into grain production and marketing. Bounties and subsidies are given on fertilizer produced in, or imported into, and sold in Australia. Taxation concessions. Marketing Organization. Australian Wheat Board (AWB) is sole mar- keter of wheat within Australia and of wheat and wheat flour for export. A system of quotas on deliveries of wheat from growers to the Australian Wheat Board came into effect in the 1969/70 season when stocks began to build up. Quotas suspended as from the 1975/76 season. There is no national marketing authority for barley but grower controlled statutory marketing boards in each State. The marketing of oats, maize and sorghum is undertaken by various State statutory marketing boards where they exist, in some S*ates it remains in private industry. Utilization Policy. Food consumption and price: apart from those concerned with wheat stabilization, there are no national measures affecting food consumption or consumption prices. Feed consumption and price: the Australian Wheat Board sells all wheat at one price. Feed grains are marketed by either the private trade or by State or grower-controlled marketing boards which pool receipts of the crop season. April 1982 V - 27 Milling. Regulations only affect standards of quality, cleanliness and purity of the product. Export Policy. Customs regulations control the exportation of wheat and wheat products, barley and grain sorghum. As a member of the Food Aid Convention, Australia ships foodgrains as food aid to developing countries. Bilateral agreements have been made with China, Japan and Malaysia. The Gover- nment's general policy is aimed at giving encouragement to the expansion of exports. Import Policy. No Government controls cr regulations applying to imports of grains other than those related to quarantine. Imports are subject to customs duties. Stock Policy. Policies are the responsibility of the various grain marketing authorities and are owned by either the statutory boards or cooper- atives. No stock targets have been established although the ARB has sought to maintain carryiver wheat stocks of about 550,000 tons. CANADA Policy Objectives. Shield producers from the most serious price * fluctuations while maintaining flexibility in production and encouraging farmers to make voluntary adjustments to meet changing economic conditions. Price Policy. Guaranteed prices: initial payments on the basic grades of wheat, oats and barley delivered to the Canadian Wheat Board are established each year and are in effect Federal Government guaranteed floor prices as any deficit incurred by the Board in its marketing operations are recouped by the Federal Government. Producers receive certification on which basis final payments are made. Sales proceeds from the marketing of grains are pooled. The Federal Government guarantees to western Canadian wheat growers a higher price for milling wheat sold for domestic human consumption than wheat sold to other destinations to strengthen their income position. Prices of all grains may also be stabilized under provision of the Agriculture Stabilization Act and the proposed voluntary Western Grain Stabilization Act. Non-price Policy. Insurance if average yields fall below certain levels in designated areas. Research into production, marketing and processing of grains. Provincial Crop Insurance system. Rehabilitation programs to assist low income farmers. Credit on long term basis. Cooperative farm machinery purchase. Credit on intermediate and short term basis for purchase of machi- nery, livestock and farm improvements. April 1982 V - 28 Marketing Organization. The "Canadian Grain Commission" and the "Canadian Wheat Board" are responsible for the grading, standards and orderly marketing of grains sold for export and for "Board" wheat sold in Canada. Sales of wheat produced in Ontario is controlled by the Ontario Wheat Producer Marketing Board. Coarse grain exports from the "designated area" are the responsibility of the Canadian Wheat Board. Domestic coarse grain sales can be marketed through the Wheat Board or privately. Utilization Policy. Food consumption and price: The Government has established a price system for wheat for domestic human consumption. Feed consumption and price: subsidized transportation of grains and mill-feed for animal use. Milling. No Government measures directly and exclusively affecting the milling industry. Export Policy. Grain exports sales are conducted through agents of the Canadian Wheat Board or through direct Board sales to Governments. Credit sales are made under the Export Development Act by the Canadian Wheat Board. Food aid is undertaken on a bilateral and multilateral basis. General policy aim is to expand and diversify trade to the greatest extent possible. Canada is a member of the International Wheat Agreement and adheres to the Principles of Surplus Disposal. Import Policy. Canada operates a three column tariff schedule - British Preferential, Most Favoured Nation and General. Imported grains which require storage facilities must obtain a storage permit from the Canadian Grain Commission. Import permits are required from the Canadian Wheat Board for the importation of wheat, oats and barley and the more important products manufactured from these cereals. Stock Policy. The Canadian Wheat Board endeavours to ensure that adequate supplies of the type and quality of grain in demand are in appro- priate position at correct times to effectively service the demand of both the domestic and export markets. EGYPT Policy Objectives. To increase the production of grains through higher yields. Price Policy. Producer prices are fixed by Government for requisi- tion crops including wheat while those for other grains depend on ruling supply and demand conditions. April 1982 V - 29 Non-price Policy. Credit at special interest rates, fertilizer supplied at subsidized prices, propagation of high-yielding varieties and programs to improve irrigation, drainage and fertility. Marketing Organization. Requisition crops are purchased by cooperat- ive societies while other products are sold on the open market through private trade channels. Utilization Policy. Food consumption. Wheat, flour, bread and maize are sold at Government fixed prices. Bread is heavily subsidized. Feed consumption. Maize made available on quotas at fixed prices. Milling. National milling industry is Government owned. Export Policy. No cereal exports except rice. Import Policy. Grains are imported by the Foreign Trade Organization and taken over by the Silo Organisation at wharf. Stock Policy. Not reported. INDIA Policy Objectives. Achieve sustained growth in production of all grains consistent with the growth in demand. Price Policy. Minimum support prices and procurement prices for major foodgrains established by Government as incentives to expand production. Methods of procurement vary from state to state. Non-price "olicy. Main elements of aid to production include: increased coverage under HYV program, multiple cropping, irrigation for inten- sive cultivation, organized provision of inputs, credit facilities, extension service, research and education. Subsidies on inputs are generally restricted to special development programs. Marketing Organizations. The Food Corporation of India is the sole agency of the Central Government for procurement, imports, transport, storage ai.d sale of foodgrains. In addition, private traders and cooperatives operate under strict licensing and.control. Private inter-state trade is prohibited. Utilization Policy. Rationing in areas with large urban population. Distribution of food grains through fair price shops to vulnerable groups in addition to supplies from the open market. No encouragement or restrictions on the use of grains for animal feed. * KENYA Policy Objectives. To achieve self-sufficiency in maize, wheat and ba7l,y and to develop an export trade for surpluses at no loss to the Govern- ment. April 1982 V - 30 Price Policy. Guaranteed prices for wheat and maize are fixed annually to stimulate production. The Government buys through Boards, the only agencies authorized to purchase grains. Non-price Policy. The Government provides subsidies on fertilizers, technical assistance to growers, and sponsors research on new varieties of grains. Growers are invited to insure their crops under a Guaranteed Minimum Return Programme. Marketing Organization. The production of maize, barley and wheat is channelled through the Maize and Produce Board and the Wheat Board. Produce is purchased through the Kenya Farmers Association and other licensed agents. Utilization Policy. Food consumption: Consumers are assured of price protection in purchasing maize meal and bread. Retail prices are fixed annually. Feed consumption: The Maize and Produce Board sells maize for animal feed on quota allotments. Milling: Grain milling industry is regulated by the Government in the form of licenses. Export Policy. No grain exports. Import Policy. Wheat is State traded and not subject to tariff and quota restrictions. Stock Policy. Reserve stock targets at 90,000 - 180,000 tons for maize and 40,000 tons for wheat. Stocks are managed and kept by the respective Boards. KOREA Policy Objectives. To maintain adequate price levels for and insur- ing maximum incomes to producers. Encourage the use of grains in preference to rice. Insure smooth supply and stable markets. Price Policy. Guaranteed prices: During period of peak supply, the Governmennt purchases all grain offered at earlier determined prices. Prices fixed by taking into consideration production costs, parity prices, non-farm price indices and other pertinent economic factors. Government arranges for advance payment to be recovered in kind. Non-price Policy. Fertilizers accredited up to 20% of total farm requirements. Subsidies and loans for the purchases of agricultural machines and tools. Free seed of high yielding varieties. Credit facilities for short term l3ans. Research into underground water resources. April 1982 V - 31 Marketing Organization. The procurement program is carried out by the Agricultural Cooperatives as Government agents. In addition grain is traded freely on the open market. Utilization Policy. Food consumption: Besides free market transac- tions grain is distributed by agricultural cooperatives on behalf of the Government. Sales prices are only slightly above Government procurement prices. The retail price of wheat flour is subsidized. Feed consumption: no specific regulations but imports restricted. Milling: Government license required. Export Policy. Exports are subject to the recommendation of the Minister of Agriculture within the limits of the Grain Control Act. No aids to grain exports. Import Policy. Imports are under control and subject to licensing. Wheat and barley are allowed to be imported free of duty. Stock Policy. Stock target to cover three months' consumption. Government reserves are stored with cooperatives and privately owned ware- houses. National storage capacities continuously expanded. MEXICO Policy Objectives. To achieve self-sufficiency. Price Policy. Minimum prices for grains guaranteed by the Federal Government, made effective through annual programs. Non-price Policy. Government supply of improved seed, fertilizers and agricultural machinery. Extension service. Crop insurance scheme. Marketing Organization. Government procurement through agents with the support of official banks. Utilization Policy. Government fixed retail prices of grains for human consumption. The Government encourages processing of surplus maize into exportable products, or incorporation of this maize in animal feed mixes. Licenses required for grain milling and processing. Export Policy. No grain exports. Import Policy. Imports through Government agencies only, which can be exempted from customs duties. Stock Policy. The Compania Nacional de Subsistencias Populares is responsible for the national stock policy. Objectives are to maintain a regul- ar flow of supply into domestic consumption, April 1982 V - 32 NIGERIA Policy Objectives. Increase prodiction to satisfy growing demand in volume and quality. Price Policy. No guaranteed prices fixed by the Government but the National Grain Production Company was created with a view to increase producer prices and incomes. Non-price Policy. Extended loan facilities. Subsidies on fertilizer, support of the Centre for Agricultural Mechanization, promotion of high-yield- ing varieties. Marketiag Organization. Diversification program to expand wheat production. Marketing through private trade channels. Utilization Policy. The most prevailing consumption pattern is subsistance farming. Increased use of oil cakes and meals for animal feeding but no particular policy. Milling: Duty privileges on imported machinery. Export Policy. No exports of grains. Import Policy. Imports to supplement domestic production. Particu- lar support of regional trade. Stock Policy. The National Grain Production Company is responsible for establishing a strategic reserve as buffer stock. Target 250,000 tons. PAKISTAN Policy Objectives. Self-sufficiency in food grains iii shortest possible time. Price Policy. Guaranteed prices: Government fixed support price for wheat. Non-price Policy. Seeds are Government supplied at cost prices, fertilizer is subsidized and measures are taken to increase the water supply for irrigation. Marketing Organization. Provincial Governments operate wheot pro- curement centers in competition with the private trade. Interprovincial movements of wheat and wheat flour are prohibited. Utilization Policy. Retail prices of wheat for human consumption from Government stocks are subsidized and sold at annually fixed prices. Export Policy. No grain exports. Import Policy. Wheat imports are handled by the Government and are not subject to import duties. April 1982 V - 33 Stock Policy. The national stock target is 500,000 tons of wheat to meet emergency situations. Storage capacity is sufficient to meet the target. THAILAND Policy Objectives. Increase grain production to satisfy domestic demand for export. Improvement of institutional arrangements to encourage cultivation. Price Policy. A minimum price guarantee scheme is in operation for paddy. Non-price Policy. The Government provides financial and technical assistance to producers on irrigation, soil conservation, the supply of seeds, fertilizers, credit and extension services. Marketing Organization. Improved marketing facilities are provided by the increasing number of Agricultural Cooperative Societies. Utilization Policy. Food consumption: Government measures are restricted to rice only. Feed consumption: No specific measures in force except that exports are subject to quota to satisfy domestic requirements first. Milling: All grain milling industries are under the control of the Ministry of Industry and licenses are required for their operation. Export Policy. Exports of maize and sorghum are under quality con- trol. The general policy is to facilitate the expansion of export trade. Import Policy. There are no quantitative restrictions but grains are subject to import duties. Stock Policy. The national stock policy covers rice only. UNITED KINGDOM Policy Objectives. Continuing expansion of cereal production mainly in feed grains. Mechanisms of the Common Agricultural Policy of the EC were adopted. Policy alignment during the transition period ending 1977. Price Policy. Guaranteed prices: Direct support is given in form of deficiency payments to producers. Non-price Policy. Grants on capital investment. Tax benefits on capital expenditure. Agricultural loan program. Support of research and promo- tion of new varieties. Marketing Organization. The Home Grown Cereals Authority assists in the orderly marketing of home-grown grains. April 1982 V - 34 Utilization Policy. Food consumption: Subsidies on flour and bread. Retail prices of these items under control. Feed consumption: No support measures. Export Policy. EC controls and rcgulations applied. Import Policy. EC import regulations applicable. Stock Policy. No established national stock policy. UNITED STATES OF AMERICA Policy Objectives. To assure adequate supplies at reasonable prices to consumers but to avoid production which would create burdensome surpluses, to maintain incomes of farmers and to achieve these purposes at minimum cost to the Government. Price Policy. Price support for grains is generally accomplished through non-recourse loans at specific prices which remain unchanged through out the season. These loans are a means of interim financing, permitting farmers to take advantage of increases in market prices without the risk of price declines below the loan level. The support operations are carried out through the Commodity Credit Corporation (CCC). Non-price Policy. Research into various aspects of production, marketirg and processing of graias. Extension services to improve farming practices. Supplementary credit - short and long term for capable operators on adequate sized farms who are unable to get credit elsewhere. Crop insurance. Marketing Organization. No quotas, allocations or other programs to restrict output are in effect. Grain marketing at all levels is conducted through commercial trade channels. The Commodity Credit Corporation is author- ized to conduct operations of a marketing nature including supporting prices, procuring commodities for various purposes, removing and disposing of surplus commodities, increasing domestic consumption of agricultural products and exporting such products. The CCC, in carrying out its functions operates through regular commercial facilities. Utilization Policy. Food consumption: No Federal regulations that directly affect consumption or prices of cereal products. However, under the Commodity Distribution Program, various semi-processed grains are provided to needy families, charitable institutions, school lunch participants and April 1982 V - 35 * disaster victims. Food Stamp program provides commodities to low income families. Feed consumption and milling. No regulations pertaining to the use of cereals in animal feeds, industrial products or for milling. Export Policy. Trading of grains is a function of private enter- prise. No State control as such but provision of financial assistance to facilitate export trade. Import Policy. The US does not maintain any non-tariff trade barriers which restrict the importation of grain or grain products. However, grain is subject to import duties. Stock Policy. To maintain stocks at a level which would permit the US to meet normal requirements, including exports, in case of a crop failure or other emergencies. Stocks are held by the Government, the grain trade and producers.