FAPRI 2002 World Agricultural Outlook Briefing Book

FAPRI 22 World Agricultural Outlook Briefing Book

FAPRI 22 World Agricultural Outlook FAPRI - Iowa State University 3 Bruce Babcock, CARD Director 3 John Beghin, FAPRI Director 3 Jay Fabiosa, Technical Director and International Livestock Analyst 3 Frank Fuller, International Dairy Consultant 3 Stéphane De Cara, International Grains Analyst 3 Holger Matthey, International Oilseeds Analyst 3 Cheng Fang, Chinese Agriculture and International Cotton Analyst 3 Alexander Saak, U.S. Market and Policy Analyst 3 Amani El Obeid, Sugar Analyst 3 Murat Isik, International Dairy Analyst 3 Chad Hart, U.S. Policy and Insurance Analyst 3 Seth Meyer, Cotton Analyst (University of Missouri) 3 Karen Kovarik, System Support Specialist CENTER FOR AGRICULTURAL AND RURAL DEVELOPMENT IOWA STATE UNIVERSITY AMES, IOWA 511-17 TELEPHONE: 515.294.7519 http://www.fapri.iastate.edu

FAPRI 22 World Agricultural Outlook Table of Contents 3 World Agricultural Outlook, Briefing Book 5 Major Factors Affecting World Agriculture 6 Outlook for U.S. Agricultural Exports 12 Wheat Outlook 14 Rice Outlook 2 Coarse Grains Outlook 24 Oilseeds Outlook 32 Cotton Outlook 44 Sugar Outlook 46 Livestock and Poultry Outlook 48 Dairy Outlook 62 Country-specific baseline tables may be obtained at http://www.fapri.iastate.edu/

FAPRI 22 World Agricultural Outlook Abbreviations and Acronyms BSE CEECs CIF cwt EU FCR FMD FOB FSU GDP ha kg MBM mha mmt mt NAFTA NFD OTMS ROW SPS tmt TRQ WMP WTO bovine spongiform encephalopathy Central and Eastern European Countries cost, insurance, and freight hundredweight European Union feed conversion ratio foot-and-mouth disease freight on board Former Soviet Union gross domestic product hectare kilogram meat and bone meal million hectares million metric tons metric ton North American Free Trade Agreement nonfat dry milk over-thirty-month scheme Rest of World Sanitary and Phytosanitary thousand metric tons tariff rate quota whole milk powder World Trade Organization page 4

World Agricultural Outlook Briefing Book Charts, Highlights, and Tables

FAPRI 22 World Agricultural Outlook Major Factors Affecting World Agriculture NAFTA Real GDP Growth Rates Percent 8 6 4 2-2 -4 Mexico s growth path tends to oscillate around the growth patterns of the United States and Canada. The latter countries experienced a slowdown in 21 but will rebound and reach growth rates between 2.7% and 3.8% per annum after 22. Mexico will rebound as well and is expected to grow at rates between 4% and 5% after 22. -6-8 1991 1993 1995 1997 1999 21 23 25 27 29 211 U.S. Mexico Canada Asia Real GDP Growth Rates Percent 2 15 1 5-5 Asian economies grew 1% in 21 and will grow by 1.7% this year. Stronger growth will resume after 22, with annual rates of real growth above 4%. China is the only bright spot in Asia for 22, with a real growth above 7%/year. Japan will remain in recession in 22. Modest growth will resume in 23 with rates of growth at or below 2.4%. -1 1991 1993 1995 1997 1999 21 23 25 27 29 211 Japan South Korea China Taiwan Latin America Real GDP Growth Rates Percent 12 1 8 6 4 2-2 -4 Latin America's performance is mixed. The aggregate annual rate of growth for the continent was.7% in 21, which is expected to increase to 1.6% in 22 and to stay above 4% after 23. Brazil seems to be avoiding Argentina s problems. Argentina s 21 recession, will deepen in 22 (-4.9% growth rate). Its financial crisis, looming last fall has had a severe impact over the last few months. -6 1991 1993 1995 1997 1999 21 23 25 27 29 211 Latin America Brazil Argentina page 6

FAPRI 22 World Agricultural Outlook Major Factors Affecting World Agriculture 5. 4. 3. 2. 1.. Europe Real GDP Growth Rates Percent 1 5-5 -1-15 1991 1993 1995 1997 1999 21 23 25 27 29 211 Exchange Rate Projections Real per U.S. $ 6. European Union Poland Czech Rep. Hungary Peso per U.S. $ 8 1991 1993 1995 1997 1999 21 23 25 27 29 211 Brazil Argentina 7 6 5 4 3 2 1 The EU-15 region experienced moderate economic growth in 21with an aggregate growth rate of 1.7%. In 22, growth will remain modest. Beyond 22, growth will accelerate, at an annual rate of between 2.5 and 3.2%. Some acceding countries are doing well (Hungary, Czech Republic ) while others are doing poorly (Poland). Much effort has gone into making the countries EU-ready. Growth paths of the CEECs have been converging with the path of the aggregate EU-15 region. Latin American countries are expected to continue to devalue their currency vis-àvis the U.S. dollar. Argentina is expected to devalue its currency by 66% in 22, by 27.4% in 23, and to keep devaluating annually by about 13.5% after that. The Brazilian real experienced a devaluation vis-à-vis the dollar of 28.2% in 21. This trend will continue with a 24.3% devaluation in 22 and smaller annual devaluations of 6.5% beyond 22. Exchange Rate Projections Euro per U.S. $ Yen per U.S. $ 1.2 16 14 1. 12.8 1.6 8 6.4 4.2 2. 1991 1993 1995 1997 1999 21 23 25 27 29 211 EU Japan The euro depreciated by 3% in 21 relative to the U.S. dollar. It is expected to appreciate gradually beginning in 22 to regain parity with the dollar in 24. The 22 FAPRI baseline maintains this parity for the remainder of the outlook period. The yen depreciated 13% in 21 vis-à-vis the U.S. dollar and is expected to depreciate again in 22. After 22, the yen will appreciate moderately for the remainder of the projection period and will remain above 12 yen/u.s.$ until 25. page 7

FAPRI 22 World Agricultural Outlook Real GDP Projections 21 22 23 24 25 26 27 28 29 21 211 212 (Percentage Change from Previous Year) World 1.3 1.7 3.8 3.4 3.3 3.4 3.4 3.4 3.5 3.6 3.5 3.5 Developed Market Economies Australia 1.7 1.9 3. 2.5 2.4 2.4 2.3 2.3 2.4 2.4 2.4 2.4 Canada 1.6 1.4 3.5 3.1 2.8 3. 2.7 2.9 2.9 2.9 2.9 2.8 European Union 1.7 1.7 3.2 2.8 2.5 2.5 2.4 2.3 2.3 2.3 2.3 2.4 Japan -1.2 -.9 1.7 2. 2.3 2.4 2.4 2.3 2.2 2.2 2.1 2.1 New Zealand 2. 2.7 3.9 3.1 3.3 3.2 3.2 3.3 3.3 3.4 3.4 3.4 Switzerland 1.7 1.5 2.5 2.3 2.1 2.1 2.1 2.3 2.1 2.3 2. 2.2 United States 1. 1.3 4.3 2.9 2.8 2.8 3. 3.3 3.6 3.8 3.7 3.6 Economies in Transition Eastern Europe 3. 3.4 4.6 5. 5. 5.1 5.1 5.1 5.1 5. 5. 5. Bulgaria 3.9 4.3 5.3 5.4 5.2 4.8 4.6 4.4 4.2 4. 4. 4.2 Czech Republic 3.7 3.3 5. 5.1 5.3 5.4 5.5 5.5 5.5 5.4 5.4 5.3 Hungary 3.8 3.9 4.5 5.1 5.2 5.2 5.3 5.4 5.4 5.4 5.4 5.4 Poland 1.3 2.3 4.4 5.3 5.2 5.1 5. 4.9 4.8 4.7 4.6 4.5 Romania 4.6 4.3 4.6 4. 4. 4.2 4.2 4.5 4.7 5. 5.2 5.5 Slovakia 2.7 4.3 4.5 4.5 4.5 4.3 4.1 3.9 3.7 3.5 3.5 3.5 Slovenia 3.4 3.9 4.8 5. 5.5 6. 6.3 6.5 6.5 6.5 6.5 6.3 Former Soviet Union 5.3 4. 4.7 5.3 5.5 5.7 5.7 5.7 5.7 5.6 5.5 5.6 Russia 4.7 3.5 4.5 5.2 5.5 5.7 5.7 5.6 5.5 5.4 5.3 5.4 Ukraine 8.3 6. 5.5 5.1 5.2 5.2 5.2 5.4 5.4 5.5 5.2 5.2 Baltics Estonia 4.3 4. 5.2 5.2 5.2 5.3 5.4 5.5 5.7 6. 6. 6. Latvia 6.5 5. 5. 5. 5. 5.5 5.5 5.5 5.5 6. 6. 6. Lithuania 4.8 4.5 5.3 5. 5. 5. 5. 5. 5. 5. 5. 4.8 Other Economies Asia 1. 1.7 3.9 4.2 4.4 4.6 4.6 4.6 4.6 4.6 4.6 4.6 China 7.2 7. 7.5 8.1 7.9 8.3 7.2 7.1 7.5 7.7 7.5 7. Hong Kong -.3 2.1 4.1 4.2 4.3 4.7 4.9 4.5 5. 5.4 4.8 5. India 5. 5.5 5.9 5.8 5.8 5.9 5.9 6. 6. 6. 6. 5.9 Indonesia 3.1 3.5 5.1 5.4 5.6 5.6 5.3 5.2 4.8 4.7 4.7 4.7 Malaysia -1. 3. 6.2 5.6 5.4 5.2 5.5 5.7 5.6 5.6 5.5 5.4 Pakistan 2.6 3.4 4.8 4.1 4.6 4.5 4.4 4.4 4.5 4.5 4.5 4.6 Philippines 1.8 2.8 4.7 5.1 5.1 5.1 5.2 5.4 5.5 5.5 5.4 5.3 South Korea 2. 2.9 6.8 6.6 6.1 6. 5.7 5.5 5.1 4.8 4.6 4.4 Taiwan -2.1 1.5 4. 4.6 5. 5.2 5. 4.5 4.1 3.8 3.8 3.7 Thailand.3.9 4.1 4.8 5.1 5.7 5.9 6. 6.1 6.1 6.1 6.4 Vietnam 6.6 5.8 7. 6.9 6.8 6.7 6.6 6.5 6.4 6.3 6.2 6.2 Latin America.7 1.6 3.6 4.3 4.4 4.5 4.5 4.5 4.5 4.5 4.5 4.5 Argentina -2.5-4.9-1. 3.4 3.5 3.6 3.7 3.8 3.8 3.9 4. 4.1 Brazil 1.5 1.9 3.6 3.7 3.7 3.9 4. 4. 4.1 4.1 4.1 4.2 Columbia 2.1 3.1 3.8 4.1 4. 4.1 4. 4.1 4.1 3.9 3.7 3.8 Mexico. 3.5 5.1 5.4 5.6 5.8 4.2 5.5 5. 4.6 4.1 3.7 Paraguay 4.2 3.9 4.5 4.4 4.3 4.3 4.2 4.1 4. 4. 4. 4. Uruguay -1.7 1.3 3.1 3.3 3.7 4. 4.5 5.1 5.1 5.2 5.2 5.2 Venezuela 3.5 2.6 3.7 4.7 4.7 4.7 4.6 4.4 4.3 4. 3.9 3.9 Africa 3. 3.1 4. 4.1 4.2 4.5 4.5 4.5 4.5 4.5 4.5 4.5 Algeria 3.4 3.2 4.4 4.1 3.6 4.1 4.1 4.3 4.3 4.3 4.4 4.4 Egypt 3.2 3.8 4.7 5.2 5.5 6. 5.7 5.6 5.5 5.3 5.3 5.2 Morocco 5.4 4.1 4.5 4.3 4.4 4.7 4.5 4.4 4.3 4.2 4.2 4.2 Nigeria 4.7 4.8 4.1 3.3 3.3 3.7 3.9 3.9 3.8 3.8 3.8 3.8 South Africa 2.3 2.3 2.8 2.8 3.2 3.2 1.1 2.1 2.4 1.7 1.7 1.9 Tunisia 4.5 4.6 5.9 5.6 5.5 5.4 5.4 5.3 5.1 4.9 4.8 4.6 Middle East 3.2 2.7 4.1 4.6 4.8 4.8 5.7 4.7 4.8 4.8 4.6 4.6 Iran 4.3 3.6 4.8 5.1 5.2 5.3 5.1 5. 4.9 4.7 4.7 4.7 Israel -1..1 3.3 4.5 4.9 5. 4.8 4.8 4.7 4.7 4.6 4.6 Saudi Arabia 4.1 3.1 3.6 4.1 4.3 4.2 4.2 3.9 3.7 3.5 3.4 3.2 Source: International Financial Statistics January 22 and Projections after 21 are from WEFA/DRI. page 8

FAPRI 22 World Agricultural Outlook GDP Deflator Projections 21 22 23 24 25 26 27 28 29 21 211 212 (Percentage Change from Previous Year) Developed Market Economies Australia 2.1 1.6 1.3 1.5 1.6 1.4 1.8 1.6 1.6 1.6 1.6 1.6 Canada 2.6 2. 2.2 2.2 2.5 2.6 2.9 1.5 1.7 1.7 1.7 1.7 European Union 2..9 1.3.7 1.3 1.7 1.7 1.8 1.7 1.7 1.8 1.8 Japan -1.5 -.9.2.6.8.9 1.1 1.3 1.4 1.5 1.5 1.5 New Zealand 2.4 2.3 2.8 2.7 3.1 3.3 3.1 3.3 3.4 3.3 3.3 3.3 Switzerland 2.1 1.7 2. 1.9 1.8 1.8 1.7 1.8 1.7 1.7 1.8 1.9 United States 2.2 1.7 2.3 2.4 2.4 2.5 2.5 2.4 2.3 2.2 2. 2. Economies in Transition Eastern Europe 4.9 2.7 3.4 3.3 3.1 2. 3.4 5.3 3.8 3.3 2.9 2.8 Bulgaria 8. 4.3 4. 3.9 3.8 3.5 3.5 3.5 3.5 3.5 3.5 3.4 Czech Republic 5. 5.6 4.8 4.4 4.3 4.1 3.8 3.5 3.5 3.5 3.5 3.5 Hungary 8.9 6.9 6.1 4.9 4.2 3.9 3.5 3.5 3.5 3.5 3.5 3.5 Poland 6.3 4. 3.9 3.7 3.6 3.5 3.5 3.5 3.5 3.5 3.5 3.5 Romania 34.1 24.2 2.2 15.2 11.4 8.9 7.7 7.2 6.5 5.5 4.7 4.1 Slovakia 7.9 6.7 6.4 6.2 5.9 5.5 5.3 5. 5. 5. 4.8 4.5 Slovenia 8.6 6.6 4.9 3.5 3. 3. 3. 3. 3. 3. 3. 3. Former Soviet Union 2.2 1.7 2.3 2.4 2.4 2.2 2.2 2.2 2.3 2.3 2.4 2.3 Russia 21.8 15.2 14.3 11.3 8.9 6.4 5. 5. 5. 5. 5. 4.8 Ukraine 12.5 9. 6.9 5.4 5. 5. 5. 5. 5. 5. 5. 5. Baltics Estonia 6. 3.9 3.4 3. 3. 3. 3. 3. 3. 3. 3. 3. Latvia 2.2 1.7 2.5 2.5 2.5 2.8 3. 3. 3. 3. 3. 3. Lithuania 1.4 1.5 2. 2. 2. 2. 2. 2. 2. 2. 2. 2. Other Economies Asia -1. 1.2 2.4 2.7 2.5 3.6 3.5 3.8 4.3 4.4 4.8 4.9 China 1.5 1.4 2.7 3.4 4. 5.1 5.2 4.9 4.8 4.6 4.4 4.2 Hong Kong -1. -1.3-1.2 -.3.2.4.5.7.8.8.9.9 India 5.2 3.8 5.9 6.3 8. 6.3 6.2 6.4 6.3 6.3 6.2 6.2 Indonesia 14.9 1.4 6. 5.8 6.3 5.8 5.6 5.4 5.3 5.3 5.2 5.2 Malaysia 2.8 3.3 3. 3.3 3.6 3. 3.3 3. 2.1 2.1 2.1 2.2 Pakistan 5.6 9.6 7.9 7.5 7.1 6.4 6.4 6.9 6.8 6.7 6.6 6.6 Philippines 6.3 8.8 6.4 7.1 8.3 7. 6.8 7.3 7.1 7. 6.8 6.7 South Korea 3.2 2.7 4.8 5. 4.7 4.6 4.6 4.6 4.6 4.6 4.6 4.5 Taiwan.6.1.7.8.8.9 1..9.9.8.6.6 Thailand 1.5 1.4.7 1.2 1.4 1.4 1.7 1.9 2.1 2.3 2.3 2.5 Vietnam 4.5 5. 4.8 5.7 6. 5.4 5.8 6.2 5.9 5.9 5.8 6. Latin America.3 1.2 5.3 5.5 5.3 5.2 4.6 5.1 4.9 4.7 4.5 4.3 Argentina -2.9 2.4 19. 14.3 13.8 13.2 13.2 13.2 13.2 13.2 13.2 13.2 Brazil 8.6 7.2 7.1 6.9 6.8 6.7 6.7 6.7 6.7 6.7 6.7 6.7 Columbia 8.8 8.3 7.3 7.2 6.6 6. 6. 6. 6. 6. 6. 6. Mexico 6.1 8.1 6.4 6.4 6. 5.8 5.8 5.8 5.8 5.8 5.8 5.8 Paraguay 11.8 9.6 9.4 9. 8.8 8.5 8.2 7.9 7.7 7.5 7.5 7.5 Uruguay 6.7 6.5 5.9 6. 5.8 5.7 5.7 5.7 5.7 5.7 5.7 5.7 Venezuela 13.3 14.4 14.3 12. 9.9 8.5 8.5 8.5 8.5 8.5 8.5 8.5 Africa 2.7 3.2 2.9 2.4 2.4 2.2 2.1.9 1.6.9 1.4 1.3 Algeria 4.8 3. 1.9 2. 2.1 3. 3. 3. 3. 3. 3. 3. Egypt 4. 4.5 4.6 4.2 4.4 4.2 4.2 4.2 4.2 4.2 4.2 4.2 Morocco 2.9 3. 3.4 4.1 2.6 2.8 2.8 2.8 2.8 2.8 2.8 2.8 Nigeria 13.3 12.8 9.5 9.4 9.9 11.1 11.2 11. 1.9 1.7 1.7 1.7 South Africa 7.6 6.4 4.1 3.3 3.5 3.7 4.5 1.6 2.8 1.7 2.6 2.3 Tunisia 3. 3.5 2.8 2.7 2.3 2. 2. 2. 2. 2. 2. 2. Middle East.8 1.8 2.2 2.3 2.7 2.1 1.3 2.2 2.2 2.1 2.4 2.4 Iran 14.4 12.1 12.3 11.3 1.3 9.2 9.2 9.2 9.2 9.2 9.2 9.2 Israel -.9 3.2 4.8 4.1 3.4 2.2 2.2 2.2 2.2 2.2 2.2 2.2 Saudi Arabia -3.8 1.2 1.2 1.9 1.7 1.3 1.3 1.3 1.3 1.3 1.3 1.3 Source: International Financial Statistics January 22 and Projections after 21 are from WEFA/DRI. Note: measure evolution of cost expressed in local currency. page 9

FAPRI 22 World Agricultural Outlook Exchange Rate Projections (Local Currency per U.S. Dollar) 21 22 23 24 25 26 27 28 29 21 211 212 Developed Market Economies (Percentage Change from Previous Year) Australia 3.7-4.4-4.5-4.2-3.6 2.8 -.3-4. -1.3-1.1.. Canada 3.1-3.5-3.6-3. -2..6 -.6 -.7 -.7 -.7 -.7 -.7 European Union 2.9-4.6-2. -5.8........ Japan 13. 4.9-2. -2.4-2.6-2.6-2.6-2.7-2.6-2.3-1.9-1.4 New Zealand 8.3 -.2-1.9-1.6 -.5.3..1.1.. -.1 Switzerland -.8-3.3.3-6.4-3.2 2.5. -4.6-1.4 -.7.. Economies in Transition Eastern Europe Bulgaria 2.2-1.4-3.5-4.1 1.3 -.7 -.7 -.1 -.3.5.. Czech Republic -2.8-1.9-2.6-2.5 2.4 -.6.2 -.1 -.3.6.. Hungary 1.4-1.6-4.3-4.9 1. -.7 -.7 -.1 -.3.5.. Poland -2.9 1.8.8.6 3.9 -.7 -.6 -.3 -.1.4.. Romania 32.9 19.5 14.8 11.4 12.7 3.5 5.6 8.6 4.6 3.9 2.5 2.5 Slovakia 4.1-1.7 -.6 -.6 2.6-3.2 -.7 -.1 -.3.5.. Slovenia 7.6-6. -5.2-4.4 1.6 -.7 -.7 -.1 -.3.5.. Former Soviet Union Russia 3.9 1.5 1.2 8. 4.7 2.7 2.5 2.5 2.2 2. 2. 2. Ukraine -1.1 2.7 6.6 5.3 3.7 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Baltics Estonia 2.2-5.1-4.2-3.9-2. 2.1-1. -4.1-1.6 -.5.. Latvia 1.6-1.3-3.8-3.9-2. 2.1-1. -4.1-1.6 -.6.. Lithuania. -1.9-3.8-3.9-2. 2.1-1. -4.1-1.6 -.5.. Other Economies Asia China..8 1.3 5.7.9 1.4 -.7-2.2.1 1.3 1..8 Hong Kong.1........... India 5.2 8.4 6.3 8.2 4.4 4.6 4.2 4.1 4.1 4. 3.9 3.8 Indonesia 21. 1. -3. 4.1 3.4 3.7 3.2 3. 2.8 2.7 2.7 2.6 Malaysia. 3.6 3. -1.4 3.1 -.2 -.4 -.6 -.6 -.7 -.7 -.6 Pakistan 18.7 9.2 6.2 4.5 4.7 4.6 4.3 4.3 4.4 4.4 4.4 4.3 Philippines 15.5 5.7 5.2 6.5 5.8 5.1 4.7 4.7 4.8 4.7 4.5 4.3 South Korea 14.1-2. -2.1-1.1.2 1.3 1.2 1.2 1.2 1.2 1.2 1.1 Taiwan 8. -.1-2.5 -.9 -.5-1. -1. -1.1-1.1-1.2-1.3-1.3 Thailand 11.2-1.3-3.5-2.8-2.2-2.1-1.9-3.8-3.1-2.7 -.7-1.5 Vietnam 4.5 5.1 4.5 3.9 3.6 3.9 3.8 3.3 3.4 3.6 3.8 3.8 Latin America Argentina. 66.5 27.4 15.3 14. 13.5 13.5 13.5 13.5 13.5 13.5 13.5 Brazil 28.2 24.3 8.2 6.1 6. 5.9 5.9 5.9 5.9 5.9 5.9 5.9 Columbia 1.1 9. 8.4 1. 6.8 7.4 7.4 7.4 7.4 7.4 7.4 7.4 Mexico -.1 5.7 5. 4.2 3.6 3.6 3.6 3.6 3.6 3.6 3.6 3.6 Paraguay 6.1 5.8 5.4 5.1 4.8 4.5 4.2 4. 3.8 3.5 3.5 3.5 Uruguay 1.1 15.3 9. 8.9 8.7 8.5 8.5 8.5 8.5 8.5 8.5 8.5 Venezuela 7. 12.5 17.5 1.2 9.5 8.1 8.1 8.1 8.1 8.1 8.1 8.1 Africa Algeria 2.2 -.9 -.6 1.2.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3 Egypt 14.9 8. 2.1 2.5 3.3 3.6 3.6 3.6 3.6 3.6 3.6 3.6 Morocco -.5-1.4-3.9 -.6 -.8 -.6 -.3 -.2 -.1... Nigeria 14.9 9.9 1.2 1.1 9.8 9.6 9.3 9.1 9. 8.8 8.8 8.8 South Africa 2.9 14.6 6.1 6.1 6.1 6.1 6. 4. 3. 2. 2. 2. Tunisia 4.3-2.1. -2.1-2.2.7.7.7.7.7.7.7 Middle East Iran -2.5 7.3 9.7 1.6 6.8 7.1 7.1 7.1 7.1 7.1 7.1 7.1 Israel 3.6 5. 3.1 1.8.9 1. 1. 1. 1. 1. 1. 1. Saudi Arabia -.1........... Source: International Financial Statistics January 22 and Projections after 21 are from WEFA/DRI. page 1

FAPRI 22 World Agricultural Outlook 3 25 2 15 1 5 World Crop Trade and U.S. Market Share Million MT 35 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 U.S. Other Exporters U.S. Market Share Trade Outlook Percent 7 6 5 4 3 2 1 Crop trade is projected to grow by 33%, adding 82.5 mmt over the baseline. Trade liberalization and increasing demand from developing countries sustain the crop trade growth rate slightly over its 199s level. On the demand side, the increase in Chinese imports alone accounts for nearly 3% of the trade expansion. Wheat, corn, and soybean trade account for over 8% of crop trade in 21/2 and nearly 85% of the increase over the next decade. The U.S. remains the largest exporter in these three commodities over the baseline. However, despite expanding market opportunities, the U.S. faces increasing competition. As a result, the U.S. market share erodes over the baseline, decreasing steadily from 45.1% in 21/2 to 4.3% in 211/12. Argentina, Brazil, and, to a lesser extent, the EU benefit from the weakness of their currency, strengthening their position on world markets. World Meat Trade and U.S. Market Share Million MT Percent 16 3 14 25 12 2 1 8 15 6 1 4 5 2 1995 1997 1999 21 23 25 27 29 211 U.S. Other Exporters U.S. Market Share The U.S. world meat market share increased from the 23.31% average in the last two years to 26.6% in 21. Significant increases in both pork and poultry exports, owing to SPS issues in beef, more than compensated the increase in beef imports by the U.S. Continuing herd rebuilding in the beef sector and only a modest growth in pork exports in the first half of the decade cause the U.S. market share to drop to 24.27%, while other countries (e.g., Brazil and Canada) expand their exports. Additional market share of 2.88 percentage points are regained, as the U.S. becomes a net beef exporter in the second half of the decade. page 11

FAPRI 22 World Agricultural Outlook Outlook for U.S. Agricultural Exports Quantity of U.S. Agricultural Exports Million MT 25 2 15 1 5 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Animals and Animal Products Grains and Feeds Oilseeds and Products Cotton Other Products U.S. exports are projected to rise 34.1 mmt over the baseline, with grains and feeds accounting for 7% and oilseeds and oilseed products comprising 14.2% of the total growth. U.S. grain and feed exports increase 27% over the outlook period, with feed grains and feed products accounting for 66.9% of the total 26.8 mmt increase. Animals and animal product exports are anticipated to increase 29.3%, and oilseed and oilseed product exports are projected to rise a modest 14.6%. Value of U.S. Agricultural Exports Billion Dollars 8 7 6 5 4 3 2 1 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Animals and Animal Products Grains and Feeds Oilseeds and Products Cotton Other Products The value of U.S. exports is projected to increase 4% to $71.6 billion by 211/12. Slightly more than half of the growth in value is explained by increases in the total volume of exports; the remainder is generated by strengthening prices. A 26.8 mmt rise in grain and feed exports, predominantly corn and wheat exports, accounts for 28.5% of the total increase in export value. The value of animal and animal product exports rises more than 4% over the baseline, accounting for 27% of the total growth in the value of U.S. exports. Almost 6% of the increase in the value of animal product exports comes from beef and pork exports. Growth in high-value agricultural exports accounts for 64% of the $18.6 billion increase in the value of U.S. agricultural exports over the baseline. Nearly 35% of the growth in high-value exports is accounted for by increases in the value of horticulture and other exports. Increases in the value of animal and animal product exports constitute more than 42% of the growth in high-value exports. page 12

FAPRI 22 World Agricultural Outlook Quantity of U.S. Agricultural Exports 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 11/12 (Thousand Metric Tons, Fiscal Year) Animals and Animal Products 6,77 7,233 7,267 7,414 7,584 7,835 8,125 8,364 8,57 8,668 8,756 Grains and Feeds 98,996 13,83 14,567 15,987 17,992 11,656 113,814 117,878 12,254 123,274 125,84 Wheat (Unmilled and Flour) 25,91 26,188 25,486 25,457 25,754 26,88 26,7 27,176 27,727 28,267 28,953 Rice (Paddy Milled) 3,69 3,253 3,41 3,18 2,976 2,935 2,896 2,842 2,786 2,729 2,669 Feed Grains and Products 55,928 57,687 59,539 6,524 61,928 63,961 66,11 68,558 7,31 72,179 73,872 Other Grains and Feeds 14,98 15,955 16,5 16,988 17,333 17,673 18,17 19,32 19,79 2,99 2,39 Oilseeds and Products 36,986 38,194 38,21 38,941 39,567 4,2 4,538 4,97 41,326 41,81 42,382 Cotton (excl. Linters) 1,661 2,18 2,287 2,39 2,297 2,295 2,38 2,33 2,357 2,379 2,42 Other Products 9,66 9,392 9,691 1,3 1,351 1,6 1,933 11,291 11,566 11,886 12,191 Total 153,479 16,1 161,832 164,681 167,79 171,47 175,717 18,833 184,73 188,7 191,535 Value of U.S. Agricultural Exports 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 11/12 (Million U.S. Dollars, Fiscal Year) Bulk Commodities * 18,934 19,368 19,958 2,464 21,98 21,722 22,536 23,395 24,12 24,89 25,646 High-Value Products 34,26 34,534 35,72 37,36 38,417 39,798 41,271 42,626 43,915 44,87 45,959 Animals and Animal Products 12,364 13,15 13,35 13,775 14,364 15,89 15,832 16,418 16,951 17,76 17,416 Meat and Meat Products 5,262 6,119 6,253 6,439 6,836 7,316 7,786 8,13 8,389 8,232 8,222 Poultry and Poultry Products 2,529 2,619 2,683 2,779 2,863 2,959 3,71 3,142 3,22 3,315 3,452 Dairy Products 1,138 984 953 92 914 96 892 884 879 881 881 Hides and Skins 1,954 1,624 1,769 1,899 1,975 2,78 2,26 2,356 2,484 2,644 2,816 Other Animal Products 1,482 1,669 1,693 1,738 1,776 1,831 1,876 1,933 1,98 2,4 2,45 Grains and Feeds 13,845 14,46 15,73 15,444 15,848 16,293 16,894 17,523 17,955 18,558 19,16 Wheat (Unmilled and Flour) 3,446 3,746 3,839 3,887 4,42 4,112 4,328 4,462 4,642 4,789 5,27 Rice (Paddy Milled) 758 788 747 757 764 77 776 777 778 778 778 Coarse Grains 5,473 5,832 6,398 6,654 6,878 7,18 7,528 7,933 8,157 8,536 8,839 Corn 4,511 4,89 5,434 5,667 5,87 6,149 6,469 6,838 7,3 7,376 7,648 Other Feed Grains 962 942 964 986 1,9 1,31 1,59 1,96 1,127 1,161 1,192 Feeds and Fodders 4,168 4,94 4,9 4,146 4,164 4,231 4,262 4,35 4,379 4,454 4,516 Oilseeds and Products 8,693 8,471 8,376 8,682 9,57 9,383 9,753 1,136 1,467 1,798 11,212 Soybeans 5,89 4,98 4,885 5,2 5,25 5,428 5,642 5,872 6,57 6,251 6,486 Soybean Meal 1,353 1,211 1,173 1,277 1,346 1,419 1,51 1,578 1,657 1,728 1,821 Soybean Oil 24 53 482 511 54 574 63 631 658 683 718 Other Oilseeds and Products 2,12 1,848 1,837 1,874 1,921 1,961 2,7 2,54 2,95 2,136 2,187 Tobacco, Unmanufactured 1,18 1,363 1,369 1,39 1,389 1,389 1,39 1,391 1,393 1,396 1,398 Cotton and Linters 2,88 2,157 2,58 2,675 2,81 2,911 3,24 3,157 3,36 3,453 3,66 Horticulture and Other Products 14,668 14,437 15,2 15,535 16,57 16,454 16,914 17,397 17,854 18,335 18,812 Total 52,961 53,93 55,678 57,51 59,515 61,52 63,87 66,21 67,927 69,616 71,65 * Bulk Commodities include wheat, rice, coarse grains, soybeans, cotton, and tobacco. High-value is total exports minus bulk commodities. page 13

FAPRI 22 World Agricultural Outlook Wheat Outlook World Wheat Stock-to-Use Ratio vs. Price Dollars per MT 25 2 15 1 5 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 U.S. FOB Gulf price Stock-to-Use Ratio Percent 25 2 15 1 5 From its peak in 1995/96 to its lowest level in 1999/, world wheat price decreased by almost 5%. As a result of less area, lower world stocks, and sustained demand, world wheat price has begun to recover over the last two years. Over the next ten years, the decrease in the stock-to-use ratio maintains an upward pressure on wheat price. Gulf FOB wheat price is projected to grow 2.1% annually. In the meantime, stock-to-use ratio steadily declines and reaches 17.4% by 211/12. World Wheat Area, Production, and Consumption Thousand ha 8, 235, 7, 23, 6, 225, 5, 4, 22, 3, 215, 2, 1, 21, 25, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 In 21/2, world wheat area totals 214.6 mha, only.1 mha above the record-low level observed in 1994/95. Fueled by the recovery in price and rebounds in the EU and the U.S., world wheat area increases by 1.1 mha in 22/3. Over the next ten years, world area grows a meager.11% annually, adding 2.5 mha. As a result, the increase of 9.6 mmt in world wheat production is projected to come primarily from yield growth. World Wheat Feed, Food Use, and Per Capita Consumption 8, 7, 6, 5, 4, 3, 2, 1, Production Consumption Area 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Feed use Food use Per capita consumption kg/h 84 83 82 81 8 79 78 77 Fueled by population growth and by a slight increase in per-capita consumption, world food use is projected to grow by almost 14% over the next ten years. Most of this increase comes from Asian and Middle Eastern countries, in which a shift in diets and income growth boost percapita consumption. Feed use is projected to grow at a slightly slower pace of 1.1% annually. The bulk of this increase comes from the EU, the U.S. and the FSU, where most of the substitutions with other grains occur. page 14

FAPRI 22 World Agricultural Outlook Major Wheat Exporters World Wheat Trade and U.S. Market Share 14, 12, 1, 8, 6, 4, 2, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Net trade U.S. Market share Wheat Production by Major Competitors 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 EU Argentina Australia Canada Percent 5 45 4 35 3 25 2 15 1 5 World wheat net trade is projected to grow slightly more than 3% annually, reaching 115.3 mmt by 211/12. Growing imports from developing Asian and Middle Eastern countries account for most of this increase because of growing demand and limited potential to increase production. Despite exports increasing by 3.1 mmt, the U.S. is expected to lose market shares over the next ten years, as the EU and Argentina capture most of the increase in net trade. In 21/2, the U.S. supplies 29% of the world net trade; by 211/12, it accounts for less than 24%. Due to bad weather conditions in 21/2, the EU experienced lower-than-trend yields and low harvested area. With recovery both in area and yields by 22/3, the EU is projected to bounce back to its 2/1 levels and produce above 15 mmt. Boosted mainly by enhanced competitiveness on the world market, Argentine production grows nearly 3% annually. Yield growth in Australia and Canada partially offsets the decline in area. Wheat Market Shares Percent 35 3 25 2 15 1 5 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 EU Argentina Australia Canada The EU is expected to recover its rank on the world wheat market, as production resumes in 22/3 and it is able to export without subsidization. The devaluation of the Argentine peso along with gloomy prospects for domestic demand boosts Argentine market share. From 14.6% in 21/2, it climbs to 16% by 24/5 and then holds in the longer run. With exports growing at a slower pace than world net trade, Australian and Canadian market shares are projected to decrease slightly but steadily over the next ten years. page 15

FAPRI 22 World Agricultural Outlook Major Wheat Exporters European Union Wheat Supply and Utilization 14, 12, 1, 8, 6, 4, 2, Argentina Wheat Supply and Utilization 25, 2, 15, 1, 5, Canada Wheat Supply and Utilization 35, 3, 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Production Consumption Net exports 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Production Consumption Net exports 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Production Consumption Net exports 25, 2, 15, 1, 5, 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 3, 25, 2, 15, 1, 5, In 22/3, an equalization of oilseeds and grain payments and a recovery in domestic price result in a.9 mha rebound in wheat area. From 22/3 on, most of the production increase is projected to come from yield growth, as only limited area substitutions are expected. By 211/12, the EU produces 118.6 mmt. Recovery in the livestock sector results in an additional 1.8 mmt in feed use in 22/3. Domestic price remains below world price throughout the projection period, allowing the EU to export without subsidization. By 211/12, the EU exports 22.8 mmt. Over the last ten years, the share of Argentine wheat exported to world markets has been steadily increasing, from 6% in the early 199s to 75% in 21/2. This trend is projected to continue as the devaluation of the peso against the dollar enhances the competitiveness of Argentine exports, while low real income growth depresses domestic use. Over the next ten years, production is projected to grow 34.2% through both area expansion and yield growth. In the meantime, Argentine exports increase by 47.1%, reaching 18.4 mmt in 211/12. Canadian wheat area is projected to decline over the next ten years, mainly because of area shifting to oilseeds. In 21/2, Canadian production reaches its lowest level since 1988/89, 21.3 mmt, primarily because of yields well below their long-run trend. With yields returning to trend, Canada produces 25.7 mmt in 22/3. Production then grows 1.1% annually, to reach 28.8 mmt by 211/12. Primarily driven by feed use, domestic consumption increases by 1.6 mmt over the next decade. Canadian net exports increase by 3 mmt over the projection period, totaling 18.9 mmt in 211/12. page 16

FAPRI 22 World Agricultural Outlook Major Wheat Importers Wheat Net Imports by Major Regions 12, 1, 8, 6, 4, 2, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Asia Latin America Africa and Middle East More than half of the increase in world net imports comes from Asian countries. Growing food use needs in a trade liberalization context are projected to result in an additional 16.9 mmt of imports by these countries over the next ten years. Another quarter of the increase in net trade comes from Middle Eastern and African countries, which are expected to increase their imports by 8.1 mmt to meet their fast-growing food consumption. Net imports from Latin American countries grow by almost 3% over the next decade and reach 23.6 mmt by 211/12. Asia Wheat Net Imports 45, 4, 35, 3, 25, 2, 15, 1, 5, -5, -1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Other Asia China High-Income East Asia India Japan Pakistan As a result of accession to the WTO, China and newly industrialized East Asian countries show the strongest growth in net imports, with 5.3 and 7.1 mmt in net imports respectively by 211/12. Indian net exports are projected to increase in the first two years, as export subsidies are used to diminish soaring stocks. However, in the long run, net exports are expected to decrease as consumption outpaces production. Japan remains a steady-todeclining importer as little growth potential is expected in food consumption. China Wheat Net Imports 18, 16, 14, 12, 1, 8, 6, 4, 2, -2, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Since 1996/97, China has been a relatively small player on wheat markets, alternating as a net importer and a net exporter. Starting in 22/3, in-quota imports in China are subject to a low tariff that exerts a downward pressure on domestic supply, while boosting domestic consumption. As a result, China imports increase rapidly in the first four years of accession. Chinese imports are projected to reach 5.7 mmt by 26/7 and then remain stable throughout the rest of the projection period. page 17

India Wheat Supply and Utilization 8, 7, 6, 5, 4, 3, 2, 1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 FAPRI 22 World Agricultural Outlook Major Wheat Importers Production Consumption Net exports 4, 3, 2, 1, -1, -2, -3, A drop in food consumption of 5.7 mmt in 21/2 is the main driving factor in the strong increase in Indian net exports and stocks. Despite decreasing production, net exports double in 21/2 compared to 2/1 and stocks climb from 21.5 mmt to 27 mmt. Domestic consumption is projected to resume in 22/3, while export subsidy programs are projected to lower stocks. Along with a slight decline in area and moderate yield growth, this results in a steep decrease in Indian net exports starting in 23/4. India is projected to become a net importer by 29/1 and imports 1.3 mmt by 211/12. Latin America Wheat Net Imports 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Other Latin America Brazil Mexico Africa and Middle East Wheat Net Imports 6, 5, 4, 3, 2, 1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Other Africa and Middle East Algeria Tunisia Morocco Egypt Iran Among Latin American countries, Brazil is the largest market for wheat. In 21/2, twothirds or 6.5 mmt of the wheat consumed in Brazil is imported. Higher returns for soybeans limit area expansion to only.1 mha over the next decade. The resulting increase in production does not allow Brazil to meet its rising demand. Brazilian net imports grow by 16% over the next ten years, totaling 7.5 mmt in 211/12. Sustained growth in per-capita consumption drives Mexican net imports up over the next decade, from 2.7 mmt to 4 mmt. African and Middle Eastern countries are the second fastest growing market for wheat. Since 1999/, Iran has depended heavily on wheat imports because of bad climatic conditions. With yields bouncing back to trend, Iran imports are projected to drop to 5.5 mmt in 22/3, down 1 mmt compared to 21/2. In the long run, increasing per-capita consumption drives imports up. In 211/12, Iran imports 7.6 mmt. Despite the continuing downward trend in Egyptian per-capita consumption, Egyptian imports are projected to increase by.9 mmt over the next ten years. page 18

FAPRI 22 World Agricultural Outlook Wheat Trade 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 11/12 Net Exporters (Thousand Metric Tons) Argentina 12,475 13,619 14,57 15,48 15,68 15,937 16,53 16,93 17,4 17,88 18,354 Australia 17,45 16,743 16,812 17,18 17,528 17,954 18,342 18,73 19,13 19,518 19,954 Canada 15,85 17,595 17,645 17,968 18,135 18,348 18,49 18,663 18,753 18,854 18,96 European Union 6,675 11,525 12,727 13,692 15,749 16,586 17,574 18,479 19,944 21,52 22,756 Czech Republic 7 655 69 564 56 538 52 5 481 475 46 Hungary 1,9 2,35 2,6 1,991 2,13 2,41 2,72 2,99 2,126 2,157 2,189 Russia 1,5 763 695 964 99 1,184 1,291 1,451 1,527 1,693 1,742 Ukraine 3,9 2,57 2,552 2,822 3,19 3,12 3,191 3,242 3,282 3,376 3,479 United States 24,631 23,841 23,614 23,983 24,123 24,831 25,227 25,843 26,242 27,42 27,473 Total Net Exports 85,81 89,345 91,167 94,142 97,725 1,538 13,29 15,883 18,857 112,442 115,313 Net Importers Japan 5,2 5,326 5,327 5,326 5,323 5,319 5,313 5,35 5,295 5,283 5,268 Other Former Soviet Union 82 329 474 519 516 52 472 436 394 353 318 Other Western Europe 435 444 434 427 423 418 414 49 44 399 395 Other Eastern Europe -59-6 -947-1,32-1,156-1,176-1,268-1,36-1,368-1,417-1,516 Poland 15 375 489 614 77 772 847 897 963 99 1,34 China 5 1,343 2,33 4,478 5,336 5,7 5,465 5,413 5,84 5,851 5,34 High-Income East Asia 5,975 6,341 6,471 6,53 6,626 6,688 6,782 6,845 6,935 6,995 7,84 India -2,9-2,476-3,787-4,42-3,851-3,148-2,714-2,149-1,524-949 -37 Pakistan -5 373 4 532 625 779 836 1,27 1,179 1,344 1,473 Other Asia 13,89 14,387 14,788 15,14 15,577 15,924 16,426 16,898 17,452 17,941 18,562 Brazil 6,5 6,81 6,873 6,841 6,862 6,953 7,53 7,157 7,288 7,426 7,54 Mexico 2,7 2,612 2,753 2,898 3,73 3,22 3,38 3,545 3,713 3,864 4,15 Other Latin America 9,45 9,43 9,734 9,952 1,317 1,522 1,872 11,116 11,441 11,77 12,83 Algeria 4,5 4,346 4,457 4,598 4,764 4,945 5,125 5,32 5,515 5,78 5,96 Egypt 5,8 5,945 6,77 6,175 6,28 6,351 6,433 6,54 6,577 6,633 6,695 Iran 6,5 5,485 5,357 5,444 5,741 5,936 6,255 6,533 6,885 7,191 7,565 Morocco 2,73 2,882 3,42 3,149 3,24 3,343 3,456 3,575 3,69 3,81 3,933 Tunisia 1,55 1,697 1,757 1,795 1,846 1,831 1,839 1,832 1,838 1,822 1,829 Other Africa/Middle East 2,9 21,63 22,411 22,92 22,642 22,741 23,289 23,573 24,85 24,434 25,82 Rest of World 42 454 487 476 567 651 666 688 743 791 811 Residual 2,266 2,266 2,266 2,266 2,266 2,266 2,266 2,266 2,266 2,266 2,266 Total Net Imports 85,81 89,345 91,167 94,142 97,725 1,538 13,29 15,883 18,857 112,442 115,313 Wheat Prices (U.S. Dollars per Metric Ton) U.S. FOB Gulf 126.45 13.98 133.9 137.41 138.1 142.66 144.79 148.5 15.12 154.39 156.22 Canadian Thunder Bay 12.46 16.3 17.32 111.63 113.61 118.9 12.19 123.6 125.65 13.19 131.96 Australian Wheat Board 81.41 83.87 84.4 87.45 95.21 96.57 93.29 98.46 1.22 15.48 17.26 CIF Rotterdam 148.99 154.28 156.73 161.77 162.58 167.9 17.38 174.18 176.59 181.58 183.71 page 19

FAPRI 22 World Agricultural Outlook Rice Outlook World Rice Stock-to-Use Ratio vs. Price Dollars per MT 4 35 3 25 2 15 1 5 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Percent 3 25 2 15 1 5 In 21/2, world rice price falls below its 1995/96 level, reaching $175 per mt. A sharp decrease in world area, together with the drop in the stock-to-use ratio in the past two years, results in a recovery of world prices starting in 22/3. The rice price growth averages 2.8 % a year over the baseline. By 211/12, the Thai rice price reaches $232 per mt. The stock-to-use ratio declines slightly but steadily throughout the baseline period, falling from nearly 24% in 21/2 to 21% in 211/12. FOB Bangkok 1% B Grade Stock-to-use ratio World Rice Area, Production, and Consumption Thousand ha 5, 156, 45, 154, 4, 152, 35, 15, 3, 148, 25, 146, 2, 15, 144, 1, 142, 5, 14, 138, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Production Consumption Area As a result of low prices, world rice area dropped 3.9 mha between 1999/ and 21/2. This downward trend is projected to continue until 23/4, as urbanization limits area expansion and higher returns from other grains favor substitutions. From 24/5 on, world rice area stabilizes at around 15 mha. Hence, the 1.1 % annual growth in rice production arises only from yield growth. World production reaches 437.4 mmt by 211/12. With per-capita consumption declining in many high-consuming countries, rice consumption grows slowly, fueled only by population growth. World Rice Food Use and Per Capita Consumption 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 kg/h 64 63 62 61 6 59 58 Slight recovery in prices, along with sustained income growth in Asian countries, drives percapita consumption down 2.7 kg/ha over the baseline period. However, population growth and growth in non-traditional consuming countries more than offset this decline. Over the next decade, rice consumption is projected to increase by 32.6 mmt, reaching 436.8 mmt by 211/12. Food use Per capita consumption page 2

FAPRI 22 World Agricultural Outlook Rice Outlook World Rice Trade 3, 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Rice Production by Major Competitors 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Thailand Vietnam China Rice Market Shares Percent 5 4 3 2 1-1 -2 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Thailand Vietnam China U.S. World rice trade accounts for less than 5% of world consumption in 21/2. This share is projected to rise slowly over the baseline period. Over the last four years, rice world trade decreased by 4.2 mmt, falling to just above 19 mmt in 21/2. An increase in rice consumption, together with limited area expansion, results in a 23.6% increase in world rice trade over the next ten years. World rice trade reaches 23.8 mmt by 211/12,.4 mmt higher than its 1996/97 level. China is the largest rice producer, producing one-third of the world rice production in 21/2. As area is shifted away from rice because of lower import tariffs upon WTO accession and substitution to other grains, Chinese production grows slowly over the baseline. China is projected to produce 138.4 mmt by 211/2. Thailand and Vietnam are the two largest exporters on the world markets. Primarily fueled by yield growth, production in these two countries is expected to increase by 2.9 and 3.4 mmt, respectively. As a result of declining per-capita consumption, the share of Thai rice exported to world markets is expected to increase from 41.5% to 49% over the baseline. Thailand captures 63% of the increase in the world rice trade and strengthens its position as the largest rice exporter. A quarter of the expansion of rice trade is captured by Vietnam, whose market share stabilizes slightly above 2%. With a decline in per-capita consumption that more than offsets population growth, China establishes itself as the third largest exporter on world markets. As a result of rising domestic demand and declining production, the US market share falls from 12.3% to 7.1% over the baseline period. page 21

FAPRI 22 World Agricultural Outlook Rice Outlook Thailand Rice Supply and Utilization 25, 2, 15, 1, 5, 12, 1, 8, 6, 4, 2, Fueled primarily by yield growth and to a lesser extent by a slight increase in area, Thai rice production grows 1.6% annually over the baseline period, reaching 19.7 mmt by 211/12. Meanwhile, the decline in Thai per capita consumption leads to a steady decline in consumption. As a result, additional product is shipped to world markets. Thai exports increase from 7 mmt in 21/2 to 9.7 mmt in 211/12. 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Production Consumption Net exports Asia Rice Net Imports 8, 7, 6, 5, 4, 3, 2, 1, -1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Indonesia Philippines Japan South Korea Indonesia is the largest importer in the region. As population rises rapidly and offsets the decline in per capita consumption, rice consumption growth is projected to average 1%. With limited area expansion and less potential to release stocks to supply domestic markets, Indonesia is projected to rely increasingly on imports until 24/5. In the outer years, however, Indonesian imports decrease as production outpaces consumption. By 211/12, Indonesia imports decrease to 1.3 mmt by 211/12. In recent years, Japan has been alternatively a net importer and a net exporter, depending on the quantity produced. Driven down by declining consumption, Japanese imports are projected to decline steadily starting in 22/3. Other Rice Net Imports 3, 2,5 2, 1,5 1, 5 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Saudi Arabia Brazil EU Over the next ten years, the expansion in Brazilian production is driven primarily by yield growth. Meanwhile consumption growth is slowed by the continuing decline in per capita consumption. As a result, Brazilian net imports are projected to decrease by.4 mmt over the baseline period. Increasing per capita consumption in the EU and Saudi Arabia drive imports up. By 211/12, Saudi Arabian imports reach 1.3 mmt,.5 mmt higher than in 21/2. With annual growth per capita consumption averaging 1%, EU imports increase by nearly 5%, totaling.7 mmt by 211/12. page 22

FAPRI 22 World Agricultural Outlook Rice Trade 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 11/12 Net Exporters (Thousand Metric Tons) Argentina 235 197 159 145 136 13 126 123 121 12 118 China 1,19 1,493 1,348 1,33 1,339 1,387 1,295 1,368 1,82 2,183 2,7 India 2,3 1,999 1,331 1,64 1,73 1,52 1,24 1,355 1,657 1,79 2,27 Myanmar (Burma) 5 756 751 755 762 77 78 79 81 814 829 Pakistan 1,1 1,28 1,16 1,4 993 982 971 961 951 941 931 Taiwan 67 4 44 47 51 55 58 63 67 72 77 Thailand 7, 7,226 7,317 7,571 7,885 8,136 8,442 8,738 8,978 9,315 9,662 United States 3,493 3,156 3,117 3,5 2,98 2,921 2,839 2,753 2,666 2,578 2,479 Uruguay 575 555 567 581 597 619 63 646 66 681 696 Vietnam 3,96 3,873 3,877 4,75 4,145 4,316 4,529 4,659 4,778 4,921 5,16 Total Net Exports 2,42 2,322 19,526 19,595 19,961 2,366 2,874 21,455 22,498 23,334 24,624 Net Importers Brazil 5 386 278 237 29 19 176 166 158 151 143 European Union 44 474 59 562 569 581 596 65 619 636 653 Indonesia 1,6 3,8 3,65 3,248 2,913 2,718 2,497 2,196 1,919 1,628 1,315 Japan 55 85 651 575 54 437 372 36 237 16 68 Philippines 7 688 727 765 83 84 877 914 95 985 1,2 Saudi Arabia 845 943 985 1,24 1,6 1,12 1,141 1,183 1,222 1,264 1,33 South Korea 145 64 41 85 135 155 174 177 192 195 25 Rest of World 14,263 12,618 12,2 11,875 12,569 13,166 13,892 14,791 16,112 17,257 18,893 Residual 249 249 249 249 249 249 249 249 249 249 249 Total Net Imports 2,42 2,322 19,526 19,595 19,961 2,366 2,874 21,455 22,498 23,334 24,624 Rice Prices (U.S. Dollars per Metric Ton) FOB Bangkok 1% B Grade 175. 18.64 185.84 191.3 196.88 22.25 27.69 213.35 219.1 225.17 231.57 FOB Bangkok 15% Broken 166. 171.7 175.74 18.65 185.66 19.49 195.39 2.47 25.64 211.9 216.85 page 23

FAPRI 22 World Agricultural Outlook Coarse Grain Outlook World Coarse Grain Area 3, 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 With grain prices recovering, world coarse grain area is projected to increase slowly, adding 3.8 mha over the next decade. This represents a meager 1.6% increase over the projection period. Driven by higher returns, increases in corn and sorghum offset a slight decrease in barley. By 211/12, coarse grain area totals 237.8 mha, among which nearly 6% are planted in corn. By the end of the baseline period, however, world coarse grain area remains 14 mha below its 1996/97 level. Corn Barley Sorghum World Coarse Grain Supply and Utilization 1,, 12, 9, 8, 1, 7, 8, 6, 5, 6, 4, 3, 4, 2, 2, 1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 World coarse grain production is projected to grow 1.6% annually over the baseline period. Yield growth alone explains nearly 9% of this increase. In 21/2, world coarse grain consumption totals 85 mmt, 24.6 mmt above world production. This difference is projected to decline over the baseline, as stocks are driven down and prices increase. By 211/12, world coarse grain consumption totals 915.5 mmt,.7 mmt below world production. Coarse Grain = Corn, Barley, and Sorghum Production Consumption Net Trade Coarse Grain Production by Major Competitors 16, 14, 12, 1, 8, 6, 4, 2, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 EU Argentina Australia Ukraine Coarse Grain = Corn, Barley, and Sorghum Among U.S. competitors in the coarse grain markets, Argentine production grows the fastest, rising more than 3% a year on average. Most of this production increase is projected to come from area expansion. By the end of the baseline period, Argentina produces 2.8 mmt of coarse grains, up 5.7 mmt from its 21/2 levels. Production growth in the EU, Ukraine, and Australia comes exclusively from yield growth, as coarse grain area in these countries remains steady to declining. page 24

FAPRI 22 World Agricultural Outlook Coarse Grain Outlook 2 15 1 5-5 World Coarse Grain Trade and U.S. Market Share 12, 1, 8, 6, 4, 2, Coarse Grain Market Shares Percent 25 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Coarse Grain = Corn, Barley, and Sorghum Coarse Grain Major Importers 6, 5, 4, 3, 2, 1, -1, -2, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Coarse Grain = Corn, Barley, and Sorghum Corn Barley Sorghum U.S. Market share EU Argentina Australia Ukraine China Japan Mexico Taiwan Percent 9 8 7 6 5 4 3 2 1 World coarse grain trade is projected to grow at an average annual pace slightly less than 3%. Boosted by trade liberalization and growth in the livestock sector, corn markets experience the fastest growth among coarse grains. Corn represents 72% of coarse grain trade in 21/2 and accounts for more than 83% of the 27.6 mmt increase in coarse grain trade. Over the baseline period, the U.S. remains the largest exporter of corn and sorghum, and it is a marginal player on barley markets. However, U.S. export expansion is limited by increased competition from Argentina. Low planting area in corn due to bad weather conditions limited Argentina's exports to less than 1% of world coarse grain trade in 21/2. However, starting in 22/3, devaluation of the peso and low domestic demand boost Argentina's exports. Argentina's market share reaches 12% in 26/7 and stabilizes over the last four years of the projection period. Slower expansion in Australian barley and sorghum exports results in a steady decline of Australia's market share. Most of this decline is captured by EU barley exports, which are projected to grow over 4% annually. For the first time since 1995/96, China is a net importer of coarse grains, with net imports of barley exceeding net exports of corn by.5 mmt in 21/2. Driven by sustained domestic demand and drops in tariffs upon WTO accession, Chinese barley and corn net imports are projected to increase by 2.1 mmt and 9.5 mmt respectively over the baseline. Decline in the livestock industry results in steady to decreasing Japanese coarse grain imports. Mexican coarse grain net imports increase by 2.4 mmt over the baseline, reaching 13.3 mmt by 211/12. page 25

World Corn Stock-to-Use Ratio vs. Price Dollars per MT 18 16 14 12 1 8 6 4 2 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 U.S. FOB Gulf price FAPRI 22 World Agricultural Outlook Stock-to-use ratio Corn Outlook Percent 3 25 2 15 1 5 Over the last two years, low world corn production led to a slight recovery in world corn price along with a significant drop of world stocks. In 21/2, the nominal Gulf FOB corn price bounces back to its 1998/99 levels. Driven up by increasing demand from world markets and lower stocks, corn price is projected to grow 2% annually over the baseline, reaching $113 per mt by 211/12. World ending stocks decrease by 17.6 mmt over the baseline, with the largest part of this decrease occurring in China. The stock-touse ratio reaches 13.3% by 211/12. World Corn Area, Production, and Consumption 8, 7, 6, 5, 4, 3, 2, 1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Production Consumption Area Thousand ha 144, 142, 14, 138, 136, 134, 132, 13, 128, 126, In 21/2, world corn area totals 136.3 mha, 5.3 mha below its 1996/97 peak. As a result of the recovery in prices, world corn area is projected to grow.3% annually, adding 4.7 mha over the baseline period. More than half of this increase occurs in the first two years of projection. The U.S. accounts for 45.6% of this increase. Growing 1.8% annually, production is expected to slightly outpace consumption. Nearly 8% of the increase in production is explained by yield growth. World Corn Feed, Food Use, and Per Capita Consumption 8, 7, 6, 5, 4, 3, 2, 1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Feed use Food and other use Per capita consumption kg/h 31. 3.5 3. 29.5 29. 28.5 28. 27.5 As a result of low per-capita consumption and recovery in the livestock sector, the feed use share of total corn use peaks at 71.2% in 21/2. This share is projected to decline as new prospects for ethanol production in the U.S. and in China lead to a 1.6 kg/h increase in per-capita consumption. Fueled by growth in livestock production, feed use is projected to reach 492.1 mmt by 211/12, increasing by 56.6 mmt over the baseline. Total use is projected to grow slightly less than 1.5% annually. page 26

FAPRI 22 World Agricultural Outlook Major Corn Exporters World Corn Trade and U.S. Market Share 9, 8, 7, 6, 5, 4, 3, 2, 1, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Net trade U.S. Market share Percent 1 9 8 7 6 5 4 3 2 1 In 2/1 and 21/2, large releases of stocks, slow growth in feed use, and a decline in food and industrial use kept world corn trade slightly below 61 mmt. New market opportunities for food and industrial use together with growth in livestock production and trade liberalization result in a 37.8% increase over the baseline. Despite a 16.3 mmt increase in U.S. exports over the baseline, U.S. market share declines slightly as competitors such as Argentina gain market shares. By 211/12, U.S. exports account for 79% of world net trade. Corn Production by Major Competitors 4, 35, 3, 25, 2, 15, 1, 5, 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Argentina South Africa Hungary In 21/2, the three major U.S. competitors account for less than 5% of total production and about 17% of world trade. In 21/2, bad weather resulted in a five-year low for Argentine production at 11.5 mmt. More competitive exports on international markets are the basis for a 24.6% increase in Argentine corn area. This results in a 4.1 mmt increase in Argentine corn production. South African production increases by 2.2 mmt over the baseline, driven by both yield growth and area expansion. Hungarian production increases by.5 mmt only with yield growth. Corn Market Shares Percent 25 2 15 1 5-5 -1-15 1991/92 1994/95 1997/98 2/1 23/4 26/7 29/1 Argentina Hungary South Africa Because of their currency advantage on world markets, Argentine exports are projected to increase quickly after falling below 7 mmt in 21/2. An increase in feed use due to lower area availability is almost entirely offset by a decrease in food and other uses because of a decline in real income. As a result, Argentina exports 11 mmt or 7% of its production by 211/12 and holds 13.2% of the world markets. By the end of the baseline, South Africa establishes itself as the third largest net exporter, capturing 4% of the world market. page 27