Cereal stocks still low, says FAO

By staff reporter

- Last updated on GMT

Related tags: Agriculture

World cereal production is up this year, says the FAO - but total
supplies still barely meet demand and prices are likely to remain
high.

Cereal supply has been a matter of concern since production declined significantly in both 2005 and 2006, and coincided with greater demand, falling stocks and price surges. The FAO believes the situation is exacerbated by increasing attention to biofuels, which is creating ever more demand for cereal crops. Increasingly, food processors and biofuel producers compete in the same commodity markets. 251 million gallons of biodiesel was manufacted in 2000, a figure which more than tripled to an estimated 790 million gallons in 2005. In its latest Crop Prospects and Food Situation report, the UN's Food and Agriculture Organisation (FAO) says production is expected to reach 2,095 tonnes in 2007 - up 4.8 per cent on 2006 levels. But shortages over the last few years have left supplies low. Although production seems to be moving in the right direction, the FAO says prices rose significantly in 2006-7 - and it does not expect there to be any let-up in 2007-8. "As a result, the cereal import bill of the low-income food deficit countries (LIFDCs) is forecast to increase by about one-quarter in the current season,"​ it said. Food difficulties are said to persist in some 33 countries. These include Bolivia, where droughts and floods in the 2007 cropping season caused serious crop and livestock losses, and Somalia, where political conflict in the south is likely to reduce the area planted in the 2007 season. Food shortages are also expected in Zimbabwe as a result of the economic crisis and massive inflation. Food supply for millions of people in the Democratic People's Republic of Korea is also said to be a serious concern, despite recent agricultural recovery and food aid pledges.

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