Agriculture and Fisheries

▪ 2002

Introduction

National and International Issues

Food Production.

       Selected Indexes of World Agricultural and Food ProductionTotal agricultural and food production increased slightly in 2001, while global per capita food production was 1.1% lower. (See Table (Selected Indexes of World Agricultural and Food Production).) Taken together, less-developed countries increased output, while production in developed countries was slightly lower; per capita food production in both regions fell.

      Two regions had persistently weak production compared with the 1989–91 period. Transitional countries in the former Soviet Union and Eastern Europe continued to have agricultural and food production at levels 70% of those for 1989–91, and little recovery was evident in 2001. These countries faced agricultural bottlenecks due to poor infrastructure, weak credit markets, underdeveloped input and land markets, weak macroeconomic performance, and incomplete privatization. Moreover, reduced agricultural production in some of these economies may have been affected by market forces. Production difficulties experienced by sub-Saharan Africa during the 1990s also continued into the new millennium. Some African countries expanded total output but saw declining per capita output, primarily because of quickly rising populations. Other countries experienced total and per capita output declines owing to environmental degradation and war. In the Democratic Republic of the Congo, per capita food output was 37% lower than in 1989–91. Ethiopia experienced a substantial fall in per capita output beginning in 1997 as a result of drought and its war with Eritrea.

Food Aid.

       Shipment of Food Aid in CerealsInternational food aid continued to be critical for several countries. (See Table (Shipment of Food Aid in Cereals).) Shipments of cereal grains for aid in 2000–01 declined sharply from the previous year, largely owing to reduced contributions from the United States. The U.S. remained the largest international donor, but American shipments fell by 35%. Meanwhile, Japan more than doubled its shipments of cereal food aid and moved past the European Union (EU) to become the second largest donor.

      The main aid recipients were largely the same as in previous years. Somalia faced drought and war and was a major target of aid programs. Although North Korea's harvest improved in 2001, that country continued to be short of food and sought assistance through the UN's World Food Programme. When Hurricane Michelle damaged Cuban agriculture, U.S. producers sold food to Cuba despite the trade embargo that had been in effect since the early 1960s. Fighting in Afghanistan and a huge refugee population created a food emergency, for which the U.S. and other donor countries provided supplies. At the time the U.S. bombing began, food-aid packets were also delivered by air drop, but ground fighting disrupted the delivery of food and other aid to civilians.

World Trade Organization.

      The members of the World Trade Organization (WTO) met in Doha, Qatar, in November and launched a new round of global trade liberalization negotiations. China and Taiwan were both accepted for WTO membership. Problem areas in agricultural trade negotiations were discussed, including further limits on export subsidies.

      During 2001 the WTO heard a number of international trade disputes. The U.S. complained about Mexico's adoption of tariff measures against the U.S., Canadian dairy policy, and South Korean beef-import rules. Argentina and the EU quarreled over import barriers on bovine hides, while the EU and the U.S. confronted each other over wheat gluten and continued their long-running dispute over the EU ban on hormone-treated beef. The U.S. had filed a case in the WTO against the EU banana-import policy that relied on import quotas for various countries. The WTO had ruled in favour of the U.S., but the EU had not complied. In April the parties agreed that the EU would adopt a tariff-only import regime effective Jan. 1, 2006, and until then would institute a system of licensing based on historical trade levels, with increased quotas for Latin American bananas.

      In July 1999 the U.S. had introduced import barriers against lamb meat to protect its domestic industry. Australia and New Zealand filed complaints that were upheld by the WTO, and in November the U.S. restrictions were removed.

Agricultural Policy.

      U.S. farm-support regulations, which were to expire in 2002, had been adopted in 1996 when global agricultural markets were tight and farm prices were strong. Since 1998, however, Congress had been obligated to provide special annual supplemental assistance and spend far more than anticipated to maintain adequate levels of farm income. New legislation passed by the House of Representatives in October 2001 formalized this supplemental spending and made a 10-year commitment to continue substantial government subsidies to farming. Another concern in the U.S. was the granting of trade-promotion authority. The U.S. was finding itself at a disadvantage when it participated in WTO talks to liberalize agricultural trade. Other countries were reluctant to negotiate with the executive branch when it was Congress that enjoyed the authority of final approval of trade agreements. Pres. George W. Bush sought the renewal of presidential authority for “fast-track” trade negotation, which had lapsed in the mid-1990s, but the measure was controversial and opposed by groups that opposed liberalizing trade. On December 6 the House approved trade-promotion authority by a one-vote margin, but by year's end the Senate had yet to consider the matter.

      Agricultural policy was proving a significant obstacle to the ongoing negotiations to enlarge the EU to embrace Central and Eastern European countries. EU farm-support policies were quite generous to farmers but were costly, consuming about half of the EU's annual budget. A number of the countries that were seeking admission had large agricultural sectors, and some, such as Poland, had numerous small farms. If the existing EU farm policy was expanded to take in those countries, cost would rise steeply. Farm policy reform was unpopular with EU farmers, but farmers in countries applying for membership wanted equal treatment, even while fearing competition with highly efficient, highly subsidized Western European agriculture.

Livestock Diseases.

      Foot-and-mouth disease (FMD) outbreaks occurred in many countries, including Great Britain and Argentina, beginning in late February. (See Special Report (Trouble on the Hoof: Disease Outbreaks in Europe ).) Measures were quickly undertaken to restrict the spread of the disease. Infected animals in Britain were placed in quarantine and slaughtered. Britain destroyed over four million animals, or about 8% of its animal inventory. Movements of products in rural areas were restricted or banned, and tourists were prohibited from visiting certain areas; large economic losses resulted. Fresh-meat exports from countries with the infection were banned, and travelers faced increased security. Although FMD is rarely transmissible to humans, the outbreaks following the experience with bovine spongiform encephalopathy (BSE) caused a reduction in European meat consumption. By late summer the disease appeared to have been contained, and few new cases were being reported.

      In late September BSE, which does seem to be transmissible to humans, appeared in Japan. Demand for beef in Japan plummeted; wholesale beef prices fell by 50%; and other countries prohibited beef imports from Japan. Although Japan was a large net importer of beef, it exported some specialty beef products.

      Hong Kong experienced an outbreak of influenza in poultry, and about one million birds were eradicated. Trade in poultry meat through Hong Kong was disrupted as China tightened inspections on poultry originating in Hong Kong and on frozen poultry from other countries transported through Hong Kong. South Korea, the Philippines, and Japan banned poultry imports from Hong Kong, and Taiwan introduced tighter screening of travelers.

Global Economic Developments.

      Agricultural trade was adversely affected by global economic developments in 2001, notably the spread of recession. Consumption of agricultural products is linked to income. As incomes fall, demand for agricultural goods declines and trade shrinks. In 2001 every major economy experienced weaker economic activity, and a recession began in the United States in March. The terrorist attacks in September further weakened both the U.S. and the world economies. Japan continued to have a poor economic performance, and European economies saw lower growth rates. Reduced U.S. imports of technology lowered growth in Pacific Rim countries. Argentina was mired in a multiyear recession and by the end of the year was facing a default on $132 billion in international debt obligations.

      Currency values affect international trade for agricultural products. Most trade occurs in U.S. dollars, and a strong U.S. dollar weakens the purchasing power of countries importing U.S. agricultural goods. While the U.S. dollar weakened during much of the year, it remained high by historical standards and strengthened against the currencies of rival exporting countries, which thus reduced the competitiveness abroad of U.S. agricultural products.

Global Markets in 2001

Grains, Oilseeds, and Livestock.

      Global production of grains and oilseed was higher in 2001, and prices for farm commodities remained weak. World grain production in the 2001 crop year rose from 1,836,000,000 tons to 1,843,000,000 tons (tons here and throughout are metric tons). Coarse grains output was 2% higher. Coarse grain production in the U.S. fell 11 million tons, or 1%, from the large 2000 crop. Major exporters had smaller coarse grains crops, but several key importing countries harvested larger crops. Russia, Ukraine, and other Eastern European countries had significantly larger harvests. China recovered from a drought, and 2001 production was up by two million tons. World rice production dropped 1.1%. This was the second year of smaller global rice production and marked a break with the steadily rising harvests experienced in the 1990s. World wheat production fell nearly 1% to 577 million tons, dragged down by the decline in the U.S. The U.S. had been experiencing a long-run decline in area planted in wheat because farmers found other crops more attractive. Improved wheat crops were recorded by Eastern Europe, North Africa, Russia, and Kazakhstan. Chinese wheat production decreased from 100 million tons to 94 million tons. India and Pakistan saw output declines of 10%. World coarse grains trade fell 4%. Rice trade remained 24 million tons. With reduced global production, world wheat trade was 4% higher. With global wheat consumption greater than production, global stocks fell to the lowest level since 1995–96. Even with a larger global coarse grains crop, expanded consumption in 2001–02 reduced stocks. For rice, growing use combined with lower output caused a stock reduction. The tightening global supply and use balance caused higher wheat and coarse grains prices; however, price levels remained low.

      World oilseed production had continuously increased since 1991, and production expanded by 3.6% in 2001, a new record. The U.S. harvested a huge soybean crop, 4.8% above even the large 2000 crop. Soybean outputs in Argentina and Brazil were also large. Oilseed trade rose 5.6%, and ending stocks were 1.9% lower. Oilseed meal and vegetable oil outputs rose with trade increasing owing to expansion of meal and oil use. Prices remained low.

      Global meat production expanded in 2001. Beef and pork output rose by nearly 1% to 133.1 million tons. That rise was not matched by increased demand, however, and trade in meat dropped from 9.1 million tons to 8.8 million tons. Both global production and trade of poultry meat expanded. Output increased 2.8%, and trade was 3% higher, which resulted in a 3% increase in consumption. Worldwide output of dairy products grew; cow's milk output was greater in 2001 at 378.5 million tons, compared with 377.1 million tons in 2000. Production declines in the U.S. and the EU were offset by increased production in Oceania. The U.S. and the EU saw butter production fall because of low prices relative to other dairy products, but trade in butter remained unchanged. Cheese production grew 2%, but total world exports were unchanged because increases from Oceania were offset by reduced EU trade. Nonfat dry milk production was 5% below the 2000 level owing to lower milk and stable cheese output in the U.S. and the EU and to expectations that prospects for nonfat dry milk were not as favourable as those for cheese.

Tropical Products.

      World sugar production for 2001–02 was down 2% from the previous year. Brazilian output, down sharply in 2000–01, recovered by 8.1% in 2001–02, while EU sugar production during the year fell 12.5% below the 2000–01 level. At 34.2 million tons, global sugar trade was down by 2 million tons. Brazilian exports rose 23%, but exports from the EU dropped 44%. World sugar consumption in 2001–02 rose by 1.5%. Owing to the tighter global supply, prices that had been low for two years strengthened somewhat.

      Coffee production in 2001–02 rose slightly above the level of the previous year. This, added to the large beginning stock, meant that total supply was 4% greater. Brazilian coffee output was 1% lower, but large stocks permitted a 16% increase in exports. These large supplies put downward pressure on coffee prices worldwide. In September 2000 the Association of Coffee Producing Countries agreed to reduce export supplies by 20% in order to boost prices, but one year later, with prices at new lows, the attempt was abandoned. Some members could not bear the costs of withholding coffee exports as nonmembers expanded their exports to take up the slack.

Philip L. Paarlberg

Fisheries

 Total world fish-catch figures for 1999, the latest year for which figures were available in 2001, were finalized by the UN Food and Agriculture Organization and showed a recovery from the disastrous effects of the El Niño weather patterns the previous year to reach 92,866,600 metric tons. The total catch of fish, crustaceans, and mollusks from marine and inland waters rose 7% over the 1998 figure of 86,933,100 metric tons. (See Graph—>.)

 The leading fishing nation in 1999 again was China, with a figure of 17,240,000 metric tons. (See Graph—>.) This total was similar to the 1998 figure and was expected to remain relatively constant while the country's main focus remained the continued growth in farmed production. There was also an increase in China's farmed production to a massive 22,790,000 metric tons.

 Peru recovered second position in the world catch league in 1999 with a haul of 8,430,000 metric tons, a staggering 94% increase over the previous year, when El Niño decimated the anchoveta stocks off the Pacific coast of South America. (See Graph—>.) While the recovery was welcome for the Peruvian fishing fleet and fishmeal industry, it would go only a short way to offset the debts incurred by the industry when El Niño's warm waters devastated the fish catch. Third-place Japan again recorded a small decrease (2%) in catch to 5,176,460 metric tons in 1999, but the country remained a major export target for many of the other producing nations.

      Chile, which was also affected by the decline in anchoveta resources, recorded a large recovery with a 55% rise to 5,050,528 from 3,265,383 metric tons in 1998. Despite this, there was continued serious concern over the country's jack mackerel stocks, which registered a 30% decrease in catch from 2,060,000 metric tons in 1998 to 1,420,000 metric tons in 1999. Tight fishing controls on the jack mackerel fishery were in place.

      The U.S. managed only a 2% increase in its catch of 4,749,645 metric tons. Russia, which was dependent on its Alaska pollock catch, reported a 7% decrease to 4,141,157 metric tons. The Russian fishing industry was finding the going tough, and unless it could reverse the trend, it was likely to find itself below 4,000,000 metric tons. A change in economic policy by the Russian Central Fisheries Committee had left the industry not only having to cope with high fuel prices but also having to bid for its fishing quotas against foreign fishing interests in government-organized auctions.

      Morocco, in 25th place with a relatively modest catch of 750,000 metric tons, was growing in importance. In 2001 the European Union failed to agree on the renewal of a third-party access agreement with Morocco that would allow significant access to Spanish and Portuguese vessels. Morocco was therefore preparing to see its own landings rise significantly in the coming years.

Martin Gill

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