Agriculture and Food Supplies

▪ 2007

Introduction

Bird flu reached Europe and Africa, and concerns over BSE continued to disrupt trade in beef. An international vault for seeds was under construction on an Arctic island. Stocks of important food-fish species were reported under threat.

Agricultural Production and Aid

Food Production.

      World grain production in the 2005–06 crop year was 2,012,000,000 metric tons, which was a decline of about 1.6% from the previous year. World wheat production fell 1.4%, and the production of coarse grain ( corn [maize], barley, oats, sorghum, rye, millet, and mixed grains) was 3.7% lower. Offsetting the production declines for wheat and coarse grains was a 3.8% expansion of rice output. The decline in wheat production was concentrated in the European Union, North Africa, and India. Weather adversely affected coarse-grain crops in the United States, Argentina, Mexico, the EU, North Africa, and Russia, while China's production showed an improvement. Rice production in India, Pakistan, and Thailand rose substantially, and the only major rice-trading countries that experienced a decline in output were Brazil and the U.S. For the 2006–07 crop year, world production of grain was forecast to decline an additional 1.8%. Global wheat and coarse-grain production were forecast lower, but rice production was expected to rise. Global coarse-grain production was forecast to be 1% lower, and world rice output was forecast to be one million metric tons greater, with most countries repeating their 2005–06 outputs.

      For the 2005–06 crop year, world oilseed production rose 1.8% to 388 million metric tons. Production in the 2006–07 crop year was expected to rise another 1.8% as U.S. soybean production recovered from a decline in 2005–06. The output of crops in South America expanded in 2006, and 2007 crops were forecast to increase further.

      With global grain consumption increasing, ending stocks were expected to continue to fall. Global stocks fell 3% during the 2005–06 crop year. A major factor for the decline in coarse-grain stocks was the expectation of expanding demand for ethanol made from corn. Several new production plants were planned to start operation in the U.S. in 2007. The U.S. farm price for corn started rising in the summer, when reduced output together with the anticipated expansion of ethanol production began to affect markets.

Food Aid.

 Several African countries faced food emergencies as crop problems in 2005 led to shortages in early 2006. Acute drought in northern Kenya, southern Ethiopia, and Somalia placed millions of people at risk of famine. Later in the year unusually heavy rains caused extensive flooding in the region and hindered the distribution of food aid. Zimbabwe continued to suffer the effects of its aggressive land-reform program, which had caused a collapse in agricultural output. One-half of the population of Zimbabwe—once an agricultural exporter—was relying on international food aid. The food crisis in the Darfur region of The Sudan continued, and an estimated four million people were in jeopardy. Chad and the Central African Republic also had large numbers of people who were facing starvation.

Agricultural Policy

Doha Development Round.

      The Doha Development Round of trade talks under the auspices of the World Trade Organization (WTO) tottered and finally collapsed. At the December 2005 ministerial meeting in Hong Kong, attending countries had agreed to complete a framework for the liberalization of agricultural trade by the end of April 2006. The deadline was extended to the end of June, but by late July progress still had not been made, and the talks were officially suspended. The United States had offered to make substantial reductions in its domestic price support, but the cuts were to be made from its WTO spending ceiling and not from actual subsidy outlays. Other countries argued that the U.S. would not in fact be reducing its agriculture subsidies, since subsidy outlays by the U.S. had been well below its spending ceiling. The United States in turn was displeased over its market access to the European Union and less-developed countries. Although they had offered reduced import barriers, the U.S. felt that the reductions were insufficient. Other problems in the Doha Development Round included disputes over how many products could receive special exemptions from import-barrier reductions and disagreements in defining which countries should be considered less-developed and therefore entitled to special treatment.

Genetically Modified Food.

 The production of genetically modified (GM) food remained controversial but continued to expand, with the total area planted to GM crops growing at double-digit rates. By 2006 GM crops were being grown in more than 20 countries on more than about 100 million ha (250 million ac). It was estimated that one-half of the world's soybeans, one-quarter of its corn, and one-tenth of its cotton were GM crops.

      In 2006 the WTO ruled against restrictions that the EU had placed on the approval of GM crops. The United States, Argentina, and Canada filed a complaint with the WTO in 2003 about EU rules that had effectively banned imports of GM crops since 1998. After a series of postponements, a final ruling against the European ban was issued in September.

      In July U.S. officials learned that unapproved GM rice had been found in rice supplies for the commercial market. The EU responded by demanding that long-grain-rice imports from the U.S. be tested and certified. Japan banned long-grain imports and threatened to ban other types of rice imported from the U.S. Additional concerns about inadequate controls of GM plants and products were raised by a study in Oregon that found genetically modified creeping bentgrass, developed for possible use on golf courses, in the wild as far as 3.8 km (2.7 mi) from its test plots. (See Life Sciences: Botany (Life Sciences ).)

International Seed Bank.

 In June construction began on the Svalbard International Seed Vault, which was intended to safeguard the seeds of the world's food plants in the event of a global crisis. The secure facility was being built into the side of a mountain on Spitsbergen, the main island of the Svalbard Islands, a Norwegian archipelago in the Arctic Ocean. The site was chosen for its cold conditions and permafrost, which would help preserve the seeds in the event the vault's cooling systems failed. The vault, endorsed by more than 100 countries, was being built by Norway in coordination with the Global Crop Diversity Trust. Scheduled for completion in 2007, the vault would house up to three million varieties of plants; individual countries were to provide the seed samples to be preserved.

Animal Diseases.

       Avian influenza caused by the highly pathogenic virus H5N1, which had caused outbreaks in several Asian countries starting in 2003, continued to spread via migratory birds, and the virus reached Western Europe and Africa in early 2006. Although avian influenza infected wild birds, it did not infect commercial poultry in Europe. As a precaution, many free-range-poultry producers moved their birds indoors to avoid contact with wild birds. The H5N1 strain was transmissible to humans who came in contact with live infected birds, and humans infected by the virus had a mortality rate greater than 50%. Although cooked poultry was not considered to pose a risk of infection to humans because the heat of cooking would kill the virus, the consumption and trade of poultry meat in Europe were negatively affected by the avian-influenza outbreaks.

      Several countries lifted trade bans that they had imposed on Canadian and American beef in 2003, when bovine spongiform encephalopathy (BSE, or mad cow disease) was found in a cow in Canada and another in the United States. A complicating factor in the reopening of the beef trade was the fact that cases of BSE continued to appear. The U.S. reported one case of BSE in Alabama in March, and Canada reported several cases during the year. Japan, which had been a top importer of North American beef, announced in December 2005 that it was reopening its market to the United States and to Canada. Trade in U.S. beef was halted in the following month, however, because one American exporter had allowed shipment with backbone matter, which was prohibited under the rules that had been negotiated. After further talks, shipments resumed in July. South Korea, which had also been a top importer, indicated that it would again allow American beef into its market. South Korea reopened its market in October, but trade was soon disrupted after a bone chip was found in a shipment.

      In February foot-and-mouth disease appeared in Argentina, and about 4,000 head of cattle were destroyed to contain it. Several countries canceled imports of Argentine beef.

Trans Fat.

      The consumption of trans fat—primarily in the form of partially hydrogenated vegetable oils in foods—had been blamed for contributing to obesity and coronary heart disease. (Hydrogenation is a process used for converting vegetable oils into solid or semisolid fats and improving their shelf life.) U.S. labeling requirements for the trans-fat content of packaged foods came into effect in January, and food manufacturers and restaurant chains were taking steps to eliminate trans fat from their products. Kentucky Fried Chicken, for example, announced that by the end of April 2007, it would replace partially hydrogenated vegetable oil with low-linolenic soybean oil, which does not need to be hydrogenated. The production of low-linolenic soybeans and special varieties of other sources of vegetable oil was expected to increase as demand continued to grow for substitutes to partially hydrogenated oil.

Philip L. Paarlberg

Fisheries

      Commercial fisheries figures published by the UN Food and Agriculture Organization indicated that in 2004, the latest year for which figures were available, the total production for the world's capture fisheries increased by 4,476,324 metric tons, or 4.95%, from the 2003 figure. Marine capture fisheries recorded a 5.27% increase, 4,293,818 metric tons over the 2003 figure of 81,494,385 metric tons, while freshwater inland capture fisheries recorded a 2.02% increase, to 9,218,605 metric tons. World aquaculture continued to grow, increasing by 7.48% in 2004 to reach a total production of 45,468,356 metric tons. Overall, the world supply of fish showed a 5.66% jump over 2003 to 140,363,237 metric tons.

 In 2004 China was still the world's leading fishing country, recording an 0.82% increase in total catch to reach 16,892,793 metric tons, a figure that, when added to China's aquaculture production of 30,614,968 metric tons, dwarfed the next nearest producer. (For Production Trends for the Top 10 Catching Nations, 1995–2004, see Graph—>.)

 The anchoveta (Peruvian anchovy; Engraulis ringens) recovered strongly, recording a 72.14% increase in catch over 2003 and contributing to a 57.96% increase in Peru's total catch. (For Catch Trends for the Top Five Caught Fish Species, 1995–2004, see Graph—>.) The Japanese anchovy, however, decreased by 14.02%, dropping from fifth to seventh position among the top 10 species caught. Atlantic herring and largehead hairtail moved up. Also of interest was the rapid increase (331.12%) in the catch of jumbo flying squid (Dosidicus gigas) in the previous five years. Capelin continued to show a decline.

      Growing concerns about overfishing and marine pollution culminated with the publication in Science magazine in November 2006 of a report from a 13-member international team of ecologists and economists. The group, which comprised researchers from four countries and investigated worldwide catch data for the past 50 years, predicted the collapse of the world seafood supply as early as 2048. Cod and tuna were two fish identified as under threat, and concern was expressed for the state of marine ecosystems generally. Other reports during the year pinpointed stocks of Mediterranean bluefin tuna and orange roughy as particularly worrying. On the positive side, some types of Chilean sea bass, which in the past had been severely threatened, were again declared sustainable; global trade in caviar from wild sturgeon was proscribed; and New Zealand announced plans to ban destructive bottom trawling in large portions of its exclusive economic zone.

      At the annual meeting of the International Whaling Commission (IWC), held in June in the Caribbean country of Saint Kitts and Nevis, member countries, vigorously lobbied by Japan, narrowly voted in favour of eventually abandoning the 20-year-old worldwide ban on whaling, although a three-fourths majority would be required actually to overturn the moratorium. On October 17 Iceland announced that it would take 9 endangered fin whales and 30 minke whales by the end of August 2007, its first commercial whaling activity in more than 20 years. Iceland thus joined Japan and Norway as the only countries defying the IWC ban.

Martin J. Gill; Editor

▪ 2006

Introduction

The continued spread of bird flu raised global concerns. Some bans on beef imposed because of BSE were relaxed. Food emergencies severely affected several countries in Africa, and G-8 countries agreed to large increases in development aid.

Agricultural Production

and Aid

Food Production.

      World agricultural markets in 2005 reflected crop supplies in 2004 and 2005. The world production of grain in the 2004–05 crop year was 2,036,940,000 metric tons, which was a gain of 9.6% over the previous year and represented increases in the production of wheat, rice, and coarse grain (corn, barley, oats, sorghum, rye, millet, and mixed grains). The rise in wheat production was the result of larger harvests in China, the European Union, India, Russia, and Ukraine, which offset smaller harvests in Australia and the United States. Rice production increased in China, Pakistan, South Korea, and the United States, and coarse-grain production rose in the U.S., Argentina, China, the EU, and Ukraine. For the 2005–06 crop year, world grain production was forecast to fall 3%, with decreases in both global wheat and coarse-grain production but a slight increase in rice production. As a result of these trends, prices for wheat were stable and prices for other grains fell.

      World oilseed, oilmeal, and vegetable oil production also increased. For the 2004–05 crop year, world oilseed production rose 13.4% to 379,050,000 metric tons, and most regions experienced increases. Production for 2005–06 was expected to rise 2.1%, with reduced U.S. soybean harvests more than offset by gains in South America.

Food Aid.

      Despite abundant global food supplies, food shortages remained in many areas, even within countries that generally had adequate supplies. In India about 20% of the population was undernourished, and the figure in China was estimated to be about 10%. Several African states faced food emergencies. Niger experienced its worst food crisis since 1985, with about 3.6 million persons threatened with famine because of inadequate rainfall, locust infestation, and restrictions on the importation of rice and wheat. Malawi, which was hurt by drought, produced only 37% of the food it needed, and five million persons were estimated to be at risk. Zambia had a poor harvest because its rains came only during a brief period, and farming in Zimbabwe continued to be hurt by poor weather, land reform, and political and economic strife. Food shortages also existed in North Korea, Ethiopia, and Eritrea.

      In addition to the ongoing food aid and related assistance provided through the UN World Food Programme and individual national programs, the issue of development aid was addressed by food-donor countries at the 2005 Group of Eight (G-8) Summit in Gleneagles, Scot. The G-8 countries agreed to expand development aid by $50 billion worldwide by 2010, with $25 billion earmarked for Africa.

      Rice, which was the staple food in many less-developed countries, was the focus of genetic research to increase its nutritional value. Some researchers were working with “golden rice,” a strain developed to contain beta-carotene, which the human body converts into vitamin A. In 2005 a new strain of “golden rice” that contained much higher levels of beta-carotene than earlier strains was announced, and its use was seen as a potential way of overcoming vitamin-A deficiency in the diets of many children in less-developed countries. In a breakthrough that was expected to speed the development of new strains of rice, geneticists in 2005 published the complete mapping of the genetic sequence of the rice genome. See Life Sciences: ) (Life Sciences )

Animal Diseases.

      In 2005 outbreaks of avian influenza (bird flu) continued to appear in several East and Southeast Asian countries, including Cambodia, China, Indonesia, Thailand, and Vietnam, and spread into a number of other countries, including Russia, Turkey, and Romania. Hundreds of millions of birds, including chickens and ducks, had died from the disease or were destroyed to control it. The outbreaks, which had begun in 2003, were caused by a highly pathogenic virus strain called H5N1. The virus was also transmissible to humans who came in contact with infected birds. By the end of 2005, about 140 persons had been infected with the virus and about one-half of them, including many children, had died. Fears concerning the disease led to a decrease in the consumption of poultry meat, though cooking had been found to destroy the virus. A major concern was that the virus might mutate into a form that could be readily transmitted from human to human, which could trigger a deadly flu pandemic, and many countries and nongovernmental organizations were making contingency plans for response to such a crisis. (See World Affairs: Vietnam: Sidebar (Bird Flu-The Next Human Pandemic? ).)

      Trade bans that had been imposed by many countries on Canadian and American beef because of concerns over bovine spongiform encephalopathy (BSE, or mad cow disease) continued to affect meat and livestock markets. Trade had been halted in 2003 after BSE was found in a cow in Canada and in a cow in the United States. A few countries, such as Chile and the Philippines, reopened their markets to some North American beef products in 2005. After lengthy negotiations the U.S. and Japan, a major importer before its 2003 ban, resolved disagreements concerning the safety of American beef. In December the U.S. government announced that the Japanese would again be buying and made a call for other beef importers also to reopen their markets. A complicating factor in the resumption of North American beef exports was the appearance of new cases of BSE. Canada reported two cases in January, and in June the U.S. reported one case in Texas. Early in the year the U.S. had agreed to relax its ban on importing Canadian livestock by allowing imports of cattle under 30 months of age effective March 7, but a federal injunction delayed the action until July.

      In October there was an outbreak of foot-and-mouth disease in the Brazilian state of Mato Grosso do Sul. As a result, cattle that showed signs of infection were destroyed, and trade restrictions on Brazilian beef were imposed. Brazil had been one of the world's leading exporters of beef. Some countries refused imports from Brazil completely, but others banned only beef from the regions where the disease had been found.

Agricultural Policy

Trade Disputes.

      There were numerous trade disputes during the year. In 1998 the United States and Canada had won the right from the World Trade Organization (WTO) to impose sanctions on the European Union for its ban on hormone-treated beef. In 2005 the EU claimed that it was in compliance with the WTO ruling, and it challenged the U.S. and Canadian sanctions before a WTO panel. Among other disputes, Canada and the United States argued over trade in wheat, corn (maize), and hogs. The U.S. had imposed countervailing duties on wheat and hogs, but the wheat duties were partially overturned by administrators of the North American Free Trade Agreement, and the duties imposed on hogs were abolished. Canada moved to impose duties on American corn because of U.S. agricultural policies. In 2005 the U.S. changed the way it set fees for its export credit guarantee program after the WTO's ruling in a case in which Brazil had challenged export programs for U.S. cotton. EU policy rules for trade in sugar had been an irritant in global markets. The WTO ruled that subsidized sugar exports by the EU exceeded the allowed limits. The EU proposed to reduce the amount of subsidized sugar exported by simplifying production quotas and reducing price guarantees 39% by 2009. Preferential access to the European market for former European colonies would also be reduced. Other decisions made by the WTO included a ruling against Mexican duties on high-fructose corn syrup and a ruling against the latest efforts by the EU to rectify its banana-import policies, against which the WTO had originally ruled in 1997 after Latin American countries and the United States filed a complaint.

Doha Development Round.

      The Doha Development Round of trade talks under the auspices of the WTO struggled to make headway. During the first half of 2005, there was little progress made over the major issues under negotiation—market access, export subsidies, and domestic price support. The Cairns Group of nonsubsidizing exporters and the G-20 group of less-developed nations pressured the U.S., the EU, and Japan for concessions on policies concerning agricultural commodities. In September the U.S. proposed large reductions in U.S. agricultural supports if the Europeans and Japanese would also make bold reforms. The U.S. proposal went beyond what the Japanese could agree to, and the EU countered with a less-ambitious proposal, which triggered a negative response from France. At the December meeting of the WTO in Hong Kong, the Doha Development Round was kept moving with the goal of negotiating additional trade liberalization by April 30, 2006. Developed countries made an agreement to end export subsidies by 2013, which laid the basis for resolving complaints by West African nations that had limited progress in the negotiations. The agreement also called for imports of virtually all goods exported by the least-developed countries to be duty free by 2008.

Philip L. Paarlberg

Fisheries

      Figures published by the UN Food and Agriculture Organization indicated that in 2003, the latest year for which figures were available, the total production for the world's capture fisheries decreased by 3.09% to 90,219,746 metric tons from the 2002 figure of 93,003,701 metric tons. Marine capture fisheries recorded a 3.69% decrease of 2,997,988 metric tons to a total of 81,277,992 metric tons, while freshwater capture fisheries recorded a 2.39% increase of 214,033 metric tons to 8,941,754 metric tons. Total world production from aquaculture increased by 2,514,570 metric tons during 2003 to reach 42,304,141 metric tons. As a result, the world supply of fish showed an overall decrease of only 465,338 metric tons from the 2002 figure to the 2003 total of 132,523,887 metric tons.

  The overall drop of 2.99 million metric tons in the total marine capture fisheries production during 2003 was accounted for by a 3.5-million-metric-ton fall in the anchoveta (Peruvian anchovy) catch, which also resulted in a 43.97% decrease in the total catch recorded for Peru. Following a 25.66% increase in the anchoveta catch in 2002, this subsequent decrease in 2003 confirmed the immense variability in biomass from year to year that always affected Peru's fisheries. (For Catch Trends for the Top Five Caught Fish Species, 1994–2003, see Graph—>.) The effect of this variability was mirrored in the corresponding production trends for Peru and Chile, which were reliant on the anchoveta as their main catch. (For Production Trends for the Top 10 Catching Nations, 1994–2003, seeGraph—>.)

       China continued as the world's leading fishing nation and recorded a small 1.21% increase in total catch to reach 16,775,653 metric tons in 2003. This figure was more than 10 million metric tons greater than its nearest rival but paled against China's massive capability from aquaculture, which in 2003 produced 28,892,005 metric tons. Although Peru remained in second position among catching nations, the 8.9% catch increase the country recorded in 2002 was followed by a decrease of 43.97% to 6,089,660 metric tons in 2003; this reversal was due entirely to the drop in the anchoveta catch. The only change in position within the top 10 producing nations was India's rise into sixth position, which resulted from the reduction in Chile's anchoveta catch.

      Among the major species of fish caught during 2003, anchoveta remained the leading species, with 6,202,447 metric tons landed, a 56.43% decline from 2002. Two other species among the top 10 caught showed marginal decreases, while 7 recorded increases in the tonnage landed. Capelin (a pelagic species, like anchoveta) dropped out of the top 10, from 4th position in 2002 to 11th in 2003, with a 72.52% decrease to 1,148,106 metric tons.

Martin J. Gill

▪ 2005

Introduction

World Markets

      World agricultural markets in 2004 reflected crop supplies in 2003 and 2004. Early 2004 prices were strong because 2003 global crop production was low. The 2003–04 world grain production was 1,847,000,000 metric tons, with oilseed production at 336,730,000 metric tons. Larger 2004 production resulted in lower crop prices in the fall. Global grain production in the 2004–05 crop year rose to 2,005,240,000 metric tons, and oilseed production was 390,540,000 metric tons. Between spring and fall oilseed prices halved and grain prices fell roughly one-third.

Food Emergencies.

      Chronic hunger continued to afflict 850 million people, and several countries faced food crises. North Korea again required external food assistance. Several African states had difficulties owing to political discord or insurgencies. In Zimbabwe, for example, the government's land-reform program contributed to declining farm output, and in northern Uganda fighting caused farmers to abandon crops and flee to refugee camps. A food crisis accompanied the ethnic and political violence in the Darfur region of The Sudan. Rainfall was sparse and infrequent, so crops suffered. Lack of support by the Sudanese government hindered international relief efforts and left millions in jeopardy. The World Food Programme was able to feed 1.3 million Sudanese in September but reached only 1.1 million in October because many people remained in areas inaccessible to relief efforts. Expectations were for continued need by 1.45 million refugees in 2005 and by perhaps 2.8 million Darfuri villagers under threat of starvation until the 2005 crops could be harvested. Meanwhile, Ethiopia tried to combat chronic hunger created by earlier civil strife and drought by relocating farmers from the highlands to more productive areas.

Locusts.

      Just as a several-year-long drought in western Africa seemed to be ending with the welcome arrival of seasonal rains, a new danger appeared in the form of swarms of locusts, the worst in the area in 15 years. Having risen in North Africa as early as late 2003, billions of locusts swept westward in July and August 2004 across the Sahel and into Chad, northern Nigeria, Mali, Mauritania, and Senegal, even invading the Canary Islands by the end of November. Mauritania, the country worst hit, reported that about half its cereal crop had been lost. The UN Food and Agriculture Organization (FAO) estimated in September that 2.5 million rural households could suffer food shortages, and the agency asked for $100 million in international aid to combat the infestation. Locusts swarmed in the eastern Mediterranean region in November as well, but countries such as Egypt, Israel, and Cyprus were better equipped than the West African states to combat the insects, and crop losses there were relatively small.

Agricultural Subsidies.

      Agricultural subsidies distort agricultural production and international trade. In 2003 the European Union spent $121 billion to support agriculture, about 25% of the value of gross farm income; the United States spent $39 billion (20%); and Japan, South Korea, Norway, and Switzerland all paid subsidies that represented well over half of farm income. Such subsidies hurt farmers in less-developed countries (LDCs) and other places with lower-level farm subsidies.

       World Trade Organization (WTO) rulings in 2004 were expected to affect global farm-subsidy programs as well as the outcome of current trade negotiations. The anger of LDCs at U.S. support for cotton farmers had been one reason for the collapse of world trade talks in 2003. In April, in a mixed ruling on a complaint filed by Brazil against U.S. cotton subsidies, the WTO supported the use by the U.S. of direct, decoupled payments and some export credit-guarantee programs but found other guarantees and safety-net price-support programs to be in violation of WTO rules. Since the U.S. supported grains and oilseeds with similar programs, it was feared that the WTO ruling might affect those commodities as well. Another flash point, EU support to sugar producers, was found to violate WTO rules because the subsidies exceeded allowable limits. Excess European sugar would lower world prices and put more efficient producers at a disadvantage.

World Trade Organization Negotiations.

      In August negotiators in the Doha Development Round of WTO talks reached a framework agreement that rejuvenated the talks to liberalize global agricultural markets that had collapsed in 2003. Under the framework, countries pledged to eliminate export subsidies, lower domestic subsidies, expand market access, and impose discipline on state trading and export-credit programs. Developed nations agreed to cut farm subsidies by 20% in the year following an agreement—a promise that could turn out to be less generous than it appeared, because the cuts would be measured from the maximum allowed farm subsidy, not from actual subsidy outlays. Tariffs would be substantially reduced by all but the poorest nations, and LDCs would be given longer to reduce tariffs and could have special rules and safeguards for sensitive commodities. The Doha round was to have been completed by Jan. 1, 2005, but that deadline clearly would not be met.

Regional Trade Agreements.

      The United States signed regional free-trade accords with Central American countries and with Australia. In the Central American case, trade in horticultural products was liberalized and trade in sugar was expanded somewhat. Beef, dairy, and sugar were sensitive products in Australian-U.S. trade. Under the agreement between those two countries, scheduled to enter into force on Jan. 1, 2005, U.S. beef duties were to be phased out over 18 years; for dairy products the U.S. would not change its above-quota tariff, but the quota was expanded slightly. Australian access to the U.S. sugar market was unchanged.

Livestock Diseases.

      Outbreaks of livestock disease disrupted global livestock trade again in 2004. Avian influenza outbreaks were reported in January and February in Cambodia, China, Japan, South Korea, Laos, Thailand, and Vietnam, and there were some cases in which the disease had infected humans. Millions of birds were destroyed, and poultry trade originating in areas with the disease was halted. Cases of avian influenza were found in some U.S. states in February, but most foreign importers banned only imports originating from those regions reporting diseased birds. New outbreaks occurred during the summer in China, Thailand, and Vietnam; by year's end more than 30 human deaths from bird flu had been reported.

      After one cow in Washington state was diagnosed with bovine spongiform encephalopathy (BSE, or mad cow disease) in late December 2003, most countries banned imports of U.S. cattle and beef. During 2004 the ban affected global meat markets as importing countries shifted purchases to other beef exporters, such as Australia, or increased purchases of other meats, especially pork. U.S. pork exports rose sharply. Once it had been determined that no other American cattle had BSE, the U.S. sought to restart its beef exports. Shipments to Mexico resumed relatively soon, but trade with other major beef-importing nations remained banned until late in 2004, when framework agreements for the resumption of U.S. beef exports to Japan, South Korea, and Taiwan were adopted. One stumbling block for resuming trade was testing rules; Japan, for example, tested every bovine slaughtered. The U.S. argued that BSE had never been detected in animals younger than 30 months and that testing every animal was costly and did not increase safety. The two sides compromised by agreeing that testing animals under 20 months old was not necessary. Under the shadow of the discovery of animals with BSE in the summer of 2003, Canada's border with the United States remained closed to live cattle, beef from cattle over 30 months of age, and beef containing bone or specified risk material. Limited imports from Canada were due to resume in March 2005. The U.S. was Canada's major beef market.

Soybean Rust.

      In November Asian soybean rust (Phakopsora pachyrhizi), a fungal disease that can devastate crop yields, was identified in nine southern U.S. states; Argentina reported it in December. Other major soybean exporters in South America had soybean rust, but the U.S. had theretofore been rust-free. It was believed that the rust spores had been blown to the U.S. from South America by hurricanes.

Genetically Modified Food.

      Genetically modified (GM) crops and foods continued to be resisted in many countries, especially in Europe. In May a six-year moratorium on imports of genetically modified corn (maize) into Europe ended, but cultivation of GM crops in Europe still faced obstacles. British studies concluded that GM maize, sugar beets, and rapeseed did not threaten the environment and were safe, but the European Union had so far not approved their cultivation. Monsanto Co. put on hold plans to sell GM wheat for production in the United States because of fears that the output could not be sold in Europe or Japan. In Brazil (the second largest producer of soybeans, after the U.S.) legislation that would allow the growing of GM soybeans passed the Senate and was being considered by the lower house. China was considering permitting production of GM rice in order to reduce pesticide use.

Philip L. Paarlberg

Fisheries

      Figures published in 2004 by the UN Food and Agriculture Organization (FAO) indicated that in 2002, the latest year for which figures were available, the total production for the world's capture fisheries increased slightly, by 0.35%, from the 2001 figure of 92,862,087 metric tons to a total of 93,190,654 metric tons. Marine capture fisheries recorded a 0.34% increase of 288,492 metric tons over the 2001 figure to 84,452,487 metric tons, while freshwater capture fisheries recorded a 0.46% increase of 40,075 metric tons to 8,738,167 metric tons.

      The overall world fish catch during 2002 totaled 132,989,225 metric tons, up 2.3 million metric tons over 2001. Aquaculture production accounted for almost all of the increase, with a total production in 2002 of 39,789,571 metric tons, compared with 37,789,095 metric tons in 2001.

  China continued as the world's leading fishing nation, although its total output for 2002 remained almost static at 16,553,144 metric tons. Peru (again in second place) and Chile (in sixth) recorded significant increases in their catch during 2002, with 8.91% and 11.11% increases, respectively. The U.S. retained third position in the list of top producing nations, but Indonesia overtook Japan in fourth with a 5.15% increase as the total Japanese catch continued its decade-long decline. Russia, which had recorded a year-on-year decline in total catch since 1996, registered a further 12.26% decrease to 3,232,295 metric tons. (For Production Trends for the Top 10 Catching Nations, 1993–2002, see Graph—>.)

      Among the leading fish species caught during 2002, number one by far was the anchoveta (Peruvian anchovy), which is fished commercially off the Pacific coast of South America and is subject to huge variations in the numbers of fish reaching maturity each year. The latest figures showed that the quantity of anchoveta caught during 2002 increased by 25.66% over the previous year to 9,702,614 metric tons and was the main explanation for the increases in total catch recorded by Peru and Chile.

 The Alaska pollock catch dropped by 18.44% to 2,654,854 metric tons. It was announced during 2004 that following a three-year assessment process, the Bering Sea/Aleutian Islands pollock fishery had been awarded certification to the Marine Stewardship Council's standards for sustainable fisheries. This was regarded as a visible acknowledgement of the growing awareness of the need to manage commercial fisheries in a responsible and sustainable way. Other species that recorded a significant reduction in landings included Chilean jack mackerel (43.36%), which dropped from third to seventh in the list of leading species caught, blue whiting (13.72%), and chub mackerel (23.26%). Skipjack tuna moved up to third position in 2002 from sixth the previous year as a result of a 10.64% increase, while capelin rose from ninth to fourth, courtesy of a 14.84% boost. (For Catch Trends for the Top Five Caught Fish Species, 1993–2002, see Graph—>.)

Martin J. Gill

▪ 2004

Introduction

Agricultural Production and Aid

Food Production.

      In 2003 global food production recovered from its 2002 drop but remained below 2001 levels. Severe weather conditions throughout the world hurt crops. At 883,780,000 metric tons, world coarse grain production for the 2003 crop was above the 869,910,000 metric tons of the 2002 crop but below the 892,420,000 metric tons of 2001. World rice production, at 391,300,000 metric tons (milled basis), was below the 398,600,000 metric tons of 2001 but above the 380,090,000 metric tons produced in 2002. World wheat output, at 550,510,000 metric tons, was below the 566,840,000 metric tons of 2002 and considerably below 2001's production of 581,860,000 metric tons. World oilseed production grew to 344,930,000 metric tons versus 328,960,000 metric tons in 2002 and 324,900,000 metric tons in 2001. That increase occurred despite the dry weather that reduced the U.S. soybean crop. World beef production in 2003 was 49,789,000 metric tons, slightly below the 51,033,000 metric tons of 2002 but above the 2001 level. Global pork production expanded from 86,030,000 metric tons in 2002 to 87,204,000 metric tons, while poultry meat production, at 52,833,000 metric tons, was unchanged from the previous year.

      With global trade in crops remaining near recent levels, global ending stocks fell and prices were strong. Global wheat stocks fell from 201,110,000 metric tons at the 2001 harvest to 127,930,000 metric tons, the tightest in recent years. Global coarse grains stocks, which were 176,540,000 in crop year 2001, fell to 105,940,000 metric tons. Rice and oilseed stocks were also lower. As a result, prices strengthened, especially compared with the low prices of the late 1990s, 2000, and 2001.

Food Aid.

      Food assistance was again critical for some regions; southern and eastern Africa, especially, struggled with acute shortages. The 2002 crops in southern Africa were sharply reduced by inadequate precipitation, and until the 2003 crops were harvested, millions of people depended on international assistance. Drought in East Africa and political turmoil in Zimbabwe contributed to the hardships, as did the spread of HIV/AIDS in the region, which caused high death rates among the economically active population. North Korea was again unable to provide adequate food for its population. Damaged infrastructure and poor security in rural areas hindered food production and delivery in Afghanistan, and the war and its aftermath in Iraq damaged agricultural production and complicated deliveries of international food assistance.

Agricultural Policy

International Trade Negotiations.

      The ongoing World Trade Organization (WTO) talks, which had been launched in Doha, Qatar, in 2001, were called the Doha Development Round because they were intended to assist less-developed countries (LDCs) in conducting trade, gaining access to markets in developed countries, and reducing trade-distorting policies of developed nations. The delegates hoped by the end of March to set a framework for a full ministerial meeting in Cancún, Mex., in September. Initial proposals by member states, however, revealed a great disparity of views on reforms. Compromise proved impossible, and the March deadline passed. A measure of agreement between the European Union and the United States reached in August revived hopes that negotiations in Cancún would succeed, but the LDCs were suspicious that the U.S. and the EU were intent on excluding them from the process.

      The ministers who met in Cancún in September were unable to move forward. The Americans and the Europeans wanted a loosening of government purchasing, services, and investment as well as the establishment of rules to facilitate trade and regulate competition in exchange for liberalizing their agricultural policies. The LDCs sought specific concessions, including the elimination of export and domestic subsidies to farmers in developed countries and improved access to markets in the developed countries. The ministers adjourned without agreement but with the hope that the process might be rekindled in early 2004.

      Following the collapse of the WTO negotiations, U.S. trade policy concentrated on expanding regional and bilateral trade agreements. Negotiations with several states, including Morocco and Australia, were under way, and a trade agreement with four Latin American countries was reached in mid-December. The Free Trade Area of the Americas was one regional association of interest to the U.S., but FTAA talks in November stalled partly over agricultural issues. Brazil, one of the leaders of the group that opposed the U.S. stand at Cancún, wanted agricultural issues to be prominent in the FTAA talks, while the U.S. sought to have agriculture covered in the WTO negotiations.

European Agricultural Policy.

      In June the EU made some changes in its Common Agricultural Policy (CAP). Beginning in 2005, farm subsidies would be partially decoupled; that is, subsidies would no longer be tied to actual farm production. The extent of decoupling would vary by commodity. Support would be cut for producers of butter and powdered milk but not for grain producers. This reform was intended to smooth the way for EU enlargement in 2004. Agricultural policy had been a stumbling block for EU expansion, because most potential entrants had large agricultural sectors.

Genetically Modified (GM) Food.

      The EU's moratorium on approvals of genetically modified food products continued to be an issue. In May the U.S., Argentina, Canada, and Egypt went before the WTO to challenge the legality of the moratorium. In July the EU adopted new rules on labeling and traceability of food containing GM material in July. The new rules presented an opportunity to end the moratorium, but they did not defuse the trade dispute because they expanded the scope of previous labeling requirements. Under the new rules food containing more than 0.9% GM material would have to be labeled, and processed products made from GM plants would have to be labeled. Countries that exported GM crops and food products complained of continued discrimination and pressed their case at the WTO.

      Meanwhile, global production of GM crops expanded. Most of the soybeans grown in the U.S. and Argentina and a large proportion of U.S. corn (maize) were genetically modified. Farmers in Canada, China, India, Indonesia, and South Africa grew GM crops ranging from soybeans and canola to cotton. At the same time, GM research continued on vitamin-enriched rice, virus-resistant sweet potatoes, drought-resistant barley, and protein-enriched potatoes, all important crops for LDCs. Brazil, which had banned GM soybeans, seemed to be vacillating: authorities there allowed the planting and sale of GM soybeans for one year.

Livestock Disease.

      Animal diseases were again in the news in 2003. In February a man in Hong Kong died from avian influenza after visiting relatives in China proper. Also in February avian influenza was detected in The Netherlands, and some 20% of that nation's poultry was destroyed; production in neighbouring Belgium and Germany was also affected. In March Japan temporarily banned U.S. poultry sales following a report of an outbreak of the disease in Connecticut. Later in the year incidences of exotic Newcastle disease (END) in the western U.S. resulted in the placement of affected states under quarantine.

      The beef market was disrupted with the discovery in May of a Canadian cow with bovine spongiform encephalopathy (BSE, or mad cow disease). Canadian exports of cattle and beef and other ruminant products were banned. This devastated the Canadian beef and cattle industry insofar as exports, mostly to the U.S., accounted for more than half of the industry's output. Canadian authorities traced the sick animal's history and tested other animals but found no additional cases. In August the U.S. allowed controlled imports of Canadian beef and ruminant products, although trade restrictions remained throughout 2003. In late December a cow in Washington state tested positive for BSE, the first case ever in the U.S. Beef prices and stock prices for fast-food restaurants plunged as many countries banned American beef and domestic consumers showed some nervousness. On December 30 U.S. Department of Agriculture officials sought to shore up confidence in American beef production by banning the use as food or feed additives of all animals that were too old or too sick to stand up and by inaugurating a tracking system for all American slaughter cattle.

Country of Origin Labeling.

      Controversy continued over country of origin labeling (COOL) mandated by the 2002 U.S. farm bill and scheduled to start in September 2004. Advocates said that COOL would certify the safety of meat products and boost demand; opponents argued that the system was too costly, violated world trade rules, and would not increase demand. Decisions on the implementation of COOL were deferred until 2004.

Philip L. Paarlberg

Fisheries

      The UN Food and Agriculture Organization (FAO) indicated that in 2001, the latest year for which figures were available, the total production for the world's capture fisheries decreased by 3.34% from the 2000 figure to a total of 92,356,034 metric tons. The marine capture fisheries recorded a fall of 2,987,823 metric tons to 83,663,276 metric tons, while the output from freshwater fisheries declined 95,963 metric tons to 8,692,758 metric tons. These results overturned the increases recorded during 2000.

      Despite this decrease of nearly 2.5 million metric tons, the overall world supply of fish during 2001 remained stable at 130.2 million metric tons, with aquaculture production rising by 2.4 million metric tons to offset the capture fishery falloff. It was estimated that about 31 million metric tons, almost all from industrial marine capture fisheries, were used for reduction to fish meal and fish oil products.

 The major reason for the decline in marine fishery production was the continuing fluctuation in the catch of anchoveta (Peruvian anchovy). In 2000 the anchoveta catch recorded a 29.27% increase, while the total production for 2001 declined by 4.06 million metric tons (36.03%), although it remained the top species in terms of total tonnage caught. (See Graph—>.) These fluctuations in the catch of anchoveta were closely related to changing natural and environmental conditions affecting the seas off the coasts of Peru and Chile, most notably El Niño. Excluding anchoveta, global capture production had remained relatively stable since 1995. Of the other top species caught, Chilean jack mackerel jumped from sixth place to third with an increase of 968,340 metric tons (62.86%) over the 2000 catch, while Atlantic herring recorded a 427,708-metric-ton (17.6%) decrease in catch and fell to fourth. Of those species outside the top five caught, blue whiting, chub mackerel, and capelin showed significant increases.

      The leading fishing nation was again China, with total production of 16,529,389 metric tons, a small 2.7% decrease from the 2000 figure. There was an ongoing debate over the accuracy of the figures reported for China's output of both capture fishery and aquaculture production. Many experts believed that China's figures should be listed separately; the FAO was criticized during 2002 for reportedly overestimating significantly China's capture production in the organization's annual fishery statistics.

 Peru remained the second top producing nation, despite a decline in anchoveta landings that resulted in the total catch's dropping by 2,670,000 million metric tons (25.07%) to 7,986,103 metric tons in 2001. The U.S., Indonesia, and India recorded increases in production, while Japan, Chile, and Russia declined in the total tonnage of fish landed and fell in the relative rankings. (See Graph—>.) Outside the top 10 producing nations, the performances of Morocco, which had a 20.8% increase in catch to 1,083,276 metric tons, and South Africa, whose fish catch rose by 17.4% to 755,345 metric tons, were worthy of note.

Martin J. Gill

▪ 2003

Introduction

National and International Issues

Food Production.

      The year 2002 saw mounting concerns over global food supplies as harvests declined in many areas of the world. North America, Africa, and Australia experienced drought that significantly reduced crop output. Also contributing to the production decline in Africa was continued political instability. Total grain output in the United States fell 25,900,000 metric tons, or 8%, owing to drought. Output in other countries fell 52,070,000 metric tons, or 2.6%. With global consumption nearly constant, ending stocks fell owing to the lower output. World output of oilseeds fell slightly, less than 1%, because the reduction in U.S. output was offset by increases elsewhere. World meat output rose 2.9% in 2002. The tightening global supply-and-demand balance caused strong price increases for major agricultural commodities.

Food Aid.

      By the early summer of 2002, concerns about the possibility of famine for over 14 million people in southern Africa had emerged. The countries most seriously affected included Zambia, Zimbabwe, Malawi, Lesotho, Swaziland, and Mozambique. By fall 2002 roughly nine million more people in Ethiopia and Eritrea were forecast to need food assistance from external sources. While drought was a factor in all countries, other forces contributed. In much of the region, a shortage of land had led to overuse and degradation of the soil. While fertilizer could compensate for the loss in soil productivity, most small farmers could not afford to buy fertilizer at commercial prices, and international donors had reduced their donations of fertilizer in recent years. Political issues often magnified the food crisis. In Zimbabwe land reform directed at large commercial white-owned farms contributed to the decline in production, while restricted access to food by members of the political opposition worsened the food crisis. Malawi's government was accused of having sold its national emergency grain stock prior to the crisis. Poor transportation and marketing systems compounded the effects of drought by slowing delivery of food aid and, over the longer run, critical agricultural inputs such as seed and fertilizers.

      Food assistance was also slowed in southern Africa by concerns that American grain offered for food relief contained genetically modified (GM) corn (maize). Thousands of tons of aid were initially rejected or locked away from the starving population. Recipient countries were further concerned that GM corn would be retained for seed and thereby introduce manipulated genes into future crops, a situation that would hamper exports to Europe, where there was resistance to importing GM corn. Eventually, Mozambique and Zimbabwe accepted offers by donor countries to grind the corn before distribution so that it could not be used as seed, but Zambia continued to resist the aid on the grounds that GM corn jeopardized the safety of the population. In Angola continued internal strife threatened an estimated half million people as refugees were forced to abandon their fields.

      Other countries faced famine as well. North Korea continued to require food assistance despite domestic reforms to raise prices and salaries sharply. The World Food Programme had been feeding six million people in North Korea and generally enjoyed access to most regions of the country. Especially toward the end of the year, concerns over North Korea's nuclear-weapons-development program increased the reluctance of donor agencies to provide food aid. U.S. pursuit of its “war on terrorism” on the territory of Afghanistan affected the return to normalcy of agricultural production, so the country still had to rely on food assistance from the international community.

International Organizations.

      The World Food Summit organized by the United Nations Food and Agriculture Organization (FAO) was held in Rome, June 10-13, with the purpose of renewing the world's commitment to reduce hunger. Delegates approved a measure reaffirming a 1996 resolution to cut the number of hungry in the world by more than half by 2015. Delegates from less-developed countries were critical of subsidization of farmers in developed countries for depressing world commodity prices. Developed countries also came under fire for maintaining import barriers on agricultural products that denied farmers in less-developed areas access to richer markets. Calls were made to increase agricultural aid from the existing $11 billion to $24 billion. Another criticism that was voiced was that most industrialized countries had not sent top leaders to the summit (only Spain and host Italy were represented by their prime ministers) and did not seem to take the meeting very seriously.

      Multilateral trade liberalization negotiations launched in Doha, Qatar, in November 2001 continued through 2002, and some progress was registered. In August the U.S. Congress granted Pres. George W. Bush trade promotion authority (TPA). The president was again given the go-ahead to negotiate trade deals subject to a “yes-no” vote in Congress. The president's TPA had expired eight years earlier, and the U.S. negotiating position was weakened because other states were reluctant to negotiate with the president when Congress could subsequently change any agreement he approved.

      During 2002 several countries presented their initial negotiating positions for the Doha Round. The U.S. proposed cutting tariffs on agricultural products to an average of 15%, expanding market access commitments by 20%, and reducing domestic farm subsidies to no more than 5% of the value of production. The U.S. also sought elimination of export subsidies. The Cairns Group, a coalition of 17 agricultural exporting countries with little governmental farm support, introduced a proposal that asked for larger tariff cuts and greater market access plus elimination of trade-distorting domestic support. Proposals by less-developed countries focused on more access to developed-country markets. The Japanese proposal called for less-ambitious changes from existing WTO trade rules. The European Union (EU) did not formally make a proposal in 2002 but was judged likely to oppose ending export subsidies and domestic support in its position statement in 2003. The EU sought to restrict imports of GM foods until they were shown to be safe for consumers and the environment. The exporting states, notably the U.S., opposed restrictions on the movement of GM foods.

Agricultural Policy.

      Several important changes in agricultural policy occurred in 2002. The U.S. adopted new multiyear agricultural legislation formalizing the countercycle payments to farm support that had been used to supplement governmental support to American farmers since world commodity prices fell in the late 1990s. Earlier, Congress had enacted annual supplemental farm spending. The new legislation set formulas for calculating levels of support through 2007. New environmental programs were authorized in which farmers would qualify for additional subsidies for adopting environmentally friendly farming practices. Because the forecasted expenditure in support of the new laws was higher than in the past (not taking the supplemental payments into account), the new U.S. laws were seen by many to be expanding subsidy payments to American farmers and thus inconsistent with the position stated to the WTO. The U.S. came in for heavy criticism abroad.

      The U.S. government also continued to promote regional trade agreements. In December a free-trade agreement was signed with Chile, the first step on a path to expand the North American Free Trade Agreement (NAFTA) into a Free Trade Area of the Americas (FTAA). About three-quarters of U.S.-Chilean agricultural trade would be tariff-free in 4 years, with all barriers gone after 12 years.

      In July cuts in EU farm subsidies were proposed, and it was suggested that remaining subsidies be changed to production-neutral payments and tied to environmental objectives. That proposal generated intense resistance from farm groups. During the fall Germany and France agreed on multiyear funding of agricultural policy at current levels, an agreement that paved the way for the EU to offer membership to 10 candidate states from Central Europe in December. EU environmental ministers also hammered out rules for trade in GM foods, agreeing that at point of departure shippers must provide a list of all GM organisms in the food. Products containing more than 0.9% genetically modified material would require labels. Extensive traceability rules for food products containing GM material were also proposed. The proposals were forwarded to the European Parliament for approval.

Food Quality, Safety, and Labeling.

      Bipartisan legislation aimed at protecting the country's food supply that had been quickly drawn up following the terrorist attacks and anthrax outbreaks in the U.S. in 2001 was apparently bogged down in House-Senate committee in 2002. The proposals would have increased the government inspections of food imports, required American food manufacturers to register with the federal government, given the FDA powers to halt and inspect food shipments, and allowed federal agents to inspect food company records. Not surprisingly, food manufacturers and retailers groups opposed such provisions, claiming that guaranteeing the security of the country's food supply from terrorist tampering could be accomplished more efficiently in other ways that did not involve huge increases in federal power.

 Capping a 12-year campaign, environmentalists, organic farmers, chefs, and grocers succeeded in enacting national standards for organic foods in October. The U.S. Department of Agriculture adopted new regulations and labeling criteria, including a USDA Organic Seal of Approval (see graphic—>). According to the USDA, “organic” means the product is free of artificial flavours, colours, and preservatives, artificial fertilizers and sewage sludge, synthetic pesticides, irradiation, and genetically engineered ingredients. “Organic” is a more rigorous designation than “Natural,” which does not exclude pesticides, irradiation, and GM processes. Three levels of organic labels were instituted. For a product to be labeled “100% Organic,” every ingredient (except water and salt) must be organic. “Organic” means that 95% of the ingredients must be organic. A product labeled “Made with organic ingredients” must have at least 70% organic components, but the “USDA Organic” seal may not be used.

      Earlier in the year Sen. Tom Harkin, a Democrat from Iowa and chair of the Senate Agriculture Committee, had inserted language into the Senate's version of the farm bill that would, as he said, “more clearly define pasteurization,” the process that destroys bacteria in food, traditionally through heating. Henceforth, “pasteurization” would be understood to include irradiation, notably of beef, a process that was called “cold pasteurization.” Sale of irradiated foods, including meats, had been approved by the FDA in 2000, but various public interest groups were resisting implementation and expansion of food irradiation. It was not clear if Harkin's proposals would also enjoin the federal government from banning irradiated foods in school lunch programs and similar public projects.

      The McDonald's Corp. announced in March that it planned to settle a series of lawsuits brought by vegetarian and religious organizations. These groups claimed that their members had been misled by McDonald's announcement that in 1990 they had switched to using vegetable oils in the preparation of their french fries, when in fact the fry oils still contained some beef tallow. The fast-food giant said it would pay out $6 million to vegetarian groups and another $4 million to organizations of Hindus and Sikhs, who do not eat beef, as well as make individual monetary settlements with other claimants. In February the U.S. Drug Enforcement Agency extended the grace period given to food manufacturers to dispose of any of their products that included hemp. In October 2001 the DEA had banned food products containing tetrahydrocannabinol (THC), the active ingredient in hemp (and its relative, marijuana). THC is found in hemp seed oil, which is used in the preparation of snack foods.

      Greece won a significant concession when the EU Commission ruled in October that henceforth only the raw-milk sheep's cheese made in Greece could be labeled and sold as “feta.” A number of other producers in southeastern Europe and elsewhere—notably Denmark—also marketed locally made cheese as “feta,” and these countries had hoped that “feta” would be ruled a generic product name, such as “cheddar” and “brie.” Ironically, although Greece was the world's largest producer of feta, nearly all of its output was consumed within Greece.

Personalities.

      A Cuban-born agricultural researcher, Pedro Sanchez, was named the recipient of the World Food Prize, an award valued at $250,000 that was established in 1986 by Norman Borlaug, the prime mover of the Green Revolution and recipient of the 1970 Nobel Prize for Peace. Sanchez had developed methods for improving the yield of poor croplands, especially in South America and Africa, by using low-tech, inexpensive techniques appropriate to the local situations. His schemes could replace the “slash-and-burn” style of agriculture that was widespread in those areas and that had resulted in the destruction of forests and the impoverishment of the soils. A former professor of soil science, Sanchez had served as director of the International Center for Research in Agroforestry in Nairobi, Kenya, and was chairman of the United Nations Task Force on World Hunger. Sanchez was preparing to accept a new position as director of tropical agriculture at the Earth Institute at Columbia University, New York City.

Global Markets in 2002

Grains, Oilseeds, and Livestock.

      World supplies of grain and oilseed crops fell in 2002 owing to dryness in many regions. As a result, commodity prices were higher than they had been in recent years. World crop production in the 2002 crop year was 1,810,000,000 metric tons, compared with 1,864,000,000 metric tons for crop year 2001.

      World wheat production fell by more than 10 million metric tons to 569 million. Drought in the U.S. and Canada plus increasing crop area devoted to corn and oilseeds caused a 17.4% drop in U.S. and 23.8% in Canadian wheat output. Dryness also affected Southern Hemisphere wheat crops, with production in Argentina 13% less than the previous year and Australian output down more than 56%. EU output increased from 92 million to 104 million metric tons, the greatest growth in any area. World wheat trade in the 2002 crop year was 5% lower, the increase in demand being satisfied by reductions in ending stocks. The tighter global supply generated higher prices, and crop year 2002 wheat prices soared 37% above 2001 prices.

      World output of coarse grains fell from 887.5 million to 861 million metric tons. Most of that decrease was attributable to the 6.3% drop in the U.S. crop, 16.7 million metric tons. By weight the Canadian crop fell less—2.8 million metric tons—but this represented a decline of 12.5%. China and the countries of the former Soviet Union showed improved production, 11 million and 26 million metric tons, respectively. Coarse grains were planted late in the year in the Southern Hemisphere and harvested early in the following year. Low precipitation reduced expectations for the 2003 harvest; forecasts for Australia were halved. World trade in coarse grains remained nearly unchanged by balancing demand and ending stocks, which totaled 144 million metric tons, compared with 174 million for crop year 2001. World prices rose 22% as supplies fell.

      World rice output was about 17 million metric tons (milled basis)—or 4.2%—lower for the year. Most of the decline—14 million metric tons—occurred in India, where a below-normal crop followed an above-average 2001 crop. World trade rose by 1.6%. Global use fell less than 1%, so ending stocks adjusted by falling from 132 million metric tons to 105 million. Prices remained steady compared with the previous year.

      Global oilseed production was slightly lower in crop year 2002, owing largely to a 7% reduction in the U.S. soybean crop. Increased foreign output, especially in South America, offset the decline in U.S. production. Ending stock reduction for oilseeds allowed slightly expanded meal and vegetable oil production and trade. The average annual soybean price strengthened by about 24%.

      Global beef and pork output rose slightly—2.8%—while trade increased to allow a 7.4% increase in consumption. Beginning in late 2001 Japan, the world's major beef importer, experienced outbreaks of bovine spongiform encephalopathy (BSE) in four animals, and consumers reacted by sharply reducing beef consumption. During 2002, when the “mad-cow” disease did not spread, the government removed the infected cattle; efforts to convince Japanese consumers of the safety of imported beef met with some success, and beef consumption again began to rise. Meanwhile, under threat of punitive fines, France lifted the ban on purchases of British beef that it had imposed in 1996 during the BSE crisis in Great Britain. The U.K. was also declared free of foot-and-mouth disease in January, and exports of British sheep and goats resumed in February.

      Poultry meat output was up 3% for the year, although trade in poultry meat reversed its recent growth trend and fell to six million tons, a drop of 3.3%. World milk production rose by 1.4%.

Tropical Products.

      World sugar production in 2002–03 was 139 million metric tons, 5 million above 2001–02. Brazilian output continued to expand, and EU output recovered from the previous year's low. China and Russia, both major import markets, enjoyed increased production. World trade was 3.4 million metric tons—7.8%—greater, with Brazil, the EU, and Thailand the largest exporting countries. Because of the increased output from China and Russia, exports grew notably in Africa, the Middle East, and Asia. Consumption continued to expand as it had for the past decade. Sugar prices were weaker than in 2001; the lowest prices were registered early in 2002 but recovered somewhat later.

      World coffee production in 2002–03 was 125 million bags, up 12% from the 2001–02 season, mostly owing to increased output in Brazil. World trade was up roughly 4%, with Brazilian exports 15% above year-earlier levels. The weakness of the Brazilian currency aided the competitiveness of its coffee in international markets. With consumption only 1% greater, coffee prices continued to be low in 2002. A report in September from the U.K.-based charitable organization Oxfam expressed concern about the growing discrepancy between the income of the world's coffee farmers, who received on average 53 cents per kilogram (1 kg = 2.2 lb) for their coffee beans, and the revenues of the coffee companies—especially the five leading multinationals: Procter & Gamble Co., Nestlé, Kraft Foods, Sara Lee Corp., and Tchibo Holding AG—which sold the coffee for an average of $7.92 per kilogram. The problem had been magnified, the report said, by a glut of coffee in the past five years and a corresponding drop of some $4 billion in the value of coffee exports.

      Investors' anxieties over the violence and civil war in Côte d'Ivoire, which grew about 40% of the world's cocoa, were reflected in a rise in cocoa prices of more than 60% over the year, reaching levels not seen since 1986.

Philip L. Paarlberg

Fisheries

 Figures produced by the UN Food and Agriculture Organization indicated that in 2000, the latest year for which figures were available, total production for the world's capture fisheries registered a rise of 1.76% over 1999 to 94,848,674 metric tons. Inland-water production increased by 3.59% to 8,801,070 metric tons, while marine output rose by 1.58% to record a total of 86,047,604 metric tons landed. Aquaculture production rose by 6.39% during the same period to 35,585,111 metric tons. (See Graph—>).

 The leading catching nation was again China, with 16,987,325 metric tons, although this was a 1.47% reduction from the 1999 total of 17,240,032 metric tons caught. Peru, the second largest producer, with 10,658,620 metric tons, reaped the rewards of improved anchoveta (Peruvian anchovy) stocks to achieve a 26.46% increase in landings over the previous year. (See .) Graph—>

      Anchoveta remained the world's top species in terms of volume, recording a 29.27% overall increase to 11,276,357 metric tons landed. (See Table (Catch Trends for the Top 10 Caught Species in 2000).) Capelin, which rose from 13th place in 1999 to 9th in 2000, showed an increase of 60.9% in landings and helped to boost the Icelandic catch to about 1,980,000 metric tons in 2000, a significant 14.2% increase over 1999 that pushed Iceland up to 11th place among catching nations. Problems with the Alaska pollock (walleye pollock) resource in the North Pacific was reflected in a 10% drop in landings during 2000, although it still maintained its place as the second most numerous commercial fish species landed, with 3,024,796 metric tons.

      Total global exports of fish and fish products increased in 2000 to $55.2 billion, a gain of almost 4.5% over 1999. Thailand continued to be the main fish-exporting country, with $4.4 billion in exports. China rose to number two, with $3.6 billion in fish-related exports, an impressive growth of nearly 22% from 1999. The fisheries exporting industry in China specialized in importing raw material and reprocessing it for export at increased value.

      Fish imports reached a new record of $60 billion in 2000. Developed countries accounted for about 80% of total imports in value terms. Japan, which had experienced a decline in imports during 1998 and 1999, was the largest importer of fishery products, responsible for some 26% of the worldwide total. The European Union again relied heavily on imports for its fish supply. Most euro zone countries, however, reported a lower value of fishery imports in 2000, with the exception of Spain, the world's third leading importer. The United States, the fourth largest exporter, also was the second biggest importer of fishery products. Expanding shrimp imports accounted for much of the increase in imports of fishery products to the U.S. in 2000.

Martin J. Gill

▪ 2001

Introduction

      Starvation, genetically modified organisms, “mad cow” disease, and weather-related problems all captured headlines in the year 2000 and raised questions about the world's food supply.

National and International Issues

Food Production.

      Agricultural markets throughout the world enjoyed ample supplies and low prices in 2000. Though total agricultural and food production was about 1% greater than in 1999, global per capita food production was slightly lower than in 1999. (See Table I (Selected Indexes of World Agricultural and Food Production, Table ).) Both developed and less-developed countries (LDCs) experienced increased output. For developed nations the output increase was greater than their population increase, so per capita production rose. The output increase in the LDCs was not as great as the population increase, and, consequently, per capita output fell.

      Production did not increase in two areas of the world. Countries undergoing the transition from centrally planned to market economies in the former Soviet Union and Eastern Europe continued to experience low output, only 70% of the 1989–91 totals. Little recovery was evident in 2000. Those states were hindered by agricultural bottlenecks due to poor infrastructure, weak credit markets, underdeveloped input and land markets, weak macroeconomic performance, and incomplete privatization.

      Countries in sub-Saharan Africa had experienced production difficulties during the 1990s, and that pattern continued in 2000. Some economies expanded their total output but suffered from declining per capita production. Other countries experienced declines in both total and per capita output. Dry weather occurred in some areas, including Kenya and Ethiopia. Mozambique experienced catastrophic flooding. Output in many countries in central Africa fell, owing to man-made causes, including environmental degradation, war, inadequate economic development, and rapid population growth.

Food Aid.

      With several countries experiencing stagnant or declining production, food aid continued to be critical. (See Table II (Shipment of Food Aid in Cereals, Table ).) Shipments of cereals for aid were lower in 1999–2000 than in the previous year but were well above the levels recorded in the mid-1990s, when global food supplies were tight. The United States remained the largest donor, followed by the European Union (EU). The U.S. also registered the largest increase in shipments compared with the mid-1990s. During that time the U.S. shipped approximately 6 million tons, but in 1998 and 1999 the U.S. provided 10 million–11 million tons. Other donors also increased shipments but had more stable commitments, so the increases were not as large. The large rise in U.S. shipments occurred as global supplies increased. This produced criticism by other donors that the U.S. was using food aid primarily to raise farm prices rather than to fight hunger.

      Food aid was provided to Ethiopia as drought and the war with Eritrea threatened many with starvation. Unrest in Angola and other countries in central and southern Africa created food-assistance needs. North Korea received food aid from the U.S. and other donor nations. Traditional recipients such as Bangladesh also continued to obtain aid. The catastrophic flooding in Mozambique in February resulted in a large relief effort to that nation. Russia emerged as the single largest recipient of U.S. food aid, receiving $217 million, because of its problems with the transition to a market economy.

World Trade Organization (WTO).

      In late 1999 representatives of 135 nations gathered in Seattle, Wash., to launch new trade-liberalization negotiations. The meeting failed to establish a new round of comprehensive negotiations, but talks on agriculture mandated by the Uruguay Round began.

      Little progress on agricultural issues was made. The U.S. called for the elimination of export subsidies, reduced farm support, improved market access, and tighter rules for government trading agencies. The Cairns Group of “nonsubsidizing” countries held many of the same views as the U.S. but with some critical differences. Cairns Group members (Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand, and Uruguay) took a broader view of the policies that could be considered export subsidies by including export credit and credit guarantee programs. European states, Japan, and South Korea supported continued large subsidies to agriculture, arguing that farming provides such nonmarket benefits as environmental protection, rural development, landscape preservation, and food security.

      China's entry into the WTO became more likely in 2000. In late 1999 the U.S. and China reached agreement on Chinese policy reforms required for membership. China agreed to convert nontariff barriers to tariffs and to reduce barriers by 2005 and also allowed private trading firms to have larger shares in international trade. During the summer after much debate the U.S. Congress ratified the agreement. The EU also completed an agreement with China to facilitate WTO membership.

European Union Expansion.

      Negotiations to expand the EU to include Central and Eastern European nations continued, with agriculture one of the most sensitive areas. The EU expansion under existing farm policy would cause large increases in farm program costs, which in 2000 represented about half of the EU's budget. In many Central and Eastern European countries, farming was a substantial share of the economy and a large employer of labour. For nations with limited abilities to support farmers, competition with subsidized EU farmers would be difficult. Access to EU subsidies would provide more balanced competition and inject large subsidies into a critical sector for those economies.

Genetically Modified Organisms (GMOs).

      Trade in agricultural products containing genetically modified material continued to be controversial. Europeans resisted consuming genetically altered food products and staged mass protests against those products. Consumer concerns about GMOs in food also increased in many other nations, including Japan, Australia, and Canada. New labeling requirements for GMO food were adopted. In the U.S. the Gerber and Heinz companies announced that they would not use genetically modified material in baby food, and other food product manufacturers quit using farm commodities containing GMOs.

      In January an international agreement on trade in food with GMOs was reached in Montreal. The Cartagena Protocol on Biosafety allowed a nation to ban imports of a genetically modified product if it believed that there was insufficient scientific evidence of the product's safety. The agreement also included rules on transportation and labeling. The effectiveness of the protocol in bridging the interests of advocates and opponents of GMO foods was disputed, however.

      Instances of GMO contamination of the American corn crop were reported in autumn 2000. StarLink, a genetically modified variety of corn approved for animal feed use in the U.S., was not certified for human food because of potential human allergic reactions. (Some countries, such as Japan, did not allow StarLink for any use.) StarLink corn was to be segregated from other varieties when grown and marketed. Tests on American food products, notably taco shells, however, revealed traces of the variety, and it was found in some export shipments to Japan. Products were recalled and efforts to find the source of the contamination were begun, but tracing StarLink corn through the marketing system proved impossible. Overseas exports of American corn were disrupted as well. Evidence of contamination of other corn came to light, indicating that pollen from StarLink had drifted onto other cornfields such that the GMO strains became mixed with other corn. Some estimated that up to half of the Iowa corn crop was thus contaminated, even though StarLink accounted for only 1% of the state's planted crop. (See Special Report (Genetically Modified Foods: The Political Debate ).)

Livestock Diseases.

      Two important livestock diseases affected agriculture during the year. Foot-and-mouth disease outbreaks occurred in Argentina, Brazil, South Korea, and Japan and resulted in herd slaughter and the banning of fresh meat exports to disease-free markets. Fresh meat exports were diverted to lower-priced markets or sold as cooked meat.

      Bovine spongiform encephalopathy (BSE) appeared in continental European nations. The disease, sometimes called “mad cow” disease, had first appeared in British cattle in the 1980s. At first it was believed that BSE could not be passed to humans, so infected beef was allowed to enter the food system. In the mid-1990s, however, a potential link to a fatal human ailment, Creutzfeldt-Jakob disease, caused a severe reduction in demand for beef and a ban on British beef and cattle exports. In late 2000 BSE-infected cattle appeared in France, Germany, Portugal, and Spain. Demand for beef plunged. The EU introduced policies to halt the further spread of the disease and to provide emergency aid to cattle farmers.

Trade Disputes.

      Ongoing trade disputes burdened the international food system. The U.S. and the EU were unable to resolve differences over the EU ban on hormone-treated beef and the restrictive EU import policy for bananas. At the end of 2000, those policies remained in effect, as did the U.S. retaliatory duties. U.S. trade law allowed for the retaliatory duties to rotate among commodities, a process called “carousel” retaliation. The U.S. government, however, decided against rotating the duties, which angered U.S. agricultural interests.

      The U.S. and the international community maintained embargoes prohibiting the exports of goods to several countries. Agricultural interests in the U.S. opposed those restrictions and lobbied for their removal, with some success. Improved relations with North Korea and that nation's urgent food needs resulted in further food-aid shipments from the U.S. The 40-year embargo by the U.S. against Cuba was eased in the case of food. UN sanctions against several nations, including Yugoslavia, Iraq, and Libya, were softened during the year as well.

Global Markets in 2000

Grains, Oilseeds, and Livestock.

      World grain production in the 2000 crop year was lower than in 1999. A major cause of the reduced output was drought in China. World wheat production fell 1.2% to 580 million tons, the lowest output since the 1995 crop. Coarse grains production declined 2%, also the smallest crop since 1995. Rice production fell 1.1%, the first decline since 1993.

      The reduced outputs of wheat and coarse grains were reflected in trade as both worldwide wheat trade and coarse grains trade fell about 3%. In contrast, rice trade remained constant. Despite falling output and reduced trade, global wheat consumption expanded slightly; consequently, there was a 13% reduction in ending stocks. Coarse grains consumption also expanded, and stocks were reduced. For rice the expansion in trade was less than the reduction in output. Use rose, and ending stocks fell. The tighter global supply and the increase in consumption caused a slight improvement in wheat and coarse grains prices, yet price levels remained low. Rice prices weakened slightly.

      World oilseed production expanded 1.2% and set a new record. Output had increased 35% since the 1991 crop. The U.S. harvested a huge soybean crop, and soybean production in Argentina and Brazil was also large. Oilseed trade fell 1.5%, and ending stocks were 8% lower. Oilseed meal and vegetable oil outputs rose, and trade remained about the same as in the 1999 crop year. Increased production allowed an expansion of meal and oil use. With reduced global stocks, farm prices for soybeans improved compared with the 1999 crop.

      World meat production expanded in 2000. Beef output by major trading nations rose by 1.4% to 49.6 million tons. That increase matched the rise in consumption, so world beef trade remained at the record levels observed in 1999. A similar situation occurred for pork. World production rose 1.5%. Trade in pork was slightly lower in 2000 compared with 1999 but remained well above the levels observed in 1996, 1997, and 1998. Both world production and trade of poultry meat expanded in 2000. Output increased about 2.7%, and trade was 5% higher. The expanded output and trade resulted in an increase of 2.9% in consumption. Output of dairy products grew. Cow milk production rose more than 1%. Butter production and exports were higher, and cheese output rose 2%. Nonfat dry milk production was more than 2% above the 1999 level.

Tropical Products.

      World sugar production for 2000–01 (the 2000 crop) declined 7% from the record output of 1999–2000. As consumption continued to grow, world ending stocks fell. Global sugar trade at 33.2 million tons was below the 1999 record level of 35.5 million tons. The major cause of the reduced production was a drought in Brazil. Output in that nation fell 4.1 million tons, and increases in China and the EU were not sufficient to offset that decline. Owing to the tighter global supply and the increase in consumption, prices were slightly higher.

      Coffee production in 2000 was 9% above the 1999 level as most major producers increased their output. During the El Niño–La Niña years, production was hurt by weather, including excessive rain in Central America and droughts in parts of Africa. The increased production in 2000 put downward pressure on coffee prices, which in New York City reached six-year lows. In May the Association of Coffee Producing Countries agreed to reduce export supplies by 20% in order to boost prices. Members of the International Coffee Organization agreed to a new six-year international coffee agreement, scheduled to start in the fall of 2001. The agreement would strengthen international cooperation, promote coffee consumption, and assist with technology transfer.

      World cocoa production rose more than 6% in 2000. Brazil, Côte d'Ivoire, and Ecuador experienced production increases. Most other nations had outputs similar to those in 1999.

Philip L. Paarlberg

Fisheries

      The finalized figures for world fish catch during 1998 (see Table (Nominal Catches of Fish by Principal Producers )), the latest year for which figures were available, were confirmed by the UN Food and Agriculture Organization (FAO) at 86.3 million metric tons. The figure was lower than the estimate of 87.8 million metric tons published in late 1999. The result was a 7.8% decrease from the 1997 figure of 93.6 million metric tons of fish caught and reversed the trend that had been observed since 1991 of a steady climb in catch totals.

      China again took an increasing share of the total catch with 17.2 million metric tons, a 9.6% increase over the 1997 figure and a massive 300% rise in the 10 years since 1989. Following three years of stability in catch, Japan (in second place) fell from 5.9 million metric tons in 1997 to 5,260,000 metric tons in 1998. The El Niño weather pattern in the Pacific Ocean had a drastic effect on the anchovy resources off Peru, which registered a drop from 7,870,000 metric tons in 1997 to 4,340,000 metric tons in 1998. Figures for 1999, however, showed that the resources had recovered strongly, with a total of 8.5 million metric tons recorded, and forecasts for the 2000 catch were even higher. Reductions in catch during 1997 were also recorded for Chile, which suffered from the effects of El Niño, as well as for South Korea, Iceland, Denmark, and Mexico. None of the top 25 countries except China showed a strong increase for the year.

      Aquaculture contributed an additional 30.9 million metric tons for a total marine production of 117.2 million metric tons in 1998. China continued as the world leader, with aquaculture production of 20.8 million metric tons, an increase from 19.3 million metric tons in 1997.

      During 2000 the FAO produced a projection of world fishery production in 2010. Estimates ranged between 107 million and 144 million metric tons; it was likely that about 30 million metric tons would be reduced to fish meal and oil for nonfood use. An estimated 74 million to 114 million metric tons would be made available for human consumption. It was expected that most of the increase in fish production would come from aquaculture. The contribution from capture fisheries would depend on further development and the effectiveness of fisheries management. According to the FAO, if management of currently overfished stocks was improved, there could be an increase of between 5 million and 10 million metric tons; continued overfishing, however, would result in decreasing production.

      The world's largest-capacity fishing vessel, which was launched in September 2000, arrived at its home port on the west coast of Ireland. The Atlantic Dawn, built at a cost of £50 million (about $75 million), was capable of freezing and storing a massive 7,000 metric tons of whole frozen pelagic fish on three decks of holds. The vessel was 144 m (472 ft) long, with a beam of 24.3 m (80 ft) and a carrying capacity estimated to be some 2,000 metric tons greater than its nearest rival. To keep such a vessel economical, the designers built it to be as flexible as possible and to be able to fish worldwide either as a pelagic trawler or by utilizing purse seine techniques. The Atlantic Dawn was scheduled to begin fishing for sardinella, mackerel, and horse mackerel in West African waters off the coast of Mauritania.

Martin Gill

▪ 2000

Introduction

National and International Issues

       Selected Indexes of World Agricultural and Food Production, Table In 1999 world agricultural markets were affected by continued large food supplies and the lingering effects of Asian financial problems. Prices for major agricultural commodities such as wheat, corn (maize), soybeans, and pork were the lowest in recent decades. World agricultural production and food output were 1% above 1998 levels, and few countries experienced reduced agricultural and food production. (See Table I (Selected Indexes of World Agricultural and Food Production, Table ).) The few exceptions included Japan, which was liberalizing its agricultural import restrictions, and Russia, still labouring under economic and political turmoil. The increase in food output was less than the rise in global population, so per capita food production fell slightly in 1999.

U.S. Policy.

      During 1999 the U.S. provided additional support to farmers to compensate for low commodity prices. Legislation passed in 1996 was intended to provide farmers with fixed annual support payments through 2002. Those laws anticipated rising global commodity prices, but because prices had remained low, farmers had to ask for additional support. During 1998 and 1999 several billions of dollars of additional emergency relief were given to farmers. Until 1999 swine farmers had received no support, but during the fall of 1998 and the spring of 1999, prices for live swine fell to levels unseen since the Great Depression. Some experts blamed overproduction by swine growers for the depressed pork prices, while others blamed limits on slaughter capacity or an increased concentration of meatpacking firms. The problems in the swine sector led to a debate over the effects of increased concentration of agricultural processing industries generally. Many farmers believed that concentration disadvantaged independent farmers, and they pressed for legislation to limit mergers of agricultural processing plants.

Agenda 2000.

      During the spring of 1999, the European Union (EU) liberalized its agricultural policy. The immediate cause was the expected cost of the existing farm policy if new members from Central Europe with large agricultural sectors—primarily Poland and Hungary—acceded to the EU. From January through March, proposals to reduce the price support offered to European farmers were gradually scaled back. The final package called for price supports to be reduced by 15% over two years, which enabled the EU to absorb new members more easily and increase its ability to comply with future Uruguay Round commitments under the General Agreement on Tariffs and Trade. The decision to cut price supports angered European farmers and led to massive protests.

Beef Hormones.

      A long dispute between the EU and the U.S. over imports of American beef treated with hormones became a major trade issue in 1999. The issue had begun taking shape in the late 1980s, when because of health concerns the EU banned the importation of beef treated with growth hormones. The U.S. argued that such a ban lacked any scientific basis and twice obtained World Trade Organization (WTO) rulings supporting its position. Despite the WTO rulings, the EU refused to alter its policy pending further scientific studies. The U.S. received permission from the WTO to impose retaliatory duties on $117 million worth of European products if the dispute was not resolved by the middle of May. No resolution was forthcoming, and the U.S. imposed the duties in July. The U.S. decision prompted protests by European farmers and contributed to an atmosphere of hostility between the two largest agricultural traders.

Genetically Modified Organisms (GMOs).

      Americans faced increasing difficulty in selling farm products in overseas markets during the year because of concerns over the use of biotechnology. In previous years questions about the safety of genetically modified soybeans and corn had been raised mostly in Europe. As the year wore on, concerns began to spread to Asia and North America. Some countries began to require warning labels and impose other restrictions on GMOs in foodstuffs. American farmers, who in general had rapidly and enthusiastically embraced the new technology, were understandably concerned that their products might not be acceptable in world markets. As a result, some major American agricultural processors indicated that farmers would have to certify GMO-free status upon delivery of their produce. Some manufacturers of baby foods announced that they would not use genetically modified commodities as inputs. (See also Life Sciences: Molecular Biology. (Life Sciences ))

World Trade Organization (WTO).

      Agricultural and trade policies were a central issue when trade ministers from around the globe gathered in Seattle, Wash., in November to launch a new round of negotiations to liberalize trade. Also from around the world, protesters gathered to disrupt the meeting. Disputes over agriculture were a major stumbling block and contributed to the failure of the talks as well as to the start of a new round. The U.S. and other exporting nations pressed for increased access to importer markets, elimination of export subsidies, reduced domestic support of farmers, and regulation of state trading agencies. The EU and Japan resisted many of these proposals. In the postmortems of the Seattle meeting, countries were quick to blame one another for the lack of progress. The Uruguay Round agreement had called for negotiations on agriculture, but following the debacle in Seattle, opinions differed on how this might occur. The U.S. took the view that negotiations would begin in January 2000 on the basis of agreements reached in Seattle. The EU position was that future negotiations, if they did indeed begin, would constitute an entirely new beginning. (See also Economic Affairs: International Trade. (Economic Affairs ))

Chinese Accession to the WTO.

      The question of Chinese entry into the WTO was a major issue throughout the year. In what was essentially a debate between the United States and China, the Chinese were being urged to alter their trading practices to ones more compliant with WTO rules, but they were reluctant to do so. The U.S. was keen to have China loosen its regulations on importation of agricultural products. During the summer an apparently acceptable framework for Chinese accession to the WTO was hammered out, but political events precluded its implementation. Further bilateral U.S.-China negotiations in November won Chinese commitments to agricultural import reforms. Although Chinese WTO membership seemed to be on track, the U.S. Congress deferred its consideration of the accord until the spring of 2000, and the collapse of the Seattle talks added somewhat more uncertainty.

Global Markets in 1999

Grains, Oilseeds, and Livestock.

       World Cereal Supply and Distribution, Table Total world grain output for 1999–2000 was forecast at 1,856,000,000 metric tons. (See Table II (World Cereal Supply and Distribution, Table ).) While less than the 1,871,000,000 metric tons estimated for 1998–99, it was nonetheless a large crop slightly below forecast utilization. Consequently, world trade was expected to remain at the 1998–99 level, and only minimal declines in the ending stocks for grain were anticipated. World wheat production in 1999–2000 was forecast to fall from 589 million to 584 million metric tons. Canada, Argentina, and Australia experienced near-record harvests, but crops in the U.S., the EU, and several large importing countries were smaller. World wheat trade was expected to rise from 101 million to 104 million metric tons, with ending stocks falling from 136 million to 131 million metric tons. Nevertheless, forecasts of ending stocks of wheat for 1999–2000 remained large, and no increase in price was expected.

      World rice production was expected to continue in a pattern of annual increases. Global rice output in 1998–99 was 392 million metric tons (on a milled basis), compared with 380 million metric tons in 1996–97. (See Table II.) Output forecast for 1999–2000 was 396 million metric tons. Both China and India, the largest rice producers, had larger crops than the year before. World rice trade was forecast to drop from 24 million metric tons in 1998–99 to 23 million in 1999–2000. Larger imports by the Middle East and Latin America were offset by reduced imports by Asian countries. Larger global production and reduced trade meant increased ending stocks for 1999–2000. Ending stocks were expected to rise from 57 million to 59 million metric tons, and prices were forecast to fall by 35%.

 Global coarse grain production in 1999–2000 was forecast to fall to 876 million metric tons, lower than the crops recorded in previous years. The 1996–97 coarse grains crop was 908 million metric tons, and in 1998–99 it was 890 million tons. Smaller crops were anticipated for the U.S., Australia, China, India, Indonesia, Philippines, Ukraine, and the EU. During the summer of 1999, dry conditions due to the La Niña weather event hurt crop output. (See Earth Sciences: Map—.) Improved crops were forecast for Argentina and South Africa. The past South African corn crops had been severely harmed by the El Niño weather pattern but had begun rebounding. Total use was forecast to be 875 million metric tons, the same level recorded in the past several years. World production was expected roughly to match world utilization, and world trade was forecast to fall slightly, with ending stocks forecast to rise slightly. Corn prices in 1999–2000 were expected to be 7% lower.

       World Production of Major Oilseeds and Products, Table Oilseed production was forecast to rise as it had during most of the 1990s. The 1999–2000 global production was expected to be 296.9 million metric tons, an increase of 1.1% over the 1998–99 output. (See Table III (World Production of Major Oilseeds and Products, Table ).) The increase in total oilseed production was due to larger supplies of rapeseed. Global rapeseed production was forecast to rise from 36.7 million to 42.7 million metric tons owing to larger crops in Canada, China, India, and the EU. In contrast, soybeans, the dominant oilseed, were expected to experience reduced production as a result of smaller crops in the U.S., Argentina, and China. Increased oilseed production resulted in larger outputs for the products obtained by processing oilseeds, protein meals, and vegetable oils. Edible vegetable oil production was forecast to rise from 80.6 million to 84.4 million metric tons. Protein meal production, at 168.2 million metric tons, was expected to be 5.2 million tons above 1998–99. Record utilization of oilseeds translated into increased world trade and lower ending stocks. Oilseed trade in 1999–2000 was forecast to be 56.8 million metric tons, compared with 54.5 million in 1998–99. Ending stocks were expected to fall from 28.5 million to 27.8 million metric tons. Despite the forecast reduction in ending stocks, prices were expected to remain weak because supplies were large, and competing grain supplies would limit any price increases.

      Output increased in the dairy sector. Milk production for 1999 was forecast to be 1% above that for 1998. World butter production for 1999 was forecast to be higher than in 1998, with butter trade at the same level. Cheese production was forecast to be 2% greater in 1999, reflecting an increase in U.S. cheese production. Nonfat dry milk production was 4% above the 1998 level.

      World red meat production was forecast to continue to rise. Production in 1999 was 1.1% higher, and the forecast for 2000 was another 0.2% increase. Utilization increased slightly faster, so world trade expanded. For 1998 the U.S. Department of Agriculture had estimated world trade at 8.9 million metric tons. The 1999 estimate was 9 million tons, and the 2000 forecast was 9.3 million tons. Cattle inventories were expected to be unchanged, with increases in China, India, South America, and Oceania offsetting reductions in the former Soviet Union, North America, and the EU. Beef production was forecast to be slightly higher in 1999 but modestly lower in 2000. World beef trade in 1999 was sluggish, but prospects were brighter in 2000, especially for South American producers, owing to currency devaluations. World pork production was expected to be 2% higher in 1999 and 1% greater in 2000. Increased production in China, Brazil, and Canada offset declines in the U.S. and Europe. Because of the large supplies and very low pork prices, consumption of pork was forecast to be 2% higher in 1999, at 76.5 million metric tons, and 1% higher in 2000. Pork imports for 1999 were forecast to be 7% above those for 1998 as Asian nations recovered from their financial problems. Pork exports for 2000 were forecast to rise another 1%.

      A similar picture emerged for poultry. Between 1998 and 1999 world poultry output rose 3.9%. Another 3.2% rise in output was forecast for 2000. Use of poultry had climbed slightly faster, so world trade expanded from 5.7 million metric tons in 1998 to 5.9 million metric tons in 1999 and was forecast to increase to 6.2 million metric tons in 2000.

Tropical Products.

      World sugar production for 1999–2000 was forecast at a record 133.9 million metric tons, 3% above the 1998–99 output. The increase was due to the 4% increase in sugar produced from sugarcane. Sugar production from beets was forecast to be slightly lower. With increased Brazilian and EU sugar exports, world sugar trade at 36.7 million metric tons was 3% higher. Exports from South Africa, Cuba, Guatemala, and Poland in 1999–2000 were forecast lower. Russia was expected to remain the largest importer, but the economic and political troubles of that country would likely lower volumes. Increased sugar consumption in Asia, Africa, and the Middle East was expected to raise sugar consumption in 1999–2000 to a record 130.1 million metric tons. The economic problems in Asia and elsewhere had resulted in stable sugar consumption in recent years, and sugar consumption was forecast to return to its historical growth as those problems eased. Like other commodities, sugar faced large supplies and weak prices. Coffee exhibited a different picture, with 1999–2000 production forecast at 107.2 million bags, 1% below the 1998–99 record. Supplies in Brazil and Colombia were forecast lower owing to short crops. Exports were forecast to increase 1.1 million bags, or 1%, over 1998–99, with other exporters offsetting the anticipated decline in exports by Brazil and Colombia.

Philip L. Paarlberg

Fisheries

       Fishery Production and Trade by Principal Producers in 1997 World production of fish, crustaceans, and mollusks again showed a rise in 1997, the latest year for which figures were available, with a 1.8% increase above the 1996 level to 122.1 million metric tons. (See Table (Fishery Production and Trade by Principal Producers in 1997 ).) The major share of production came from capture fisheries, which remained stable at 93.3 million metric tons, or 76% of the total world production, while aquaculture provided a further 28.8 million metric tons, a 7.6% rise over the 1996 figure. This growth in production volume, however, could not be matched by the growth in the current value of the total world production. Lower average first-sale prices caused the value to grow by just 1% on average compared with 1996. A total of 92.9 million metric tons, slightly above two-thirds of the total production, was utilized for direct human consumption, while 29.3 million metric tons went for reduction into fish meal, a decrease of 6% from 1996.

      Statistics from the UN Food and Agriculture Organization (FAO) indicated that the nutritional contribution of fishery products to the human diet was around one-sixth of the animal protein intake. Nearly half of fishery production was consumed in a fresh/chilled form, while a further 30% was consumed as frozen products. The remaining 25% was salted, dried, smoked, or canned.

      China still dominated world fishery production; its capture fishery increased by 1.5 million metric tons over 1996 to reach 15.7 million metric tons of fish caught. Huge efforts and resources were devoted to developing the country's fisheries operations in both the capture and aquaculture sectors. Total production output, including aquaculture, reached more than 35 million metric tons. Peru continued as the second largest fishing nation; however, its mainly meal or reduction fishery saw a cut of 1,650,000 metric tons from 1996 to 7,870,000 metric tons. With the onset of the worst-ever El Niño weather pattern in the Pacific Ocean, the figures for the fishery in 1998 were predicted to be even lower. Japan climbed into third place with 6,688,833 metric tons, despite recording a slight fall from 1996. Chile dropped to fourth, mainly because the effects of El Niño reduced the catch of jack mackerel by some 880,000 metric tons.

      Anchoveta, Alaska pollock, and Chilean jack mackerel retained their positions as the top three species landed, but all showed decreases in tonnage caught. The next four species—Atlantic herring, chub mackerel, Japanese anchovy, and capelin—all showed rising trends in tonnage landed. Although anchoveta retained its place as the most prolific species, during 1997 the full effects of El Niño had yet to take effect. Forecasts for 1998 production figures already predicted a fall to a total of around 115 million metric tons, down 6% from 1997. The fish meal industry was also feeling the effects of El Niño, with a drop in output of some 2 million metric tons from the previous year.

      The FAO pointed out that catches in the Northwest, Southeast, and the Eastern Central Atlantic Ocean “reached their maximum production levels one or two decades ago and are now showing a declining trend.” It also stated that “the main areas where total catches still follow an increasing trend and where, in principle, some potential for increase still exists are the Eastern and Western Indian Ocean, the Western Central Pacific and the Northwest Pacific.”

Martin Gill

▪ 1999

Introduction

INTERNATIONAL ISSUES

      World agricultural markets in 1998 were dominated by two events, the economic turbulence in Asia and the El Niño weather phenomenon. Asian problems lowered the value of world agricultural trade and raised concerns about the health of the global economy. The El Niño event, during which the waters in the Pacific Ocean off South America warm and alter global weather patterns, caused drought in some regions and floods in others but did not reduce total global food supplies compared with 1997. The combined effects of these forces, however, resulted in a difficult year for farmers in many parts of the world.

       Selected Indexes of World Agricultural and Food Production, Table According to the Food and Agriculture Organization (FAO), world agricultural production rose 0.2% in 1998. (See Table I (Selected Indexes of World Agricultural and Food Production, Table ).) Even with the small increase, agricultural production reached a record level. For 1998 the growth in food production in the less-developed countries kept pace with the rise in population so that per capita food production was slightly higher. Developed countries experienced a decline in per capita production, which either reduced their surplus for export or increased their import needs.

      Although at a global level food production rose, there were many differences by region, which reflected economic and weather problems. Among the developed countries, output in the United States and Canada increased 0.1% and 1.5%, respectively, while the European Union (EU) recorded another strong performance. Agricultural production in Russia had fallen during most of the 1990s, and there were production problems again in 1998. Reduced output was linked to the ongoing problems of the transition from central planning to a market economy. The agricultural sector experienced problems with obtaining adequate supplies of inputs, such as fertilizers and chemicals, as well as with tardy payments for products delivered and delayed wages. South Africa suffered greatly from El Niño, with 1997-98 corn production sharply lower. Although Australia suffered a reduced wheat crop due to El Niño, rain arrived at a critical time in the fall of 1997 and prevented a large crop loss.

      For the less-developed countries location was critical to agricultural performance in 1998. Argentina and Brazil produced above-normal soybean crops owing to timely rains associated with El Niño. Other less-developed countries were not so fortunate. Indonesian agricultural production suffered from an El Niño-induced drought and the region's economic collapse. China also experienced some dryness induced by El Niño, which adversely affected its 1997-98 coarse grain crops. By contrast, Mexico received excessive rains, which reduced its coarse grain output. Thailand and the Philippines were affected by both El Niño and economic problems, but Thailand was able to expand its rice output. Production problems in Central Africa were partly the fault of El Niño and partly man-made, as warfare erupted in the region.

Food Emergencies.

      A number of food emergencies occurred in 1998. The Sudan experienced one of its periodic droughts. Efforts to organize relief supplies were hampered because Sudanese government troops were fighting with rebel forces in the drought-stricken areas and regarded food aid as assistance to the rebels. North Korea experienced famine, as it had in 1997. During the spring of 1998 food supplies there shrank to very low levels, and millions, especially children and the elderly, were at risk. Large quantities of grain were delivered to that country during the spring, and, although the situation eased in the summer, the 1998 harvests were again poor. Drought in Indonesia and falling incomes due to the economic crisis produced a food emergency in that nation, but the international community provided billions of dollars in credits, allowing the purchase of large volumes of wheat and rice. In the fall of 1998 concern over food shortages in Russia emerged. Due to drought in the Volga river area and continued economic chaos, Russian grain production was at its lowest level since the early 1950s. With its political and economic problems Russia did not have the money to purchase food on world markets and was offered food assistance.

      Some food emergencies were man-made. Ethnic warfare in Central and East Africa resulted in mass movements of people who did not have adequate food. Fighting in the Serbian province of Kosovo between Yugoslav forces and ethnic Albanians in the fall of 1998 drove the Albanians away from their villages and fields just before winter. An accord between the Yugoslav government and NATO provided humanitarian relief. Iraq continued to suffer food shortages as a result of the trade sanctions imposed by the UN.

       Shipment of Food Aid in Cereals, Table The trend of decreasing food aid continued during the year. (See Table II (Shipment of Food Aid in Cereals, Table ).) In the early 1990s cereal food aid averaged more than 12 million tons. In 1996-97 the total dropped sharply to just over five million tons, and it remained at that level in 1997-98. A decline in cereal food aid was characteristic of most donor nations, but the major donors registered the largest declines. The U.S., the largest donor, had reduced cereal food aid by nearly five million tons, or 70%, since 1992-95. The second largest donor, the EU, had lowered its aid by three million tons, or 77%. These declines reflected changes in world grain markets, as government-owned surplus stocks were reduced by policy shifts as well as by the tight global supplies of the mid-1990s. For example, in accord with a decision taken in 1996, the U.S. government no longer held large grain stocks accumulated under farm price support programs. In the past such stocks were often used for food aid. The trend of reduced cereal food aid was a concern to many food experts. Tighter world food supplies could be expected as production resources were being used to the maximum. There would be little to no growth in supply at a time when income and population growth would be boosting demand.

Asian Crisis.

      The Asian economic crisis affected world agriculture during 1998. Although the specific origins of the problems differed by country, all were related to unsound banking and financial systems. The crisis appeared in Thailand in July 1997 and by the end of that year had spread to Indonesia, Malaysia, South Korea, the Philippines, Singapore, and, to a lesser extent, Taiwan and Hong Kong. These nations devalued currencies, and the national economies suffered. In the case of Indonesia the downturn was extremely severe. For agricultural goods the economic problems resulted in reduced food imports and an incentive to increase domestic output and, when possible, increase agricultural exports.

      The impact on agriculture was not as severe as many had feared, however. One reason was that the most affected nations were not large agricultural traders. Roughly 5-6% of world agricultural exports and imports were traded by South Korea, Indonesia, Thailand, Malaysia, Singapore, and Taiwan. Of the group South Korea was the most important to agricultural trade. A second reason was that sales contracts negotiated in late 1997 were shipped in 1998 and this delayed the impact of reduced incomes on agricultural trade. Furthermore, exporting nations and international agencies extended credit to Indonesia, South Korea, and Thailand.

      Later in the year concern mounted that the economic malaise was spreading. Japan slid into recession. Growth in China slowed, but the nation managed to avoid serious difficulties in 1998. Reduced imports of primary commodities, from petroleum to metals to agricultural goods, put downward pressure on the export earnings of nations that relied heavily on primary commodity exports. In late summer Russia was forced to devalue and default on international payments. Soon afterward the currencies of Brazil, Venezuela, Chile, and Mexico came under attack.

      For agricultural markets the possible spread of economic problems was a worrisome development. The countries originally affected were not large agricultural traders, but Japan was the world's largest agricultural importer. Also the countries of Latin America represented a large import market for some agricultural goods as well as being major exporters of others. The spectre of turbulence in Latin-American economies contributed to a sharp fall in agricultural prices.

El Niño.

      Agricultural markets in 1998 were influenced by the expectation of a strong El Niño and the realization, at least in part, of the worst fears. In the summer and fall of 1997 ocean temperature recordings confirmed that a strong El Niño was underway. With expectations of drought and flooding in some key agricultural producers, which would result in reduced global food supplies, prices rose during the fall of 1997.

      El Niño did adversely affect a number of crops. Rice in Indonesia was badly damaged, as was corn in southern Africa. Excessive rains in California damaged vegetables, and crops on the western coast of South America were not spared. A number of important crops, however, escaped the full force of El Niño. The Australian wheat crop received timely rains, which reduced its decline. Rice production in Thailand rose, and Chinese crop production remained strong. Thus food production worldwide rose in 1998, despite El Niño.

AGRICULTURAL COMMODITIES

Prices.

      With economic difficulties in Asia and increases in the production of most agricultural goods, world market prices fell in 1998. For most commodities the decline in price was quite severe, and in many nations farm incomes were falling. In nations where farm prices were supported by governments, the budget costs of farm programs were rising.

      Farm prices in the U.S. illustrated the extent of the decline. Prior to 1996 U.S. farm incomes were supported by payments that rose as crop prices fell. After 1996, however, farmers received a fixed payment regardless of the price. In 1995-96 the U.S. average farm price for wheat was $167 per ton. By 1997-98 the farm price dropped to $124 per ton, and the expected price in 1998-99 was $97 per ton. The U.S. farm price for soybeans dropped 26% from 1996-97 to 1998-99. Farm prices among the meats revealed a much different pattern. Beef and poultry prices at the farm level did not weaken greatly. Farm beef prices in the U.S. remained around $1,500-$1,600 per ton with poultry prices at about $1,300 per ton. Farm prices for pork, however, collapsed to levels unseen in recent decades. In 1997 the U.S. pork price at the farm level was slightly over $1,100 per ton, but in 1998 it had declined to $750 per ton.

Grains.

       World Cereal Supply and Distribution, Table World grain production in 1997-98 was 1,886,000,000 tons, up from 1,872,000,000 tons in 1996-97, despite production losses due to El Niño. (See Table III (World Cereal Supply and Distribution, Table ).) This increased production was achieved on 10 million fewer hectares (1 hectare = 2.47 acres). The expanded production reflected increased grain crops in the U.S., Canada, Europe, and Argentina. World wheat production registered a large increase from 1996-97 to 1997-98, rising from 583 million tons to 612 million. World rice production also rose, from 380 million tons on a milled basis to 385 million, the fourth consecutive year of record production. In contrast, world production of coarse grains—corn, barley, sorghum, millet, oats, and rye—was slightly lower, falling from 908 million tons to 889 million. Despite that decline, coarse grains output in 1997-98 was the second largest production level ever recorded. Economic upset in Asia kept world trade in grains stagnant in 1997-98, remaining at 212 million tons. The decline was due to less trade in coarse grains. World wheat trade was unchanged, but global coarse grains exports fell from 93 million tons to 87 million.

      Although world trade declined, global consumption of wheat and coarse grains rose. Wheat use rose 10 million tons, or 1.8%. Consumption of coarse grains increased two million tons. At 25 million tons world trade in rice in 1997-98 was six million tons above the 1996-97 total. With increased production resulting from the devaluation of the Thai baht and reduced domestic consumption because of declining incomes, rice exports from Thailand in 1998 increased to 6.1 million tons compared with 5.3 million in 1997. Indonesian and Philippine imports in 1997-98 rose sharply. Indonesia experienced a severe loss in rice output and rapidly rising food prices. This prompted a large increase in rice imports, from 800,000 tons in 1997 to 5.9 million tons in 1998.

      Ending grain stocks at 320 million tons in 1997-98 equaled 17% of world consumption, or about 63 days worth of supply. That represented a marked increase over the much tighter global supplies of the middle 1990s.

      Forecasts for 1998-99 saw a reduced, but still large, world grain crop of about 1,850,000,000 tons. World rice production was expected to fall to 376 million tons. Wheat production was forecast to fall to 591 million tons in 1998-99, as was the coarse grain output at 883 million tons. Continuing economic problems and abundant supplies were expected to cut world trade in 1998-99. Wheat, coarse grains, and rice exports were all forecast to decline. Worldwide grain consumption was expected to rise 14 million tons to 1,867,000,000 tons, most of this increase was owing to expanded wheat use. Ending stocks for 1998-99 were expected to be lower, as output fell and use continued to rise.

Oilseeds and Products.

       World Production of Major Oilseeds and Products, Table World oilseed production in 1997-98 totaled 287 million tons, 26 million tons higher than the previous year. (See Table IV (World Production of Major Oilseeds and Products, Table ).) The U.S., the world's largest soybean producer, had a good crop in the fall of 1997 at 74 million tons, up 9 million from the previous year. The crops in Brazil and Argentina in the spring of 1998 increased 16% and 67%, respectively, owing to excellent growing conditions and stable economic conditions. Also contributing to the large expansion in Argentina was a shift to soybeans in some areas previously planted in wheat. Soybean production in China rose 11%. Oilseed production in Canada increased 25%, as farmers recovered from wet weather during the previous planting season. European oilseed output was 15% greater.

      World oilseed trade rose sharply in 1997-98 to balance regional increases in demand for protein feed with the location of supplies. In 1996-97, 49 million tons of oilseeds were traded. For 1997-98 trade expanded to 53 million tons. With expanded oilseed production, outputs of oilseed meals and vegetable oils rose in 1997-98. Trade of oilseed meals and vegetable oils remained stable. Ending stocks of oilseeds grew from 16 million tons in 1996-97 to 22 million tons for 1997-98. The low level of ending stocks in 1996-97 reflected the high world market prices of that year, which discouraged stockholding.

      Forecasts for world oilseed production in 1998-99 predicted a slight increase above the 1997-98 level. Soybean output in South America was expected to fall to more normal yields, but that drop would be offset by the large U.S. soybean crop harvested in the fall of 1998 and larger rapeseed crops in Canada and the EU. The composition of trade in oilseeds and products was expected to shift; for 1998-99 oilseed trade was forecast to weaken, and trade volumes of oilseed meals and vegetable oils were expected to rise. At a global level, oilseed stocks were forecast to continue to increase.

Livestock and Meat.

       Livestock Inventories and Meat Production in Major Producing Countries, Table World production of red meat in 1998 continued the recent trend of annual increases. (See Table V (Livestock Inventories and Meat Production in Major Producing Countries, Table )). In 1997 output totaled 136 million tons. For 1998 production was estimated at 141 million tons. With red meat trade totaling about eight million tons, consumption closely followed the production trend. Preliminary forecasts for 1998 indicated a slight decline in consumption due to falling incomes in Asian nations that traditionally import large quantities of beef and pork.

      Poultry meat output in 1998 rose to more than 61 million tons from 60 million tons in 1997. Worldwide consumption kept pace with the expansion in output. Whereas world red meat production expanded 25% since 1989, world poultry meat production rose 62%. The faster rise in poultry meat production was owing to a number of factors. One was the shift in favour of poultry meats in developed countries because of health concerns associated with the consumption of red meat. Also, rising incomes in less-developed countries during the 1990s boosted the demand in those countries for meat, especially poultry. In addition, efficiency gains in poultry meat production kept poultry meat prices relatively low compared with other meats.

Dairy.

       World Production of Milk, Table Milk production for 1998 was 548 million tons, or nearly 1% above 1997. (See Table VI (World Production of Milk, Table ).) In the U.S. higher prices and reduced feed prices helped boost milk yields to offset a decline in numbers of cows. Milk production in Canada was higher despite a reduced production quota, partly as a result of a mild winter in eastern Canada. Mexico also experienced an output increase, as some large dairies expanded animal inventories. With favourable prices compared to alternative outputs and lower feed prices, Australian production rose roughly 3% above the 1997 level. In contrast, dry weather in New Zealand limited the rise in production to about 1%.

      Butter production also rose in 1998, but the Asian economic crisis contributed to a decline in butter trade. The Asian market represented the major market for traditional butter exporters Australia and New Zealand. Production in the U.S. declined 3% from the 1997 total, while Canadian production remained at about the same level. EU output was slightly lower as were exports, which suffered from the economic dislocations in Russia, the major European butter market.

      Cheese production rose about 2% in 1998, but trade remained unchanged. Output in the U.S. increased more than the world average—3%—and exports also rose. European cheese production remained about the same in 1998 as in 1997. European exports were weaker, as export subsidies were reduced according to an agreement by the World Trade Organization.

Sugar.

       World Production of Centrifugal Sugar, Table World sugar production in 1997-98 reached a record 125 million tons as a result of production increases in many nations and regions, including Mexico, the U.S., Central and South America, China, Africa, the Middle East, Pakistan, and the EU. (See Table VII (World Production of Centrifugal Sugar, Table ).) Cuba, other Caribbean nations, Eastern Europe, the nations of the former Soviet Union, India, and other Asian nations experienced stable or declining output. The expansion came on top of record production in 1996-97 of 123 million tons. Consumption in 1997-98 rose to 127 million tons from 123 million tons the previous year. With the production and consumption increases roughly the same, trade at the global level remained at 35.6 million-35.8 million tons.

      For 1998-99 world production was expected to reach a record 127 million tons. With demand in South America and in Asia forecast to remain strong, world consumption was forecast to rise above the 1997-98 level to 128 million tons. World trade was forecast to fall slightly from 35.6 million tons to 34.8 million. Much of the production increase was owing to improved sugar output in India, Africa, and Brazil. The EU, Australia, and Thailand were expected to reduce exports; Brazil was expected to continue the large exports recorded in 1997; and exports were to be expanded in North African countries and South Africa.

Coffee.

       World Green Coffee Production, Table Coffee production worldwide in 1998-99 was forecast at a record 108 million bags, 14% above the 1997-98 figure. (See Table VIII (World Green Coffee Production, Table ).) The total reflected sharply increased production in Brazil—52%—and slightly increased output in Colombia—2%. Brazil experienced favourable weather, and prices for coffee were high in 1997, which created a positive climate for investment. Mexico produced a record crop of 5.6 million bags as a result of a larger planted area, new plants entering the production phase, and a rebound from the weather-reduced 1997-98 harvest. The opposite situation occurred in Indonesia where production fell to 6.6 million bags, 6% below the 1997-98 output and 16% below the 1996-97 production of 7.9 million bags. Output in several Central and South American nations fell or remained unchanged. Guatemala, Costa Rica, and Ecuador experienced reduced production because of excessive El Niño-generated rainfall. In addition, Hurricane Mitch in October 1998 devastated coffee crops in Honduras and Nicaragua. By contrast, Peru and Venezuela recorded production increases. In Africa, Uganda registered a 15% increase in production with 3.8 million bags.

      Expanded world production in 1998-99 led to increased world coffee trade, which was forecast at 81.1 million bags, 7% above that of 1997-98. The sharply improved Brazilian output lowered the prices of Brazilian coffee in world markets and improved its competitiveness. Although Indonesia was a major coffee producer, domestic consumption was small and the bulk of that nation's production was exported. Exports in 1998-99 were forecast at 4,750,000 bags, compared with 4.9 million in 1997-98.

Cocoa.

       World Cocoa Bean Production, Table World cocoa production for 1998-99 was forecast at 2,690,000 tons, roughly the same as in 1997-98 and below the output of 2,717,000 tons of 1996-97. (See Table IX (World Cocoa Bean Production, Table ).) Within the global total several regional shifts occurred. For 1998-99 output in North and Central America returned to the level recorded for 1996-97, following a larger crop in 1997-98. South America exhibited the opposite pattern, as production was forecast to rebound in 1998-99 after a reduced 1997-98 crop. Despite continuous output gains in Africa's largest cocoa producer, Côte d'Ivoire, the regional total output was forecast to fall in 1998-99 because of smaller crops in Ghana and Nigeria.

Cotton.

       World Cotton Production and Consumption, Table World cotton production continued its fluctuation of recent years. (See Table X (World Cotton Production and Consumption, Table ).) The area planted to cotton in 1997-98 was just over 33 million hectares, slightly less than in 1996-97. Improved yields resulted in a small increase in production from 89 million bales to 91 million. With consumption of cotton stagnant at 88 million bales, world trade fell slightly, and approximately 3 million bales were added to world ending stocks. Weather caused reduced production in South Asia but boosted cotton output in the U.S. and China.

      For 1998-99 these patterns were expected to continue. The area planted to cotton was forecast to fall just below 33 million hectares, with output declining to 84 million bales. Worldwide consumption was expected to remain at 88 million bales, so ending stocks should fall to just above the level of 1996-97, 38 million bales. The major cotton producers, the U.S. and China, were expected to reduce their 1998-99 crops, the large harvests in 1997-98 having put downward pressure on prices. The former Soviet republics were forecast to continue to reduce their production. Poor weather and the economic difficulties experienced by those nations created a negative outlook for their farmers.

PHILIP L. PAARLBERG

FISHERIES

       World Fishery Production The total world catch of fish in 1996, the latest year for which figures were available, increased significantly over that of 1995. The record total of 121 million metric tons represented a gain of 3.7 million metric tons over 1995. (See Table (World Fishery Production ).)

       Fishery Production and Trade by Principal Producers in 1996 China continued to be the leading producing nation, registering an increase of 7.5 million metric tons during 1996 for a total of 31,936,876 metric tons. The positions of the top 10 producing nations remained the same, with significant increases shown by Peru (up 578,752 metric tons over 1995), Iceland (up 447,821 metric tons), India (up 356,761 metric tons), Russia (up 354,803 metric tons), and Indonesia (up 283,940 metric tons). Nations registering decreases were Chile (down 680,391 metric tons), Denmark (down 318,188 metric tons), and the U.S. (down 240,289 metric tons). (For details on Fishery Production and Trade by Principal Producers in 1996, see Table (Fishery Production and Trade by Principal Producers in 1996 ).)

      Some interesting changes occurred among the top 20 species landed during 1996. Anchoveta remained in the top spot, increasing slightly from 8,664,576 metric tons in 1995 to 8,863,714 in 1996. Alaska pollock moved up to second place, even though it decreased from 4,687,718 metric tons in 1995 to 4,378,843 in 1996. A larger decrease, however, was registered by third-place Chilean jack mackerel, from 4,955,186 metric tons in 1995 to 4,378,843 in 1996.

      The largest difference registered was that for Pacific cupped oysters, which rose from 17th place in 1995 with 1,020,969 metric tons to fourth place in 1996 with 2,948,605. The reason for this huge disparity was not a sudden massive increase in the number of oysters caught but instead was the result of a change in the way that China reported its production figures in order to conform with the standard reporting procedures of the UN Food and Agriculture Organization (FAO). China had been reporting production statistics for the blood cockle, Japanese carpet shell, and Pacific cupped oyster to the FAO as shelled or shucked weight. This method significantly understated its production of those species because the standard practice with the FAO and other international fishery organizations was to report aquatic production as "nominal catch," the liveweight equivalent. A major increase in the catch of capelin, mostly from waters surrounding Iceland, resulted in a move from 20th place with 748,796 metric tons in 1995 up to 11th with 1,527,065. Production of chub mackerel also increased significantly, rising from 1,556,888 metric tons in 1995 to 2,167,881 in 1996.

      The rises in production during the last few years were accounted for almost entirely by increases in output from aquaculture. (See Special Report (Aquaculture: Fulfilling Its Promise ).) The level of catch reported by the world's fishing fleets leveled off at about 85 million-87 million metric tons.

      Despite the increases in production, the fishing industry was described during the year as "economically inefficient." The director of the FAO Fishery Resources Division commented in May 1998, "Although the problems of fishery management are now widely recognized and new international instruments such as the UN Agreement on Straddling and Highly Migratory Fish Stocks and the FAO Code of Conduct for Responsible Fisheries were adopted in 1995, fisheries management has generally failed to protect resources from being overexploited and fisheries from being economically inefficient." The main reasons for this failure, according to the FAO, were the "lack of political will to make difficult adjustments, particularly regarding the access to fishery resources and fishing rights," and the "success of industry lobbies in resisting changes" that would address the problems. Also mentioned was the persistence of direct and indirect subsidies and the lack of control of their fleets by flag states. Warnings were voiced that without "urgent intervention" to control or reduce fishing, the estimated 60-70% of global stocks that were currently fully exploited or overfished would continue to decline.

      Although many of the world's fishery resources were heavily exploited, there did appear to be some limited scope for development. The FAO estimated that better management of marine fisheries would result in a catch totaling 93 million metric tons, a gain of 6 million-8 million metric tons over the present. Better management should include practices that reduce unwanted by-catch, as each year commercial fisheries discard about 20 million metric tons of fish.

      The FAO concluded that a reduction of at least 30% of world fishing capacity would be required to allow the rebuilding of overfished resources. That message was taken up by the international environmental protection organization Greenpeace, which recommended a 50% reduction in the world's fishing fleets. In response, many countries began instituting controls on their fleets, although not as rapidly and extensively as Greenpeace wished. In the European Union the fisheries ministers agreed to cut the EU fishing fleet by up to 30% over five years as part of a fleet restructuring scheme.

MARTIN GILL

FOOD PROCESSING

      Home meal replacements became a major trend in 1998, particularly in the U.S., and the popularity of ready-to-eat, carryout meals increased. Convenience was the main spur to product and package innovation. Package design focused on ease of opening and environmental benefits. The increase in vegetarianism prompted new products and market strategies in this field. Although consumers paid lip service to the importance of healthful eating, dieting for health reasons declined while demand increased for products containing natural and organically grown ingredients. Functional foods with claimed specific health benefits, once perceived as a fad confined to Japan, became increasingly important in many other countries.

      Consumer resistance to genetic modification (GM) of food animals and plants grew markedly during the year. Consumers in Ireland were given official advice on whether GM resulted in foods that were safe to eat. Concerned that consumers were unaware of the growing use of GM in food and the constituents produced by GM and by the lack of legislation in this field, European trade bodies urged their members to label products that contained such constituents.

      It was estimated that in the U.S. alone approximately 30 million people were affected by food poisoning, of whom some 9,000 died. Catering services accounted for about one-third of fatalities, and processing was thought to be responsible for the remainder. Fears over E. coli bacteria spurred the U.S. Food and Drug Administration (FDA) to order warning labels on containers of unpasteurized fruit juice. Sweden expressed concern that salmonella had been detected in food imported from other European Union countries under EU free trade rules. In the U.K. new cases of bovine spongiform encephalopathy, also known as "mad cow" disease, fell dramatically, but the British National Audit Office said that by the year 2000 the BSE crisis will have cost the country about $6 billion, making it Britain's most expensive peacetime catastrophe.

Business Trends.

      The economic crisis in Asia, a key emerging market for food products and machinery, had serious implications for the global food industry. Indonesia, Thailand, and South Korea, where the cost of imported goods doubled in six months, were most at risk, but there was optimism that China would emerge relatively unscathed. The New Zealand Dairy Board stood to lose annual sales to the region of powdered milk worth $1 billion.

      Growth rates in most Latin-American countries, particularly Brazil, exceeded those in Europe, with demand for many food products, such as milk and meat, outstripping supply. Central and Eastern Europe provided opportunities for Western food companies and equipment suppliers, which increased their presence through exports, joint ventures, and new factories. Meanwhile, the consumer market for food in Western Europe reached volume saturation, but changes in the type of food consumed boosted the food ingredients market, worth $40 billion in the EU. The greatest growth was in non-nutritive sweeteners, a trend also seen in the U.S., where there was a general move toward more natural products and ingredients.

Company Developments.

      Cadbury Schweppes of the U.K. joined with the Carlyle Group of the U.S. to set up the American Bottling Co., which bought two U.S. soft drink companies, Beverage America and Select Beverages, for $724 million. Cadbury also bought the Polish chocolate maker Wedel from PepsiCo Inc. for more than $70 million and spent $120 million on a chocolate factory in Novgorod, Russia.

      In September, French authorities, Coca-Cola Co. blocked the planned acquisition of Orangina of France, distributor of PepsiCo's two main brands, for about $850 million. The move was seen as an attempt by Coca-Cola to oust PepsiCo from France. Coca-Cola opened a $50 million plant in Shanghai, which was expected to increase the company's investment in China to over $800 million. PepsiCo announced the acquisition of the Tropicana fruit juice business from Seagram of Canada for $3.3 billion. Inchcape of the U.K. sold its Russian bottling plant to Coca-Cola for $87 million only days before the ruble was devalued in August.

      Guinness PLC and Grand Metropolitan PLC of the U.K. were cleared to merge by the U.S. Federal Trade Commission (FTC), which gave its approval of the £24 billion ($40 billion) deal on condition that the new group, renamed Diageo, dispose of its Dewar's whisky and Bombay gin brands, together worth around £1,150,000,000 ($1,897,500,000). The sale of the global rights to the brands was the largest the FTC had ordered. The European Commission had already ruled that the Dewar's brand in Europe must be sold.

      In other international deals, H.J. Heinz Co. of the U.S. chose Auckland, N.Z., as the headquarters of its newly merged Australia and New Zealand operations, with sales exceeding $500 million. The British dairy processor Colac International established a new division, Volactive, dedicated to the production of functional food ingredients based on U.S. technology.

      A growth rate of about 6% was achieved by the world's top 50 food groups. The world's top 200 food groups had combined sales of some $750 billion and commanded 40% of the world's total food market. Nestlé SA of Switzerland, with food and drink sales of about $40 billion, remained the world's top food company.

New Products and Ingredients.

      The functional foods category presented the largest number of new product launches, as the market for healthful foods increased dramatically. LC1, an enriched yoghurt from Nestlé, was available in Europe, as was Symbalance, an enriched yoghurt from the Swiss dairy company Tonilait. Jour apres Jour was a French heat-treated skimmed milk enriched with vitamins and micronutrients and containing Actilight soluble fibre recently approved by the European Union's Scientific Committee on Food. In addition to products claiming to improve health, new products were formulated for their beauty benefits. Skin Beauty Drink from Pokka in Japan and Bio Aloe Vera yogurt from Danone in France were claimed to beautify the skin. Burgen Soy and Linseed Bread, introduced in the U.K. by Allied Bakeries and in Australia by Tip Top Bakeries, was claimed to alleviate menopausal symptoms in women.

      An appetite suppressor, Måv!l yogurt from Skanemejerier of Sweden, was claimed to create a comfortable sated feeling lasting 3-6 hours and to contain no drugs or artificial digestion blockers. Despite concern among consumers over possible gastrointestinal side effects, snack chips containing the fat substitute olestra became available in the U.S.

      McFarland's Food Co. of the U.S. launched Chicken Bacon, made by a patented process from ground chicken meat with the darker meat combined with lighter stripes to resemble traditional pork bacon, with natural smoke flavour and seasoning added. The company was looking for European licensees because of the EU embargo on U.S. poultry.

      After 12 years of development, Tate & Lyle of the U.K. launched a new sweetener called Slite, described as having all the qualities of sugar but half the calories. It received clearance from the FDA, which also approved sweeteners developed by two U.S. companies, the sucrose-based Sucralose from McNeil Specialty Products and the calorie-free acesulfame potassium (called Sunett) from Nutrinova. Meanwhile, in mid-December an advisory group to the U.S. National Toxicology Program recommended that the artificial sweetener saccharin be removed from the U.S. government's list of suspected carcinogens. Three other groups had earlier studied the question; two had voted in favour and one against removal of saccharin from the list.

Technology.

      Uproar from environmentalists prompted the Joseph Co. of California with BOC in Britain to develop a self-chilling beverage can using carbon dioxide instead of the ozone-harming gas previously contemplated. The beverage was automatically chilled in two minutes when a button on the can was pressed. The National Food Research Institute of Japan developed a method of eradicating pests from farm produce by using low-energy electron beams, eliminating the need for fumigants.

      A machine that sterilized meat without cooking it and which could be integrated into food-processing lines was developed by the U.S. Department of Agriculture's Research Service in Pennsylvania. It applied a vacuum to meat or poultry cuts followed by a burst of steam and then cooling. BTTG Biotechnology of the U.K. invented a DNA test method for identifying all types of meat and fish (whether raw, canned, or processed) contained in food products, even when present in very tiny amounts.

Packaging.

      LifeTop was the name of a package sealing system introduced by BioGaia Biologics AB of Sweden, allowing storage of beneficial bacterial cultures to be kept separate from short-life dairy products until the moment of consumption and thereby extending storage life from weeks to months. Chichiyasu of Japan launched a health drink using the system.

      Combibloc of the U.S. launched cartons made by a laser-cutting process for creating an easily openable spout. The first user was Mexican processor La Costeña for its tomato products. In the U.K. researchers at Scientific Generics made an initial announcement on the development of a cardboard can strong enough to hold pressurized beverages.

Government Action.

      The World Health Organization ruled in favour of EU-member states setting health standards that exceed international minimal standards on the sale of products. This overturned a previous ruling that the EU import prohibition of beef treated with hormones violated international free trade.

      An EU proposal that firms be allowed to state that their products "may contain genetically modified ingredients" was thrown out as being too confusing. It was replaced by a requirement that labels state either that products contain such ingredients or are guaranteed to be free from them.

      The EU gave legal protection to certain traditional European meat, beer, and edible oil products to stop them from being produced outside their home regions and by the wrong methods. The EU threw out a European Parliament amendment to its chocolate directive and allowed British and Irish manufacturers to continue to describe their chocolate as "pure chocolate," despite its added vegetable fat.

ANTHONY WOOLLEN

▪ 1998

Introduction

International Issues

       Selected Indexes of World Agricultural and Food Production, Table(For Selected Indexes of World Agricultural and Food Production, seeTable 1 (Selected Indexes of World Agricultural and Food Production, Table).)

      World agricultural production in 1997 was 1% above the previous high recorded in 1996, according to statistics compiled by the Food and Agriculture Organization (FAO) of the United Nations. Crop production remained about the same as in 1996, but livestock production increased nearly 2%. Food products accounted for the increase in agricultural output; production of nonfood agricultural products such as fibres and industrial products remained the same as in 1996. The increase in food production in 1997 kept pace with world population growth. Since 1990, world agricultural production per capita had increased 4%.

      Farmers in industrial countries expanded their production at the modest pace of about 1% per year between 1990 and 1997. Their crop output expanded at twice the rate of livestock production. Farm production of fibres, industrial products, and other nonfood items declined slightly from 1990. Total agricultural production in the United States grew at a vigorous rate of over 2% per year, whereas in the European Union (EU) there was no obvious trend. The growth in U.S. agricultural production was boosted in 1996 and 1997 by a change in federal farm policy that relaxed restrictions on the area planted to crops and allowed farmers more freedom in allocating their land among crops. The lack of growth in agriculture in the EU reflected an agricultural policy that gradually removed financial incentives for farmers to increase output.

      Since 1990, food production in less-developed African countries had been expanding about 2% per year. In 1997, however, grain production was down nearly 10% from the record 1996 harvest, which more than offset increases in production of other crops and livestock products. Growth in food production did not keep up with population growth. On average, per capita production in 1997 was down about 3% from 1990.

      China demonstrated amazing ability to expand agricultural production in the 1990s. At something over 3%, production expansion in 1997 was modest, relative to recent years, owing to a poor grain harvest. Between 1990 and 1997, however, total agricultural output grew well over 50%, recording a 35% increase in crop production and a 115% increase in livestock products. Per capita food production in China increased 50% during the seven years; per capita production of animal products doubled.

      Experts on Chinese agriculture accurately predicted China's rapid expansion of production and consumption of livestock products. They also predicted that China would not be able to expand feed production enough to meet the needs of the livestock and would have to greatly increase imports of coarse grains (corn, sorghum, oats, and barley). By year-end 1997, however, that had not happened. During the 1990s production of domestic feeds—along with the near elimination of coarse grain exports—enabled the domestic feed supply to keep pace with livestock production. Domestic production of high-protein meal, an important source of animal feed obtained from processed oilseeds, increased more than 300% between 1990 and 1997. Grain production increased about 15% from 1990, with most of that increase being used to feed livestock rather than people. In addition, inventories of grain reached a record high by the end of the 1996-97 crop year. In 1997 coarse grain production fell about 4%, but feed requirements were expected to be maintained through the 1997-98 feeding year by drawing down year-end stocks by about 50%.

      The countries of Eastern Europe and the former Soviet republics presented an entirely different picture of agricultural well-being. Production from their farms peaked in 1990. During the following years of political and economic restructuring, agricultural output in those countries declined by more than one-fourth. Crop production fell 18%, owing primarily to lower crop yields, and livestock products were down 34%. The hardest-hit countries—Azerbaijan, Bulgaria, Estonia, and Latvia—experienced declines in agricultural production of between 40% and 50%. In 1997, however, there were signs that the decline had hit bottom. A large increase in cereal production, due to higher yields, offset small declines in production of other crops and livestock.

Food Emergencies.

       Shipment of Food Aid in Cereals, TableA study by the U.S. Department of Agriculture's (USDA's) Economic Research Service showed that 9 million-11 million tons of food aid in the form of cereals were estimated to be needed during the 1996-97 crop year to raise food consumption in hard-hit less-developed countries to target levels. The target was the average of their food consumption in the previous five years—a figure that was still far short of their minimal nutritional needs. Food needs in those countries were less than in previous years because of their improved harvests and increased commercial food purchases. The FAO reported that aid shipments of cereals by donors, principally the U.S. and the EU, during the 1996-97 reporting year totaled slightly under five million tons—which was far short of food-aid needs. (See Table II (Shipment of Food Aid in Cereals, Table).)

      In general, food production in 1997 continued to improve in countries defined by the FAO as "low-income food-deficit," increasing 2% over 1996. Food emergencies continued to exist, however. The FAO identified food emergencies in 31 countries in 1997, up from 25 the previous year. Most were in Africa.

      Even so, the African situation eased somewhat in 1997. The FAO estimated that food production in the continent declined slightly in 1997 from the record-high level of the previous year, and overall there was somewhat less civil strife. Emergencies did, however, exist. The FAO reported that Ethiopia and Uganda suffered crop failures and food shortages as a result of adverse weather and civil disorder. Food production was also seriously reduced in Somalia, Tanzania, Burkina Faso, The Gambia, Senegal, Cape Verde, and Malawi. The ravages of war continued to cut food production in The Sudan, Rwanda, and Burundi, but some recovery was evident in 1997 in the latter two countries. Food emergencies also continued in Sierra Leone and Liberia. Civil strife in the Republic of Congo seriously disrupted food production and distribution in 1997.

      The food crisis continued in North Korea during the year. A typhoon and severe drought in 1997 followed two years of destructive flooding of farmland in the nation. The disruptions of the Persian Gulf War and the resulting trade embargo continued to greatly restrict food supplies to Iraq. As a consequence, malnutrition was widespread. The UN-brokered food-for-oil trade agreement eased the food situation somewhat in 1997, but malnutrition persisted. The FAO reported that Mongolia continued to have food shortages. Papua New Guinea and Haiti suffered from very poor harvests due to prolonged droughts. In addition, four of the former Soviet republics—Armenia, Azerbaijan, Georgia, and Tajikistan—suffered food shortages as a result of poor weather and the disruptions of the transition to new civil and economic conditions.

Food-Aid Supplies.

       Shipment of Food Aid in Cereals, TableFood-aid shipments in 1996-97 sharply declined, continuing the downward trend of the 1990s. (See Table II (Shipment of Food Aid in Cereals, Table).)Cereals, primarily wheat, accounted for about 85% of the volume of food aid. The FAO estimated that cereal shipments in 1996-97 fell 37% from the previous year; noncereal shipments (meat, fish, dried fruit, fats, oil, skim milk) fell 28%. Virtually all aid shipments came from developed countries. In 1996-97, however, China became a significant donor of cereals. Most of the food-aid shipments in 1996-97 went to low-income food-deficit countries in Asia and Africa. The remainder went to countries in Eastern Europe, the former Soviet republics, Latin America, and the Caribbean.

      Nearly three-fourths of cereal aid historically had been provided by the U.S. and the EU. Over the years, their aid shipments were high when domestic stocks—especially government-controlled stocks—were abundant and cereal prices were low. Shipments dropped in years when cereal surpluses disappeared and prices increased. High cereal prices and tight global supplies thus helped explain the sharp drop in cereal-aid shipments by all donor countries in 1995-96. Although prices dropped in 1996-97, cereal stocks in the U.S. and the EU remained at very low levels. A combination of low cereal stocks and government fiscal constraints helped restrict food-aid shipments in 1996-97. Food-aid shipments were forecast by the FAO to decline further in 1997-98, mainly because of expected reductions in noncereal shipments.

El Niño.

      Every two to seven years, the weather in much of the world is disturbed by increases in water temperatures in the equatorial Pacific Ocean, beginning off the coasts of Peru and Ecuador. The disturbance tends to build during the year, peak around Christmas (the name El Niño means "the Child" and refers to the Christ child), and then gradually dissipate. Strong El Niño disturbances were observed in 1982-83 and 1991-92. They created severe drought in some regions of the world and flooding in other areas. The associated changes in ocean currents and water temperature also had an impact on fish supplies. (See also EARTH SCIENCES: Meteorology.)

      Scientists found that the impacts of El Niño on weather and the ocean ecosystem were somewhat predictable. Consequently, private markets and governments had some early warnings in 1997 of potential food production problems. For example, the FAO and World Food Program took steps to monitor food-supply conditions in regions of the world where people were most vulnerable.

      In early 1997 the signs of a new El Niño began to appear. Drought developed in Indonesia, Papua New Guinea, and Australia. Heavy rain hit California and parts of South America. Drought in much of Southeast Asia reduced coconut and palm yields. Crops in other parts of the world also were damaged by drought and floods, but it was more difficult to link those weather disturbances to El Niño.

      El Niño-related weather disturbances caused some severe localized crop damage, but the impact on world food supplies was minimal in 1997. Greater damage was expected to occur in 1998, especially to Southern Hemisphere crops planted in late 1997 and harvested in 1998, including tropical products as coffee, tea, cocoa, and fruits.

      The effects of El Niño on cereal production in 1997 were minor. Drought had put the Australian wheat crop on the brink of disaster, but rains came just in time to prevent major damage. Because of the low stocks of grain expected to be carried over from the 1997 crop, weather conditions in 1998 could have a major impact on world grain prices. The FAO observed that the largest impact of El Niño in late 1997 and 1998 likely would be on supplies of oil and meal (a high-protein feed for livestock). A contributing problem was expected to be the decline in meal and oil processed from fish caught off the Pacific coast of South America because of the reduced fish population there.

Low Grain Stocks.

      At the end of the 1995-96 crop year, grain stocks were only 14% of world grain consumption—the lowest in decades. Nine years earlier, stocks had been 28% of consumption. In addition, considerable quantities of stocks were located in countries such as China, where they were not available to world markets. As a result, there was virtually no grain safety net to protect the world's consumers from a poor grain harvest in 1996-97. Because of the rapidly increasing livestock numbers in the less-developed countries, the world demand for grain was rapidly expanding. Fortunately, a record world grain harvest in 1996-97 and an expected record harvest in 1997-98 were able to satisfy demand and provide a small recovery in world stock levels. Even so, grain stock levels at the end of the 1997-98 crop year were expected to be slightly below the minimum recommended by the FAO to provide protection against the possibility of a poor harvest in 1998. Another record grain harvest would be needed in 1998-99 to replenish stocks.

Dolly.

      In February a team of scientists at the Roslin Institute near Edinburgh announced that they had cloned an adult sheep. The seven-month-old clone, Dolly, grew from an altered embryo placed in a surrogate mother. The embryo was created from an egg cell whose nucleus had been replaced by the nucleus of a cell from an adult sheep.

      The world's first clone of an adult animal was a milestone in science and could have a significant impact on livestock production. It also sparked an international debate on the ethics of research that could possibly lead to the cloning of humans. A team of Danish researchers stopped research on cloning cattle, pending public debate. (See LIFE SCIENCES: Special Report.)

Agricultural Commodities

Grains.

       World Cereal Supply and Distribution, TableThe poor grain harvest in 1995-96 drove up prices on world grain markets. High prices stimulated many of the world's farmers to plant additional land to grains. As a result, world production in 1996-97 increased 9%. (See Table III (World Cereal Supply and Distribution, Table).) Much of the increase came from wheat and coarse grains produced in China and in grain-exporting countries such as the U.S., the EU, Canada, Australia, and Argentina. World production of coarse grains increased 104 million tons (13%) in 1996-97, with most of the increase coming from the U.S., China, and the EU. The coarse grain harvest in the former Soviet republics declined 7% and offset their gain in wheat production.

      Global stocks of coarse grains had declined to a record low stock-to-use ratio just before the 1996-97 harvest. There were virtually no stocks available to protect against a poor crop. Fortunately, the bountiful 1996-97 harvest was adequate to feed the world's expanding livestock herd and still leave 25 million tons to add to carryover stocks. World rice production in 1996-97 continued its modest upward trend, and wheat production increased 8%.

      The world's 1997-98 grain crop was forecast to exceed slightly the previous year's record. China was expected to enjoy a 9% larger wheat harvest, but the nation's coarse grain production would likely be down 16%. China's livestock production could be maintained, however, by drastically reducing year-end stocks. The former Soviet republics, on the other hand, were forecast to experience their first major increase in cereal grain output (about 25%) since 1990. As a result, abundant feed and food would be available, and carryover stocks would likely double. Production of wheat rose in the U.S., and the EU harvested a larger coarse grain crop, but most other countries were expected to have smaller harvests.

Oilseeds.

       World Production of Major Oilseeds and Products, TableMost oilseeds were crushed to produce meal and vegetable oil. The near-record world harvest of oilseeds in 1996-97 still fell short of the rapidly growing demand for oilseed products. As a result, the prices of oilseed products increased on world markets, and year-end global stocks of oilseeds fell to their lowest level in recent years. The USDA forecast an 8% increase in world oilseed production for 1997-98. (SeeTable IV (World Production of Major Oilseeds and Products, Table).) That increase was expected to exceed the growth in world consumption of oilseed products and to replenish world year-end stocks. On the other hand, fishmeal production (7% of world meal production) was expected to decline in 1997-98.

      Soybeans accounted for more than half of the world production of oilseeds. The U.S. (with 50% of world production), Brazil (20%), and Argentina (9%) were the world's three largest producers and exporters of soybeans and their products. In 1996-97 they experienced a profitable export market. The USDA forecast that each would set new production records in 1997-98, with output exceeding the previous year's level by 15% in the U.S., 9% in Brazil, and nearly 30% in Argentina.

      The 1997-98 forecast was for robust exports of soybeans and products. Because of its rapidly expanding livestock industry, China was expected to need a major increase in imports of soybeans and meal. The EU, the largest importer, was expected to maintain a high level of imports in 1997-98. On the other hand, East Asian countries other than China showed no signs of growth in imports owing to the downturn in their economies.

       World Production of Major Oilseeds and Products, TableThough not revealed in the numbers in Table IV (World Production of Major Oilseeds and Products, Table), evidence was accumulating by December 1997 that world oil production in 1997-98 would fall short of expectations. Drought in Southeast Asia was affecting tropical oil production there. In addition, El Niño's negative impact on the fish catch off the coast of Chile was expected to lower that nation's production of fish oil.

Livestock and Meat.

       Livestock Inventories and Meat Production in Major Producing Countries, TableThe FAO estimated that world meat production in 1997 increased nearly 5% over 1996 because of strong demand and lower feed prices. (See Table V (Livestock Inventories and Meat Production in Major Producing Countries, Table).) Most of the meat expansion occurred in the production of pork and poultry in less-developed countries. The rapid increase in meat production in China in recent years made it by far the world's leading producer, followed by the U.S. and the EU. Per capita consumption of meat was estimated by the FAO to increase 6% in less-developed countries but remain the same in developed countries.

      Beef production was estimated by the FAO and the USDA to be down marginally in most regions of the world. In the EU food-safety issues plagued the beef industry. In China, however, beef production was expected to increase 9%. Overall, a small increase in world beef trade was expected. The world's beef herd marginally decreased in 1997. The herds in the U.S. and the former Soviet republics declined 2% and 8%, respectively. China's herd increased about 5%. These changes in China and the former Soviet republics in 1997 were continuations of trends that existed throughout the 1990s.

      World pork production in 1997 was estimated to increase 5% over 1996, including 9% growth across the less-developed countries. Production was down in the EU and Russia. World trade of pork, which represented less than 3% of production, was not expected to change significantly from 1996. The global inventory of hog numbers increased about 1% in 1997. Growth of hog inventories in the U.S. and in the less-developed countries—especially China—slightly exceeded drops in numbers in the EU and the former Soviet republics.

      As with beef and pork, the less-developed countries led the way in poultry expansion in 1997. Production was estimated to increase nearly 10% in those nations, whereas the largest producer, the U.S., registered a 3% gain. World trade volume increased in 1997, with the U.S. showing an increase of about 8%.

Dairy.

       World Production of Milk, TableAccording to FAO estimates, world milk production from cattle, buffalo, camels, sheep, and goats was expected to increase 1% in 1997, with most of the increase coming from the less-developed countries. (See Table VI (World Production of Milk, Table).) Domestic demand for milk products in most developed countries remained relatively static in recent years. In contrast, higher incomes in many less-developed countries in Asia and Latin America stimulated their demand for milk products, and production increased rapidly. As a group, less-developed countries had increased milk production by one-third since 1990.

      The multiyear decline in milk production in Eastern Europe and the former Soviet republics showed evidence of bottoming out in 1997. Between 1990 and 1996 it dropped over 50%, but FAO estimates revealed no further decline in 1997. Russia purchased large quantities of butter from the world market in 1997, strengthening world prices. Near the end of 1997, there were concerns in world markets about the possible drought-induced effects of El Niño on the dairy industry in New Zealand and Australia—two major exporters. The impact of El Niño on 1997 milk production was surprisingly small.

Sugar.

       World Production of Centrifugal Sugar, TableThe USDA forecast that world sugar production in 1997-98 would remain essentially the same as in the previous two years. (See Table VII (World Production of Centrifugal Sugar, Table).) About 70% of the world's sugar was produced from cane, and the remaining 30% came from beets. Global consumption just matched production in 1996-97, but it was forecast to exceed production slightly in 1997-98 and draw down global sugar stocks. Little change in world trade of sugar was forecast.

      In 1997-98 Brazil was forecast to displace India as the world's leading sugar producer. Since 1991-92 Brazil's production had more than doubled, with most of the growth going into exports. India's production dropped one-fourth from the previous two years because farmers took land out of sugar and used it for more profitable crops. Production in the U.S. and the EU was forecast to increase 5% and 2%, respectively.

      On the other hand, the USDA forecast a continued decline of production in the former Soviet republics and in Cuba. Cuba's sugar harvest suffered from a combination of poor weather and shortages of production inputs. Sugar production in the countries of Eastern Europe was forecast to decrease slightly in 1997-98 after the large increase in 1996-97. Thailand was forecast to have a sharp reduction in 1997-98 because of the drought. Sugar consumption was expected to continue its upward trend in the less-developed countries as a result of population growth and higher incomes. The demand for beverages accounted for much of the growth in the consumption of sugar. In the developed countries, a combination of slow population growth and the substitution of other sweeteners for sugar accounted for their lack of growth in demand for sugar.

Coffee.

       World Green Coffee Production, TableWorld green coffee stocks were at a 16-year low at the beginning of the 1996-97 crop year because of a poor crop the previous year. Fortunately, the coffee harvest in 1996-97 was very good. USDA data revealed that Brazil, with a 64% increase in production, provided the main source of recovery. (See Table VIII (World Green Coffee Production, Table).) A combination of record-high domestic use in producing countries plus record-high exports, however, exhausted the world's 1996-97 coffee crop and further depleted year-end stocks. In exporting countries total coffee exports were up 11% from 1995-96; domestic consumption increased 3%.

      A tight world coffee market was expected during the 1997-98 crop year. Beginning stocks were very low, and coffee demand was expected to exceed the previous year's record. June 1997 estimates by the USDA indicated that the 1997-98 coffee harvest worldwide would be about 3% above 1996-97. Vietnam became the fifth largest producer and was expected to account for the most growth. Nonetheless, the growth in world production was expected to fall short of the predicted demand, which would lead to even lower levels of year-end stocks. As a result, coffee prices sharply increased.

      After the June production estimates were reported, El Niño entered the picture. It was blamed for bringing additional uncertainty to the world coffee market. Drought hurt the coffee crop in Indonesia and Kenya, and Tropical Storm Pauline destroyed several thousand hectares of coffee in Mexico. Additional weather damage from El Niño was expected in early 1998. As a result, estimates made by the FAO in late 1997 indicated that world coffee production in 1997-98 would be down about 8% rather than increasing, as previously forecast by the USDA.

Cocoa.

       World Cocoa Bean Production, TableWorld cocoa production in 1996-97 declined 8% from the record crop harvested the previous year. (See Table IX (World Cocoa Bean Production, Table).) The two largest producers, Côte d'Ivoire and Ghana, accounted for most of the increase in 1995-96 and most of the decline in 1996-97. The 1997-98 world cocoa crop was expected to be marginally larger.

      Farmers in Côte d'Ivoire, which accounted for more than 40% of world cocoa production, had expanded production by cutting into virgin forests. The government, however, planned to prohibit this practice and thus sharply reduce the potential for future growth in production. Ghana was expected to increase production 8% in 1997-98 owing to cyclical production patterns and favourable weather. An increase in the cocoa tree population in Ghana continued, spurred by a jump in government-set producer prices for the beans. Indonesia was expected to have a record harvest of cocoa beans in 1997-98 in spite of the drought. Production had increased by one-fourth since 1992-93 as a result of an aggressive government-industry program of research and farmer assistance.

      By contrast, Brazil and Malaysia exhibited downward production trends. Brazil, where production had declined 50% in five years, suffered from serious disease problems and seemed slow to overcome them. In Malaysia more profitable oil palm trees and other crops were replacing cocoa trees.

Cotton.

       World Cotton Production and Consumption, TableThe USDA estimated that world cotton production in 1996-97 declined 4% from the previous year, but production in 1997-98 was forecast to increase slightly. (See Table X (World Cotton Production and Consumption, Table).) During the past four decades, cotton yield per hectare had increased about 1.8% per year. Harvested area and yield were forecast to increase slightly in 1997-98.

      Africa experienced a healthy increase in cotton production, 10% in 1996-97 and a forecast of 9% in 1997-98. In the former Soviet republics, cotton production was forecast to increase 17% in 1997 after eight years of decline, during which production was cut in half. On the other hand, China's cotton harvest shrank in both 1996 and 1997.

      World consumption of cotton was expected to continue its upward trend of between 1% and 2% per year. In South Korea, Thailand, Indonesia, and other Southeast Asian countries, however, economic disruptions in 1997 were expected to reduce imports and consumption of cotton. Domestic cotton use in the former Soviet republics in 1996-97 was 70% below its peak of seven years earlier, but consumption was forecast to increase in 1997-98.

      World cotton stocks at the beginning of 1997-98 rose 7% from the previous year and were equivalent to about 40% of annual world consumption. The USDA forecast year-end stocks to be about the same as beginning stocks. China, which held 40% of the world's cotton stocks, was forecast to reduce its huge stockpile during 1997-98 in order to fill the growing gap between domestic production and consumption and also to reduce imports.

JERRY A. SHARPLES

      See also Business and Industry Review: Textiles; Earth Sciences: Meteorology.

Fisheries

       World Fisheries, 1995According to the latest figures released by the UN Food and Agriculture Organization (FAO), 1995 provided yet another increase in the world catch of fish. The total of 112.9 million metric tons represented a gain of 3.3 million metric tons over 1994. (See World Fisheries Table (World Fisheries, 1995).) The increase was due exclusively to a higher level of aquaculture production. Indeed, the FAO reported a slight fall in the total wild catch from 92.1 million metric tons in 1994 to just under 92 million in 1995. The top 20 producing countries accounted for about 80% of total world production, and the top 10 accounted for almost 70%.

      China again dominated the producing nations with a total output of 24.4 million metric tons of fish caught or raised. This was approximately 15.5 million metric tons ahead of the second-place nation, Peru, which recorded just over 8.9 million metric tons, a drop from 11.6 million in 1994. Of Peru's 8.9 million metric tons, only 51,508 were produced through aquaculture, whereas in China 10.8 million metric tons of the 15.5 million total were derived from aquaculture. Third-place Chile with 7.6 million metric tons, fourth-place Japan with 6.8 million, and fifth-place U.S. with 5.6 million showed decreases in catch in 1995. In contrast, sixth-place India continued to show a steady increase in production, with a rise to 4.9 million metric tons from 4.5 million in 1994.

       Top 20 Species Landed, 1995Despite a drop from 12,520,000 metric tons in 1994 to 8,640,000 in 1995, South American anchoveta (tropical anchovy) again topped the leading species caught. Alaska pollock lost the number two spot to Chilean jack mackerel, which rose from 4,260,000 metric tons to more than 4,960,000. Also increasing in quantity in 1995 were Alaska pollock, from 4,300,000 to 4,690,000 metric tons; Atlantic herring, from 1,900,000 to 2,240,000 metric tons; and skipjack tuna, from 1,490,000 to 1,560,000 metric tons. The Atlantic cod and European pilchard also registered slight increases. The Japanese pilchard catch, however, continued to decline, with just 733,000 metric tons caught in 1995, compared with as many as 3,770,000 as recently as 1991. (For Top Species Landed, see Table (Top 20 Species Landed, 1995).)

      Of the total fishery production in 1995, approximately 31.5 million metric tons were used for reduction to fish meal, and the total available for human consumption was estimated at 80 million metric tons, 3.4 million more than 1994. This represented a greater increase than the estimated population growth rate for the same year and resulted in an increase in the average per capita availability of food fish to 14 kg (31 lb). Most of the production increase occurred in Asia, particularly China.

      The trend of growth in the value of the international trade in fish continued in 1995. In 1985 the value of international fish exports was $17 billion; five years later it had risen to $35.8 billion, and by 1995 it had reached $52 billion. The overall trend in the value of the trade, however, was one of slower growth in recent years. In 1995 Japan, with some 30% of the world's total, continued to be the largest importer of fishery products. In value terms developed countries accounted for about 85% of total fish imports.

      The U.S. was the world's second biggest importer of fishery products but was also the world's second biggest exporter. The European Union increased its dependence on imports for its fish supply.

      For many less-developed countries the fish trade represented a significant source of earnings. The increase in net receipts of foreign exchange in those countries—deducting their imports from the total value of their exports—was impressive, rising from $5.1 billion in 1985 to $16 billion in 1994; a further increase to $18 billion was recorded in 1995.

      During 1995 the Japanese government, with technical assistance from the FAO, convened the International Conference on the Sustainable Contribution of Fisheries to Food Security. The conference adopted the Kyoto Declaration and Plan of Action on the Sustainable Contribution of Fisheries to Food Security. The Kyoto Declaration was a comprehensive document that took into account previous decisions that had undermined sustainable resource use, which in turn constrained the fisheries sector's contribution to food security. Both the Kyoto Declaration and the Plan of Action were a major contribution to the 1996 FAO World Food Summit.

MARTIN GILL

Food Processing

      Consumption of fast foods and convenient meals increased considerably throughout the world in 1997. Americans and Japanese ate away from home most often. In Europe the chilled-foods sector rose more than 8% over 1996, the U.K. taking first place with a 42% share. Some 90% of Americans turned to low-fat and low-calorie foods on a regular basis. Dietary fibre was back in favour as a healthful food, but, as the term meant different things to different people, nutritionists called for a definition of it. Confusion existed on what constituted a healthful diet; research by the U.S. Department of Agriculture found that throughout the world the foods that people were advised to eat and those they actually ate were different. The fear of "mad cow" disease continued to stimulate demand for meats other than beef, especially in Europe, where more than 4% of the population had become vegetarians. Gaining in popularity in many parts of the world were exotic meats, such as kangaroo, emu, and crocodile.

      Consumption of nonalcoholic beverages increased worldwide, most strongly in less-developed countries. Flower-flavoured beverages found favour in Asia, especially in China. Low-calorie beverages remained a popular trend in Japan. The market for iced tea grew fastest in Asia, taking 16% of the continent's soft-drink market; 80% of that market was in Japan, Indonesia, and Taiwan. In Europe iced tea was most popular in Switzerland and Austria and least so in the U.K. Bottled water took the highest share of the soft-drink market in Europe. Clear sparkling drinks were past their peak in the U.S. but increased in popularity in Europe. Sales of alcoholic fruit drinks, known as alcopops, soared. The main markets were in Australia and the U.K., where sales rose to $375 million, but there was also much activity throughout Europe. Public concern that such beverages encouraged underage drinking caused sales bans in some British supermarket chains and the withdrawal of some brands by manufacturers and the relabeling of others.

      Food-borne disease increased to record levels throughout the world and remained a serious public health problem. Infected fruit juice in the U.S. hospitalized 60 people and shut down the California plant of the largest American juice processor, which had to recall juice nationwide. In the U.K. the death toll believed to result from beef infected by "mad cow" disease rose to 21, and in December the British government announced that beginning in 1998 it would ban the sale of beef on the bone.

      Food adulteration became more prevalent. Some unscrupulous European suppliers sent large quantities of adulterated fruit juice to the U.S. market, and a fraud involving adulterated concentrated juices was uncovered in Germany. Honey, coffee, and cheese, yogurt, and other milk products were also involved.

Business Trends.

      Latin America was identified as a major area for expansion for international food companies. McCain Foods of Canada announced plans to invest $25 million in a plant in Buenos Aires, Arg., to produce frozen french fries. Pavan Mapimpianti of Italy teamed with Molinos Rio de la Plata to inaugurate a $14 million plant, also in Buenos Aires, to produce 100 million tons per year of pasta products.

      Able to supply only 46% of its total food requirements, Japan remained the world's largest net food importer in 1997. The nation spent more than $60 billion on food imports, of which the U.S. accounted for 30%. Japan's food and drink spending, at more than $3,000 per person, was the highest in the world and was growing the fastest. In China demand grew for snacks, many from Japan. India's several large food companies predicted high growth rates.

      The European chilled-foods market, worth more than $10 billion annually, grew by 8.6% in 1997. The U.K. had the largest share with 42%, followed by France with 21%. In Europe sales of own-label products, at more than $30 billion, grew at a rate higher than the general market growth; the U.K. led with a 40% share.

      Beer sales in Europe continued their 1% annual growth. Germany remained the most important national beer market, with a consumption per head of about 140 litres (One litre = 0.264 gal). The European market for herbal teas grew strongly, mint flavours becoming the most popular.

Company Developments.

      Quaker Oats Co. of the U.S. wrote off $1.4 billion after selling for $300 million the Snapple soft drinks company acquired for $1.7 billion in December 1994. H.J. Heinz Co. of the U.S. announced the biggest reorganization in its history, involving a $650 million restructuring charge, the loss of 2,500 jobs (a cut in its worldwide workforce of 43,000 by about 6%), and the closing of 25 factories in Europe, North America, and Asia. With the acquisition of Coca-Cola Bottlers Philippines Inc for about $2.5 billion, Coca-Cola Amatil Ltd., the Australian Coca-Cola franchisee, became the largest Coca-Cola bottling group outside the U.S.

      The U.K.'s Trade and Industry Department blocked the acquisition of the nation's third largest brewer, Carlsberg-Tetley PLC, by the second largest, Bass PLC, because it would reduce competition. Both the European Commission and the U.S. Federal Trade Commission said they would investigate the proposed merger of the two British alcoholic beverage firms Grand Metropolitan PLC and Guinness PLC. The combined sales of the two companies would give them 40% of the Scotch whisky market in some countries.

      Nestlé SA of Switzerland remained the top world food and drink company, with a sales total in 1996 of $39 billion. It was followed by Philip Morris Companies Inc. (U.S., $33 billion) and Unilever PLC (U.K./Neth., $27 billion).

New Products and Ingredients.

      Iceland Frozen Foods of the U.K. launched a range of flavoured vegetables for children that included chocolate-flavoured carrots and pizza-flavoured sweet corn. In Italy La Faraona introduced a low-fat ostrich meat, and in the U.K. the retail chain Tesco PLC launched its own brand of ostrich steaks and kangaroo products from Australia.

      In the U.S. Kerry Ingredients developed KerryBits, flavoured pieces to add the flavour, texture, and appearance of real fruit to bakery products economically. Yoghurtesse of San Francisco introduced a fat replacer made from skim milk protein containing no fat or cholesterol and only one-tenth the calories of ordinary fat. Archer-Daniels-Midland Co. in the U.S. launched NutriBev, a vegetarian alternative to milk based on soya protein that could be made into a drink. New snack foods that were quickly prepared and easy to eat abounded. Bacon Pizza Bakes from Tulip International in the U.K. used breadcrumb-coated bacon instead of bread as a pizza base, and a similar product from Soviplus in France used a breaded poultry slice as a base.

      Despite adverse publicity for alcopops, the British market for these beverages continued to grow. Fruit-flavoured tea drinks containing 4% alcohol appeared in Japan under the name Fantasy Time Cocktail. Whitbread & Co. Ltd. of the U.K. launched beers containing vodka and whiskey, which again caused concern among antialcohol groups.

Technology.

      Interest in electronic aroma-sensing instruments grew, and several became commercially available. They were used for such purposes as detecting rancidity in fats, distinguishing between blends of tea, predicting the shelf life of dairy products, detecting product adulteration, and checking food-grade packaging materials. GEC Alsthom of Nantes, France, unveiled the Hyperbar high-pressure processing machine for nonthermal sterilization of food. Two such machines were in operation in France.

      The U.S. became the world leader in the processing of spices by irradiation. SteriGenics of California extended its spice-irradiation activities to fresh fruit and vegetables. The number of countries that approved the use of irradiation for one or more food items reached 39, and 29 were using the technology.

Packaging.

      Edible protein-based water-soluble packaging films, which were made from carrageenan (a colloid extracted from red algae and used as a stabilizing or thickening agent) and became part of the food they wrapped, were being developed by Watson Foods Co. in the U.S. in partnership with Polymer Films and the British companies Cambridge Consultants and Enak. The Coca-Cola Co. introduced a 12-oz contoured can, in the shape of the original Coca-Cola bottle, in Terre Haute, Ind., birthplace of the original bottle in 1915, and in four southwestern U.S. markets.

      Successful launches of Quaker Oats's and Kellogg Co.'s cereals in microwavable stand-up pouches, in the U.S. and Canada, respectively, marked the first packaging changes in 90 years in the breakfast cereal industry. Flexible packaging also was gaining in popularity for microwavable full meals, soups, snacks, cake mixes, and milk.

Government Action.

      European Union (EU) regulations effective as of May 1997 required special labeling for novel foods and ingredients and for those containing genetically modified organisms. EU regulations effective from March 1997 required companies that were involved in any packaging activity valued at more than $7.5 million a year (falling to $1.5 million in 2000) and handled more than 50 tons per year of packaging materials to recover and recycle specific tonnages of packaging waste. The new British government, elected in May, announced the establishment of an independent food standards agency, consisting of 10 food experts, to oversee food safety.

      In the U.S. the government established new rules requiring seafood processors to take steps to prevent contamination of their products and also proposed new regulations for organic foods. The Clinton administration also proposed an increase in government spending for food inspection and safety research.

ANTHONY WOOLLEN

      See also Business and Industry Review: Beverages; Tobacco; The Environment; Health and Disease.

▪ 1997

Introduction

       Selected Indexes of World Agricultural and Food Production, Table(For Selected Indexes of World Agricultural and Food Production, see Table I (Selected Indexes of World Agricultural and Food Production, Table).)

      A world food crisis was averted in 1996 by the recovery of grain production. Grain stocks were expected to increase from the record-low levels recorded at the end of the 1995-96 marketing year. Increased stocks would provide added security against any crop failure in 1997. The increase in grain production was widespread among less-developed countries (LDCs). As a result, food-aid needs were expected to drop in late 1996 and into 1997 as the larger crop was harvested and prices declined. Also noteworthy in 1996 were the World Food Summit, where nations committed themselves to efforts to reduce the number of undernourished people by half by 2015, and bovine spongiform encephalopathy (BSE)—"mad cow" disease—which shocked beef producers and consumers in the United Kingdom. The shock (but not the disease) was felt throughout the European Union (EU) and beyond.

      World agriculture in 1996 was also affected by longer-term forces. World markets for food and feed gradually had become more integrated. Nations continued to reform their domestic agricultural policies and reduce trade barriers. Part of the reform was needed to meet commitments to the Uruguay round trade agreement. One important example was new agricultural legislation in the United States. As a result of recent reforms, producers and consumers in many nations were responding more quickly to world market forces. This was demonstrated by the many farmers who shifted large areas of cropland from other uses to grain production in 1996. Many barriers to integrated world markets still remained, however.

      A second force was the rapidly increasing income of people in many LDCs. With more income they demanded more food—especially meat and fresh fruits and vegetables. In China, for example, the rapidly growing demand for meat was felt around the world in the form of expanded demand for feed grains and oilseed meal. In addition, the higher incomes of people in LDCs enabled them to gain better access to food. A survey by the Food and Agriculture Organization (FAO) of the United Nations showed that in the early 1990s there were about 850 million people with inadequate access to food—down from 900 million 20 years earlier—even though the population of LDCs had increased by 1.5 billion over that period.

      A third force was the decline in food production and consumption throughout the 1990s in the countries of Eastern Europe and the former Soviet Union. By 1996 there was evidence that this was halting in some countries, but the overall decline continued.

INTERNATIONAL ISSUES

Food-Aid Needs.

      The FAO and other international aid organizations have stressed that two kinds of food-related assistance are usually needed. There is the short-run need for donors to provide food to meet emergencies caused by natural and man-made disasters. There also is the longer-run need to assist countries in improving their agricultural sectors. In the mid-1990s some LDCs—for example, Sierra Leone and Rwanda—emerged from prolonged civil strife and were facing the possibility of peace and increased stability. These countries would be especially suitable targets for longer-term assistance. A healthy agricultural sector would not only provide more food but also improve the incomes and access to food of the large proportion of the population that lived in rural areas.

       Shipment of Food Aid in Cereals, TableIn 1996-97 the short-term food prospects improved in many low-income food-deficit countries (LIFDCs). Although food-aid needs declined worldwide, shortages persisted in many countries owing to crop failures, natural disasters, and continuing civil strife. According to the results of an annual analysis by the Economic Research Service of the U.S. Department of Agriculture (USDA), LDCs would need about 9 million to 11 million tons of food aid in the form of cereals during the 1996-97 crop year. Food-aid needs were concentrated in sub-Saharan Africa, Bangladesh, Afghanistan, and North Korea. The 1996-97 estimate was down from the previous year's estimated needs as a result of improved harvests and increased commercial imports at lower prices in countries receiving aid. Donor nations, however, were expected to supply only 7.5 million tons of cereal aid. (See TABLE II (Shipment of Food Aid in Cereals, Table).)

      The USDA estimate of food-aid needs was obtained by examination of the requirements of 65 LDCs. "Aid needs" for each country were defined as the difference between a target level of food consumption and what could be grown and commercially imported. The target was the average level of food consumption per capita over the previous five years. The 9 million to 11 million tons needed to meet this target in 1996-97 would still fall far short of supplying minimum nutritional standards.

      The FAO estimated that 40% of the population of Africa had been undernourished in recent years. In addition, civil strife in various parts of Africa had caused greatly diminished local food production and created several million refugees who needed emergency food aid. A year after the UN forces left Somalia, clan-based fighting continued, and the food emergency worsened in 1996. Cereal harvests also were much below normal. The fighting also disrupted emergency food aid to Somalia by international organizations. Poor cereal harvests and fighting created a food emergency in the capital, Mogadishu. The Sudan suffered from severe floods, pest infestation, and civil war that reduced cereal production and disrupted emergency food assistance. Continuing strife in Liberia also led to a sharp decline in food production in 1996 and disrupted food assistance. Much of the Liberian population took refuge in neighbouring states. By the end of the year, however, there was evidence that a peace agreement might enable relief supplies to move and allow farmers to return to their fields and tend the crops.

      In the Great Lakes region of Africa (Burundi, Rwanda, Tanzania, and Zaire), masses of refugees moved between countries to escape civil strife. Local food production was devastated. The food situation in these countries in 1996 was precarious, and emergency food was urgently needed. Thousands of refugees returned to their farms and homes in Rwanda in 1996 as some stability returned to the country. As a result, there was some recovery of food production.

      Owing to strong economic growth and above-average cereal harvests, food-aid needs were down in most of the LDCs in Latin America and Asia in 1996. In Afghanistan and Iraq, however, production was down, and food-aid needs increased. Food shortages also persisted in North Korea and Laos owing to extensive flooding. The countries of the former Soviet Union generally experienced increased cereal production and some expansion of commercial trade, which thus reduced their need for food aid. In Tajikistan and Turkmenistan, however, food shortages persisted.

Food-Aid Supplies.

      Wealthy countries provided food aid to other countries in two ways: as a direct aid shipment and as a concessional sale at a reduced price or with a low-interest loan. Because of the world cereal shortage in 1995-96, cereal prices were at record highs. As a result, aid shipments were down, and concessional sales were nearly eliminated. The FAO estimated that LIFDCs increased their expenditures on cereal imports by 35% from the previous year, even though they imported less.

      Total cereal-aid shipments (mostly wheat) in 1995-96 were estimated by the FAO to have been 7.2 million tons, with 5.7 million tons having gone to LIFDCs and the remaining 1.5 million tons to other countries. The record-low aid to LIFDCs was down nearly 30% from the previous year and down nearly 40% from the average of the previous four years. Much of the decline in shipments was to sub-Saharan Africa, but aid shipments to Latin-American and Caribbean countries also declined sharply. Considerably more food aid was sent to North Korea. Food-aid shipments to countries in Eastern Europe and the former Soviet Union (non-LIFDCs) were down 30% from 1994-95. Among donor nations most of the decline was due to reduced shipments by the U.S. and the EU, which combined still accounted for 75% of the cereal food aid. Japan increased its aid shipments. In 1994-95, 30% of food-aid shipments went through multilateral channels such as the World Food Programme.

      In November 1996 the FAO estimated 1996-97 food-aid shipments at 7.5 million tons, an increase of 4% over the previous year. Most of the increase was expected to come from the EU and go to the LIFDCs in Africa and Asia.

World Food Summit.

      The World Food Summit, held Nov. 13-17, 1996, at the Rome headquarters of the FAO, brought together world leaders to discuss global food security. At a similar conference in 1974, leaders had pledged a goal of eradicating hunger within a decade. It did not happen. The FAO estimated that in 1996 about 14% of the world's population suffered from chronic undernutrition. The FAO had classified more than 80 nations as LIFDCs—half in sub-Saharan Africa. The world's population, expected to increase 50% by 2030, faced a declining per-person supply of tillable land and fresh water. These basic facts provided the background for the 1996 summit. The record-low cereal stocks and sharp increases in cereal prices on world markets in 1995 and 1996 added to the urgency of the summit.

      The summit produced a "Declaration on World Food Security" that identified the causes of food insecurity and the actions pledged by governments to correct the problem. According to this declaration, food security is attained "when all people, at all times, have physical and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preferences for an active and healthy life." The summit's goal was "reducing the number of undernourished people to half their present level no later than 2015.

      The summit declaration recognized that the primary cause of food insecurity was poverty, not a global shortage of food. Poverty eradication would require a peaceful and stable community where job opportunities existed and skills could be improved. It was ironic that the majority of the world's hungry lived in rural areas. The declaration called for more investment in agriculture in LDCs to reduce rural poverty as well as to increase food supplies. The declaration also emphasized the need for the world to be better prepared to deal with food-aid needs caused by natural and man-made disasters. Over the last half-century, world cereals markets had had to deal with surpluses most years. Although reducing poverty was a major focus of the declaration, the future need for stable and expanding food supplies and effective emergency food assistance was also highlighted.

      A plan of action was adopted by the summit to achieve its objectives. No new international bureaucracies were established, and nations were not asked to make specific pledges of support. Individual nations, international organizations, and non-governmental organizations were expected to decide their individual courses of action in fulfilling the plan. The FAO Committee on World Food Security would have responsibility for monitoring progress.

New U.S. Farm Legislation.

      Big changes were made in U.S. farm and food policy with the passage of the seven-year Federal Agricultural Improvement and Reform (FAIR) Act of 1996. In keeping with the liberalization of farm policy that had been taking place in other countries, the FAIR Act shifted to farmers much of the government's control of production of grains and cotton. Less-dramatic changes were made in government programs for dairy, sugar, and peanuts. In addition to reducing government intervention in production, the act would reduce government costs, increase agricultural exports, promote conservation, continue food aid, and stay within the limits on agricultural-production subsidies and export subsidies specified by the World Trade Organization.

      The act terminated farm-deficiency payments on grains and cotton. Deficiency payments increased when farm prices fell. They were replaced with annual payments to farmers that were fixed by formula for each farm throughout the seven-year life of the program. The total cost of these payments would be 7% less than the cost of deficiency payments over the seven years prior to 1996. In addition, farmers would receive some protection against unusually low market prices for grains, cotton, and oilseeds. As a trade-off for reduced income protection, grain and cotton farmers would no longer be required to reduce their planted area in order to receive payments. The government would, however, continue to offer multiyear contracts to pay farmers for retiring fragile land from production and switching it to conservation uses.

      Changes in the act essentially removed the U.S. government as the buyer of last resort in order to support market prices. In addition, subsidies provided to farmers for storing grain were eliminated. Stockholding of agricultural commodities would be left to the private sector. For its contribution to global food security, however, the U.S. government would continue to provide a four million-ton grain reserve.

      Programs to expand U.S. agricultural exports were continued with some modification. Export credit guarantees, export market promotion, and export subsidies—the Export Enhancement Program—were extended, but the level of funding was reduced.

      Domestic and foreign food-aid programs were continued. The Food Stamp Program, by far the largest domestic food program, would continue to assist low-income households with food purchases, but it was authorized for only an additional two years. When the FAIR Act was passed, Congress expected to incorporate food stamps into a new and reformed total welfare program. Other food programs continued by the FAIR Act provided for the purchase and distribution of food for food banks and soup kitchens and for other special needs. These programs were authorized for seven years. Funding was also continued for overseas food aid and for low-cost long-term credit for food purchases by LDCs.

"Mad Cow" Disease.

      In March the U.K. announced a possible link between BSE, or "mad cow" disease, which was primarily found in the U.K., and Creutzfeldt-Jakob disease, a rare but fatal condition in humans. Though the announcement stressed that the evidence for this connection was weak, consumers in the EU immediately cut back on beef purchases. Beef prices in stores and cattle prices in the country sharply declined. In response to the crisis, the European Commission and the British government took action to ban all exports of cattle, beef, or beef products from the U.K. and to ban the consumption of milk from infected cattle. In addition, the U.K. began a plan to destroy hundreds of thousands of infected cattle over a five-to-seven-year period. A similar plan was later announced by Switzerland, the second most infected country. As a result of the health scare, beef consumption in the EU was expected to be down in 1996.

      Scientists believed that BSE was transmitted through infected feedstuffs. The infected feed contained meat and bone meal improperly rendered from carcasses of sheep infected with scrapie disease. BSE, which primarily affected cattle, was fatal, and there was no treatment, but it did not spread from animal to animal. Control of the disease was complicated because signs of the illness did not appear for three to five years after infection. Nearly all cases of BSE were in the U.K., but a few were reported in other European countries.

      The disease was first diagnosed in the U.K. in 1986. The number of confirmed infections in cattle peaked in 1992 and then rapidly declined. By 1996 about 150,000 cases had been confirmed among the U.K.'s 11 million dairy and beef cattle. The disease was expected to be eradicated in about five years by eliminating the infected feedstuffs and by destroying infected cattle. In an effort to offset some of the loss of income of cattle farmers, the EU instituted programs of direct income support to affected producers and increased government procurement of beef.

AGRICULTURAL COMMODITIES

Grains.

       World Cereal Supply and Distribution, TableEarly in 1996 the world faced a shortage of grain. (See TABLE III (World Cereal Supply and Distribution, Table).) This was the culmination of forces that had been at work over several years. The rapidly growing world demand for grain appeared to have caught up with forces that were limiting world grain production. More grain had been needed in recent years to feed livestock to meet the rapidly expanding demand for meat in China and other LDCs; therefore, grain used for livestock feed competed with grain used for direct human consumption. Supplies had been abundant and world market prices depressed mainly owing to subsidized grain exports and the release of government-controlled stocks by the U.S. and the EU. Consequently, there had been no growth in total world grain production since 1990.

      The possibility of a world grain shortage emerged in late 1995, when it became clear that the 1995 crop, plus available stocks carried forward from 1994, would fall short of expected world use. Although the world wheat and rice crops in 1995 were larger than in the previous year, coarse grain production was down more than 8%, mainly owing to a poor harvest in the U.S. and in the countries of the former Soviet Union. Production of all types of grain was down only 3%, but there were very few available grain stocks carried over from the previous year to make up the shortage. As a result, grain prices rapidly increased.

      More danger signs appeared in early 1996 as weather in the U.S. caused major delays in corn (maize) planting. Concerns of a potential crisis pushed grain prices to record-high levels. By May corn prices on the commodities market in Chicago had doubled from a year earlier. As the season progressed, however, crop conditions improved in the U.S. and in much of the world. Several months later it was becoming apparent that farmers around the world had responded to higher prices by planting more grain—reversing a downward trend since 1981 in area planted. By November the FAO and USDA expected a record-high yield per hectare and a record grain harvest that would be 8% larger than the previous year's crop. A crop that large was expected to meet the growth in world demand and allow some rebuilding of stocks. The crisis passed, and grain prices declined.

      Large increases in grain production were expected in 1996 in the major grain-exporting countries. Farmers in the U.S. and the EU planted a larger area to grain in 1996 and obtained above-average yields. As a result, grain production was up 19% over 1995 in the U.S. and up 16% in the EU. Farmers in Africa increased grain production nearly 11% and those in Asia 3%. The only major grain-growing areas of the world to show a decline in production were the countries of the former Soviet Union and Eastern Europe, where production by 1996 was down a third from 1990.

      As a result of grain shortages and high prices, world grain consumption during the 1995-96 crop year declined for the first time in years. In the competition between humans and animals for the reduced supply of grain, animals lost. Slightly more grain was consumed as human food and used for industrial purposes, but less was consumed by livestock. Both feed and food consumption were expected to be up 3% in 1996-97 as a result of the larger supply.

      The volume of world grain trade had changed little over the past 10 years. Trade volume in 1996-97, however, was expected to decline 6% owing to above-average grain harvests in importing countries.

      In mid-1996, at the end of the 1995-96 crop year, world stocks of all grains had dropped to 244 million tons. The stocks-to-use ratio was under 14%—the lowest on record. Virtually none of these stocks were available for export. The FAO in late 1995 estimated that world grain production would have to increase at least 4% in 1996 in order to provide a minimum level of food security. As of December 1996, the crop was estimated to have increased by 8%. The added production was expected to permit more stocks to be available at the end of the crop year in 1997. They would provide some increased security against crop failures in that year, but even so the world stock-to-consumption ratio—15%—would be the second lowest on record.

      World coarse grain production in 1996-97 was expected to increase 11% over the poor harvest of 1995-96 and to slightly exceed the old production record set in 1992-93. Area harvested increased 2%, and average yield was up nearly 9% to set a new record. World wheat production was expected to increase 8% and rice 2% over 1995-96.

Oilseeds.

       World Production of Major Oilseeds and Products, TableWorld production of oilseeds in 1996-97 was expected to slightly exceed the previous year's production but to fall short of the record set in 1994-95. (See TABLE IV (World Production of Major Oilseeds and Products, Table).) Farmers around the world reduced their area planted to oilseeds in 1996-97 in order to expand what was expected to be more profitable grain production. Higher yields, especially for soybeans in the U.S., offset the drop in area harvested. A larger world soybean harvest compensated for reduced production of cottonseed, sunflower seed, and rapeseed. Increased production of soybeans in the U.S. (up 8%) and Brazil (up 12%) accounted for most of the world's expected increase in soybean production.

      Sunflower-seed production in the republics of the former Soviet Union and rapeseed production in Canada, Europe, and China declined because farmers shifted land into wheat and corn. Likewise, cottonseed production dropped in China and India because land was transferred from cotton, which was expected to be less profitable, to grains and other oilseeds.

      The demand for vegetable oil and meal (a livestock feed) from crushed oilseeds continued to grow in 1996-97. But owing to the very low level of world stocks at the end of the 1995-96 crop year and virtually no expansion in production in 1996-97, world markets for oilseeds, meal, and oil were expected to be tight. No buildups of year-end stocks were expected.

      China's large and rapidly expanding meat industry needed more meal in 1996-97, and the growing population needed more oil. The USDA expected China to use over 30% more soybean meal in 1996-97 than in 1994-95, but its oilseed crop was expected to be smaller. Consequently, China likely would increase imports of oilseeds and their products in 1996-97. Similar circumstances existed in the oilseed markets of other major Asian importing countries. In India, however, imports were expected to decline because of increased domestic production and abundant stocks at the beginning of the year.

Livestock and Meat.

       Livestock Inventories and Meat Production in Major Producing Countries, TableThe FAO forecast a 3% increase in world meat production in 1996, consisting of a 5.5% increase in LDCs and a very small increase in the rest of the world. The increased output in LDCs amounted to a 3% increase per capita. These July 1996 forecasts by the FAO, however, were high relative to later forecasts by the USDA for major producing countries. (See TABLE V (Livestock Inventories and Meat Production in Major Producing Countries, Table).) World meat production continued a slow but steady shift toward poultry meat and pork and away from other meats, especially in LDCs.

      World poultry production in 1996 was expected to increase 5% over the previous year. Production in the U.S., the leader, was up 6%, and in China, the second largest producer, up 18% because of strong domestic and foreign demand. Even though poultry meat prices were up owing to higher feed costs, world exports of poultry meat were expected to increase 5% over 1995 and 28% over 1994. Major importers were China, Japan, and Mexico.

      Pork production worldwide was forecast by the FAO to increase 3% in 1996, while the USDA expected no change from 1995. The swine industry in China, which produced over 40% of the world's pork, had difficulties in 1996. In response to favourable economic conditions in 1995, swine farmers in China significantly enlarged their herds. Going into 1996, the herd was overexpanded, pork prices were down, and feed prices were up. As a result, the herd was reduced, and feeding was cut back. Pork production in China was expected to remain about the same as in 1995 as more breeding stock and fewer fat pigs were slaughtered. In the EU the BSE outbreak led to a shift in meat demand to pork and poultry. Pork prices rose, but production expansion was limited. Environmental controls on manure production had, in effect, placed an upper limit on the swine industry in the EU. Pork production in the U.S. slightly declined in 1996 owing to high feed prices.

      The FAO expected world beef and veal production to increase 3% over 1995 (the USDA expected no increase). A small rise was expected in North America. More production in Brazil was expected owing to a strong domestic demand. The cattle industry in Poland and Romania also continued to rebound in 1996, but beef production in Kazakstan, Russia, and Ukraine continued its postreform decline because of inefficient production, high grain prices, and low beef prices. The BSE scare led to a reduction of 24% in the U.K.'s beef production in 1996. Diseased cattle were destroyed, and other cattle, suspected of being diseased, were withheld from slaughter. As a result, beef production for the 15 countries of the EU was forecast to be down 6% in 1996.

      Mainly as a result of herd expansion in China, India, and Australia, sheep meat production was expected to increase 3% in 1996 (the USDA forecast no change). The downward trend in herd size continued in the EU, South America, the U.S., and Eastern Europe. There was a substantial reduction in sheep meat production in the countries of the former Soviet Union.

Dairy.

       World Production of Milk1, TableThe FAO forecast that world milk production would increase slightly in 1995 and 1996 (see TABLE VI (World Production of Milk1, Table)), reversing a gradual decline in production since 1990. Small increases in many countries offset lower output in the republics of the former Soviet Union. Milk production in the EU was limited by production quotas. Over-quota production by any country would be subject to a large penalty. The British dairy herd was reduced because of BSE, but production was expected to be near the quota. Milk production in Australia and New Zealand was expected to be up more than 5%, setting records in both countries; both were forecast to sharply increase their exports of dairy products in 1996. On the other hand, exports of dairy products by the U.S. and the EU were expected to be down. Relatively high domestic prices for milk products and reduced export subsidies discouraged U.S. and EU exports. Subsidy reductions were in line with levels agreed upon under the Uruguay round trade agreement.

      In the republics of the former Soviet Union, milk production continued its post-1990 decline. Cow numbers were down. In addition, milk yield per cow decreased owing to poor-quality feed. Large state and collective farms continued to produce most of the milk. High-cost production plus an inefficient processing and marketing system resulted in high-priced milk at retail outlets. Demand for dairy products also was down because prices increased more rapidly than did personal income. Similar conditions existed in most Eastern European countries.

Sugar.

       World Production of Centrifugal Sugar, TableIn 1996 about 70% of the world's sugar supply came from cane and the remainder from beets. World production of sugar from both sources in 1996-97 was forecast to increase 2% over the previous year's record harvest. (See TABLE VII (World Production of Centrifugal Sugar, Table).) Favourable weather was the main reason for increased output in Brazil (up 6%), Eastern Europe (up 24%), Africa and the Middle East (up 14%), and Australia (up 10%). Sugar production was down 16% from the previous year in the former Soviet republics owing to poor weather and down 7% in India owing to reduced plantings.

      World sugar consumption was expected to continue its upward trend in 1996-97. Most of the growth continued to be in the less-developed world. This was especially true in Asian countries that had low per capita sugar consumption and rapidly increasing incomes. Brazil, the world's largest sugar producer and consumer, also processed cane for fuel. Consumer preferences for sugar substitutes in developed countries continued to depress their demand for sugar. World sugar trade was expected to increase slightly in 1996-97, led by expected import expansion by Russia, China, and the U.S.

      World sugar carryover stocks, as a percentage of consumption, were at a record low of 16% at the beginning of the 1994-95 crop year. Each year thereafter production exceeded consumption, and stocks accumulated. At the beginning of 1996-97, stocks reached 20% of consumption. Carryover stocks were expected to increase to 22% by the end of 1996-97, with over one-fourth in India.

Coffee.

       World Green Coffee Production, TableThe 1996-97 world green coffee crop was forecast to be 14% larger than the relatively small crop harvested in 1995-96. (See TABLE VIII (World Green Coffee Production, Table).) Most of the rise was due to large increases in production in Brazil, Indonesia, Colombia, and Côte d'Ivoire. Production in Brazil, which accounted for a quarter of the world's green coffee output, was down 40% in 1995-96 owing to severe frost damage. Production was expected to almost fully recover in 1996-97.

      Because of the poor coffee harvest in 1995-96, world end-of-year coffee stocks were drawn down 30%. The effect of the 1994 frost in Brazil was still being felt in world coffee markets in late 1996. Retail coffee prices in the U.S. were down somewhat from 1995, but they still were 40% above prices prior to the frost.

Cocoa.

       World Cocoa Bean Production, TableIn 1996 the USDA sharply increased its earlier estimate of 1995-96 world cocoa production as its record-breaking size became evident. For 1996-97, however, world cocoa output was forecast to fall by 8% to 2,660,000 tons. (See TABLE IX (World Cocoa Bean Production, Table).) Production in 1996-97 in Côte d'Ivoire and Ghana was forecast to decline from the previous year by 12% and 7%, respectively, owing to poor weather conditions and normal cyclical declines that tend to occur after a record harvest. Brazil's crop was forecast to be down 12% because of poor weather and disease problems. World consumption was expected to exceed production, and carryover stocks were expected to be drawn down by 142,000 tons by the end of the 1996-97 crop year.

Cotton.

       World Cotton Production and Consumption, TableWorld cotton production in 1995-96 was the second largest on record. The USDA forecast that the 1996-97 crop would be down about 5%. (See TABLE X (World Cotton Production and Consumption, Table).) Farmers in many countries shifted land from cotton to grain in 1996. Output in the U.S., the largest producer, was expected to increase 4% in 1996-97, and African countries were expected to increase production 9%. Output was forecast to be down 20% in China, the second largest producer of cotton. Cotton production in the former Soviet republics was expected to continue its downward trend, declining 11% from 1995-96 and more than 40% from the 1980s. In response to high prices, farmers in the U.S. in 1995 increased the area planted to cotton by 23%, but an unusually poor growing season caused production actually to decline. Because of prospects for higher profits from growing grain and the added planting flexibility provided by the new government farm program, U.S. farmers in 1996 reduced the area planted to cotton by 16%. Near-record yields, however, boosted production over the previous year.

      A very small increase in world cotton consumption was forecast for 1996-97, reversing the downward trend of recent years. Small growth in consumption in India and the U.S. accounted for most of the global increase. World cotton trade was expected to continue its decline in 1996-97. With production expected to exceed world consumption again in 1996-97, cotton stocks at the end of 1996-97 were forecast to grow 3-4% over the level at the beginning of the crop year. China held more than 40% of the world's stocks, but virtually all the growth was expected to be by the U.S. (JERRY A. SHARPLES)

      See also Textiles (Business and Industry Review ); Gardening (Environment ).

      This article updates agriculture, history of (agriculture, origins of).

FISHERIES

      According to the latest figures released by the UN Food and Agriculture Organization (FAO), 1994 produced the highest-ever world fish catch, a 7.3 million-metric ton increase over the 1993 total, to reach a staggering 109.6 million metric tons. (See World Fisheries Table.) Fish for human consumption rose from 72.9 million metric tons in 1993 to 74.8 million in 1994 and for nonhuman consumption increased from 29.3 million metric tons in 1993 to 34.7 million in 1994.

      The South Americans were taking advantage of the bumper numbers of anchoveta available while they could, since these stocks can fluctuate widely depending on the prevailing conditions caused by El Niño. With the anchoveta catch reaching 11.9 million metric tons, it came close to approaching the record haul of 13 million metric tons caught during 1970. Alaska pollock finished second again, but third-place Chilean jack mackerel recorded its highest catch ever, with 4.3 million metric tons. (For Top 10 Species Landed, see Table.)

      The most interesting aspect of these catch statistics was the precautionary note sounded by the FAO, which reiterated its previous warnings that despite the increases shown, the majority of the species that were subject to fishing were either fully or overly exploited. The FAO also commented that the potential for additional increases in the catch yields in the long term was extremely limited; indeed, preliminary figures for 1995 revealed that the catch had already taken a downward turn.

      With a record total of 20,720,000 metric tons, China in 1994 again topped the list of fish-producing nations. Increases in the production of farmed fish (aquaculture), especially varieties of carp, accounted for most of the 3.2 million-metric ton gain over 1993. China also increased its catch of such wild species as largehead hairtails, scad, and filefishes.

      Along with the larger catch of anchoveta, Peru increased its catch of South American pilchard by 450,000 metric tons, while Chile's catch of Chilean horse mackerel rose by 810,000 metric tons.

      Two major fishing nations again recorded declines in catch during 1994. While remaining the world's largest tuna-catching nation by landing 710,000 metric tons of tuna during 1994, Japan suffered a reduction of 770,000 metric tons in its total catch, mainly owing to reduced landings of Japanese pilchard and skipjack tuna. Russia also recorded a decline in catch from 4.5 million metric tons in 1993 to 3.8 million metric tons in 1994. More than half of the decrease was due to reductions in the catch of Alaska pollock.

      Another large step forward in obtaining consensus in the utilization of the world's fisheries was completed in October 1995 with the final agreement and adoption of a Code of Conduct for Responsible Fisheries. The code, which was voluntary, established 10 main objectives, the first and foremost of which was to establish principles, in accordance with the relevant rules of international law, for responsible fishing and fisheries activities, taking into account all relevant biological, technical, economic, social, environmental, and commercial aspects. Prevention of overfishing by the implementation of sound management strategies was emphasized.

      A significant area of concern during the year was bycatch and the implementation of selective and environmentally safe fishing gear and practices. Bycatch are fish caught unintentionally during fishing operations. This was a particular problem with trawling, especially shrimp trawling; large-scale gillnetting; and some purse seine and longline fisheries.

      Most commercial fishing operations were governed by some form of quota system that allowed fishing vessels to catch and, more important, to land a certain amount of a particular species that were above a certain agreed-upon minimum size. If fish were caught for which a vessel did not have a license or that might be under the minimum size, this bycatch was traditionally dumped back into the sea. Recent studies of bycatch published by the FAO found that up to 27 million metric tons of fish might be destroyed in this way every year. This was more than a quarter of the world's total marine catch.

      If serious efforts were made to control the dumping of fish at sea and to utilize the bycatch for human consumption, potentially significant increases in the availability of fish for human consumption could be made without any additional pressure on fish stocks.

      Several countries, including Canada, Mexico, and Norway, implemented policies to promote the use of fishing methods that would reduce the amount of bycatch. One method that was gaining in popularity was the use of escape panels and grates incorporated into trawl nets just ahead of the cod end of the net; these allowed the escape of undersized fish and/or nontargeted species. An example of this type of device was the Nordmore grate, which was used off eastern Canada and in Norway to reduce groundfish (such as cod, flounder, and haddock) bycatch in fisheries that used small mesh trawls; these included fisheries for shrimp and silver hake. Studies revealed that bycatch could be reduced to 1-2% of the catch with the use of such devices.

      Since 1992 fishermen in Newfoundland had faced a moratorium on the catching of cod and other groundfish species for either commercial or recreational purposes. The devastation of the Grand Banks cod had been caused by a combination of environmental changes and years of overfishing by Canadian and foreign fleets, and it had a profoundly depressing effect on fishing communities in Newfoundland and Nova Scotia. During September, however, the Canadian government felt confident enough to open the cod fishery for a brief experimental period during two weekends for food fishers only. The results of this short reopening plus indications that the cod stocks were beginning to recover brought hope that the reopening of the cod fishery on a larger but tightly regulated scale might at least be within the foreseeable future.

      (MARTIN J. GILL)

      This article updates commercial fishing.

FOOD PROCESSING

      Consumers in the developed countries became increasingly willing in 1996 to take ethical and environmental issues into account when purchasing food, placing a greater emphasis on health. Such considerations and the scare over bovine spongiform encephalopathy (BSE, or "mad cow" disease) and its possible link to human disease generated a swing to meat substitutes and vegetarian foods, although the number of true vegetarians rose very little. Processed ready-to-eat meals and convenience foods experienced accelerated growth. Consumption of bread and canned foods continued to decline, while that of breakfast cereals, bakery products other than bread, soft drinks, snack foods, and frozen, chilled, and fresh products increased.

      Dietary fibre was back in favour. Interest grew, particularly in Japan, in "functional foods," said to offer protection against chronic degenerative diseases. Examples included cherry juice that enhances the growth of beneficial digestive bacteria and a nonfat milk containing oat flour that may lower cholesterol levels in many people. Additional scientific evidence of the health benefits of fish oils was presented.

      Some two-thirds of shoppers looked for the date of expiration mark on food packages, whenever it was available, and about half scanned the lists of ingredients. Senior citizens placed greater importance on food-safety advice and manufacturers' instructions; teenagers and young adults were six times more likely to suffer food poisoning than were the elderly.

      Food poisoning did not abate; major outbreaks in Australia originating from contaminated peanut butter and meat products damaged public confidence. Apple juice, salami, and cheese were implicated in outbreaks in the U.K., where more than 30% of poultry was estimated to carry salmonella, the most common food-poisoning organism. In Scotland's worst-ever outbreak, E. coli-contaminated cooked meat killed 15. Radish sprouts were suspected at least in part as the cause of an outbreak in Japan that killed 11 and sickened some 9,000. Despite worldwide concern about BSE, in the U.K., where the problem originated, very few deaths were attributed to consumption of a BSE-contaminated meat product.

      Supermarket chains in Europe and the U.S. experienced a spate of product tampering. Manufacturers responded by increasing the production of tamper-proof packaging.

Business Trends.

      Though industrial growth in the U.S. continued to be slow, the number of food and beverage plants increased to an estimated 15,000, substantially up from the estimated 13,000 of the previous year; however, the number of dairy plants declined. Profit margins increased. U.S. food investments in overseas countries again exceeded foreign investments in the U.S. Sales by U.S.-owned overseas food plants were forecast to exceed $100 billion, compared with some $50 billion for foreign firms manufacturing in the U.S.

      Counterfeiting of branded products in the U.S. reached crisis level. The Food and Drug Administration (FDA) discovered large-scale illegal manufacturing. Large quantities of recalled and time-expired products were illicitly relabeled and sold to unwitting supermarkets and grocery stores.

      World sales of frozen foods climbed to an estimated $75 billion, of which 28% were in the U.S. The success in the U.S. of frozen yogurt, now estimated to have 10% of the ice cream market there, was not matched in Europe except in The Netherlands, where it gained 6% of the ice cream market.

      In the U.K. about 10,000 food workers were affected by the BSE crisis; 2,500 slaughterhouse workers out of 7,000 were laid off. Demand increased for products that would be alternatives to beef. U.K. exports of manufactured products containing beef declined sharply, but total British food exports increased to an estimated $15 billion, 13% higher than in 1995.

      By the spring of 1996, U.K. sales of alcoholic soft drinks, or "alcopops," had grown to about $200 million in less than a year from their launch in June 1995; there was a concurrent decline in the sales of cider. The drinks were condemned by consumer groups for encouraging underage drinking.

Company Developments.

      Nestlé SA of Switzerland retained its position as the world's largest food producer, its sales increasing by 3.4% in the 12-month period ended Dec. 31, 1995. Nestlé sold Wine World Estates, which owned 2,630 ha (6,500 ac) of vineyards in California, to a newly formed U.S. consortium comprising Silverado Partners and Texas Pacific Group. Nestlé sold twice the amount of soft drinks in Europe as PepsiCo, and Italy's San Benedetto overtook Cadbury Schweppes PLC of the U.K., but Coca-Cola Co. outsold all four put together.

      Cadbury Schweppes sold its beverage plants in the U.K. to Coca-Cola Enterprises, a subsidiary of the U.S. company, for about $930 million. The company also sold its 51% stake in Coca-Cola & Schweppes Beverages to Coca-Cola but bought Neilson Cadbury from George Weston Ltd. for about $165 million.

      McDonald's, Pizza Hut, and Burger King of the U.S., in that order, retained their dominance of the fast-food market in Europe. H.J. Heinz Co. of the U.S., whose sales in the European food-service trade had increased 75% since it entered that market in 1994, acquired Britwest Ltd., a food-service supplier in the U.K. and France. United Biscuits Holdings PLC of the U.K. sold its U.S. cookie and cracker business for $487.5 million to Inflo Holdings Corp.

New Products and Ingredients.

      Ethnic dishes, especially Mexican-style foods, became more popular around the world.

      Products containing the fat replacer Omega-3 were launched in Ireland, the U.K., and Denmark. A margarine containing plant sterols said to reduce blood cholesterol levels dramatically appeared in Finland under the name Benecol.

Technology.

      A microwave process for pasteurizing raw eggs without breaking the shells, developed at Purdue University, West Lafayette, Ind., was commercialized. A pilot plant using a cold sterile bottling process for noncarbonated soft drinks, developed jointly by the German equipment maker Krones AG and the Coca-Cola Co., was established at Radeberg, near Dresden, Ger. Research in Sweden showed that the replacement of fat in hard cheese with gelatin improved taste, texture, and yield.

      The trend toward solving equipment-malfunction problems on-site by using modem communication and computer diagnostics increased. Via modem the equipment manufacturer was able to see what the food manufacturer saw on its computer screen and could then fix the problem.

Packaging.

      After a seven-year development program, Carnaud Metalbox SA of France launched a new material consisting of aluminum coated with polyethylene terephthalate (PET) plastic. The plastic provided better protection for the aluminum than did lacquer. The material was used initially for ends of beverage cans. The Swiss company Aisa introduced tubes made of a laminate of PET and polypropylene from which alternatives to glass jars could be made.

      Bonar Teich Flexibles of Germany introduced a polyolefin material called Microx for packaging microwavable snack foods. Its ability to absorb moisture without becoming heated during microwaving allowed microwaved chips (french fries) and other foods to be eaten straight from the bag.

      S&A Foods of the U.K., working with Rexam Foil & Paper Ltd., introduced a cardboard cooking dish for its Balti refrigerated and frozen meals. It incorporated a special device highly reactive to microwave energy so as to make the microwaved dishes sizzle when served. A plastic laminate over the device prevented the food from catching fire.

Government Action.

      Olestra, a fat substitute under development by Procter & Gamble Co. for 25 years, received FDA approval in the U.S. for use in certain snack foods. The company launched it commercially in June under the brand name Olean and used it for a fat-free variety of its main snack brand, Pringles; Frito-Lay and Nabisco also marketed olestra-based snacks. Procter & Gamble claimed to have solved certain side-effect problems associated with olestra, but the FDA stipulated that these be highlighted on the package labels.

      The U.S. Congress announced radical legislative proposals that would repeal the Delaney clause, which prohibited any trace in food of materials causing cancer in laboratory animals. The proposals would also require government regulators to prove food to be unsafe before it could be banned, which thus would reverse the present law requiring processors to prove their products were safe and also would open U.S. markets to products made in countries where regulations were less stringent.

      In the European Union (EU), restrictions were placed on the use of many commonly used food colours. Regulations were drafted listing approved flavourings and their conditions of use. Brand protection enforceable across the EU was allowed. Antidumping duties on imports of aspartame sweetener from the U.S. and Japan, imposed in 1991, were lifted. Following the British government's disclosure in March that there might be a link between BSE and its human counterpart, Creutzfeldt-Jakob disease, the European Commission imposed a global ban on exports of U.K. beef and beef products. (See International Issues (Agriculture and Food Supplies ).)

      The Canadian government introduced subsidies on pasta exports and restricted imports, virtually halting imports from Italy (which had more than doubled in two years). China required all imported food products to carry complete Chinese labeling as of August 31; those not in compliance would be refused entry.

      (ANTHONY WOOLLEN)

      See also Business and Industry Review: Beverages (Business and Industry Review ); Tobacco (Business and Industry Review ); The Environment (Environment ); Health and Disease .

      This article updates food preservation.

▪ 1996

Introduction

       Selected Indexes of World Agricultural and Food Production, TableThe major world food developments in 1995 involved declining grain production per capita and increasing meat production. Both developments were continuations of multiyear trends. It was estimated that global grain stocks declined to record low levels in 1995, and they were expected to decline further by the end of the 1995-96 marketing year. In response, world grain prices increased sharply. The world food system continued to be affected by the two major regions that were moving in opposite directions. In China personal incomes were rising rapidly, and the population demanded more meat in its diet. In the republics of the former Soviet Union, however, incomes and meat consumption had dropped dramatically. These longer-run changes had major impacts on world food production (see Table I (Selected Indexes of World Agricultural and Food Production, Table)) and consumption in 1995. As in past years, nature and humans continued to create food emergencies in many countries—notably in Africa. The most important agricultural policy event of the year, however, may have been the creation of the World Trade Organization (WTO).

      The gap between world food-aid needs and food-aid deliveries from donor nations widened in 1995, and the gap was expected to grow in 1996. Global food-aid needs increased, while aid shipments from donor nations declined. Aid needs existed in Africa, Asia, the former Soviet republics, Bosnia and Herzegovina, and Latin America. Chronic food shortages and emergencies were caused by a combination of natural and man-made disasters in 1995. Conditions were made worse by higher prices for grain imports and lower grain export subsidies from the United States and the European Union (EU). The decline in food-aid shipments was caused by smaller aid budgets, mainly in the United States, and higher grain prices.

INTERNATIONAL ISSUES

Food-Aid Needs.

      According to a study by the Economic Research Service of the U.S. Department of Agriculture (USDA), poor countries would need about 14 million tons of food aid during the 1995-96 marketing year, an increase of 12% from the previous year. The estimate was obtained by examination of the needs of more than 60 less developed countries (LDCs). Aid needs for each country were defined as the difference between a target level of food consumption and what could be grown and commercially imported. The target was defined as the average level of food consumption per person over the previous five years. For many countries the target fell well below what would be considered minimum nutritional needs.

      The Food and Agriculture Organization (FAO) of the United Nations estimated that 36 million people faced severe food shortages in 1995, with more than 23 million of these people living in sub-Saharan Africa. Many more faced the insecurity of chronically scarce and uncertain food supplies. Somewhat smaller global grain supplies and higher prices added to the insecurity. With the exception of war-torn Bosnia and some countries of the former Soviet Union, most food-aid needs were in Africa, southern Asia, and Latin America.

      Food emergencies persisted in Africa in 1995, with drought, civil strife, and refugees adding to the chronic problems of poverty and food shortages. A severe drought hit southern Africa, and grain harvests there were down for the second consecutive year. The FAO estimated that 10 million people needed emergency assistance in the region. Mozambique, Zambia, and Zimbabwe had the greatest food-aid needs. Access to food in Angola and Mozambique was hampered by the disruptions caused by the civil strife of previous years.

      Civil strife also continued to disrupt food supplies elsewhere in Africa. Conflicts in Rwanda and Burundi created food emergencies at home and in the refugee camps in neighbouring Zaire and Tanzania. More than one million people in The Sudan needed food aid, primarily because of civil war. Civil war also increased food needs in Liberia and Sierra Leone. Even though Ethiopia expected an average harvest, its food-aid needs were expected to top one million tons in 1995. The country's poverty and limited potential to produce food caused its chronic food shortages.

      Afghanistan and Bangladesh accounted for most of the food-aid needs in Asia. Poverty in both countries, along with the lingering effects of war in Afghanistan, created chronic food shortages. Floods in North Korea devastated crops in 1995, and by the end of the year major food shortages were arising. Most other Asian countries had experienced sustained economic growth in recent years and had been able to reduce their needs for aid by importing food through commercial channels.

      Food shortages were reported in Transcaucasia and Central Asia in 1995, primarily because of poor harvests, local civil strife, and the disruption of former distribution channels. Armenia, Azerbaijan, Georgia, Kyrgyzstan, Tajikistan, and the Russian republic of Chechnya all required some food aid. In general, however, the average caloric consumption in these areas was high relative to other countries with food-aid needs.

      Although most Latin-American countries experienced impressive economic growth in 1995, chronic food shortages persisted in Bolivia, Guatemala, Honduras, and Peru. Haiti, the poorest country in Latin America, continued to suffer from widespread poverty and poor crop production.

Food-Aid Supplies.

       Shipment of Food Aid in Cereals, TableFood-aid shipments fell by one-third in 1994-95 relative to the previous year. The United States accounted for virtually all of the drop. (See Table II (Shipment of Food Aid in Cereals, Table).) The FAO expected a further decline in 1995-96. Shipments in 1994-95 and aid commitments for 1995-96 were the lowest since the mid-1970s and fell well below the minimum target of 10 million tons established by the World Food Conference in 1974.

       Shipment of Food Aid in Cereals, TableNot all food-aid shipments went to the poorest countries. Those countries classified as low-income food-deficit countries (with an average income below $1,345 in 1993) received 10% less food aid in 1994-95. (See Table II (Shipment of Food Aid in Cereals, Table).) Though their needs probably would expand, they were likely to receive less aid in 1995-96.

Low Grain Stocks.

       World Cereal Supply and Distribution, TableIn December the USDA estimated that the global supply of grain at the end of the 1995-96 marketing year (called year-end, or carryover, grain stocks) would fall to about 229 million tons—down 23% from the end of the previous year and down 37% from 1992-93. (See Table III (World Cereal Supply and Distribution, Table).) The totals included wheat, rice, and coarse grains such as corn (maize), sorghum, oats, and barley.

      The data on year-end stocks provided an indication of the world's reserve that would be available to meet potential shortages in the following year. A carryover of 229 million tons would at first appear to be an adequate amount, since the world had never experienced a one-year shortfall of that magnitude. The figure could be misleading, however, since, because of trade barriers, grain does not flow freely between all countries. The USDA estimate of year-end stocks represented 13% of the annual world consumption, a record low. The percentage was less than that available during the world grain crisis of the early 1970s, when grain prices more than doubled and world conferences were required for addressing fears of food shortages.

      Global grain stocks declined steadily beginning in 1992. Most of the decline came from the major grain-exporting countries: the United States, the countries of the EU, Canada, Argentina, and Australia. Stocks in the former Soviet republics also declined sharply. The remainder of the world typically carried relatively few stocks—less than 4% of their annual consumption—and relied on grain from exporting countries to cover emergencies.

       World Cereal Supply and Distribution, TableThe decline in grain stocks was alarming on world markets because it was concentrated in exporting countries—especially the United States and the EU. (See Table III (World Cereal Supply and Distribution, Table).) Importers such as Japan and Egypt relied on these countries for a dependable supply of grain. Stocks in exporting countries were much more effective in buffering the world grain market against shortages than were stocks in other countries. Exporters sold to the highest bidders anywhere in the world. Other countries tended to use their grain stocks only to meet domestic needs.

      China, for example, was expected to have nearly 30% of the world's grain stocks by the end of the 1995-96 marketing year. This development would appear surprising, since China was a major grain importer in 1995-96. China's grain stocks, however, were mainly stored in interior locations, where they were produced. Because of domestic transportation difficulties, it would typically be more difficult for coastal cities to get grain from China's interior than for them to get it from abroad. China's large stocks of grain provided food security to China's interior, but they provided little security for the rest of the world.

      The low levels of grain stocks in major exporting countries at the end of the 1995-96 marketing year likely would consist only of grain in the marketing channels from producers to processors and feeders. Virtually no reserve would be left to meet possible shortages the following year. In response to these conditions, grain prices on world markets increased sharply in 1995. Higher prices caused grain consumption to decline, especially grain fed to livestock.

      The FAO estimated that global grain production would have to increase 4% in 1996 to provide a minimum level of food security. If the shortage experienced on grain markets during the 1970s was repeated, high prices in 1995 and beyond would be expected to encourage production and discourage consumption around the world. Grain stocks would thus be replenished in several years.

Declining Grain Consumption.

      World grain use in 1995 was 305 kg per person (1 kg = 2.2 lb). The amount was a drop of 2.6% from the previous year and a decline of 8% from the peak in 1986. Before 1986 grain use per person had increased, although somewhat unsteadily, for many years. The decline in per capita consumption in 1995 was partly a result of the temporary drop in grain supplies and the increase in population. The decline was also the result of longer-run dynamic changes that were taking place in world agriculture, however. Though it might first have seemed that there was some cause for concern, these changes did not necessarily imply that the world was becoming less capable of feeding its people. Rather, two forces explained most of the decline: more efficient meat production, and the restructuring of the economies of the countries of the former Soviet Union and of Eastern Europe.

      About 37% of the world's grain crop was fed to livestock—including cattle, hogs, poultry, sheep, horses, and goats. Although the quantity of grain fed to the world's livestock had not increased since 1986, world meat production had increased 22%. This increase was explained by an increase in the efficiency of converting grain to meat. Improved breeds and improved management explained part of the increase in feeding efficiency. Shifting to the production of poultry and pork rather than beef was also an important factor. It took about 11 kg of grain equivalent to produce one kilogram of beef, including the feed necessary to maintain the breeding herd. Approximately six kilograms of grain produced one kilogram of pork, and only three kilograms of grain were needed for one kilogram of poultry.

      Since 1986 world beef production had increased little. Nearly all of the increase in meat production was due to increased pork and poultry meat. China accounted for virtually all the increase in pork production. The net result was that since 1986 the quantity of grain consumed per person in the form of meat had declined 18 kg, while meat production per person had increased between one and two kilograms.

      About half of the global decline in grain consumption per person since 1986 was explained by the major decline in consumption in Eastern Europe and the former Soviet Union. Over the past 10 years, grain consumed as human food had dropped 6 million tons in these countries, while grain consumed as livestock feed had dropped 64 million tons. The combined decline was equivalent to 4% of the world grain consumption. There also was a sharp decline in the production of meat and milk. Political and economic restructuring led to higher retail prices for cereals and meat and to much lower incomes. As a result, there was a small reduction in demand for grain for human food and a large reduction in meat consumption.

      The trends of more efficient feeding of livestock and of the shift from grain-fed beef to poultry and pork should help meet the growing world demand for meat without greatly increasing the use of grain for livestock feed. As the countries of Eastern Europe and the former Soviet Union restored economic growth, they likely would increase their demand for meat, but they also had the potential to increase their output of grain and livestock significantly.

China.

      China's meat production increased 14% in 1995, accounting for most of the growth in world production. China's meat production was up 80% above 1990 levels. Most of the increase came from hogs, which supplied more than 70% of China's meat. About half of the world's pork was produced in China. Poultry production also expanded rapidly, but from a much smaller base.

      The rapid expansion of meat production had a major impact on China's grain consumption. About one-fourth of the grain in China was fed to livestock. Although the production and human consumption of grain in 1995 were about the same as in 1990, consumption by livestock was up more than 50%. The additional grain came from higher imports and a reduction in year-end stocks. Between 1993 and 1995, China shifted from being a major grain exporter to being a major importer.

      Rapid economic growth and the associated increases in personal income were the main forces behind the expansion of meat consumption in China. The country's economy grew about 8-9% in 1995 after experiencing an extraordinarily high 50% growth over the previous four years. In addition, the annual population growth was about 14 million.

      In the future China could play a major role in shaping the world's supply and distribution of food. A large increase in grain production in China was not expected. If, however, rapid economic growth did continue and China's leaders permitted meat production to expand at recent rates, China—the world's leading grain producer—could quickly become the world's leading importer of grain. On the other hand, China's leaders could make a policy decision to curtail grain and meat imports. Political resistance to the growth of grain imports was evident in 1995.

Former Soviet Republics.

      In 1995 the 15 republics of the former Soviet Union continued their trend of producing and consuming much less meat. Meat production was down 10% from 1994 and down more than 50% from 1990. The decline was about equally distributed among beef, pork, sheep, and poultry. The decline in milk production slowed in 1995, but production was still 46% below 1990.

      The reduction in meat production in these countries greatly reduced the domestic demand for grain. In 1995 grain consumed as livestock feed was down 12% from 1994, while its use as human food was down 6%. Grain used for feed and food since 1990 was down 47% and 13%, respectively. As a result, the production and importation of grain also declined. Production in 1995 was down 8% from 1994 and 36% from 1990. Net imports (imports minus exports) of grain were only 6 million tons in 1995, compared with 42 million tons in 1990. These striking changes in livestock and grain production had a major impact on world trade and food supply-demand balances in the early 1990s.

      Recovery was slow from the massive disruptions to the economies of these countries following the collapse of the Soviet Union. The sharp drop in personal income and the higher prices for food forced people to reduce their consumption of meat and milk from the high levels of earlier years and switch to more bread, potatoes, and vegetables. Although the command system had collapsed, by 1995 a new infrastructure to get production inputs to farmers, to get farm produce to consumers, and to get everyone properly reimbursed had not developed. Basic questions of who owned the land also continued to block progress. Private ownership of farmland increased very slowly, with less than 5% of all agricultural land on privately owned farms by 1995.

      If a Western-style agricultural sector were to develop in the republics of the former Soviet Union, farm production could greatly expand and the region could be a significant exporter of grains. Such exports could help offset the growing demand for grain in other parts of the world.

World Trade Organization.

      After seven years of negotiations, known as the Uruguay round, member nations in 1994 agreed to significant modifications of the General Agreement on Tariffs and Trade (GATT), the set of rules governing international trade. One component of the agreement was the creation of the World Trade Organization, effective in January 1995, to oversee the implementation of the trade rules.

      The new rules would have major long-term implications for agricultural trade and world food security. A reliable trading system was essential for moving food efficiently from food-surplus to food-deficit countries. Most countries had erected barriers to trade of agricultural products, to protect either their farmers or their consumers. The net effect of each country's actions was an inefficient global system of agriculture, in which some countries overproduced, others underproduced, and trade was more difficult than it needed to be. Past trade agreements greatly reduced barriers to trade in manufactured products, and as a result trade flourished. Little progress was made in agriculture, however. The Uruguay round agreement, for the first time, provided a framework for halting the escalation of agricultural trade barriers and for gradually bringing them down. The long-term effect should be an improved global food system.

      The basic principles of the trade rules were as follows: (1) trading should take place between countries without discrimination; (2) there should be predictable and growing access to each country's markets; (3) fair trade should be promoted; and (4) industrial countries were encouraged to assist the trade of LDCs. The main components of the GATT agreement on agriculture were the following principles. All nontariff barriers to trade were to be converted to equivalent tariffs, with all tariffs reduced an average of at least 36% over six years. Countries must allow duty-free imports of at least 3% to 5% of the domestic consumption of agricultural products. Export subsidies were to be reduced at least 36% and the volume of subsidized exports reduced at least 21% over six years. Subsidies to domestic producers of traded products would be reduced at least 20% over six years. Sanitary and phytosanitary regulations (human health standards and plant and animal safety standards) were to be based on science rather than on arbitrary rules that tended to discriminate against imports.

AGRICULTURAL COMMODITIES

Grains.

       World Cereal Supply and Distribution, Table(For World Cereal Supply and Distribution, see Table III (World Cereal Supply and Distribution, Table).)

      World grain consumption in 1995-96 was again expected to exceed production, further depleting year-end stocks. In December 1995 production of all grains was estimated to be down nearly 4% from the previous year. Although wheat production was up slightly from the poor harvest of 1994-95 and rice remained about the same, coarse grain production was expected to be down 9%. The decline in coarse grain production was caused by poor harvests in the United States (down one-fourth) and the former Soviet republics (down one-fifth). Grain production in 1995-96 was forecast to be higher in many of the LDCs.

      Because of tight supplies in the major grain-exporting countries, world grain trade in 1995-96 was forecast to continue at the level of the two previous years. A decline in coarse grain imports to Japan was expected as a result of declining livestock production and increased meat imports. China and drought-stricken Morocco were expected to increase their grain imports.

Oilseeds.

       World Production of Major Oilseeds and Products, Table(For World Production of Major Oilseeds and Products, see Table IV (World Production of Major Oilseeds and Products, Table).)

      Global oilseed production in 1995-96 was forecast to decline about 2% from the record crop of 1994-95. Soybeans, which represented half of the world's oilseed crop, accounted for the decline. A record amount was forecast to be crushed in 1995-96 to produce vegetable oil and meal (a livestock feed). As a result of lower production and higher consumption in 1995-96, year-end stocks of oilseeds were forecast to decline by about 20% from the previous year. World prices of oilseeds increased throughout the last half of 1995 as supplies became tighter.

      The United States continued to produce about half of the world's soybeans. Its output in 1995 was estimated to be down 13% from the record harvest of 1994, as the average yield per hectare declined to a more normal level (1 ha = 2.47 ac). Soybean production was also expected to be down in China and Brazil.

Livestock and Meat.

       Livestock Inventories and Meat Production In Major Producing Countries, Table(For Livestock Inventories and Meat Production in Major Producing Countries, see Table V (Livestock Inventories and Meat Production In Major Producing Countries, Table).)

      World meat production continued to expand more rapidly than population in 1995, especially in the LDCs. The FAO estimated that meat consumption per person in the LDCs would be 4% higher than in 1994, with the largest gains in East Asia and Latin America. North America and Western Europe would have small gains, and contractions would occur in the republics of the former Soviet Union, in Africa, and in the Middle East.

      The continued expansion of meat production in China and reductions in the former Soviet republics affected global meat statistics in 1995. Elsewhere, Brazil expanded its cattle herd by 3.7 million head in response to growing domestic demand and farmers' expectations of higher profits. The economic crisis combined with a drought to force Mexican farmers to cut back on their cattle and hog numbers. Australia continued to switch from grass-fed to grain-fed beef to supply the expanding Asian import market. Australia also began rebuilding its sheep herd in 1995 after the devastation left by drought. Poland increased its pork production more than 10% because of ample feed supplies and increased demand.

      The world's livestock farmers continued to increase their efficiency throughout 1995. In major producing countries beef and veal increased 2-3%, but cattle and buffalo herds increased less than 1%. World pork production increased more than 6%, but there was virtually no increase in hog inventories.

Dairy.

       World Production of Milk, Table(For World Production of Milk, see Table VI (World Production of Milk, Table).)

      Milk production in 1995 continued to decline slowly in developed countries (except in North America and Oceania) and increase in the LDCs. In the United States and Canada, the number of milk cows remained about the same, but more milk was obtained per cow. In spite of dry weather, Australia and New Zealand continued to expand their dairy herds in 1995. Their combined output was forecast to equal their record production of 1994.

      In the EU milk production remained about the same as in 1994. In Eastern Europe and the republics of the former Soviet Union, production continued to decline. Most of the decline in milk production in Russia occurred on former state and collective farms because of the lack of profits from commercial sales. Private farms apparently increased their production of milk, but mainly for local consumption. Throughout the LDCs increased demand, favourable weather conditions, and improved management combined to increase milk production in 1995.

      World prices of dairy products, including cheese, butter, and nonfat dry milk, increased substantially in the latter part of 1994 and in 1995. The increase was caused by limited export supplies by major exporters (the United States, countries of the EU, Australia, and New Zealand) and increased demand by importers.

Sugar.

       World Production of Centrifugal Sugar, Table(For World Production of Centrifugal Sugar, see Table VII (World Production of Centrifugal Sugar, Table).)

      World sugar production in 1995-96 was forecast in November at a record 118 million tons. Production was expected to exceed consumption for the second consecutive year, allowing some rebuilding of world stocks. World sugar stocks were at record low levels at the beginning of the 1994-95 crop year. Driven by low stocks and strong demand, world sugar prices increased throughout 1994 and early 1995. Prices then declined as the prospects for a large harvest in 1995 became apparent.

      The strong growth in the demand for sugar continued in 1995. Growth in the population and personal income in Latin America, the Middle East, and Asia caused these areas to increase their demand for soft drinks and processed foods containing sugar. In the industrialized countries, however, there was little growth. Consumers in these countries continued to switch to alternative sweeteners such as high-fructose corn syrup and low-caloric sweeteners.

      Cuba's sugar production in 1995-96, forecast at four million tons, was expected to rebound from the extremely poor harvest of the previous year. The figure remained, however, well below the seven million to eight million tons harvested annually during the late 1980s and early 1990s, when Cuba's sugar industry was supported by the countries of Eastern Europe and the Soviet Union. It was thought that Cuba's export prospects may have improved when it reached a multiyear agreement in 1995 with Russia to barter sugar for oil.

Coffee.

       World Green Coffee Production, Table(For World Green Coffee Production, see Table VIII (World Green Coffee Production, Table).)

      Poor weather conditions in Brazil had a major impact on world coffee production and prices in 1995-96. World production in 1995-96 was forecast to be down 8% from the previous year. Brazil's harvest was expected to be off by one-third, the lowest since 1986-87. Increased production in Mexico and Central America would only slightly offset Brazil's lowered output.

      Severe frosts in June and July 1994 combined with an extended dry spell to greatly reduce the 1995 yields of coffee in the major producing regions of Brazil. As a result, world coffee prices increased. The International Coffee Organization's monthly indicator price increased to $2.02 per pound in September 1994 from $1.08 in May. By mid-1995, however, prices had declined significantly.

Cocoa.

       World Cocoa Bean Production, Table(For World Cocoa Bean Production, see Table IX (World Cocoa Bean Production, Table).)

      World cocoa production in 1995-96 was expected to exceed the record 1994-95 harvest by 4%. Côte d'Ivoire and Ghana, which accounted for half of the world's cocoa production, enjoyed record harvests in 1994-95 because of favourable growing conditions, improved management practices, and more trees reaching their peak performance years. The 1995-96 cocoa season, which began in October, was expected to produce another record-breaking harvest in Côte d'Ivoire.

      Because of drought and disease, Brazil's 1994-95 harvest was much smaller than had been forecast and the smallest in 18 years. The 1995-96 crop was expected to rebound, although not to the levels of the early 1990s. Malaysia's cocoa production was forecast to be down 7% from the previous year, a continuation of a longer-run decline. Government-owned land in Malaysia continued to be shifted from cocoa to oil-palm production.

      World consumption of cocoa products continued its upward trend in 1994-95 as a result of higher personal incomes in much of the world. In the United States, however, consumption had declined in recent years.

Cotton.

       World Cotton Production and Consumption, Table(For World Cotton Production and Consumption, see Table X (World Cotton Production and Consumption, Table).)

      World cotton production in 1995-96 was forecast to be up 4% over that of 1994-95. Production was expected to exceed consumption, and for the second consecutive year the world's carryover stocks of cotton were expected to increase. Production increases were expected in countries in Africa and in Pakistan, but a smaller crop was expected in the United States.

      Farmers in the United States increased the area planted to cotton in 1995 by nearly 20%, but production fell short of early expectations as the yield per hectare dropped more than 20% from the relatively high 1994 yield. Cotton production in Central Asia leveled off in 1995 after several years of large declines. As was typical of many agricultural products after the collapse of the Soviet Union, the production of cotton had dropped by one-fourth between 1989 and 1994. During that same period domestic cotton consumption dropped by two-thirds. It was more profitable to export the cotton than to use it in domestic mills.

      (JERRY A. SHARPLES)

      See also Textiles (Business and Industry Review ); Gardening (Environment ).

      This updates the article agriculture, history of (agriculture, origins of).

FISHERIES

      World fish catches reached record levels in 1993, with over 100 million mt (metric tons) produced by fisheries and aquaculture. The new record total of 101,417,500 mt was up from 98,785,200 mt the year before and was over a million tons more than the previous record, which was set in 1989. The figures reported by the Food and Agriculture Organization showed that although most of the rise over 1992 was due to continuing increases in production from aquaculture, the country figures showed that results in many fisheries were consistent, with improvements showing on some of them.

       World Fisheries, 1993, TableWith more than 17% of world production—17,567,907 mt—China again topped the table (World Fisheries, 1993, Table). Sea fisheries produced over 10 million mt, but increased aquaculture accounted for most of the country's staggering 2.5 million-mt jump over the previous year.

      Emerging pelagic giant Peru knocked Japan from the number two spot with an 8,450,000-mt catch. Japan recorded 8.1 million mt to continue its steady decline since 1988, when it caught 12 million mt. Chilean catches also decreased in the face of stiff competition from Peru. One-time leading fisheries nation Russia fell to sixth place with 4,460,000 mt.

      U.S. catches continued to increase steadily and in 1993 were at 5.9 million mt, a rise from 5.6 million mt in 1992. That was enough to knock Russia, which had been in decline since the demise of the communist system, out of fifth place. The decay of the Russian fleet had left hundreds of thousands of tons of catching capacity rusting away in harbours around the world with insufficient funds to operate.

       Top 10 Species Landed, 1993, TableA massive doubling in anchoveta catches to 8.3 million mt since 1991 accounted for Peru's climb in the ranks. Anchoveta was the most-caught species in the world for the second consecutive year, followed by Alaskan pollock, which totaled 4.6 million mt in 1993. (See Table I (Top 10 Species Landed, 1993, Table).)

      Aquaculture rose dramatically over 1992 production, and wild fish catches may actually have dropped. Silver carp and grass carp were the main aquaculture species, accounting for 1.9 million and 1.5 million mt, respectively. Seaweed production, which was not included in the total, had increased by one million metric tons to 7.2 million. China again dominated, producing 4.5 million mt.

      Despite the international community's efforts over the past 10 years, there was little improvement in the conservation and management of the world's fisheries. The political dimension of fisheries conservation and management had been seriously underestimated. In an effort to deal with certain major issues facing the industry, in 1993 the United Nations set up the UN Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks to identify, assess, and find solutions to the long-standing problems of high-seas fisheries. Conferees met six times at UN headquarters in New York City before August 1995 brought the much-anticipated culmination: the approval of a 48-article draft agreement relating to the conservation of depleted fish stocks and the management of high-seas fisheries.

      The agreement was built on three essential pillars:

      Principles for conservation and management should be based on a precautionary approach and the best scientific information available. In other words, states were obliged to act conservatively when there was doubt about the vulnerability of stocks.

      Conservation measures must not be undermined by those who fished for vulnerable stocks.

      Disputes should be settled peacefully.

      It was this last area, fishing disputes, that often made the international news in early 1995. In March the international press had a field day when Canadian government vessels and Spanish trawlers were involved in a row that threatened to boil over into a dramatic showdown over the straddling fishery for groundfish, such as cod, American flounder, and Greenland halibut, on the Grand Banks off Canada.

      The roots of the problem went back to the reemergence of Spain in waters off Newfoundland in the late 1980s. The stocks of cod and other groundfish collapsed, which led to a moratorium inside Canada's 200-mi exclusive economic zone in 1992 and to the loss of 50,000 fishing and onshore jobs. This placed a fresh emphasis on conserving straddling stocks, which migrate between the Canadian zone and international waters.

      During 1994 Canada had extended laws that allowed the high-seas arrest of vessels that bore state flags and were suspected of breaking conservation rules to cover the Spanish and Portuguese fleets, which accounted for most of the European Union's (EU's) presence in the northwestern Atlantic. Ultimatums followed stating that ships in international waters could be arrested, and in March 1995 the Spanish vessel Estai was boarded, arrested, and escorted into St. John's harbour before a cheering crowd of thousands. The EU branded the Canadian action an act of "high seas piracy."

      This game of brinkmanship led to feverish activity between the two parties involved and finally resulted in a compromise. The two countries agreed to the reallocation of their catch quotas on groundfish species. Canada also agreed to repeal the law allowing authorities to board and arrest Spanish and Portuguese vessels and to drop all charges against the Estai. (MARTIN J. GILL)

      This updates the article commercial fishing.

FOOD PROCESSING

      In 1995, as people in Western nations came to realize that "there are no unhealthful foods, only unhealthful diets," sales of low-fat and diet foods declined slightly, and a shift toward traditional full-flavoured products was noted, as was the growing tendency of people to consume more fatty foods. Sales of butter and butter-based products increased. In Japan "functional foods"—containing ingredients claimed to promote health—gained ground. That market, worth an annual $7 billion, was aided by advertising laws that were less stringent than those in most other countries and that permitted unsubstantiated health claims to be made. Meat consumption was rising by 3% annually in less developed countries, contrasting with a 1% fall in developed countries, where there was an increase in vegetarianism.

      It was believed that nearly half of all consumers in the West did not bother to read nutritional information on labels and that between half and three-quarters neither read nor followed manufacturers' cooking instructions. Young people showed the greatest ignorance. Significantly, this group suffered most from food poisoning, the worldwide incidence of which continued to grow. In the U.K. 7.5% of people said they had suffered from food poisoning, up one-third from the previous year; working days lost as a result could have cost the British economy alone some $1 billion.

      A spate of food-poisoning outbreaks across the U.S. left many Americans worried about food safety. This benefited sales of kosher foods, which increased 12% in a year marked by an overall static food market. Over 26,000 products in the U.S. carried the kosher designation, including mainstream products such as Coca-Cola, Tropicana orange juice, and many canned fruits and vegetables. It was estimated that up to 70% of those buying kosher foods were not Jewish.

Business Trends.

      The 10 biggest emerging markets identified by the U.S. government were China, Indonesia, India, South Korea, Mexico, Argentina, Brazil, South Africa, Poland, and Colombia. If trends continued, by 2010 this market group could be bigger than the combined markets of the European Union (EU) and Japan. Some African, Caribbean, and Pacific states expressed alarm at EU proposals to allow the use of vegetable fats other than cocoa butter in the manufacture of chocolate, saying this could cost them $125 million a year in lost cocoa bean exports.

      Major restructuring took place among European food businesses, with large companies continuing to shift from national to regional and global operations. The completion of the General Agreement on Tariffs and Trade had opened the way to increased cheese imports into Europe, particularly affecting Denmark, Europe's biggest cheese exporter. Japan's food industry experienced unprecedented changes, notably the establishment of an open pricing system, which made that country's complex food-distribution system more accessible to imports.

      Penetration of private-label food products in the European market reached 15%. This was greatest in the U.K., where 35% of food and 28% of drinks were sold under private labels, closely followed by France, and with Spain lowest at 5%. Kellogg, Mars, and some other large companies stated they would not manufacture private-label goods, but PepsiCo, owners of the U.K.'s leading brand of potato chips, took the plunge. Heinz announced it would supply private-label baked beans to leading supermarket chains, in contrast to Nestlé's subsidiary Crosse & Blackwell, which withdrew from supplying private-label baked beans and began eliminating canned-goods sales in the U.K. because of competitive price cutting by supermarkets. Coca-Cola Co.'s dominance of the British cola drink market was hit by soaring sales of private-label colas manufactured by Cott Corp. of Canada and sold by Sainsbury and Tesco, the U.K.'s two largest supermarket chains.

      In the U.K. a large increase in the price of milk followed the abolition of the Milk Marketing Board and its replacement by Milk Marque, a cooperative owned by 60% of the country's dairy farmers. This led to declining milk sales and a shortage of milk for processing at a time when milk prices were falling in the rest of Europe.

Company Developments.

      The first phase of Florida's first new orange juice processing plant in nearly 20 years started in Clewiston. The plant, which would be operated by U.S. Sugar Corp.'s affiliate Southern Gardens Citrus Processing, would process more than 20 million boxes of oranges into 450 million litres (120 million gal) of juice a year.

      PepsiCo, which over five years had invested $200 million in building local bottling plants in India, announced an additional $100 million investment in soft drinks there, as well as $80 million to set up some 60 restaurants in India. The company's share of the Indian soft drinks market reached 32%. PepsiCo also launched the first Kentucky Fried Chicken outlet in Delhi, followed by the first Pizza Hut outlet.

      Coca-Cola Co., which already operated 13 bottling plants in China through joint ventures, announced plans to start up 10 more. Construction of four began during the year; the other six would bring investment in China to $500 million. Start-up of Coca-Cola's new $20 million bottling plant in Hanoi marked the company's return to Vietnam after a 20-year absence. Nestlé announced plans to build a $24 million plant to manufacture Nescafé instant coffee and Milo malt drink in Ho Chi Minh City, Vietnam.

      Tetra Laval of Sweden, the world's largest privately owned food packaging and processing company, supplied most of the equipment for Anchor Products' new cheese plant in Lichfield, N.Z. It was the world's largest cheese plant, with a throughput of 3 million litres (790,000 gal) of milk a day.

      Fosters Brewing Group of Australia announced it was withdrawing from brewing in the U.K. and sold its Courage brewing assets for $825 million to the Scottish & Newcastle PLC, which thus became the U.K.'s largest brewer, with nearly a third of the country's beer market. Bass, with 23% of the British beer market, formed a joint venture with Ginsber Beer Group of Siping City, China, in which Bass held a 55% share.

New Products and Ingredients.

      The number of innovative new products in the U.S. and Europe declined in 1995. Japan was at the forefront in developing new ingredients for processors and consumers, mostly in the "functional foods" category. Among new products in Japan was Yakult, a fermented milk drink that was also being made in The Netherlands and marketed in France, where Chambourcy launched a range of lactic fermented products that claimed to enhance the body's defense mechanisms. Previously confined to Japan, a number of products appeared in Europe that contained oligosaccharides, claimed to promote the growth of beneficial gut bacteria. Inulin, an oligofructose extracted from chicory, was the basis of a number of fermented milk drinks and yogurts launched by Mona and Nutricia of The Netherlands. Such products were increasingly being targeted at children, the elderly, and pregnant women.

      A powdered natural honey said to retain the typical character of the original product was introduced by Food Ingredient Specialities of the U.K. From SmithKline Beecham came a juice and dietary fibre drink under the Ribena brand name. Also in the U.K., Boots launched a fortified flavoured milk drink for mothers-to-be.

      Trends in new product development in the U.S. largely mirrored those in Europe, with low-fat introductions continuing, although at a reduced rate. The vast majority of new products were actually line extensions. Noteworthy was the mainstreaming of vegetarian foods. A new Green Giant product, Harvest soy-based burgers, was one among many new vegetable offerings introduced for the growing vegetarian market. Aseptically packed long-life milk in cartons, available in Europe for 20 years, was successfully introduced in the U.S. by Italian manufacturer Parmalat under the name Today's Milk; a few months after it was launched, sales soared to 3 million litres (790,000 gal) per month.

Technology.

      PurePulse Technologies, Inc., of San Diego, Calif., collaborated with Tetra Laval to develop a sterilization system called PureBright, which would produce a rapid succession of high-intensity light flashes 20,000 times brighter than sunlight to kill microorganisms on food and packaging materials. The system was being evaluated by the American Meat Institute for use in sterilizing or extending the shelf life of chicken, hot dogs, and prepackaged cuts of beef.

      The first milk-fractionation plant in the U.S. started up in the Center for Dairy Research in Madison, Wis., using equipment made by Tirtiaux of Belgium. Funded by the Wisconsin Milk Marketing Board, the plant was initially providing milk fat fractions—widely used by European bakers for making croissants and flaky pastry—to researchers and food companies in the U.S.

Packaging.

      An 80% increase over 18 months in the world price of aluminum forced beverage manufacturers to go back to using steel or plastic containers. Prices of other packaging materials were rising fast.

      Chris-Craft Industries Inc. of the U.K. launched an edible, water-soluble cellulose film for packaging premeasured ingredients. The packets, which accurately measured and protected ingredients from dust, were time-savers and ensured safe handling.

      During the year Hans Rausing, then head of Tetra Laval, bitterly attacked Europe's packaging-recycling policy in general and Germany's stringent packaging laws in particular, claiming they actually increased waste instead of reducing it. More than 200 local authorities in Germany restricted the sale and use of plastic cups. At least 100 German towns were considering a local tax on disposable packaging; Frankfurt and Kassel had already imposed one. Europe's packaging industry was skeptical that recovery of used materials would be profitable but glad that the laws allowed the extra costs to be passed on to the consumer.

Government Action.

      EU regulations that became effective January 1995 required new machinery to carry a mark signifying compliance with safety laws by designers, manufacturers, purchasers, and installers. An EU sweeteners directive, effective from the end of 1995, permitted the use of six intense sweeteners—aspartame, acesulfame K, saccharin, cyclamate, thaumatin, and neohesperidin DC—and prescribed an acceptable daily intake limit for each. This changed the food law in some countries and permitted cyclamate to be used in food in France and the U.K. after a ban of many years.

      Wide abuse of the cross-border EU trade system, which relied on the integrity of health certificates accompanying animal products, caused the European Parliament to endorse countermeasures that included outlawing the signing of blank certificates and maintaining a register of sample signatures of veterinarians and authorized health officials.

      (ANTHONY WOOLLEN)

      See also Business and Industry Review: Beverages (Business and Industry Review ); Tobacco (Business and Industry Review ); Environmental Issues (Environment ); Health and Disease .

      This updates the article food preservation.

▪ 1995

Introduction

       Selected Indexes of World Agricultural and Food Production, TableWorld agricultural production (see Table I (Selected Indexes of World Agricultural and Food Production, Table)) increased a little over 2% in 1994, according to preliminary estimates of the Food and Agriculture Organization (FAO) of the United Nations. The recovery of output in the developed countries, which fell 6% in 1993, was responsible for the bulk of the increase. Production in the less developed countries (LDCs) rose somewhat in excess of the 2% rate of population growth there. Output in the "countries in economic transition" in Eastern Europe and the former Soviet Union may have fallen 5% after increasing less than 1% in 1993.

INTERNATIONAL ISSUES

Food Emergencies.

      The most dramatic problems were those in Rwanda and in surrounding countries sheltering Rwandan refugees. After some 1 million people were reported killed in massacres by Hutu militiamen, 300,000 people fled to Tanzania and more than 1 million fled to Zaire. Both national and international relief organizations initially were overwhelmed by the speed and magnitude of these population movements before sufficient international assistance could arrive.

      Famine conditions also existed in the Horn of Africa, and major food assistance was needed in Ethiopia, Eritrea, Somalia, and The Sudan. Food supplies were critical for many subsistence farmers in Tanzania, and Uganda felt the impact of refugees fleeing Rwanda and The Sudan. Agriculture in Somalia was showing signs of recovery because of improved security conditions in the south that allowed some farmers to return to the land. The civil war intensified in southern Sudan in May 1994. The result was more displacement of people, disruption of agriculture, interference with relief operations, and reports of high rates of malnutrition for children under five. Ethiopia's food-aid needs remained exceptional because of the economic aftermath of three decades of civil war and an annual increase in population of nearly 3%. Burundi continued to feel the effects of the disruption of agriculture following the ethnic conflicts in October 1993.

      Conditions generally improved in West Africa, but five years of civil war in Liberia had destroyed the country's capacity to import food commercially and increased its reliance on food aid. The breakdown of the 1993 peace agreement brought a resumption of fighting, impeding the commencement of normal agricultural activities and the distribution of food aid.

      In southern Africa, Mozambique recorded another excellent grain harvest in 1994; the peace accords signed in 1992 encouraged farmers to return to their lands. Nonetheless, the country still faced the postwar problems of how to feed and resettle some 500,000 refugees and demobilized soldiers. The Angolan food-supply situation remained grave, with starvation and severe malnutrition reported throughout the country because of massive displacement of the country's population following the resumption of intensive civil war in 1992 and the frequent interruption of food distribution by the fighting.

      Swaziland, Yemen, and Kyrgyzstan were added to the FAO's list of countries requiring either exceptional or emergency food assistance. Food supplies remained difficult in Iraq, where the political dispute connected with the UN embargo continued to limit the country's ability to finance food imports. Armenia, Azerbaijan, Georgia, and Tajikistan faced exceptional or emergency food needs, while the availability of food supplies in Bosnia and Herzegovina waxed and waned with the military situation there.

      In Asia the situation in Afghanistan deteriorated further because of renewed fighting and the needs of returning refugees adding to the displaced persons within the country. The small rice crop of Laos in 1993 placed some 10% of the population in need of emergency assistance. Food supplies were also tight in Cambodia and Mongolia. In Central America crops were seriously damaged by drought, and El Salvador, Honduras, and Nicaragua experienced acute food shortages requiring outside assistance.

Food Aid.

       Shipment of Food Aid in Cereals, Table(For Shipments Of Food Aid in Cereals, see Table II (Shipment of Food Aid in Cereals, Table).) In December the Food Aid Committee of the International Wheat Agreement approved and opened for signing an extension of the current Food Aid Convention (FAC), the international mechanism for guaranteeing minimum availability of food aid, which was due to expire in June 1995. FAC members were reportedly prepared to pledge to supply a minimum of 7,320,000 tons of grain (wheat equivalent) annually, a reduction of approximately 200,000 tons from the expiring agreement. The United States was said to be maintaining its long-standing pledge of a minimum of 4,470,000 tons annually. These minimums had previously applied to a list of poorer LDCs whose incomes fell under a level prescribed by the Organisation for Economic Co-operation and Development (OECD). The new convention was believed to add to the list some of the poorer countries of the former Soviet Union and Eastern Europe.

      The FAO reported that the equivalent of about 13,340,000 tons of food aid in cereals was provided in 1993-94. The last year in which the LDCs were virtually the sole recipients of food aid was 1988-89. During the three-year period 1986-89, Africa on average was the recipient of 47% of such assistance, Asia 35%, and Latin America 18%. In 1993-94, however, LDCs received 64% of total assistance, while the former Soviet bloc became the top regional recipient, with 36% of total assistance. Among the LDCs, Africa commanded 31% of the total, Asia 21%, and Latin America 12%.

      The availability of food aid in 1994-95 was reported down sharply from 1993-94. The final total, however, was likely to be larger because donors increasingly delayed their commitments in order to respond to evolving food emergencies. Budget cutbacks and high prices for wheat brought about by the worldwide reduction in grain stocks led to reduced food-aid commitments by several countries; the estimate for U.S. aid was the lowest since 1988-89.

AIDS and Agriculture.

      Particularly in Africa and parts of South America, AIDS was increasingly regarded as a serious obstacle to the economies of many LDCs. AIDS had initially been an urban disease, but more and more cases were being reported in rural areas. The impact was expected to be particularly severe because of the central role agriculture played in so many of the poorer countries and because the disease attacked the most economically productive age group—those roughly 15-45 years of age—in countries where the very young made up a large percentage of the population. In addition, infection rates for women were two and one-half times higher than for men, and women contributed the bulk of agricultural labour in Africa and in parts of Asia and Latin America. These facts suggested potential decimation of the rural labour force in some countries.

      The stark economic problem for agriculture was how to invest in laboursaving technologies to compensate for the loss of able-bodied farm workers or to attract workers from other economic sectors. Subsidiary problems included how to adjust land-tenure arrangements and provide credit to accommodate the consolidation of farm holdings after the death of farmers. Another likely issue would be how to compensate for reduced domestic production of food through food imports, including food aid.

International Initiatives.

      A proposal by FAO Director-General Jacques Diouf to convene a World Food Summit in March 1996 in connection with the organization's 50th anniversary was endorsed by the FAO governing council in November. The aim was to develop a consensus among world leaders about the likely future direction of the world food situation and how to improve it. This would be the first meeting that heads of state had devoted to world food.

      An international convention to combat desertification was signed in Paris in October. The document focused on Africa and called for the establishment of a process to combat land degradation. The convention, which was intended to establish a mechanism for linking planning with implementation and to coordinate local national activities with those of aid donors, would enter into force, probably sometime in 1996, upon ratification by a majority of the countries. The negotiators also approved a resolution calling for voluntary "Urgent Early Action for Africa" to start the process rolling before the convention formally came into force. The resolution was based on an OECD/Club du Sahel proposal to initiate partnership agreements between individual donors and individual countries.

Ecological and Technological Developments.

      International concern over the safe use of pesticides and other agricultural chemicals led to the establishment of a system by which nearly all developed exporting countries would voluntarily inform importing countries of safety issues related to agricultural chemicals traded internationally. The intent of these London Guidelines on International Trade, sponsored by the United Nations Environmental Program, was to give LDCs a means of protecting their populations from the effects of misuse of such chemicals. The FAO Council in November endorsed a proposal to initiate negotiations making this "prior informed consent" procedure formally part of an international agreement open to signature by all countries.

Technology and Food and Environmental Safety.

      Concerns about the effects of agricultural technologies received more attention in 1994, particularly in the U.S. The U.S. Food and Drug Administration (FDA) in May approved the first whole food developed through biotechnology for sale in the U.S. The Flavr Savr tomato was engineered by Calgene Inc. to delay the ripening process so that the tomato could be picked closer to full ripeness than most mass-marketed tomatoes, thus gaining more flavour while still retaining sufficient firmness to survive being shipped long distances. Calgene said it would label the product's origin, although the FDA said it was not necessary because the tomato had the essential characteristics of traditional tomatoes.

      After lengthy hearings the U.S. Department of Agriculture (USDA) approved a genetically engineered yellow crookneck squash in December, ruling the squash was as safe as traditionally bred virus-resistant squash. Some ecologists and public-interest groups opposed the action, claiming the need for a more thorough examination of the potential risks from the escape of the genes into the wild, turning wild plants into weeds or forming new recombinant virus strains. Most plant pathologists and plant breeders saw no new risks.

      The USDA also had granted field-testing permits for 57 plants in which virus resistance had been genetically engineered. They included corn (maize), cucumbers, melons, peanuts (groundnuts), potatoes, tobacco, lettuce, papayas, beets, barley, alfalfa, watermelons, and gladiolus. A virus-resistant tomato had been marketed in China for nearly two years, resistant potatoes were being tested in Mexico, and criollo melons were the subject of research in Costa Rica.

      At the end of 1994, Agracetus, a U.S. company, was seeking a broad European patent based on the development of a key technology for insertion of genes into soybeans. In 1992 the company had obtained exclusive U.S. rights for genetically engineered cotton based on the same technique. A coalition of commercial and international public-interest groups argued that the patent was too broad and would have a chilling effect on research. The USDA also challenged the patent, saying the process was too important to be monopolized by one company and that other scientists, including some at USDA facilities, had also contributed. The company denied seeking a monopoly for cotton, saying it had licensed the process to others, including the USDA.

      The U.S. Environmental Protection Agency (EPA) in October agreed to review and phase out the use of certain cancer-causing chemicals on food as part of an out-of-court settlement with several consumer organizations. Some 85 pesticides were to be reviewed for compliance with the "Delaney Clause" of a federal law that prohibited the use of carcinogenic chemicals that concentrate during food processing. These chemicals were authorized to be used on a wide variety of fruits, vegetables, and field crops. Because not much use was made of Delaney chemicals on many crops and effective substitutes were available for others, however, the economic impact of the EPA action would likely vary from region to region.

      The European Union (EU) in December approved the use of recombinant bovine somatotropin (BST) for restricted testing purposes but extended the moratorium on its commercial use, originally imposed in 1990, through 1999. This synthetic hormone, which promotes growth in cattle and increases milk output by supplementing the BST produced naturally by a cow, was approved in the United States in November 1993. The EU's resistance to its use was primarily economics; it was feared that increased production would swell existing government stocks of dairy products and put new pressure on costly subsidies to the industry. In the United States the use of the hormone was expected to increase per-cow milk yields by 2% in 1995 and perhaps 4% by 1999. The Canadian government in August decided to delay the introduction of BST until July 1, 1995.

Trade Issues.

      International agricultural trade issues were on the back burner in 1994 as countries prepared to implement the agreement reached in the multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT), which was concluded in December 1993. U.S. ratification of the agreement, which would become operational in 1995 under the new World Trade Organization, appeared assured with congressional acceptance of the agreement and passage of implementing legislation.

      The agreement progressively reduced the level of specified agricultural subsidies but did not eliminate them. Countries were jockeying to make the most efficient use of those subsidies still permitted. For instance, to gain congressional support for GATT, the U.S. government announced that it would no longer use the export subsidies provided under its Export Enhancement Program and Dairy Export Incentive Program merely to combat other countries' unfair trade practices but would also use the programs for market expansion and promotion. The European Parliament approved the agreement and a $98-billion agricultural budget providing price supports and other subsidies under the EU's common agricultural policy (CAP). In December the United States was threatening retaliatory restrictions on European imports if the EU did not provide adequate compensation for U.S. exports lost because of tariffs raised in 1995 in connection with the enlargement of the EU from 12 to 15 members.

AGRICULTURAL COMMODITIES

Grains.

       World Cereal Supply and Distribution, Table(For World Cereal Supply and Distribution, see Table III (World Cereal Supply and Distribution, Table).) World grain production overall was expected (in December) to increase in 1994-95, largely because of the recovery in U.S. corn production, which was devastated in 1993. Global wheat production was expected to be smaller because of a sharp reduction in output in the former Soviet Union and the effects of the most severe drought in 22 years in Australia. Even with an expected reduction in wheat consumption, world wheat stocks as a percentage of wheat use were likely to fall to the lowest level since the years leading up to the world food crisis in the early 1970s. EU policies pushed government-held "intervention stocks" into the EU domestic livestock market to help hold down feed prices. The U.S., except for its Food Security Wheat Reserve of four million tons, had virtually eliminated its government-held wheat stocks.

      A potential Canadian-U.S. trade war was averted in August when Canada agreed to limit wheat exports to the U.S. at the low rates permitted under the North American Free Trade Agreement (NAFTA). The U.S. had threatened unilateral restrictions under farm legislation that allowed curbs on imports when they interfered with U.S. price-support programs. Particularly irritating to Canadians and to U.S. producers was a subrestriction in NAFTA on imports of durum used to make pasta. They claimed that U.S. durum imports had increased mainly because U.S. export subsidies for durum had reduced domestic supplies, pushing up prices and attracting imports. The U.S. saw certain Canadian transportation subsidies as providing an unfair export advantage. An expert Joint Commission on Grains was due to make nonbinding recommendations by May 31, 1995.

      World production of coarse grain was expected to increase more than 10% in 1994-95, largely because of a bumper U.S. corn crop. Aggregate output outside the U.S. was reduced because of the Australian drought's impact on barley, reduced yields in South Africa, smaller planted area in the former Soviet republics, and poor growing conditions for corn in Ukraine and the North Caucasus region of Russia. Only India, Eastern Europe, and China among the other major producers saw production increases. Decreased production, declining livestock inventories, and a limited ability to finance feed imports were pushing down coarse-grain consumption in the former Soviet Union. Australia, ordinarily a substantial exporter of coarse grains, was having to import large quantities to maintain its livestock industry.

Oilseeds.

       World Production of Major Oilseeds and Products, Table(For World Production of Major Oilseeds and Products, see Table IV (World Production of Major Oilseeds and Products, Table).) World oilseed production was expected (in December) to increase more than 10% in 1994-95 as a result of the recovery of the U.S. soybean crop from the 1993 drought and strong expansion in output of nearly all major oilseeds in response to strong prices in 1993-94 that carried over into 1994-95. Output lagged in the former Soviet Union, where sunflower-seed production fell to the lowest level in 10 years. Prices of soybeans peaked at an average of $282 per ton in January 1994 (c.i.f., Rotterdam, U.S. No. 2 yellow) and remained strong, averaging $259 per ton in 1993-94 (October-September). Prices fell rapidly when the prospect of a record-large U.S. crop in 1994-95 became clear, trading near $235 from July 1994.

      Global demand for protein meals for animal feed continued to grow more slowly than the demand for vegetable oils. The price of soybean meal slipped to $202 per ton (c.i.f., Rotterdam) in 1993-94, compared with $207 in 1992-93. Prices for most other protein meals were also either down or only a little higher than in the previous year. One reason for the lower prices was that the EU, with its large livestock industry, under CAP continued to price feed grains lower than protein meals to discourage the feeding of oilseed meal to animals. In Eastern Europe and the former Soviet Union the shortage of foreign exchange with which to purchase oilseed meal abroad was also a factor.

      International prices of vegetable oil, which had been surging since 1993 as rising demand outpaced the growth of supplies, were much stronger in 1993-94. Soybean oil prices averaged $580 per ton (f.o.b., Rotterdam), compared with $453 in 1992-93. Despite record-large global oilseed output predicted in 1994-95, supplies of vegetable oil remained extremely tight. Soybean oil prices stood at $706 per ton in November, reflecting the fact that the vegetable oil stocks-to-use ratio was the lowest in 20 years. Helping keep vegetable oil supplies tight was the small expected increase in production of palm oil in 1994-95. Most of the gain was expected to come in Indonesia, where palm plantings had been increased sharply. Malaysian output was being restrained by the cyclical stress on trees that follows a bumper crop like the one in 1993, a shortage of labour to pick the fruit, and unfavourable weather late in 1994.

Livestock and Meat.

       Livestock Inventories and Meat Production in Major Producing Countries, Table(For Livestock Inventories and Meat Production in Major Producing Countries, see Table V (Livestock Inventories and Meat Production in Major Producing Countries, Table).) The world cattle inventory grew modestly again in 1994. The most rapid gains continued to come in China, where rapid income growth was swelling the demand for meat and stimulating herd expansion. Expansion of the U.S. and Canadian economies was stimulating the demand for beef and leading to further strong growth of cattle herds there. The Australian drought necessitated the trucking of water into some towns and the temporary relocation of townspeople elsewhere. Both livestock and grain markets were disrupted, leading to increased slaughter of cattle (because of low feed supplies) and a halt to the expansion of cattle herds. Cattle herds in the former Soviet republics continued to decline.

      The expansion of global hog inventories accelerated in 1994, mainly on the basis of strong growth in China and the United States. The steadily growing Chinese industry was obtaining higher carcass weights thanks in large part to the importation of semen and to higher slaughter rates that were the result of improved management practices. A shortage of feed in the former Soviet states was slowing production there. China and the United States were also responsible for most of the growth in world production of poultry meat in 1994. China, which nearly doubled its output in four years, made good use of imported breeding stock—some 60% of all broilers were raised from nonnative stock.

      World sheep and goat inventories continued to decline and were down 10% from 1989-90. Falling wool prices and drought reduced the incentive for sheep production in Australia, as had the phaseout of the U.S. wool-support program, which was created to ensure supplies of wool for defense in World War II. Global wool production had declined every year since 1989-90.

Dairy.

       World Production of Milk, Table(For World Production of Milk, see Table VI (World Production of Milk, Table).) World milk output was forecast by the FAO (in December) to have fallen slightly in 1994, the fourth consecutive year of decline. Milk production overall in the developed countries was down about 2%, reflecting smaller output in the former Soviet Union, where modest growth in output on private farms was not enough to offset reductions in the former public sector. Milk output in the EU was affected by adverse weather conditions and by Italian and Spanish attempts to bring production in line with EU quotas. Output was up as much as 3% in the LDCs, with the largest gains in Asia.

      Australia and New Zealand were gaining importance in world dairy trade as output fell in the EU because of policy reform and as pressures increased to reduce export subsidies in Western European countries and the U.S. Subsidies were likely to increase with implementation of GATT. New Zealand, the largest exporter of butter, was investing in more output of whole-milk powder and cheese and less of butter and nonfat dry milk. The international butter market took on a two-tier character following the suspension of minimum prices for butter ($1,350 per metric ton f.o.b.) in May 1994 under the International Dairy Agreement.

Sugar.

       World Production of Centrifugal Sugar, Table(For World Production of Centrifugal Sugar, see Table VII (World Production of Centrifugal Sugar, Table).) Global sugar output in 1993-94 proved to be smaller than anticipated because of shortfalls in the Indian and Chinese crops. Recovery of Indian sugar output and scattered gains elsewhere led to expectations (in November) of increased world production in 1994-95, despite the effects of drought in Western Europe, flooding in China, and another dismal performance by the Cuban sugar industry. Global sugar consumption was expected to exceed output for the third year in a row. Sugar supplies around the world had been drawn down to their lowest levels in six years, and world prices for raw sugar by October 1994 had reached a four-year high of 14.4 cents per pound.

      Sugar production in the former Soviet Union and Eastern Europe had declined during the difficult economic transition after the collapse of communism, and sugar consumption had fallen by some 20-25% in the past five years. Early in 1994 Russia and Cuba had agreed to an extension of their 1993-94 barter deal, under which Cuba would trade one million tons of sugar for 2.5 million tons of petroleum. By November Cuba had delivered half its quota but was reportedly behind schedule in deliveries. Cuba's growing inability to supply China's sugar needs was also making that country a major buyer on the open market. Having constituted about one-quarter of the world market in the 1970s, Cuba's share of world sugar exports had declined to only about 9%. It seemed likely that the Caribbean nation would be replaced in 1994-95 by Australia as the second largest exporter.

Coffee.

       World Green Coffee Production, Table(For World Green Coffee Production, see Table VIII (World Green Coffee Production, Table).) Coffee prices shot upward in 1994, despite estimates (in December) of a modestly larger 1994-95 global coffee crop because of severe freezes in Brazil. Coffee prices began edging up early in 1994 on the basis of expectations that production would exceed consumption for the third year in a row, prefrost reductions in estimates of the 1994-95 Brazilian crop, and an announcement by members of the new World Association of Coffee Producing Nations that they would withhold coffee from the market under an export-retention scheme. The scheme replaced the expired International Coffee Agreement under the designation of the International Coffee Organization (ICO), to which both producing and consuming nations had belonged. The retention operation was barely under way when it was suspended after prices moved above 85 cents per pound.

      Prices took off when a survey estimated that the freezes, followed uncharacteristically by drought, would cut the 1995-96 Brazilian crop short by 9 million to 13 million bags from its 29 million-bag potential. The quantity of output from the 1994-95 crop was not affected, although its quality may have been reduced. Prices of green coffee, which had averaged about 62 cents per pound in 1993 (1979 ICO composite indicator), shot as high as $2.75 on the futures market in September but fell as low as $1.45 in early December. Retail prices of roasted coffee, which in the U.S. averaged $2.47 per pound in 1993, reached a plateau of a little under $4.50 in August-November 1994. Just before Christmas, producers in Colombia, Guatemala, Honduras, Nicaragua, Costa Rica, and El Salvador announced that they would withhold 20-22% of their exports beginning at the start of 1995, but traders speculated whether very much coffee was actually available to be withheld. It was forecast that U.S. imports of agricultural products in fiscal year 1995 would increase from $2 billion to $4 billion entirely because of higher coffee prices.

Cocoa.

       World Cocoa Bean Production, Table(For World Cocoa Bean Production, see Table IX (World Cocoa Bean Production, Table).) The new five-year International Cocoa Agreement established by the International Cocoa Organization (ICCO), concluded in September 1993, became operational provisionally in February 1994. The agreement attempted to influence international cocoa prices by the obligations of its individual members to control their own cocoa production. The old ICCO plan tried unsuccessfully to maintain cocoa prices within an agreed price band through operation of a buffer stock. The buffer stock continued to be liquidated gradually under a five-year schedule designed to recover some of the cost of the stock and to eliminate the potential price-depressing effects of its existence.

      Stronger demand for cocoa generated by the economic upturn in the United States and Europe, together with the modest drawdown in cocoa stocks in recent years, helped strengthen prices. Futures prices (New York, nearest three-month average) for cocoa beans moved upward from a 20-year-low average of 46.7 cents per pound in 1993 to an average of 58.4 cents for 11 months of 1994. The higher prices were stimulating increased output in Africa in 1994-95. That, together with better weather in Brazil, was leading to expectations of a record-high global cocoa crop in 1994-95.

Bananas.

      The U.S. involved itself in a dispute between banana-exporting countries and the EU when in September it accepted a petition under Section 301 of the U.S. Trade Act by the Chiquita Banana Co. and the Hawaii Banana Industry Association. It alleged unfair trade practices by the EU in establishing a new import regime in response to GATT. The EU previously had given preferential tariff treatment to imports of bananas from former European colonies in Africa and the Caribbean. Many Caribbean countries were heavily dependent on banana exports, and European preferences were important because the bananas they were importing were generally of lower quality and more expensive than Latin-American bananas. The new EU quota and licensing system continued to favour the importation of Caribbean over Latin-American bananas.

      Two GATT panels—called at the behest of Colombia, Costa Rica, Ecuador, Nicaragua, and Venezuela, with U.S. support—ruled that the new system was not in conformity with GATT rules. Under a special "framework agreement," the EU proposed to increase its annual global tariff-rate import quota from 2 million to 2.2 million tons in 1995, to establish country subquotas based on historical level of exports to the EU, and to reduce the proposed tariffs on such within-quota imports.

Cotton.

       World Cotton Production and Consumption, Table(For World Cotton Production and Consumption, see Table X (World Cotton Production and Consumption, Table).) The sharp reduction in world cotton production in 1993-94, centred mainly in Asia, contributed to a widespread drawdown in cotton stocks by the beginning of 1994-95 that stimulated cotton prices in many countries. International prices (Northern European Cotlook Index "A"), which had fallen to an average of 57.7 cents per pound in 1992-93, climbed steadily to a peak of about 86 cents in May-June for an average of 70.7 cents in 1993-94. The result was the expectation (in December) of substantially larger global cotton output in 1994-95.

      The recovery of production in China, where bollworm infestations were being brought under control, and a record- large U.S. crop were mainly responsible for the increase, although cotton plantings were expected to increase in most major producing countries. Economic recovery in the U.S., Japan, and Europe helped stimulate the demand for cotton textiles, although depressed use of cotton in the former Soviet bloc was holding down global use. Global output and use of cotton were expected to be roughly in balance following two years of substantial drawdown in global stocks. (RICHARD M. KENNEDY)

      See also Gardening ; Textiles (Business and Industry Review ).

      This updates the article agriculture, history of (agriculture, origins of).

FISHERIES

       World Fisheries, 1992, Table(For world Fisheries catch and trade, see Table XI (World Fisheries, 1992, Table).)

  The total world harvest of fish and shellfish, including aquaculture, recovered during 1992, rising above the 1991 total by just under 1.1 million mt (metric tons), mainly because of a rise in the inland catch to a total of 98,112,800 mt. These figures, while above those of the previous two years, were still below those of the late 1980s. The UN Food and Agriculture Organization reported that the recent decline in the growth of the total catch represented a slowdown in growth of production that had been taking place almost continuously over the past four decades.(For World Fisheries Catches and Landings, 1963-92, see Map—> and Chart—>.)

      Production from inland fisheries grew steadily over the past few years, primarily because of the increase in aquaculture. Consistent with the pattern of increasing production over the past decade, the most productive areas were in Asia, where, for example, China reported an increase of 689,059 mt from inland fisheries. The leading freshwater species in terms of production were silver carp, grass carp, and common carp. The anchoveta became the leading maritime species, and the catch rose by 1,433,897 mt in 1992. Alaskan pollock, in second place, increased from 4,893,493 mt in 1991 to 4,992,289 mt in 1992 and had shown a steady decline in catch in recent years.

      The top species landed in 1992 (in order of tonnage) were:

       Fisheries[Table] (Fisheries)

      These 10 species produced a combined total catch of 27,346,371 mt, compared with 27,716,381 mt in 1991. Other species with large increases included bighead carp, Japanese scallop, Japanese flying squid, Norway pout, South African anchovy, and mud carp. Species that exhibited a sharp decrease in catch included Argentine hake, Araucanian herring, Gulf menhadan, California pilchard, pink (humpback) salmon, European pilchard, and Atlantic cod.

      China was again the leading producer, with a massive jump in its total catch for 1992, rising by 14.3% to 15,007,450 mt. Production of fish and shellfish by the rest of the world (excluding China) had fallen each year since 1989. Most of this decrease was a fall in production in the republics of the former U.S.S.R.—four million tons between 1989 and 1992—owing to a slump in marine fishing activity. Japan also showed a major drop. Chile, Norway, and Iceland showed increased catches in 1992, all by about 500,000 mt.

      The problem of worldwide overfishing, dwindling fish stocks, and access to these stocks dominated the world fisheries agenda during 1994. Much publicity was given to the continuing work of the 1993 UN Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks, where the world's fishing nations had begun resolving conflicts arising from commercial fish stocks that either straddle or, at some point during a migratory life cycle, pass through a country's 200-mi exclusive economic zone (EEZ) and out into international waters. One example of the problems was the situation faced by Canada and the commercial fisheries off the Maritime Provinces. Stocks of cod, redfish, flounder, American plaice, and turbot had dropped to record-low levels by 1992-93, and Canada instituted a two-year moratorium on the domestic fishing of cod along the northern coasts of Newfoundland and Labrador in 1992. Even the fishing of cod for personal use was stopped. The moratorium was later extended and introduced for other species. The vital fishing industry in this region was decimated; upwards of 50,000 fishermen and fish-processing workers lost their livelihoods. The Canadians were infuriated by illegal operations by boats from the European Union (EU) and other countries operating on the Grand Banks in international waters outside Canada's 200-mi EEZ. These fishermen vastly exceeded agreed catch quotas for some species, sometimes by more than 16 times. (See Zoology. (Life Sciences ))

      Media attention in Western Europe was focused during the summer of 1994 on the tuna fishery in the Bay of Biscay off France and Spain. The long-standing tensions between Spanish traditional tuna "pole and line" fishermen and the French and British drift-net fishermen, who compete for bonito tuna during the short summer season, erupted into violence in July 1994. Spanish vessels surrounded French and British vessels and cut away their drift nets. The Spanish fishermen claimed that the drift-net vessels were using nets longer than the 2.5-km (1.6-mi) maximum allowed under EU legislation and were indiscriminately entrapping all bonito, including undersized fish. This, they claimed, was depleting spawning stocks and imperiling the shoals for future years. The French and British fishermen claimed that while the drift nets appeared to exceed the 2.5-km limit, they in fact consisted of lengths of net interspersed with large gaps to allow passage of marine mammals and, therefore, the total length of actual net sections did not exceed the legal limits. The real problem, however, was that the use of drift nets allowed French fishermen to capture three times as many tuna per boat as the traditional Spanish vessels while employing only half the crew.

      These examples only hint at the seriousness and global nature of the problem. During the year, Iceland sent gunboats against Norwegian trawlers in the latest outbreak of the North Atlantic "cod war." In a curious echo of the Cold War of the late 1950s, there were casualties as China and Taiwan disputed fishing rights off the island of Quemoy in the Taiwan Strait. The U.K. and Argentina were at it again over the Falkland Islands/Islas Malvinas, this time disputing squid-fishing rights. Even abject Somalia complained about EU fishermen taking one of its few remaining resources—lobsters—in the Gulf of Aden.

      One country with a good opportunity to start afresh in the development and management of a sustainable fishing industry was Namibia. Following years of exploitation of the abundant fish stocks off its coast, with the attendant problems of overfishing and declining fish catches, Namibia at a stroke rid its fishing grounds of virtually all foreign fishing-vessel operators upon gaining independence in 1990. Since then the government had pursued a variety of strategic aims, including conserving stocks, maximizing local employment, and developing and diversifying the fishing industry in a coherent and rational manner.

      Meeting in May, the International Whaling Commission voted to create a sanctuary free from commercial whaling in the waters south of Africa, South America, and Australia. Japan voted against the measure and also caused some consternation in November when it announced that it would sell some 65 tons of meat from minke whales caught for research purposes. Norway also continued its defiance of the 1987 international moratorium on whaling, announcing a quota of 301 minke for 1994. Finally, it was reported in February that the U.S.S.R. had consistently underreported its whaling catch by as much as one-half from the 1960s through the 1980s, which possibly would affect current estimates of the world whale population. (MARTIN J. GILL)

      This updates the article commercial fishing.

FOOD PROCESSING

      In 1994 conflicting reports on food, health, and nutrition appeared daily, confusing professionals and consumers alike as to what constituted a healthful diet. Sales of reduced-calorie foods, decaffeinated coffee, and other supposedly "healthful" foods declined slightly in most developed countries; sales of fresh meat declined in Europe but increased in the U.S. and Japan.

      Food-poisoning incidents in most countries remained at the high levels of 1993, costing the U.K. economy alone between $750 million and $1.5 billion in working days lost because of illness. The release of six-year-old frozen beef onto the U.K. market from the European Union's (EU's) stockpile of 860,000 tons sent shock waves of horror through the media but had no adverse effect on public health. The Australian authorities were concerned that a surge of interest in herbs and other plant extracts in cooking could lead to a rise in accidental poisoning and launched an inquiry.

Business Trends.

      Companies worldwide slashed costs by disposing of unprofitable operations and by laying off workers. Kraft General Foods, Inc., the largest U.S. food processor, laid off 14,000 workers—8% of its workforce—and shut 40 plants. Declining sales of frozen vegetables, particularly in the U.S., where consumers were switching to fresh produce, caused Green Giant, the second largest frozen-food manufacturer in the U.S., to decide to close four plants. Meanwhile, sales of chilled foods and ready-to-eat, shelf-stable meals increased.

      U.S. and European companies stepped up promotions for children's products, often drawing criticism from consumer groups that claimed this encouraged unhealthful eating among children. Character merchandising, whereby companies acquired licenses to use popular film and cartoon characters in their brand logos, increased; for example, "dinosaur mania" swept global markets following the success in 1993 of the film Jurassic Park.

      The conclusion of the General Agreement on Tariffs and Trade (GATT) negotiations promised increased opportunities for food and drink exporters. A cut in tariffs on a huge range of imports was likely to increase world income by more than $200 billion by the year 2000.

      Manufacturers' profits in some countries were reduced by the increasing number of supermarkets' own-brand products and by the speed with which copycat products were brought onto the market. The Coca-Cola Co. prevailed upon the U.K.'s largest supermarket chain, Sainsbury's, to stop selling their cola in cans that resembled those of Coke. Sainsbury's look-alike instant coffee was in line for similar action by Nestlé. U.K. trademark protection was extended to cover the appearance of a package as well as the logo.

      Sales of prepackaged nonalcoholic beverages surged on the European market, especially in Germany, boosted by increased demand for mineral waters and fruit juices. U.S. soft drink consumption remained static for the fourth consecutive year, although it exceeded that of all other beverages.

      Major marketing changes took place in the British dairy industry as a result of the abolition of the Milk Marketing Board, which had fixed prices. Prices of milk and dairy products were expected to rise, a situation made worse by the EU's quota system for milk.

Technology.

      A new Japanese production method called single-cell technology involved using an enzyme to break down vegetables and fruits into cell units in order to produce liquid and powder ingredients of foods and beverages. A Japanese company, Single Cell Foods, started using the technology, which gained approval by the U.S. Food and Drug Administration.

      By altering the structure of a natural enzyme used in cheese manufacture, two Japanese companies, NEC Corp. and Yakult Honsha, jointly developed an artificial enzyme potentially able to produce new types of food. Tetra Laval of Sweden launched Ovotherm, a system for processing and packaging liquid egg products that eliminated Salmonella and Listeria bacteria and reduced bacterial count to a level unattainable by other methods.

      The U.K. government approved the use of a new genetically modified yeast that simplified brewing, improved beer quality, and cut costs. It was the first such new yeast strain to be approved for beer production. Roche Products of the U.K. developed a new method of refining fish oil that retained nutritive properties while removing taste, allowing food products to be nutritionally enhanced without affecting their flavour.

      Air Products Co. of the U.K. launched a freezing process called zero adhesion technology (ZAT) based on the principle that nothing will stick to a surface that has been cooled to -80° C (-176° F) or below. The process allowed multilayer ice cream products of complex shape, such as realistic reproductions of popular characters, to be easily produced, a key factor in the market for children's products.

New Products and Ingredients.

      The first user of ZAT, Rowntree's of the U.K., launched Fruit Pastil-Lolly, a cross between a lollipop and an ice cream, the first sugar confectionery brand in the U.K. ice cream sector. White chocolate emerged as a global craze, particularly in the U.K., France, and Brazil.

      Physicians in New Zealand claimed that honey derived from a tree growing there could eliminate certain bacteria from infected people and that it was cheaper than and just as effective in the treatment of some stomach disorders as antibiotics.

Packaging.

      After declining for two decades, glass containers began a comeback for food and drink applications, encouraged by the environmental friendliness of glass, its healthy image, and an increase in opportunities to recycle it.

      AseptiCan, a cylindrical paperboard package for liquid foods, was launched in Europe jointly by United Paper Mills of the U.K., which made the paperboard, and Michael Höraul Maschinenfabrik of Germany, which made the forming machinery. Convenience, novel appearance, microwavability, and recyclability were its main advantages. The first customer was Finland's largest food packer, Valio Oy, which used the pack for juice drinks.

Company Developments.

      Grand Metropolitan, a U.K. food and drinks producer and owner of Pillsbury of the U.S., sold its U.S. pet food subsidiary Alpo to Nestlé for $510 million, at the same time engaging in a $420 million restructuring operation and shedding 4,000 jobs worldwide. In May Sandoz Ltd., a Swiss drug and chemicals firm, bought Gerber Products Co., the leading U.S. producer of baby foods, for $3.7 billion. Unilever, an Anglo-Dutch firm and the biggest spender on food research-and-development in the world, increased its research and development spending by 12%. Two major U.K. research organizations, Campden Food Research Association and the Flour Milling and Baking Research Association, announced that they planned to merge on Jan. 1, 1995.

      Pfizer Food Science Group, part of the New York-based Pfizer Inc., opened its first European technical service laboratory, at Sandwich, England, and announced plans for two more labs, in France and Germany, adding to those already established in the U.S., Australia, and Japan. APV of the U.K. won a $24 million contract to equip a dairy plant in Harad, Saudi Arabia. The first of its kind in the country, it would be designed to process 375,000 litres (99,000 gal) of milk per day.

      Coca-Cola announced plans to build a $26 million bottling plant in Qingdao (Tsingtao), China, bringing to 23 the number of its plants in the country. Kraft General Foods International Inc. announced in late 1993 a joint venture to build a $42 million dairy products plant in Beijing (Peking). Also in late 1993 Kraft's European subsidiary, Kraft Jacobs Suchard, bought a controlling interest in Kaunas Confectionery Co. of Lithuania, which produced 7,000 tons per year of confectionery products.

      Antinori, one of Italy's oldest Chianti producers, bought Atlas Peak, a company in California's Napa Valley producing high-quality wines. It was one-third the size of Antinori's Italian holdings. After eight years of litigation, the Swedish Tetra Laval Group, the world's largest privately owned beverage and liquid foods packaging company, lost its appeal against the $45 million fine from the European Commission for breaking the EU's competition rules. This was the largest fine ever imposed by the commission.

Government Action.

      Food law continued to advance strongly in 1994, and so did efforts at deregulation and simplification. An attack on the growing complexity of EU draft food laws was made by the European Commission president, particularly in regard to novel and genetically modified foods. The European Commission was pressing for harmonization of national laws covering nearly 3,000 flavourings used by food companies, but discussions were likely to be contentious.

      Fears about consumer confidence in milk and meat products prompted the European Commission to demand a seven-year extension of the European ban on the genetically engineered growth hormone bovine somatotropin (BST). Fears of a trade confrontation with the U.S., where the drug was developed, grew with the ending in September of a 15-month moratorium on the use of BST imposed by the U.S. Senate in June 1993. (ANTHONY WOOLLEN)

      See also Beverages (Business and Industry Review ); Tobacco (Business and Industry Review ); Environment ; Health and Disease .

      This updates the article food preservation.

▪ 1994

Introduction

National and International Issues

       Selected Indexes of World Agricultural and Food Production, Table Shipment of Food Aid in Cereals, TableWorld agricultural and food production (see Table I (Selected Indexes of World Agricultural and Food Production, Table)) declined in 1993, according to preliminary estimates of the UN Food and Agriculture Organization (FAO). Excessive rain and flooding severely damaged feed-grain and oilseed crops in the U.S., and economic disruptions in the former Soviet Union and, to a lesser extent, Eastern Europe continued to obstruct the expansion of agricultural production and trade. The drought in southern Africa, which brought famine to much of the region in 1992, was broken, but food supplies remained scarce in several areas. Other countries in Africa were still afflicted with or not yet recovered from war or civil strife. Food-aid commitments (For Shipments of Food Aid in Cereals, see Table III (Shipment of Food Aid in Cereals, Table)) in 1992-93 reached a record 15.1 million tons of cereals as donors responded to emergencies. The FAO published an important assessment of the likely course of the world food situation, especially as affecting the less developed countries (LDCs) through the first decade of the 21st century, that had both optimistic and sobering elements.

      Trade issues affecting agriculture captured the headlines during much of the year. Agricultural issues were critical to U.S. acceptance of the North American Free Trade Agreement (NAFTA) and to the conclusion of the Uruguay round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT). The agricultural provisions of NAFTA had less effect on trade between the U.S. and Mexico than provisions for other sectors, but modifications of some provisions, particularly those dealing with sugar, were vital to the agreement's passage. An 11th-hour agreement resolving long-standing differences between the U.S. and the European Community (EC) on agriculture made possible the completion of the GATT negotiations and U.S. submission of the pact to Congress before expiration of the "fast-track" negotiation authority on December 15.

Food Emergencies.

      Reports by the FAO and the World Food Program suggested that civil warfare or its aftermath continued to be a greater threat to food security than weather in 1993, especially in Africa. In Angola internal strife brought collapse of the country's economy and marketing system, drove many farmers away from their farms, and prevented outside help from reaching famine-stricken areas. Continued fighting in The Sudan created more refugees and displaced persons at the same time that many people stricken by famine earlier were returning to their homes. Some 40,000 Sudanese were reported to have crossed into Uganda and another 60,000 into Ethiopia, Kenya, and Zaire.

      In Somalia the intervention of UN and U.S. troops may not have brought political stability, but it did lead to a significant improvement in the country's food situation. Relief agencies began to scale down their operations as food became more available in markets and prices fell, but the need for food for returning refugees also contributed to the necessity for continuing outside food aid.

      The slow return of some 650,000 Rwandan refugees following the September peace agreement delayed the planting of 1993-94 crops and created a continuing need for food aid. Eritrea continued heavily dependent on food aid because of the large number of returning refugees with the end of conflict there. Food supplies were considered satisfactory in Ethiopia, thanks to good crops and substantial food-aid imports.

      Kenya's corn crop—normally the source of substantial exports—was hard hit by drought. The country was already burdened with nearly half a million refugees from neighbouring Somalia, Ethiopia, and The Sudan. Continuing civil strife in Liberia was disastrous for food production and distribution, especially in central and northern areas, but the midyear peace agreement gave hope of expanded food relief.

      Fighting also hampered food production in Sierra Leone, and relief shipments could not reach some areas, particularly those held by rebels. Political and economic turmoil left many displaced and destitute in Zaire. In Mozambique the October 1992 peace agreement and the end of the drought permitted an increase in domestic food supplies and improved relief distribution, especially to returning displaced persons.

Slow Retreat of Hunger.

      In November the FAO released an extensive review of the current state and future prospects for the global food situation, Agriculture: Towards 2010. FAO analysts started by combining the data on soil quality and terrain features—contained in the FAO-Unesco Soil Map of the World—with inventories of temperature and moisture conditions for individual countries. They then assessed how the crop yields actually achieved by the technology available under the most favourable conditions by experiment stations and farmers might be approached or reduced under the agroclimatic conditions they had mapped.

      The comprehensive study reported slow but steady progress in increasing global food production and per capita food supplies. World per capita food supplies were some 18% larger than 30 years previously, and the majority of LDCs shared in the gains. The number of people chronically undernourished was estimated to have declined, from nearly 950 million 20 years earlier to some 800 million persons in 1993, and represented about one-fifth of the population in the LDCs. Many countries, however, hardly made any progress, and sub-Saharan Africa was worse off than it had been 20 or 30 years earlier.

      Looking to the future, the FAO saw this combination of slow progress and the persistence of serious hunger likely to continue over the next two decades. The incidence of chronic undernutrition in LDCs could fall from about 800 million people to about 650 million, with per capita food supplies for direct human consumption growing from an average of nearly 2,500 calories per day to just over 2,700 by 2010. By comparison, per capita supplies in the developed countries were not expected to rise much above the current average of 3,400 calories. These estimates assumed world population growth of about 1.5% annually—from 5.3 billion people in 1990 to 7.2 billion by 2010. About 94% of the increase would come in the LDCs.

      It was anticipated that consumption in the Middle East, North Africa, East Asia (including China), Latin America, and the Caribbean region could climb to or above 3,000 calories per day. The increase in East Asia could cut the number of malnourished dramatically (from about 250 million to about 70 million) and leave sub-Saharan Africa, at about 2,150 calories, with the largest and fastest-growing concentration of undernourished people (nearly 300 million). Population there was expected to grow 3.2% annually. Moderate gains in South Asia, approaching 2,500 calories, would leave the region with about 200 million undernourished persons.

      These gains would result mainly from increased domestic production in the LDCs supplemented by some growth in food imports. They would come even in the absence of major new technological breakthroughs and despite a further slowdown in overall world agricultural production—from 2.3% annually over the past 20 years to perhaps 1.8% over the next two decades. The slower growth reflected less need for expanded production in most developed countries—and in several LDCs where consumption requirements were becoming largely satisfied—and the slow growth of effective demand in many poorer countries where consumer buying power remained weak.

      In other words, the continued existence of poverty was the main reason for undernutrition, not resource constraints like inadequate land, water, or technical knowledge such as that embodied in high-yielding plant varieties. There remained, nevertheless, a strong connection between eliminating undernutrition and promoting more rapid agricultural development because the majority of the poor in LDCs still depended on agriculture for employment and income. Increasing agricultural production in many cases represented the major opportunity for increasing income and improving nutrition, particularly in countries with high concentrations of rural poverty.

      The report in effect conceded that limited agricultural resources were still an obstacle to food security and that the need had not been overcome for both private and government action to achieve the potential increases in output that were identified in the report. The existence of 650 million undernourished persons implied continuing food emergencies and a need for external food aid.

Agriculture and Trade Policies.

Multilateral Trade Negotiations.

      The Uruguay round of GATT negotiations begun in 1986 was finally concluded on December 15, just hours before expiration of the "fast-track" authority for U.S. congressional approval. The "now-or-never" character of the deadline contributed to resolution of agricultural issues that had dragged the negotiations out for three years. The agreement was lauded as bringing agriculture truly under international trade rules for the first time and as a major step toward greater market orientation of domestic agricultural and trade policies around the world.

      Agriculture presented special obstacles because the sector was generally more heavily dependent upon domestic support policies, which were closely intertwined with trade policies. Further complications were agriculture's vulnerability to instability because of weather, the socioeconomic impact of the movement of rural people to cities, and the slow adjustment of political representation in many countries to those shifts. Domestic agricultural policies were almost completely off-limits to discussion. For instance, the U.S. had joined GATT only on the condition—"the section 22 waiver"—that it could restrict agricultural imports if they interfered, for almost any reason, with domestic support programs. Although the U.S. initially challenged internal elements of the EC's common agricultural policy (CAP) in the Tokyo round of 1979, it ultimately pulled back rather than risk gains in the reduction of barriers to industrial products.

      Conditions were changing, however. The mid-1980s saw large increases in the budgetary costs of supporting domestic agricultural programs, particularly in the U.S. and the EC. Domestic agricultural prices were supported at levels that induced more production than could be absorbed in the domestic market without producer subsidies, restriction on price-undercutting imports, or export subsidies to dispose of surpluses. The cost of these programs began to make finance ministers in many countries the discreet advocates of reduced agricultural supports and freer trade, leaving agricultural ministers to bear the brunt of farmer complaints.

      Not only that, the trade barriers and export-subsidy competition were generating a full menu of trade disputes—the chicken, pasta, and white wine "wars" making the most colourful headlines. These disputes threatened waves of retaliations and counterretaliations of expanding magnitudes. The major warring parties tended to be the U.S. and the EC, which rose from net importer to major exporter largely as a consequence of its CAP. Other exporters that relied less on subsidies threatened to join the fray. Many LDCs with strong tendencies toward government intervention in their economies began to see advantages to freeing up their economies and promoting freer trade as an engine of growth. All these influences gave growing support to the view that there also were advantages to be gained from a worldwide simultaneous reduction of trade-distorting policies and the internal government support policies that inspired them. However, U.S. persistence in pushing for serious reform measures, even at the risk of endangering an overall GATT agreement, was probably decisive in bringing agricultural policies under GATT.

      The changes in world agriculture brought about by the agreement were major but were due to come in small increments. For the first time under GATT, commitments to reduce export subsidies, to increase import access systematically, and to reduce internal support were specified in detail. The greatest impact of the agreement would likely come from the reduction of export subsidies, which may have been the primary U.S. objective in the negotiations. Both the EC and the U.S. would make substantial reductions in such expenditures. The increase in market access accomplished by the agreement was likely to be smaller initially, but the stage was set for future reductions by the establishment of specific tariffs and the elimination of the moving target represented by nontariff barriers.

      For many—especially the EC and the U.S.—the agreed-to cuts in agricultural subsidies primarily represented a freezing of subsidies at current levels brought about by domestic budgetary pressures. The plan helped deter backsliding and opened the way for future reductions. The agreement called for further negotiations in its fifth year, based on a reassessment of the agreement's accomplishments, taking into account nontrade concerns, "special and differential treatment" for LDCs, and the agreement's object of establishing a fair and market-oriented agricultural trading system. The main features of the final agreement built upon the "Dunkel text" of 1991 and the EC-U.S. "Blair House agreement" of 1992.

Export Subsidies.

      Except for LDCs, all parties by the end of the six-year implementation period were to have reduced budgetary outlays for export subsidies by at least 36% and the quantity of products subject to export subsidies by 21% from the average in the 1986-90 base period. No reductions would be required of the "least developed countries," but the reductions were 24% and 14%, respectively, for other LDCs. One part of the accord called for the cuts to be in equal annual installments, but another had the effect of permitting smaller cuts in the early years, as long as the target established by the 1986-90 base period was met at the end of the six years. (Parties were permitted a later base period—such as 1991-92, when subsidies were higher—for calculating the maximum level of subsidies permitted annually.) This modification accommodated the need of the EC for more time to dispose of its large stocks of surplus grain—especially wheat—and represented a key compromise that led to French, and thus EC, acceptance of the agricultural package.

Import Access.

      The agreement required "tariffication"—the conversion to tariffs of all nontariff barriers—and commitments to guarantee and gradually increase minimum levels of access to import markets. These barriers included the EC's variable levies, the section 22 U.S. import quotas on sugar and dairy products, the "voluntary restraints" on meat exports accepted by Australia and New Zealand to avoid triggering the U.S. meat quota, and the outright prohibition of imports by many other countries, such as Japan's ban on imported rice.

      The new tariffs initially were intended to maintain the same level of protection as had the old nontariff barriers unless reductions were negotiated elsewhere in the agreement. For developed countries these new tariffs, as well as pre-existing ones, were to be reduced over six years by an average of 36%, with a minimum of 15% for individual tariff items. The percentages were 24% and 10%, respectively, for LDCs, except for the least developed countries, which were exempt. The preagreement level of import access was supposed to be guaranteed, generally by use of tariff-rate quotas (TRQs) that charged a lower tariff on a specified volume of imports but a much higher tariff for imports in excess of that amount. All tariffs, new or old, were to be binding. Such bindings fixed tariffs at levels that could not be changed unless negotiations had provided for other forms of compensation to trading partners for the resulting reduced market access.

      Just how much increased trade these reductions might actually encourage was hard to say because countries tended to adopt a wide margin of safety in setting them. Probably of more trade importance was the creation of minimum import opportunities through the use of TRQs in cases where imports were less than 5% of domestic consumption. The TRQs, initially set at 3%, were to be expanded to 5% over the six years. Special, somewhat less stringent, minimum-access commitments were agreed to by Japan and South Korea for rice. Special quantity and price-based safeguards would protect producers in importing countries from sudden surges in imports; special provisions applied in LDCs where a primary agricultural product was the predominant staple in the country's traditional diet.

Internal Support.

      The amount of all trade-distorting subsidies was to be reduced by 20% by the year 2000 from the 1986-88 base period for each developed country and 13.3% by the year 2005 for each LDC, except that the least developed countries needed only not exceed subsidies in the base period. For all countries, reductions since the base period were counted. As agreed at Blair House, the reduction applied to all supported commodities in aggregate, not to commodities individually. The flexibility allowed by this provision and the fact that both the EC and the U.S. had cut back supports since the base period, when they were at a peak, made it unnecessary for either to cut subsidies further.

Food and Health Safety.

      The agreement also recognized a government's right to apply sanitary and phytosanitary protections to human, animal, and plant life. All signatories were encouraged to adopt internationally recognized standards but were free to apply stricter standards. All such measures were to be based on scientific justification or on risk assessment.

Commodities.

Grains.

       World Cereal Supply and Distribution, Table(For World Cereal Supply and Distribution, see Table II (World Cereal Supply and Distribution, Table).)The sharp decline in the weather-ravaged U.S. coarse-grain crop was the primary cause of an expected (in December) 5% reduction in world grain production in 1993-94. Grain supplies were adequate for maintaining consumption in 1993-94 with moderate increases in international prices because of the substantial buildup of global grain stocks during 1992-93.

      World wheat production in 1993-94 was little changed from 1992-93, and supplies were ample because of large carry-in stocks. Production gains in China, South Asia, and Eastern Europe roughly offset reductions in the former Soviet Union (mainly Kazakhstan), the EC, and North America. In Eastern Europe a poor 1992 wheat harvest and a lack of foreign exchange with which to import wheat contributed to an overall decline in global wheat consumption in 1992-93. Global wheat stocks increased substantially in 1992-93, with the EC again the leading stock holder.

      Wheat imports by the former Soviet republics increased to about 23.7 million tons in 1992-93, assisted by various aid, credit, and barter arrangements with the U.S. and the EC, but the ability of the region to maintain imports in 1993-94 was weakened by a shaky credit record. By the end of 1993, Russia had made considerable progress in catching up on overdue grain payments to the U.S., the EC, and Canada but not sufficiently to be reinstated in the U.S. credit-guarantee program from which it had been suspended in late 1992.

      The decline in global rice production in 1992-93 mainly reflected sharp declines in Chinese and Japanese output. Large stocks of rice resulting from China's bumper harvest the previous year depressed prices in an economy that as a result of economic reforms responded more to market signals. Consumer demand was weak for high-yield, low-quality rice, the production of which was encouraged by the government's previous policies. Farmers responded by switching to higher quality but lower yielding rice varieties, more profitable cash crops (e.g., vegetables, fruit, and fish), and nonagricultural land uses. The result was the smallest harvested area for rice since 1969-70.

      Unfavourable weather reduced Japanese rice output to the lowest level in decades and led the government to end its ban on rice imports temporarily. The need to import substantial quantities of rice may also have made it easier for the government to agree, for the first time, to permit importation of at least small quantities of rice on a regular basis under the GATT agreement. The Japanese consumer's preference for high-quality japonica rice, which normally accounted for less than 15% of a world rice market (dominated by indica rice), led to a strong run-up in prices that favoured the major suppliers of that rice, Australia and the U.S.

      The 31% reduction in the U.S. corn (maize) crop was responsible for a 9% decline in world coarse-grain production in 1993-94. Overall, global coarse-grain supplies, however, were only 5% smaller because of large carry-in stocks in the U.S. resulting from the record-high U.S. corn harvest. Among major export competitors, production rose in Canada, China, Australia, and the EC. China emerged as the second largest coarse-grain exporter (mainly corn and barley), shipping 11.9 million tons in 1992-93, compared with 8.6 million for the EC and 51 million for the U.S.

      Coarse-grain imports into the countries of the former Soviet Union, which averaged more than 20 million tons annually in 1989-91, were about half that in 1992-93. Besides the financial restraints on imports, the reduction of livestock subsidies, higher meat prices, and weakened consumer demand reduced meat consumption and feed-grain consumption. In October Mexico announced a reduction in corn support prices to take place over a short transition that was likely to lead to the substitution of wheat for corn plantings, particularly in irrigated areas where corn had supplanted wheat. The U.S. was expecting a substantial expansion of corn exports to that country as the combined result of this policy and Mexico's reduction of import barriers as the result of NAFTA.

Oilseeds.

       World Production of Oilseeds and Products, Table(For World Production of Oilseeds and Products, see Table IV (World Production of Oilseeds and Products, Table).)World oilseed output was expected to be smaller in 1993-94 because of a U.S. soybean crop greatly reduced by rain and flood damage in some areas and drought in others. A 50% reduction in producer prices for oilseeds resulting from lower price supports, together with land idling under the EC reform of the CAP, resulted in a 10% decline in EC oilseed production in 1993-94.

      In the EC reduced domestic oilseed meal supplies and cheaper feed-grain prices—both the result of CAP reform—were resulting in less oilseed meal and more grain being fed to animals. Financial and credit problems, together with declining livestock herds were the cause in Eastern Europe and Russia. Large carry-in stocks of soybeans from bumper harvests in 1992-93 cushioned the impact of smaller oilseed supplies, but international soybean prices, which had tended slowly downward in recent years, began to strengthen in the latter half of 1993. They averaged $246 per ton (c.i.f., Rotterdam, U.S. No. 2 yellow) in 1992-93 (October-September), compared with $237 in 1991-92, and showed signs of moving higher.

      Production of oilseeds with relatively high oil content—such as rapeseed, sunflower seed, and palm oil—had been growing more rapidly in recent years than those with high meal content. Efforts by many, particularly among the LDCs, to achieve self-sufficiency in vegetable oils were a major factor. The resulting increase in vegetable oil supplies contributed to lower prices and more rapid expansion of global consumption and trade than was the case for meals. Prices of most vegetable oils, except coconut and corn, recorded gains in 1992-93. Soybean oil prices began to recover in mid-1993, averaging $453 per ton (f.o.b., Rotterdam) in 1992-93, compared with $437 in 1991-92. The price of soybean meal edged up to $207 per ton (c.i.f., Rotterdam) in 1992-93.

Meat and Livestock.

       Livestock Numbers and Meat Production in Major Producing Countries, Table(For Livestock Numbers and Meat Production in Major Producing Countries, see Table V (Livestock Numbers and Meat Production in Major Producing Countries, Table).) The decline of the world cattle inventory tapered off in 1993. The U.S., where the cattle herd had been expanding since 1991, accounted for most of the gains. The largest declines were in the former Soviet Union, the result of confused market conditions and a shortage of animal feed. Dairy reforms in the EC, where cattle herds were important for both dairy and beef production, reduced cow herds in nearly all countries. In reunified Germany, the herd was to be reduced by five million head over five years. World beef output was estimated (in October) to be marginally smaller in 1993. EC government-held surplus stocks of beef continued to exceed one million tons in 1993, despite the decline in EC beef production.

      The growth in global pork production slowed in 1993. The largest increases were in China and the EC. China had been encouraging the creation of large-scale modern production facilities, increasing production efficiency, and greatly reducing government intervention in marketing, but commercial production still accounted for only about 20% of all hog production. Per capita meat consumption was growing at a moderate pace in China.

      The world's sheep flock, particularly in China and Australia, was increasingly being devoted to producing meat rather than wool. The trend was likely to accelerate in the U.S., where a program created to ensure wool supplies during World War II, which provided a producer premium equal to one or two times the market price, was being phased out.

      The freeing up of markets in China led to a dynamic expansion of its poultry industry, aided by an inflow of foreign capital and technology. Annual production increases had been 12% or more over the past four years, and China was challenging Brazil as the second largest exporter of broiler poultry meat. The strong domestic demand for white meat in the U.S., together with a sharp reduction in sales to the former Soviet Union, freed up large quantities of inexpensive dark meat for export that embroiled the U.S., the world's leading poultry meat exporter, in several trade disputes around the world. Most Central American countries, Colombia, Venezuela, the Czech Republic, Poland, and South Africa all imposed new import restrictions that the U.S. found reason to question.

Dairy Products.

       World Production of Dairy Products, Table(For World Production of Dairy Products, see Table VI (World Production of Dairy Products, Table).) World milk production was estimated by the FAO to have fallen about 1% in 1993, the third year of decline in a row. Output fell nearly 3% in the developed countries, largely because of continuing reductions in Eastern Europe and the former Soviet Union, where it fell the most because of further herd reductions and short supplies of feed and winter fodder. Output in the LDCs, however, which accounted for only about one-third of global production, rose 3%.

      EC and U.S. export subsidies, larger supplies from Oceania, and a slowing of shipments to the former Soviet Union helped weaken international dairy prices. International prices for butter and nonfat dry milk (NFDM) weakened in 1993, slipping from a peak in January of $1,450 per metric ton of butter (f.o.b., North European and selected world ports) to a low of $1,250 by October-November. The former Soviet republics, however, continued as the major importer of butter, thanks to food aid and other subsidized sales. The price of NFDM—$1,725 in January and February—was down to $1,338 by December. Demand for cheese remained generally strong globally, leading to further expansion of both production and consumption.

      The U.S. Food and Drug Administration (FDA) perpetuated a highly charged controversy over the use of hormones in dairy cows to increase milk output when in November it approved the use of recombinant bovine somatotropin (BST). This synthetic hormone would supplement the BST produced naturally in a cow's pituitary gland. Sale of the drug was delayed until February 1994 after completion of a congressionally mandated study of the drug's social and economic impact.

      FDA approval came after several extensive scientific reviews of the drug's safety begun in the early 1980s. The FDA found milk from treated cows safe to consume and indistinguishable from milk of untreated cows. The FDA did find that cows treated with BST had a slightly increased incidence of mastitis but concluded that safeguards were adequate.

      A 12-month extension of the ban on BST was agreed upon in December by EC agricultural ministers, however. Their concerns were primarily economic and social. They feared the drug's use would undermine the CAP by unbalancing the supplies of both milk and meat (BST is also a livestock growth promotant) and drive many small farmers out of business in poorer regions.

Sugar.

       World Production of Centrifugal Sugar, Table(For World Production of Centrifugal Sugar, see Table VII (World Production of Centrifugal Sugar, Table).) Expectations of a record-matching sugar crop in 1992-93 were not met because of unfavourable weather late in the year in parts of Asia and the poor performance of the Cuban sugar industry. A shortage of production inputs and industry breakdowns were limiting production in Cuba, Ukraine, and Russia. Cuba's sugar production fell almost 40% in 1992-93, and only a very modest recovery was in sight for 1993-94. The harvest was curtailed to permit early preparations for expanding future production. The disruption of Cuban markets in Russia and Eastern Europe had also contributed to the precipitous decline in Cuban output in recent years. Cuba's sugar exports fell from about 7 million tons annually at the end of the 1980s to about 3.8 million in 1992-93. Although the downward trend in sugar output in the former Soviet Union appeared to be reversing, supplies remained tight because of a shortage of foreign exchange with which to import sugar. Russia planned to barter fuel, fertilizer, and other supplies for two million tons of Cuban sugar in 1993-94.

      U.S. growers' opposition to the NAFTA provisions dealing with sugar endangered congressional acceptance of the entire agreement. The original text allowed duty-free entry into the U.S. of a minimum of 7,250 tons or up to 25,000 tons of Mexico's net production surplus—production minus domestic consumption—during the first six years of the agreement's 14-year transition period. Limiting exports to surplus prevented the reexport of sugar Mexico might import from third countries. If Mexico achieved a production surplus in any two successive years, it could ship its entire surplus duty-free in years 7 through 14; if not, only 150,000 tons in year 7 plus annual increments of 10% thereafter would be allowed.

      The revised agreement eliminated this "two-year rule" and instead permitted Mexico to ship up to 250,000 tons of its production surplus duty-free annually in years 7 through 14. Another revision limited potential Mexican exports by counting consumption of high-fructose corn syrup as part of total sugar consumption in determining the production surplus. By the end of the transition, all restrictions on sugar trade between the two countries were to be eliminated except those applying to sugar imported duty-free into the U.S. for refining and reexported under an existing U.S. program.

Coffee.

       World Green Coffee Production, Table(For World Green Coffee Production, see Table VIII (World Green Coffee Production, Table).) Renewed attempts during the year to negotiate a new International Coffee Agreement under the designation of the International Coffee Organization (ICO) failed because of inability to agree on the allocation of export quotas and differences between consuming and producing countries over how much higher quality coffees would be available under the quotas. The treatment of sales to non-ICO members was also an issue. The ICO had had no economic provisions since export quotas were suspended in July 1989. The ICO lost its largest consumer member in September when the U.S. announced that it would not extend its membership in the ICO beyond Sept. 30, 1994, because of a lack of congressional support and the U.S. coffee industry's preference for a free market in coffee.

       World Green Coffee Production, TableIn July coffee-producing countries began to band together to raise coffee prices. In September 28 countries representing nearly 90% of global coffee exports announced formation of the Association of Coffee Producing Countries, with headquarters in Brazil. It included all of the major coffee-producing countries (see Table VIII (World Green Coffee Production, Table)) except Mexico, India, and Vietnam. The association agreed to hold back exportable production on a scale beginning at 20% when the 20-day moving-average ICO composite price for "Other Milds and Robustas" was below 75 cents per pound. Members exporting less than 400,000 bags annually would be exempt from retention, and no decision was made about the inclusion of instant coffee in the scheme.

      The indicator price, after averaging nearly 54 cents for 1992, had risen, with implementation of the scheme, to over 71 cents in mid-December. The recovery in Brazilian output gave a prospect of substantially increased global coffee production in 1993-94. Supplies in importing countries were already more than ample because of their large buildup of stocks in 1992-93.

Cocoa.

       World Cocoa Bean Production, Table(For World Cocoa Bean Production, see Table IX (World Cocoa Bean Production, Table).) World prices for cocoa beans gave indication of bottoming out in 1993 after eight consecutive years of decline. The reason was expectations of reduced global cocoa output in 1993-94 resulting from poor crop prospects in West Africa. Futures prices (New York, nearest three-month average) steadied in 1993, averaging about 43 cents per pound during the first eight months, compared with 47 cents in 1992, but began to rise in the autumn. Despite the fact that low prices discouraged new plantings and good farming practices in many countries, the impact on overall production was fairly small. The large plantings of cacao trees in Malaysia, Côte d'Ivoire, and Indonesia in the mid-1980s were just approaching their maximum harvest potential. Cocoa bean stocks were drawn down modestly again in 1992-93 when cocoa bean grindings once again exceeded production, but stocks still equaled the equivalent of a six-month global supply. Overall, cocoa consumption was restrained by continuing low consumption in the former Soviet Union and Eastern Europe.

      A new International Cocoa Agreement (ICCA) was adopted in July to replace one that expired on September 30. The 1986 ICCA had attempted to maintain cocoa prices within an agreed band through operation of a buffer stock. The arrangement broke down in 1989 when large supplies severely depressed prices and the buffer stocks reached their maximum. Lengthy negotiations failed thereafter over differences between producing and consuming nations on what new, lower price band to defend, how to finance a withholding scheme, and how to handle large arrears owed by producing countries to maintain the buffer stock. The new agreement abandoned the buffer-stock concept in favour of supply management based on voluntary cuts in production by members. Implementation of the cuts, however, was postponed until February 1994 because of delays in ratification. Malaysia, Indonesia, and the U.S. were expected to remain outside the ICCA. A sell-off of the buffer stock in monthly installments to be spread over four and a half years was already under way.

Cotton.

       World Cotton Production, Table(For World Cotton Production, see Table X (World Cotton Production, Table).) A modest decline in world cotton production was expected in 1993-94 despite generally better weather than the previous year. Farmers in China moved much land out of cotton and into other crops in response to poor weather, insect infestations, and deferred government payments. The recovery of Pakistani output was slowed by damage from insects and the leaf-curl virus; the government suspended cotton exports to prevent a further rise in domestic cotton prices that threatened to undermine the competitiveness of the country's textile exports. In Central Asia the long decline in acreage planted to cotton appeared to be ending, and production was expected to record the first increase since 1988.

      Cotton use was rising most in countries that supplied their own cotton to manufacture and export textiles. Several countries in East Asia that traditionally relied on imported cotton to produce yarn for export had to cut back yarn production. One result was that cotton trade grew more slowly than cotton use.

      Global cotton stocks, which had soared to 40.6 million bales by the end of 1991-92, fell 5% during 1992-93, and an even larger decline seemed in prospect for 1993-94. Most of the decline occurred in China's large stocks. International cotton prices remained depressed by large global carryover stocks of cotton, which at the end of 1992-93 equaled 45% of cotton use.

      International prices of cotton (Northern European Cotlook Index "A"), whose most recent high in 1990-91 (August-July) averaged 82.9 cents per pound, had fallen to an average of 57.7 cents by 1992-93 and moved in a narrow band under 56 cents during early 1993-94. These continuing depressed prices led to reduced cotton plantings in Latin America, and several traditional cotton exporters there, such as Brazil, Mexico, Colombia, and some Central American countries, were increasingly importing more cotton than they exported.

RICHARD M. KENNEDY

      See also Gardening .

      This updates the article agriculture, history of (agriculture, origins of).

FISHERIES

       World Fisheries, 1991*, Table(For world fisheries catch and trade, see Table XI (World Fisheries, 1991*, Table).)

      According to the latest statistics compiled by the Food and Agriculture Organization (FAO) of the United Nations, the total world fish catch continued to decline, although less steeply than was evident in 1990. The record catch of 100 million metric tons in 1989 had declined to 97,245,600 metric tons in 1990; the 1991 total world catch was confirmed at 96,925,900 metric tons, a drop of just under 320,000 tons from the previous year.

      A recovery in the catch of Peruvian anchovy (anchoveta) to 4,017,106 metric tons in 1991 from 3,771,577 metric tons in 1990 reversed a decline of 1,635,950 metric tons recorded from 1989 to 1990. Alaska pollock, however, continued to drop in catch from 5,736,109 metric tons in 1990 to 4,893,493 in 1991. The top 10 species landed in 1991 (in order of tonnage) were Alaska pollock, South American pilchard, anchoveta, Chilean jack mackerel, Japanese pilchard, skipjack tuna, silver carp, Atlantic herring, European pilchard (sardine), and Atlantic cod. These 10 species produced a combined total catch of 27,716,381 metric tons, compared with 29,773,392 metric tons in 1990, a decline of nearly two million metric tons. Catches of other species, including capelin, large-head hairtail, Araucanian herring, pink salmon, and Cape horse mackerel, showed significant increases but not enough to offset the deficit.

      China increased its catch from 12,095,363 metric tons in 1990 to 13,134,967 in 1991, an increase of 8.6%. The republics of the former Soviet Union dropped from second to third position with a decline from 10,389,030 metric tons in 1990 to 9,216,927 in 1991. Japan moved up to second place despite the fact that its catch fell from 10,350,338 metric tons in 1990 to 9,306,827 in 1991. Both Peru and Chile benefited from the return of the anchoveta. The top 10 catching nations in 1991 were China, Japan, the former Soviet Union, Peru, Chile, the U.S., India, Indonesia, Thailand, and South Korea.

      The worldwide problem of overfishing and dwindling fish stocks continued to be at the forefront of the commercial fishing agenda. One of the major areas of concern was the continued pressure being put on migratory and straddling fish stock. The latter are species that straddle a country's 200-mi exclusive economic zone (EEZ), spending part of their life cycle within the boundaries of a particular country's waters but also spending either part of the year or part of their life cycle outside that zone in international waters, where there is little effective regulation of fishing. The northern cod and groundfish stocks on the Grand Banks off Canada's Newfoundland and Labrador coasts were good examples of such species. During the past few years, Canada had campaigned relentlessly to stop what it described as illegal fishing by European Community (EC) fishermen, who were operating on the boundary of Canada's 200-mi EEZ on the Grand Banks. In 1992 Canada instituted a two-year moratorium on domestic fishing for cod along the northern coasts of Newfoundland and Labrador and called on the EC to withdraw its fleets. Northwest Atlantic Fisheries Organization (NAFO) estimates revealed that stocks of cod, redfish, flounder, and American plaice had dropped to historically low levels; by 1992 they were less than one-third of the total in 1986. Some 890,000 metric tons of these species were estimated to have been taken from NAFO-regulated waters between 1986 and 1992, some 16 times the quota set for those stocks. After the moratorium on cod was introduced, the areas affected were extended and other species included; when they would be reopened remained uncertain. The effect of this in the past three years was the loss of jobs for 40,000 fishermen and fish-processing workers in Newfoundland and Labrador. In December Canada's Federal Fisheries Minister Brian Tobin officially closed several Atlantic cod and haddock fisheries.

      The survival of straddling stocks was not unique to Canada, with threats being posed on Argentina's Patagonian shelf, in the Barents Sea, in the waters off of Namibia, off the shores of Chile and Peru, on New Zealand's Challenger plateau, in the Sea of Okhotsk, and in the Bering Sea. Highly migratory fish stocks were also under extreme pressure, with species such as yellowfin, skipjack, albacore, southern and northern bluefin, and bigeye tuna all in danger.

      The opportunity for countries throughout the world to take steps toward addressing these problems came in July 1993 with the first substantive session of the United Nations Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks, held in New York City. The conference's mandate was to identify and assess existing problems related to the conservation and management of these two types of fish stocks, to consider means of improving cooperation between nations, and to formulate appropriate recommendations. At the conclusion of the conference, a high level of agreement was reached on many subjects, and an additional two sessions were planned before the summer of 1994 to allow fulfillment of the mandate.

      World fish-meal production, which had risen to 6.9 million metric tons by the end of the 1980s, fell dramatically from the 1990 figure of 6.3 million metric tons to 6.1 million metric tons in 1992. The world's major producers of fish meal were Chile, Peru, Japan, and the Scandinavian countries. All those countries, with the exception of Japan, were major exporters. Japan suffered a major drop in its output, producing more than one million tons at the end of the 1980s and dropping consistently from that time to 430,000 metric tons in 1992—a decline of 60%.

      At the end of 1992 Peru experienced a remarkable increase in fish-meal production, resulting in an increase during that year to 1,370,000 metric tons, compared with 1,310,000 in 1991. This unexpected rise resulted in a dramatic downturn in the price of fish meal, which fell from $500 per metric ton on the Hamburg (Germany) market in June 1992 to $350 per metric ton in June 1993. The pattern of fish-meal imports also had changed over the past decade. In 1983 Europe dominated the import trade with more than 50% of the total imports. In 1992, however, Europe represented less than one-third of the imports, with nearly two-thirds being imported by the Far East. This dramatic change was caused largely by a rapid rise of fish-meal consumption in China.

      In the late 1980s the total world production of fish oil was about 1.6 million metric tons, a figure that dropped during the early 1990s to 1,370,000 metric tons in 1990 and 1,050,000 in 1992. This decrease was principally caused by a dramatic decline in production in Japan, Peru, and Chile. The major producers and exporters of fish oil were Japan, Scandinavia, the U.S., and Chile. Exports during 1992 fell by more than 25% compared with 1989. The major importing countries remained the U.K., Germany, and The Netherlands.

      Fish oil is mainly used in the production of foods such as margarine. In recent years, however, it was being used increasingly by the fish-farming industry, resulting in an estimated usage of fish oil in fish feed at about one-third of total world production. Fish-oil production by the major exporting countries during the first half of 1993 rose by about 30% compared with the same period in 1992. Peru was the main reason for this dramatic rise. Fish-oil prices varied during 1992 in response to fluctuating prices of competing vegetable oils. In June 1992 the price of fish oil in the Rotterdam market was about $375 per ton.

MARTIN J. GILL

      This updates the article commercial fishing.

Food Processing

      In 1993 consumers took more care in selecting their food purchases, sought more value for their money, and resented obscure label information. Any product that reduced the trouble of preparation was popular. Brand loyalty declined; in the U.S. sales of private-label products grew twice as fast as sales of national brands.

      Genetic manipulation aroused ethical concerns. Environmental and religious groups were offended by the prospect of the implantation of animal genes into plants to enhance various properties and of the introduction of human genes into cows to bring the composition of their milk nearer to that of human milk. The U.S. Food and Drug Administration (FDA) in November approved a genetically engineered hormone to raise milk productivity. In December the Union of Concerned Scientists asked the FDA to delay approval of two genetically altered vegetable varieties scheduled to come onto the market in early 1994. Also at the end of the year, the FDA adopted new regulations that would require manufacturers of dietary supplements to adhere to the same strict labeling requirements as were applied to food products. The move was intended to eliminate false or exaggerated claims about the health benefits of such products.

      The incidence of food poisoning rose throughout the world. The World Health Organization estimated that in 1992 some 6.5 million cases of food-borne illnesses occurred in the U.S. alone, with approximately 9,000 fatalities. The newly appointed secretary of the U.S. Department of Agriculture (USDA), Mike Espy, announced plans for new meat-inspection programs and said that irradiation might be used to destroy harmful bacteria in beef. In the U.K. one person in 20 claimed to have suffered from food poisoning during 1992.

Business Trends.

      Food company profits fell during the year, especially in the U.S. Restructuring was common throughout the food industry.

      U.S. processors continued to invest large sums in developing substitutes for natural fats. Food processors had anticipated that sales of fat substitutes would have reached $1 billion a year by 1993, but actual sales were less than half of that because the industry failed to develop sufficiently palatable products.

      The British Soft Drinks Association (BSDA) warned that brand pirating was a growing problem in the U.K. soft drink trade. Of total U.K. soft drink consumption of about 8 billion litres, dispensers accounted for some 420 million litres, and the BSDA estimated that 10% of the latter were pirated, a figure rising to 30% in some areas.

      Foreign investment in Eastern Europe was stimulated by the provision of favourable credit facilities, with Hungary, the Czech Republic, Bulgaria, and Poland in the forefront. London financial analysts Coopers & Lybrand found that the former Eastern-bloc countries were in a much better position to do business than had been believed in the West. But the war in the former Yugoslavia badly hurt Bulgarian state-owned food-processing companies, which were expected to lose more than $81 million in 1993 because of lost business resulting from sanctions against Serbia and Montenegro.

      China continued the rapid development of its fast-food industry. As of late 1993 the country had more than 300 instant-noodle lines producing over 200,000 metric tons per year and 60 bread lines producing 100,000 metric tons per year. Development remained at a very early stage, however.

      Western Australia aimed to become a major supplier of high-quality processed foods for the rapidly growing Asian market, where consumption per head was likely to match that of Australia by the year 2000. Annual growth rates of processed food imports reached 18% in South Korea, 14% in Japan, and 12% in Hong Kong.

Technology.

      Interest in high-pressure technology (HPT) for sterilizing food products grew; Japan was the world leader. HPT jam and grapefruit juice were on the market there, and the Wakayama company started work on an HPT system for bulk pasteurization of fresh orange juice. The French government funded an HPT development program involving three large companies: Bongrain, BSN, and Pernod Ricard; 15 partners in Belgium, Germany, France, Spain, and the U.K. jointly proposed a three-year study of HPT. In the U.S. a pilot system was installed by ABB Autoclave Systems Inc. at Columbus, Ohio, and the same company supplied a mobile system for testing at food-plant sites in Sweden and started building a pilot plant for a European customer.

      Vending-machine technology advanced with the appearance of machines incorporating freezing systems coupled with microwave cookers so that the products were heated and ready to eat. Major U.S. processors were developing complete semiautomatic restaurants. Machines were being tested that cooked ready-to-eat meals and accepted debit cards. Processors agreed that vending was poised to grow rapidly into an industry that would provide high-quality food wherever people were—at work, at play, or traveling.

      Developed by Niro of Denmark, a commercial freeze concentration system was installed by a dairy in Wisconsin. The process partially converted the water content of dairy products into ice crystals, which were then removed by a centrifuge machine; it was cheaper than thermal concentration and did not degrade flavour or aroma.

New Products and Ingredients.

      Many new products were in the "health" category, and the main focus was on reduced fat and calorie content and increased dietary fibre. European food companies followed the lead of those in the U.S. and launched products based on olive oil, examples being a low-fat spread from Golden Vale of Ireland, a self-basting chicken product from Moy Park of the U.K., and a low-fat milk from Farmer's Best Milk of Australia.

      A recent marketing trend in the U.S. was clear beverages, which appeared and were promoted as more refreshing and lower in calories than coloured drinks. American brewers introduced "clear beer," and Coca-Cola Co. and PepsiCo introduced clear versions of their traditional cola soft drinks.

      First patented by the USDA, "Oatrim," a fat substitute made from oat flour and oat bran treated with enzymes, was launched in the U.S. jointly by Quaker Oats Co. and Rhône-Poulenc. A new development in which Oatrim played a part was the appearance of beverages containing soluble dietary fibre. A process for producing a liquid fibre ingredient from Oatrim was developed by the USDA, and the ingredient, suitable for incorporation into beverages without affecting flavour, was launched commercially by ConAgra and the joint Quaker Oats/Rhône-Poulenc venture.

      Ahold of The Netherlands introduced thin-sliced technology (TST) meat products. These were ready-to-eat fresh meat slices formed from cheap cuts or trimmings and hardly distinguishable from sliced muscle meat. They were being sold in several countries.

Packaging.

      Significant growth in modified-atmosphere packaging, consisting of a flexible film pack enclosing the product in an inert gas, took place in Europe, where 14 different types of system were in use. Another fast-growing packaging material was polyvinyl chloride (PVC), a major market for which was transparent bottles for mineral water.

      The world packaging industry perceived its biggest challenge as the protection of the environment and made intense efforts to develop products that would be environmentally sound. Continental PET Technologies of Florence, Ky., developed a process for incorporating layers of recycled plastic into soft-drink bottles and plastic food containers and teamed with Husky Injection Molding Systems Ltd. of Ontario to develop a molding system that would produce bottles with up to 50% recycled content. British Steel Tinplate of the U.K. launched its "ultimate can" (UC) project to achieve a 30% weight reduction of steel beverage cans by using a new steel alloy and produced 3,000 UC prototypes.

Company Developments.

      PepsiCo of the U.S. acquired two Spanish beverage companies for $320 million, the centrepiece of a $1 billion five-year investment plan that was expected to double PepsiCo's share of Spain's carbonated-drinks market. The Anglo-Dutch group Unilever bought the U.S. ice cream business of Kraft General Foods for an estimated $400 million, doubling the size of the group's operation in the U.S. Unilever also acquired two companies in Chile and established a joint venture in Beijing (Peking). Philip Morris, Inc., owners of Kraft General Foods, merged the latter's European operations with Jacobs Suchard to create one of the biggest food groups in Europe, worth $9 billion and employing 32,000 people.

      Cadbury Schweppes of the U.K. asked its stockholders for nearly $500 million to fund the acquisition of A&W Brands of the U.S. The company also announced its entry into a joint venture to establish Cadbury as a leading chocolate confectionery brand in China, with an initial investment of $30 million to create Cadbury Beijing.

Government Action.

      The European Community (EC) failed to achieve fully its aim of becoming an area without inner frontiers. Some, but not all, objectives were attained. An unexpected result was that food could be moved across frontiers without any inspections, and to counter this the EC announced the establishment of a food health inspectorate.

      The FDA published regulations implementing the Nutrition Labeling and Education Act. Estimates of the cost of compliance to the U.S. food industry varied widely between $1.4 billion and $10.3 billion over 20 years. The FDA also issued standards and proposals for bottled water, setting limits for some 40 possible contaminants.

      (ANTHONY WOOLLEN)

      See also Environment ; Health and Disease ; Industrial Review: Beverages (Industrial Review ); Textiles (Industrial Review ); Tobacco (Industrial Review ).

      This updates the article food preservation.

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