World foodgrain production to drop in 09-10

World foodgrain production is anticipated to drop in 2009-10 largely due to reduced area sown with these crops by farmers in the developed countries in response to a sharp fall in international cereal prices.

Some of the cereal acreage is likely to shift to oilseeds which offer prospects of better returns with lower production costs.

According to the latest reckoning by the UN Food and Agriculture Organisation (FAO), the world cereal output in 2009 is likely to decline by 3 per cent from the record 2008 crop.

Much of this decline is accounted for by the developed countries where the cereal output may drop by over 6 per cent. The fall in production in the developing countries is forecast to be only marginal at about 0.7 per cent.

The output of wheat and coarse cereals, which constitute relatively larger segment of global cereal trade, is foreseen to drop by 4.9 per cent and 3.7 per cent, respectively, while that of rice, in contrast, is projected to rise by some 0.7 per cent.

In quantitative terms, the total likely output of cereals is put, in the FAO’s first projections for 2009-10 seasons, at 2,217 million tonnes, short of previous year’s record high of 2,289.1 million tonnes but higher than the 2007-08 harvest of 2,132.4 million tonnes.

The production of wheat in 2009 is projected at 655 million tonnes, down 4.9 per cent from 688.5 million tonnes in 2008. Similarly, the output of coarse cereals is anticipated to drop by 3.7 per cent to 1,100 million tonnes from their record level of 1,141.9 million tonnes in the previous year.

The global rice harvest, on the other hand, is forecast to rise, though only marginally by 0.7 per cent, to 461.9 million tonnes in 2009 from 458.7 million tonnes a year ago.

The lower wheat output is attributed to area cut-back by wheat growers in the US, Canada as well Europe due to a sharp fall of nearly 40 per cent in the international prices in past one year and continued high input costs.

However, Australia, another major exporter of wheat which has seen revival of wheat output last year after a few drought-hit poor wheat harvests, is likely to aim at an output close to, if not larger than, previous year’s good level, it is felt.

The FAO’s projection of increase in rice output in 2009 to 462 million tonnes from 458.7 million tonnes in 2008 is deemed very preliminary as the crop is yet to be planted in major paddy growing regions of the world.

The FAO, however, does not expect the lower 2009 cereal harvest to adversely affect supplies in the global grain market because of anticipated larger carryover stocks from the current season and likely lower utilisation of grains for animal feed and for bio-fuel production.

As a result, the international prices of cereals may also remain low.