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World crop estimates 2011 November – more wheat, China corn, less rice

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The November data and major crop summaries from the World Agricultural Supply and Demand Estimates (WASDE, US Department of Agriculture, Economic Research Service) are out today. Here are the highlights:

Wheat - Global wheat supplies for 2011-12 are projected 2.6 million tons higher mostly reflecting higher production in Kazakhstan and EU-27. Kazakhstan production is raised 2.0 million tons as an extended harvest period capped off a nearly ideal growing season, confirmed by the latest government reports. EU-27 production is raised 1.2 million tons with further upward revisions for France and Spain and higher reported production in the United Kingdom and Czech Republic. Partly offsetting these increases is a 0.5-million-ton reduction for Argentina and 0.3-million-ton reductions for both Algeria and Ethiopia.

World wheat trade is raised for 2011-12 with higher expected imports for China, a number of African countries, including Morocco and Algeria, as well as for Brazil and several FSU-12 countries neighboring Kazakhstan. Partly offsetting is a reduction in projected imports for South Korea where more corn feeding is expected. Exports are raised 1.0 million tons each for EU-27 and Russia reflecting larger supplies in EU-27 and the continued heavy pace of shipments from Russia.

Global wheat consumption for 2011-12 is raised 2.4 million tons with increased feeding expected for Kazakhstan, Brazil, and Serbia. Larger crops in Kazakhstan and Serbia support more wheat feeding. Recent rains in southern Brazil have reduced wheat quality in some areas raising the potential for more feeding. Higher consumption is also expected for EU-27, Ethiopia, Kenya, and several smaller FSU-12 countries. Global ending stocks are projected 0.2 million tons higher. Rising stocks in Kazakhstan, China, and Morocco are partly offset by reductions in major exporting countries including Russia, Argentina, and EU-27.

You can get the WASDE 2011 November outlook here [pdf] and the 2011 November Excel file is here [xls]. Current and historical WASDE data are here.

Coarse grain - Global coarse grain supplies for 2011-12 are projected slightly lower with reduced U.S. corn production and lower EU-27 rye production more than offsetting higher Argentina sorghum production, higher EU-27 corn, barley, oats production, and higher Kazakhstan barley production. Corn production is lowered for a number of countries with the biggest reduction for Mexico where production is lowered 3.5 million tons. A late start to the summer rainy season and an early September freeze in parts of the southern plateau corn belt reduced yields for Mexico’s summer crop. Lower expected area for the winter crop, which will be planted in November and December, also reduces 2011-12 corn production prospects. Reservoir levels are well below those necessary to sustain a normal seasonal draw down in the northwestern corn areas which normally account for 70 to 80 percent of Mexico’s winter corn crop.

Increases in 2011-12 corn production for a number of countries partly offset reductions in Mexico, the United States, and Serbia. Corn production is raised 2.5 million tons for China with increases in both area and yields in line with the latest indications from the China National Grain and Oils Information Center. EU-27 corn production is raised 1.9 million tons mostly reflecting higher reported output in France, Romania, and Austria. Argentina production is raised 1.5 million tons with higher expected area. FSU-12 production is raised 0.7 million tons with higher reported yields in Belarus and Russia. There are also a number of production changes this month to corn and sorghum production in Sub-Saharan Africa which reduce coarse grain production for the region.

World coarse grain trade for 2011-12 is raised with increased global imports and exports of barley and corn. Barley imports are raised for Algeria, Saudi Arabia, and Jordan with exports increased for EU-27 and Russia. Corn imports are increased for China, Mexico, and South Korea. Higher expected corn exports from Argentina and EU-27 support these increases. Higher sorghum exports from Argentina offset the reduction in expected U.S. sorghum shipments. Global corn consumption is mostly unchanged with higher industrial use and feeding in China and higher corn feeding in EU-27 and South Korea offsetting reductions in Mexico and the United States. Global corn ending stocks are projected 1.6 million tons lower with reductions in EU-27, Mexico, Brazil, and the United States outweighing increases for China and Argentina.

RiceGlobal 2011-12 rice supply and use are lowered from a month ago. World 2011-12 production is forecast at a record 461.0 million tons, down 0.4 million from last month due mainly to decreases for Burma, Cambodia, Laos, and Thailand, which are partially offset by an increase for China. Thailand’s 2011-12 rice crop is lowered nearly a million tons as losses in the main-season crop from recent flooding are partially offset by an expected re-planting of some of the main season crop in the Northern Region along with an expected record dry-season crop. Flooding also lowered crop prospects in Burma, Cambodia, and Laos. China’s 2011-12 crop is raised 2.0 million tons to a record 141.0 million, due to an increase in harvested area. Harvested area is increased based on recent indications from the government of China. The increase in global consumption is due mostly to an increase for China. Global exports are lowered slightly due to reductions for Burma and Cambodia, which are partially offset by increases for Argentina and Brazil. Global ending stocks for 2011-12 are projected at 100.6 million tons, down 0.8 million from last month, but an increase of 2.6 million from the previous year.

Joining the dots between economics, income, health and poverty

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The concerns about recession and its impacts on poverty are seen commonly as a question mark over household incomes, over food security and often involve debates about social protection. An aspect that all too often gets ignored in this equation – no doubt because of its complexity – is health and in particular the health of women and children.

Changes in neonatal mortality rates between 1990 and 2009. The map illustrates the change in NMR between the years 1990 and 2009 for each of the 193 countries estimated. PLoS Medicine 8(8): e1001080

This is linked very closely to poverty, however we measure it, and the conditions that either cause poverty to persist (leading to chronic poverty) or cause households at risk to lapse into poverty every now and then (shock). The human development index methodolgy, which is from this year using multi-dimensional indices for poverty for the first time, helps us link health, poverty, income and economic growth (or its opposite).

The question is: is this new understanding, which is more in tune with the way households actually carry on with their lives and are actually affected by wider trends concerning economy, helping integrate the connections? If there is one good reason to ask this question, it is the new study on ‘Neonatal Mortality Levels for 193 Countries in 2009 with Trends since 1990: A Systematic Analysis of Progress, Projections, and Priorities’.

[The World Health Organization (WHO) has a report and summary of the study on this page - 'Newborn deaths decrease but account for higher share of global child deaths']
[The full study is available on PLoS Medicine, 1 August 2011 (Volume 8, Issue 8)]

This has shown that every year, more than 8 million children die before their fifth birthday. Most of these deaths occur in developing countries and most are caused by preventable or treatable diseases. In 2000, world leaders set a target of reducing child mortality to one-third of its 1990 level by 2015 as Millennium Development Goal 4 (MDG4). This goal, together with seven others, is designed to help improve the social, economic, and health conditions in the world’s poorest countries. In recent years, progress towards reducing child mortality has accelerated but remains insufficient to achieve MDG4.

“In particular, progress towards reducing neonatal deaths – deaths during the first 28 days of life – has been slow and neonatal deaths now account for a greater proportion of global child deaths than in 1990. Currently, nearly 41% of all deaths among children under the age of 5 years occur during the neonatal period. The major causes of neonatal deaths are complications of preterm delivery, breathing problems during or after delivery (birth asphyxia), and infections of the blood (sepsis) and lungs (pneumonia). Simple interventions such as improved hygiene at birth and advice on breastfeeding can substantially reduce neonatal deaths.”

Neonatal mortality rates in 2009. The map illustrates the NMR in year 2009 for each of the 193 countries estimated. PLoS Medicine 8(8): e1001080

The researchers used civil registration systems, household surveys, and other sources to compile a database of deaths among neonates and children under 5 years old for 193 countries between 1990 and 2009. They estimated NMRs for 38 countries from reliable vital registration data and developed a statistical model to estimate NMRs for the remaining 155 countries (in which 92% of global live births occurred).

They found that in 2009, 3.3 million babies died during their first month of life compared to 4.6 million in 1990. More than half the neonatal deaths in 2009 occurred in five countries – India, Nigeria, Pakistan, China, and the Democratic Republic of Congo. India had the largest number of neonatal deaths throughout the study. Between 1990 and 2009, although the global NMR decreased from 33.2 to 23.9 deaths per 1,000 live births (a decrease of 28%), NMRs increased in eight countries, five of which were in Africa. Moreover, in Africa as a whole, the NMR only decreased by 17.6%, from 43.6 per 1,000 live births in 1990 to 35.9 per 1,000 live births in 2009.

To return to my question concerning the understanding of economics, income, health and poverty, does most current analysis see to integrate these elements, or is it still GDP-income driven? A new (2011 May) paper released by the Brookings Institution indicates that the GDP-income route is still favoured. The paper, ‘Two Trends in Global Poverty’, Geoffrey Gertz and Laurence Chandy, has said that while the overall prevalence of poverty is in retreat, the global poverty landscape is changing. “This transformation is captured by two distinct trends: poor people are increasingly found in middle-income countries and in fragile states. Both trends – and their intersection – present important new questions for how the international community tackles global poverty reduction.”

The two charts show the trajectory of 20 developing countries along three dimensions: number of poor people, degree of fragility and real income per capita. These 20 countries collectively account for 90 percent of the world’s poor in 2005, and thus largely define the evolving state of global poverty. Graphic: Brookings Institution

“The increased prevalence of poverty in middle-income countries is in many ways a trend of success. Over the past decade, the number of countries classified as low-income has fallen by two fifths, from 66 to 40, while the number of middle-income countries has ballooned to over 100. This means 26 poor countries have grown sufficiently rich to surpass the middle-income threshold. Among those countries that have recently made the leap into middle-income status are a group of countries  -  India, Nigeria and Pakistan  – containing large populations of poor people. It  is their “graduation” which has brought about the apparent shift in poverty from the low-income to middle-income country category.”

This categorisation of middle, low and high income was to an extent useful in the 1970s, when the idea of a human development index was being discussed, but we’ve come a long way since. We know that even in smaller countries (rather, countries with populations that are relatively small compared to those whic bear the sort of burdens studied in the PLoS Medicine research) there is a great deal of income disparity. ‘Income’ itself is a condition with a bewildering number of inputs – social science is quite inadequate to the task of being able to recognise all of these, let alone quantify them and rationalise them across countries and regions – which is exactly what studies like this try to do unfortunately.

“In 2005, when more than half the world’s poor lived in such countries, it made some sense to think about fighting poverty in terms of a single developing country paradigm, based on what worked in countries such as Ghana, Tanzania, Mozambique or Vietnam,” Gertz and Chandy have said. “This logic was evident in two of the major events of that year which continue to shape today’s development agenda: the G8 meeting at Gleneagles and the High Level Forum on Aid Effectiveness in Paris. It was also apparent in Jeffrey Sachs’ influential 2005 best-seller, ‘The End of Poverty’. The legacy of these ideas is scattered throughout the work of the international development community in the design of traditional aid instruments and the standard methods of country engagement.”

The authors of the Brookings paper have said that this approach remains relevant for some countries, but with 90 percent of the world’s poor living in different settings today, its broader application can no longer be justified. Yet they have found that such an admission poses a dilemma. The dilemma exists because one of the reasons the stable low-income paradigm has persisted is because it characterizes an environment in which the international development community feels most comfortable and has the most experience. “The role of external actors in supporting poverty reduction in stable low-income countries is well understood and the standard tools of external assistance – financial and technical assistance – are well suited to them.”

Maplecroft's 2011 food security risk index

What does this mean? Does it give us a hitherto obscured insight into the inner world of aid agencies and international development departments and how they see ‘poor’ countries’ populations? Does it mean that we are burdened with three decades worth of simplistic labelling of populations at risk simply because labelling them any other way makes it difficult to help them? That’s what it looks like to me and I’d like to thank Gertz and Chandy for revealing this. But it’s way past high time this sort of categorisation was ditched, once and for all. It would do us and the battalions of development professionals a huge amount of good to simply be able to say, every so often, “we don’t know enough”.

It is worth being honest about the state of our knowledge concerning the lives of the the majority of households in ‘developing’ countries. Some of the reasons why such honesty will help in the long term are contained in a thoughtful new publication from the World Bank (whose army of development professionals will benefit from its reading). This collection is entitled ‘No Small Matter: The Impact of Poverty, Shocks, and Human Capital Investments in Early Childhood Development’ (The World Bank, 2011) and it has said that, as the 2008 global financial crisis has again demonstrated, economic crises are an unfortunate recurring event in the world and can have severe consequences for household livelihoods.

Progress in key health indicators, UN Human Development Report 2010

‘No Small Matter’ defines economic crises as sharp, negative fluctuations in aggregate income, these being especially common in developing countries, and the frequency with which they occur has been increasing in recent history. We know that declines in household and community resources are not the only risks that arise from an economic crisis because of its aggregate nature. We also know – from fieldwork and by hearing those whom we would wish to help – that at the same time as households cope with the possibility of reduced income from aggregate economic contractions, vital public services may also experience a decline in quality or availability, which in turn may have an additional impact on skill development among children. This is happening now, in more countries than ever before. The economic crisis that hit Latin America in 1982 led to a decrease in public health spending and had a disproportionate effect on the poorest groups. In 2011, the decrease in public health spending exists in many more countries.

A chapter in ‘No Small Matter’, ‘The Influence of Economic Crisis on Early Childhood Development: A Review of Pathways and Measured Impact’, by Jed Friedman and Jennifer Sturdy, is particularly useful.

This has said that “conservative estimates suggest that over 200 million children under five years of age living in developing countries fail to reach their cognitive development potential because of a range of factors, including poverty, poor health and nutrition, and lack of stimulation in home environments”. It is possible, the chapter’s authors have said, that this burden increases during times of crisis as poverty increases and food security is threatened. However, to investigate this claim more carefully it is necessary to understand the pathways through which poverty influences skill acquisition in children.

“The most severe condition affecting ECD (Early Childhood Development) is infant and early child mortality. Sharp economic downturns were associated with increases in infant mortality in Mexico, Peru and India. The mortality of children born to rural and less educated women is more sensitive to economic shocks, which suggests that the poor are disproportionately affected during most economic crises, and perhaps the poor face important credit constraints that bind in tragic ways during large contractions.

Weak relationship between economic growth and changes in health and education, UN Human Development Report 2010

The mortality of girls is also significantly more sensitive to aggregate economic shocks than that of boys. This gender differential exists even in regions such as Sub-Saharan Africa that are not particularly known for son preference and indicates a behavioral dimension where households conserve resources to better protect young sons at the expense of daughters.”

Finally, a further note about the extremely valuable PLoS Medicine study ‘Neonatal Mortality Levels for 193 Countries in 2009 with Trends since 1990: A Systematic Analysis of Progress, Projections, and Priorities’. The authors are: Mikkel Zahle Oestergaard1, Mie Inoue1, Sachiyo Yoshida, Wahyu Retno Mahanani, Fiona M. Gore1, Simon Cousens, Joy E. Lawn and Colin Douglas Mathers (on behalf of the United Nations Inter-agency Group for Child Mortality Estimation and the Child Health Epidemiology Reference Group – World Health Organization, Department of Health Statistics and Informatics; World Health Organization, Department of Child and Adolescent Health and Development; London School of Hygiene & Tropical Medicine; Saving Newborn Lives/Save the Children).

Children of poor households are more likely to die, UN Human Development Report 2010

The study found that of the 40 countries with the highest NMRs in 2009, only six are from outside the African continent (Afghanistan, Pakistan, India, Bhutan, Myanmar, and Cambodia). Among the 15 countries with the highest NMRs (all above 39), 12 were from the African region (Democratic Republic of the Congo, Mali, Sierra Leone, Guinea-Bissau, Chad, Central African Republic, Burundi, Angola, Mauritania, Mozambique, Guinea, and Equatorial Guinea), and three were from the Eastern Mediterranean (Afghanistan, Somalia, and Pakistan). Throughout the period 1990–2009, India has been the country with largest number of neonatal deaths. In 2009, the five countries with most deaths accounted for more than half of all neonatal deaths (1.7 million deaths = 52%), and 44% of global livebirths: India (27.8% of deaths, 19.6% of global livebirths), Nigeria (7.2%, 4.5%), Pakistan (6.9%, 4.0%), China (6.4%, 13.4%), and Democratic Republic of the Congo (4.6%, 2.1%). The top five contributors to the 4.6 million neonatal deaths in 1990 were: India (29.5% of deaths, 19.8% of global livebirths), China (12.3%, 18.0%), Pakistan (5.4%, 3.4%), Bangladesh (5.0%, 2.9%), and Nigeria (4.8%, 3.3%).

As the risk of children dying before the age of five has fallen, the proportion of child deaths that occur in the neonatal period has increased. This increase is primarily a consequence of decreasing non-neonatal mortality in children under five from infectious diseases such as measles, pneumonia, diarrhea, malaria, and AIDS. Globally, 41% of under-five deaths now occur in the neonatal period. Over the 20 y between 1990 and 2009, the proportion of global neonatal deaths that occurred in Africa increased. Although Africa is now the region with the highest NMR, the proportion of under-five child deaths that are neonatal remains relatively low in Africa—the fraction increased from 26% to 29% between 1990 and 2009. This apparent anomaly reflects the fact that Africa accounts for approximately 90% of child deaths due to malaria (0.7 million under-five deaths) and HIV/AIDS (0.2 million under-five deaths), resulting in relatively higher post-neonatal child mortality than other regions.

The global transmission of high food prices-World Bank’s February evidence

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Higher global wheat prices have fed into sharp increases in domestic wheat prices in many countries, the February 2011 Food Price Watch of The World Bank has said. The transmission rate of global wheat price increases to the domestic price of wheat-related products has been high in many countries, according to the report. “For instance, between June 2010 and December 2010, the price of wheat increased by large amounts in Kyrgyzstan (54%), Bangladesh (45%), Tajikistan (37%), Mongolia (33%), Sri Lanka (31%), Azerbaijan (24%), Afghanistan (19%), Sudan (16%), and Pakistan (16%). Several of these countries have a large share of calories consumed from wheat-based products, particularly for the poor. Global food prices continue to rise, though not uniformly for all grains.”

The World Bank’s Food Price Watch is produced by the Bank’s Poverty Reduction And Equity Group, Poverty Reduction And Economic Management Network. The World Bank’s food price index rose by 15% between October 2010 and January 2011, is 29% above its level a year earlier, and only 3% below its June 2008 peak. A breakdown of the index shows that the grain price index remains 16% below its peak mainly due to relatively stable rice prices, which are significantly lower than in 2008. The increase over the last quarter is driven largely by increases in the price of sugar (20%), fats and oils (22%), wheat (20%), and maize (12%).

Maize prices have increased sharply and are affected by complex linkages with other markets. In January 2011, maize prices were about 73% higher than June 2010. These increases are due to a series of downward revisions of crop forecasts, low stocks (U.S. stocks-to-use ratio for 2010-11 is projected to be 5%, the lowest since 1995), the positive relationship between maize and wheat prices, and the use of corn for biofuels.

Ethanol production demand for corn increases as oil prices go up, with sugar-based ethanol less competitive at current sugar prices. Recent United States Department of Agriculture (USDA) estimates show the share of ethanol for fuel rising from 31% of U.S. corn output in 2008-9 to a projected 40% in 2010-11. Increased demand for high fructose corn syrup from countries such as Mexico, as they substitute away from higher priced sugar, also contributes to higher demand for corn. Prospects of easing in this market depend partly on the size of the crops in Latin America, particularly Argentina, which has been affected by unusually dry weather due to the La Nina effect, and the extent of import demand from China in 2011 as well as oil and sugar price trajectories.

Domestic rice prices have risen sharply in some countries and remained steady in others. The domestic price of rice was significantly higher in Vietnam (46%) and Burundi (41%) between June–December 2010. Indonesia (19%), Bangladesh (19%), and Pakistan (19%) have increased in line with global prices. These Asian countries are large rice consumers, especially among the poor. Rice prices have increased in Vietnam despite good domestic harvests. This is primarily due to the depreciation of the currency, which has fuelled overall inflation and expectations of higher demand from large importers and led  to the minimum rice export price being raised by the Vietnamese government. Rice price increases in Sri Lanka (12%) and China (9%) have been relatively moderate in the second half of 2010, while in Cambodia and the Philippines the retail price of rice remained largely unchanged during this period.

Largest Movers in Domestic Prices, June to December 2010
Kyrgyzstan (retail, Bishkek) 54%
Bangladesh (retail, national average) 45%
Tajikistan (retail, national average) 37%
Mongolia (retail, Ulaanbaatar) 33%
Sri Lanka (retail, Colombo) 31%
Azerbaijan (retail, national average) 24%
Afghanistan (retail, Kabul) 19%
Sudan (wholesale, Khartoum) 16%
Pakistan (retail, Lahore) 16%

Vietnam (retail, Dong Thap) 46%
Burundi (retail, Bujumbura) 41%
Bangladesh (retail, Dhaka) 19%
Pakistan (retail, Lahore) 19%
Indonesia (retail, national average) 19%
Mozambique (retail, Maputo) 14%

Burundi (retail, Bujumbura) 48%
Cameroon (retail, Yaounde) 43%
Uganda (wholesale, Kampala) 38%
Kenya (wholesale, Nairobi) 22%

Brazil (wholesale São Paulo) 56%
Argentina (wholesale, Rosario) 40%
Rwanda (wholesale, Kigali) 19%

Grain markets and trade for the last third of 2010

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Continuing a trend that began earlier in the year, La Niña conditions strengthened through the summer of 2010, evidenced by a streak of cool water across the equatorial Pacific Ocean. This map reveals a broad swath of cool water stretching from South America to New Guinea. The ocean is not, however, uniformly cool. Pockets of warm water are mixed with the cool, particularly in the western Pacific. Warmer waters in this region can lead to increased rainfall, and La Niña conditions may have played a role in the devastating floods in Pakistan during the Northern Hemisphere summer of 2010. Over the eastern Pacific Ocean, cooler waters lead to less moisture along the coasts of North and South America. So as more rain pounds some parts of the globe, La Niña conditions can deepen drought in others. NASA Earth Observatory

The International Grains Council released its monthly Grain Market Report on 2010 September 23. In this report the IGC said that global grain prices advanced again in September, those for wheat having returned to the peaks reached in early August. While the initial trigger for the steep upturn in wheat and barley values in recent months was the fast deteriorating outlook for these crops in the Black Sea region, much of the more recent bullishness is attributed to concerns about smaller than anticipated US maize (corn) yields, as well as substantial new grain buying activity by importers.

The market commentary of the report said: “Another feature is the difficult harvest weather in some countries, affecting milling wheat and malting barley quality. US soyabean prices partly mirrored the upturn in maize, but were also supported by concerns about South American crop prospects and continued heavy buying by China. Asian rice prices moved higher, largely because of the impact of the flood emergency in Pakistan. The recent surge in world grain prices, while not on the same scale as in 2007-08, again prompted concerns about its impact on global food prices as well as the increased volatility in the major commodity exchanges. One measure of such volatility is the day-to-day change in futures values which, even allowing for the events of three years ago, is significantly greater than earlier in the decade. Given the generally adequate supply situation for wheat and other grains, despite recent crop concerns, many have expressed surprise at the ferocity of recent market responses.”

Grains outlook for 2010-11 – This year’s sharply reduced crops in the CIS and Europe will contribute to a fall of 1.2% in global grain supplies, reversing three successive years of stock building. World production in 2010-11 is forecast at 1,741m. tons, (1,787m.), 4m. below the previous month’s projection. This follows downward revisions, for maize in the US and wheat in the CIS region, more than offsetting improved prospects in Australia. Significant reductions in wheat and barley output will outweigh another rise in maize, although prospects for the latter crop are downgraded slightly. The difficult growing and harvesting conditions in parts of North America, Europe and the CIS have affected supplies of high-quality milling wheat and malting barley.

Grain consumption in 2010-11 is projected to increase by 0.6%, to 1,780m. tons, but this represents a marked slowing compared with previous years as the overall rate of expansion in industrial use, especially for ethanol in the US, is scaled back. In the animal feed sector, maize use is expected to be boosted, while that of wheat will likely hold steady, but this will be more than offset by reductions in barley and other grains. With global grains consumption expected to exceed output after three surplus years, global carryover stocks in 2010-11 are projected to fall by 39m. tons, to 353m., mostly because of declines in the world’s exporters, notably Russia and the US. However, the total carryover will remain significantly above the lows seen earlier in the past decade.

International Grains Council Grain Market Report 2010 September 23

International Grains Council wheat and maize export prices

Global trade in grains is expected to fall in 2010-11, mainly because of reduced wheat shipments. At 237m. tons (239m.), the total is 5m. above the August forecast, following upward revisions for the EU, Russia and sub-Saharan Africa. Export forecasts for several countries, including Australia, Canada and the US, have been lifted, with total availabilities still seen as ample in a year which will see a huge shift in trade away from the drought-afflicted Black Sea region. In all, wheat and coarse grains shipments from Kazakhstan, Russia and Ukraine will fall by 27m. tons compared with 2009-10, with around half of this shortfall likely to be sourced in the United States.

The US Department of Agriculture’s ‘Grain: World Markets and Trade’ September 2010 report is also out. It noted wheat trade changes in 2010-11 in this way:

Selected Exporters: Australia is down 500,000 tons to 15.5 million based on logistical constraints. Canada is boosted 2.0 million tons to 17.5 million due to larger exportable supplies. EU is lowered 3.0 million tons to 21.0 million on reduced exportable supplies and quality concerns, particularly for German wheat. Iran is raised 450,000 tons to 500,000 due to greater exportable supplies and opportunities opened by reduced supplies in Russia. Kazakhstan is up 500,000 tons to 6.5 million on higher Russian import demand. Russia is raised 500,000 tons to 3.5 million based on exports shipped before the ban. United States is boosted 1.0 million tons to 34.0 million on strong demand, particularly for higher quality wheat.

International Grains Council Grain Market Report 2010 September 23

International Grains Council rice and soyabean export prices

Selected Importers: Nigeria is up 400,000 tons to 4.0 million due to expected consumption growth. Russia is raised 1.4 million tons to 2.0 million due to increased demand for milling wheat caused by drought-reduced production.

The USDA report recorded trade changes in 2009-10 as “large late-season adjustments reflect reported shipments”. These are – Selected Exporters: Canada is up 500,000 tons to 19.0 million. The United Arab Emirates is raised 450,000 tons to 950,000. Selected Importers: Indonesia is down 450,000 tons to 5.4 million. Iran is up 600,000 tons to 3.6 million. Turkey is lowered 300,000 tons to 3.2 million.

Rice world markets and trade – Despite weather problems in China and Pakistan, global crop prospects remain excellent said the USDA report. Record world production is expected to not only meet rising demand but also maintain global stocks at the highest level since 2004.

International Grains Council Grain Market Report 2010 September 23

International Grains Council world grain estimates

Prices – though quotes from all origins are up somewhat from last month, Vietnam’s increase is the most dramatic. With 2010 contracts already at a record 6.2 million tons, Vietnam raised the minimum export price of 5% broken to $450 per ton FOB, essentially halting new sales and, for the first time, pushing above higher-quality U.S. #2/4 quotes ($445 per ton FOB). Vietnamese quotes are now only $30 below Thai 100B quotes, a stark departure from the $120 spread just 2 months ago. As sales stall in Vietnam, Thai sales are expected to increase as the government finally releases intervention stocks. U.S. long-grain sales are also expected to pick up on newfound competitiveness and a record crop. By contrast, the medium-grain trade is somewhat on hold as the California crop has yet to be harvested. In addition, many tenders in major markets have yet to be announced.

The USDA report forecast trade changes for 2011. These are – Pakistan’s exports are slashed 750,000 tons to 2.9 million as floods have reduced the crop and damaged infrastructure. Afghanistan’s imports are reduced 100,000 tons to 200,000, as Pakistan is by far the largest supplier due to proximity and relative prices. Iran’s imports are cut 300,000 tons to 1.2 million on the expectation that imports from Pakistan will fall. Thailand’s exports are down 500,000 tons to 9.0 million because the government stock release is happening much later in the year than originally anticipated. Vietnam’s exports are raised 450,000 tons to a record 6.2 million on contracts to date. By contrast, imports are dropped 100,000 tons to 400,000 on a slowdown of border trade with Cambodia. Indonesia’s imports are doubled to 500,000 tons as relatively high domestic prices have caused a surge in trade with neighboring countries. Iran’s imports are dropped 150,000 tons to 1.2 million on the pace of shipments. Nigeria’s imports are lowered 100,000 tons to 1.7 million on slower-than-expected imports from Thailand.

Global farmland grab and the shadow of the Soviet kolkhozes

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Peasant girl with rake, 1930s, Simon Fridland

Peasant girl with rake, 1930s, Simon Fridland

The World Bank has just released an interesting document called ‘Rising Global Interest in Farmland: Can it Yield Sustainable and Equitable Benefits?’. It is presented as a response to the global farmland grab, reviews global trends of land expansion as well as empirical evidence on land acquisitions in 14 countries between 2004 and 2009: Brazil, Cambodia, Democratic Republic of Congo, Ethiopia, Indonesia, Liberia, Lao PDR, Mexico, Mozambique, Nigeria, Peru, Sudan, Ukraine, and Zambia. (I’ll post more on the study as soon as I can read it fully.)

The inclusion of Ukraine is interesting, primarily because of the country’s long history (as a Soviet republic) of collective farming, and also because of the horrific famine that engulfed Ukraine, the northern Caucasus, and the lower Volga River area almost 80 years ago, in 1932-1933, was the result of Joseph Stalin’s policy of collectivisation. This is also part of the region which suffered in the July 2010 fires that traumatised Russia.

The Bank’s study contains a few paras about the Soviet farming system which are worth reading closely, for they help explain the current wheat shortage in Russia and the responses of both Russia and Ukraine to the continuing wheat crisis.

Woman Collective Farmer, 1932, Simon Fridland

Woman Collective Farmer, 1932, Simon Fridland

Eastern European countries have undergone major transitions from the former Soviet system of collective and state farms to new agrarian structures (says the Bank’s section on Russia). These transitions have unfolded in many ways depending on countries’ factor endowment, the share of agriculture in the overall labour force, infrastructure, and the way the reforms were implemented. In areas of low population density, where collectives were divided into small plots allocated to members, the plots were quickly rented back by companies with access to finance and machinery.

These companies were often created from former collective farms whose managers could more easily consolidate land parcels and shares. Services, institutions, and logistics were geared to large-scale production, so smallholder grain production was never viable option. Where farms were land- and capital-intensive, corporate farming was the dominant organisational structure. On the other hand, many countries where land was split up into smallholder farms also performed well. The diversity is illustrated by the share of area under corporate farms 10 years after the transition, ranging from 90 percent in Slovakia, 60 percent in Kazakhstan, 45 percent in Russia, to less than 10 percent in Albania, Latvia. and Slovenia.

In Russia, Ukraine, and Kazakhstan, the transition was associated with a 30 M ha decline in area sown, with most of that area returning to pastures or fallow. Large farms were better able to deal with the prevailing financing, infrastructure and technology constraints. Aided by the phasing out of an inefficient meat industry and the associated demand for grain as feed, the region turned from a grain deficit of 34 mt in the late 1980s to exports of more than 50 mt of grain and 7 mt of oilseeds and derivatives. In light of the scope for transfer of available technology, Russia, Ukraine and Kazakhstan, the region’s three land-abundant countries, have an opportunity to establish themselves as major players in global grain markets, especially if ways to effectively deal with volatility are found.

Farmer's first Spring. The Soviet region of Nizhnegorodsk's District, 1929, Arkadi Shishkin

Farmer's first Spring. The Soviet region of Nizhnegorodsk's District, 1929, Arkadi Shishkin

Given the slow development of markets, mergers to integrate vertically to help acquire inputs and market outputs led to the emergence of some very large companies. For example, in Russia, the 30 largest holdings farm 6.7 million ha, and in Ukraine, the largest 40 control 4 to 4.5 million ha. Many of the agricultural companies are home grown, though often with significant investment from abroad. Several have issued IPOs.

Some Western European companies have also invested directly in large-scale farming in the region. For example, Black Earth, a Swedish company, farms more than 300,000 ha in Russia. With greater demand and better logistics, there remains substantial potential for intensification and in some cases for area expansion. Cereal yields increased 38 percent from 1998-2000 to 2006-2008 but are still far below potential. For example, Ukraine’s cereal yields are 2.7 t/ha, some 40 percent of the Western European average. The potential to transfer technology and relatively cheap land has been one of the major motivations for foreign direct investment in the region.

In Russia land is either leased or owned, and in Ukraine. where private land sales are not allowed, all land is leased. usually for 5-25 years. But throughout the region, land rents are still very low relative to land of comparable quality in other parts of Europe. Competitive markets for land shares have yet to emerge. and in many situations imperfections in financial and output markets preclude own-cultivation as a viable option. So the bargaining power of landowners is often weak, suggesting that rental rates are low and that owners receive few of the benefits from large-scale cultivation.

Urban food pistoleros

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A boy plays with mud pistols in Mathare slum of Nairobi, Kenya ©Manoocher Deghati/IRIN

A boy plays with mud pistols in Mathare slum of Nairobi, Kenya ©Manoocher Deghati/IRIN

Alexander Müller, Assistant Director General, Natural Resources Management and Environment Department (FAO) and Paul Munro-Faure, Chairperson, Food for the Cities Multidisciplinary Initiative (FAO) have put out a call for “ideas, contributions and inputs that could be used for a conclusive statement related to food, agriculture and cities to be finalised during the World Urban Forum V“. This will take place in Rio de Janeiro, Brazil, from 22 to 26 March and the theme is: ‘The Right to the City, Bridging the Urban Divide’. As the call went out on the Global Forum on Food Security and Nutrition (FSN Forum), I sent in my response, as below:

Dear Alexander, Paul,

My contribution to your call on FSN for a statement on food, agriculture and cities follows. I work in India, with a Ministry of Agriculture programme called National Agricultural Innovation Project. One of its sub-projects is a knowledge-sharing effort that links crop science and farm practice through ICT. Within that framework I study rural livelihoods and the urban demand on a rural space that faces greater constraints with every passing year.

We are told frequently by central governments that growth is good (i.e. rising GDP) and that increasing per capita income is a national mission. This assertion has much to do with the boom-and-bust cycles we have witnessed in the last decade: in any number of stock markets, in the banking and finance system, in savings and pensions systems, in commodities, in credit and derivatives, and of course in basic food grains. That these cycles have occurred more frequently has as much to do with growing urbanisation in the South, and the mechanics of globalised capital and market risk.

The result is that cities in the South are, to put it crudely, laboratories for risk-taking experiments. The Gini coefficients of cities in Asia show why this is so. (Generally, cities and countries with a Gini coefficient of between 0.2 and 0.39 have relatively equitable distribution of resources. A Gini coefficient of 0.4 denotes moderately unequal distributions of income or consumption. This is the threshold at which cities and countries should tackle inequality urgently.)

Here are the composite urban Gini coefficients (from ‘State of the World’s Cities 2008/2009: Harmonious Cities’; United Nations Human Settlements Programme (UN-HABITAT), 2008). Over a given period (separate for each country), the urban Gini rose most for Nepal (0.26 to 0.43 from 1985 to 1996), China (0.23 to 0.32 from 1988 to 2002), Viet Nam (0.35 to 0.41 from 1993 to 2002), Bangladesh (0.31 to 0.37 from 1991 to 2000), Sri Lanka (0.37 to 0.42 from 1990 to 2002) and Pakistan (0.32 to 0.34 from 2000 to 2004) and it dropped marginally for India (0.35 to 0.34 from 1994 to 2000) and Cambodia (0.47 to 0.41 from 1994 to 2004). Note that the UN-Habitat calculations are only until 2004 for the latest city, and that the impacts of the triple crisis of climate change, financial volatility and food system distortions became widespread only thereafter. It’s very likely then that in cities in Asia, Africa and South America, the Gini coefficient has risen faster in the last five years than in the decade until 2004.

Gini coefficients for populations in Asian cities

Gini coefficients for populations in Asian cities

There’s another aspect that the urban Gini indicates, which several country studies have dealt with in the last few years, and that is the rural-urban divide, in terms of income inequality, consumption inequality, inequality in access to basic services and inequality of representation. Yet those at the deprived end of this quotient are also those who grow the food, absorb the agricultural risks, manage the natural resources and steward the crop biodiversity for a country. If we subscribe to the view of a dominant policy theocracy that ‘economic efficiency’ is good, then for such gross inequalities to be allowed to continue is not good, yet they do. For one thing, education and healthcare outcomes are directly impacted by such inequalities, let alone industrially-oriented ratios such as cost of redistribution, investment allocation and ‘growth’. Yet these continue, and are seen in every single country of the South quite conspicuously in the higher bands of food inflation in rural areas as compared with urban areas.

If inequality seems inescapable at outcome level however, the rural and urban ‘poor’ are certainly not sitting around waiting to be pushed even further into penury. They are using their stores of traditional knowledge (which have travelled with them just as they have migrated to the world’s peri-urbs) to innovate, adapt and survive. If we look at waste recycling in developing countries, most of it (as tonnage and as material value) relies largely on the informal recovery of waste of every description by scavengers or waste pickers. A raft of studies done on this sector in the Asia-Pacific region provide estimates of at least 2% and as much as 4% of the urban population is occupied in waste recovery (its reprocessing and re-use occupies another set of the population).

Is there a similar ‘waste picker’ model of urban agriculture that is being followed, almost invisibly, in Asian cities and towns? Likely yes. It flies under the radar of statistics because it is, per household unit, so small and well integrated with astonishingly tough living conditions. It is seen on tiny patches of marginal lands that are unsettled, usually only because of a city municipality’s hostility to rural migrants. These tiny linear patches run alongside railway tracks, drainage canals, water pipelines, expressways, marshes and swamps, residual watercourses, and between industrial zones. These vestigial connections to the immeasurably healthier lives led in their rural origins by migrants are the only in situ ‘urban farms’ in most Asian cities and towns. Existing municipal planning and zoning in Asia of the South either ignores them or subtracts them from its calculations.

A street in the slums of Dhaka, Bangladesh ©Manoocher Deghati/IRIN

A street in the slums of Dhaka, Bangladesh ©Manoocher Deghati/IRIN

Yet such spaces will be vital for our urban settlements. They are currently farmed in squalid conditions, often cheek-by-jowl with small-scale industries and their toxic effluents, and have no option but to use dangerously polluted water sources. Were they to be encouraged, planned for, incentivised and built into ward or neighbourhood food markets, they would lessen the massive burden the city places upon rural food cultivators. In ‘developing’ Asian cities that today are exemplars of more-GDP-is-good economics, there is often an utter disconnection between purchase of food and a recognition of its sources. The size, power and reach of the food processing industry plays a dominant role in enforcing this disconnection, for what it calls its economies of scale would not exist without it.

Where lie the answers? Linking rural food production – not with urban consumers but with urban wards and neighbourhoods – can help bridge the Gini gaps between urban and rural, between urban salaried and urban marginal. Just as in the ‘transition towns’ movement, in which agriculture is being increasingly promoted in urban areas, so too rural non-agricultural livelihoods development is starting to be promoted. Work-in-progress examples include the strategy adopted for the promotion of Town and Village Enterprises (TVEs) in China. These expanded rapidly in China in the post-reform period and as a result of their promotion between 1978 and 2000, the number of workers in China’s rural non-farm and farm labour sector grew, which stemmed the tide toward the hungry cities.


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