16 May 2007, Rome — World cereal production in 2007 is on track to reach a record level of 2 095 million tonnes, a rise of 4.8 percent over 2006 levels, FAO said in a tentative
forecast issued today. But with stocks at their lowest level in over two decades, total supplies would still be barely adequate to meet increased demand, boosted by the fast-growing biofuels
industry.

International prices for most cereals have risen significantly in 2006/07 so far and are likely to remain high in 2007/08, according to FAO’s latest Crop Prospects and Food Situation report. As a result, the cereal import bill of the low-income food deficit countries (LIFDCs) is
forecast to increase by about one-quarter in the current season.

Ethanol production boosts maize use

The early forecast for coarse grains production in 2007 has been revised upward to around 1 051 million tonnes, 7.1 percent up from last year and a record high, according to the report. The
bulk of the increase is expected in maize, which accounts for about 70 percent of the total.

Fast growth in demand for maize-based ethanol production is expected to boost total industrial use of coarse grains in 2007/08 by 9 percent, the report said.

Expectations for the world wheat harvest are down slightly since FAO’s April forecast, but at just below 621 million tonnes, production is still expected to be 4 percent above the
previous year’s level.

FAO’s early and very tentative forecast for world rice production in 2007 points to a slightly larger crop at some 422 million tonnes, which would match the 2005 record.

Low-income food-deficit countries

For the LIFDCs as a group, the report predicts 2007 cereal output to be similar to last year’s good level. However, excluding China and India, the largest producers, the
aggregate crop of the remaining countries is forecast to decline slightly.

In North Africa, a sharp decline is expected in 2007 cereal production, reflecting dry conditions in Morocco that are anticipated to halve the country’s wheat production this
year.

In Southern Africa, a reduced cereal harvest is being gathered for the second year in succession. In drought-affected Zimbabwe, a huge rise in the price of the basic staple maize is
anticipated. By contrast, in Malawi, an ample exportable surplus is available following a bumper harvest.

Hunger hotspots

Despite improved food supply in many of the countries normally most at risk from food insecurity, following record or bumper 2006 cereal crops, food difficulties persist in 33 countries
worldwide.

Emergency assistance is required for large numbers of vulnerable farmers in Bolivia affected by serious crop and livestock losses following drought and floods during the 2007 main
cropping season.

In the Democratic People’s Republic of Korea, despite steady recovery in agricultural production over the past few years and a recent pledge of 400 000 tonnes of food aid by the
Republic of Korea, the food supply situation for millions of people remains a serious concern, the report said.

The recent flare up of conflict in southern Somalia has displaced hundreds of thousands of people and is likely to reduce the area planted, particularly in areas surrounding the capital,
Mogadishu, during the 2007 main “gu” cropping season currently under way.

In Zimbabwe, the report anticipates food shortages for millions of vulnerable people struggling under the deepening economic crisis and sky rocketing inflation, currently considered to
be the highest in the world.

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