The USDA Foreign Agricultural Service has warned of a tightening of global grain supplies in 2006/07, with a consequent increases in prices. ‘Rising consumption is expected to outstrip production for the second straight year’, pushing stocks to the lowest level in 25 years. Rising demand for ethanol is partly to blame. Global wheat production is ‘expected to be down largely due to poor crops in the Black Sea region’, this however is expected to be balanced in part by large stocks in Argentina, Australia, Canada and the EU.
The Canadian National Union of Farmers has written a letter to UN secretary-general Kofi Annan and FAO director-general Jacques Diouf expressing concerns over ‘rapidly declining global food supplies’.
It is somewhat ironic that the difficulties in the EU cereals sector are coming at a time of tight supplies globally and an inability to clear EU cereals markets. This would suggest a need for a further round of cereals-sector reform involving price reduction, a move which the EU Council of Ministers declined to take in 2003, when a further 5% reduction in intervention prices was proposed.