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Closing the gap in the world grain harvest this year following four consecutive grain harvest shortfalls, each larger than the one before, will not be easy. The grain shortfall of 105 million tons in 2003 is easily the largest on record, amounting to 5 percent of annual world consumption of 1,930 million tons.
The four harvest shortfalls have dropped world carryover stocks of grain to the lowest level in 30 years, amounting to only 59 days of consumption. Wheat and corn prices are at 7-year highs. Rice prices are at 5-year highs. (See data.)
Can the world's farmers close the gap this year? In addition to the usual uncertainties farmers face, they must now contend with two newer trends—falling water tables and rising temperatures. If there is another large shortfall, grain prices will continue the rise of recent months, driving up food prices worldwide.
The production gain we need this year is huge. To start, we need to increase world grain output enough in 2004 to eliminate last year's shortfall of 105 million tons. In addition, we need 15 million tons to feed the 74 million people who will be added to world population this year. With the grain left in the bin as this year's harvest begins at the dangerously low level of 59 days of consumption, we also need to rebuild to the 70-day level that is considered the minimum needed for food security. If we try to do just half of that rebuilding this year, going up to 65 days of consumption, we will need another 30 million tons.
There we have it. Maintaining the current precarious balance between production and consumption will require this year's grain harvest to grow by 120 million tons. But modestly boosting food security will require a total gain of 150 million tons. Unfortunately, the chances of increasing it by even 120 million tons appear to be less than one in ten. A fifth consecutive year in which the harvest falls short of consumption seems likely. The question is, how much will it fall short and how will it affect world food prices?
In estimating this year's grain harvest, we know more about the prospect for the wheat crop than we do for rice or corn simply because the harvest is dominated by the northern hemisphere's winter wheat, which was planted last fall. Among major producers, the planted area compared with 2003 is down in China, the United States, Russia, and the Ukraine, but up in India and the European Union with little change in area overall. Given the expected recovery of wheat yields in Europe and India from the heat- and drought-reduced levels of last year, this year's world wheat crop could easily be up by 35 million tons.
Because rice is water dependent, neither the planted area nor yields vary much from year to year. The only big increase this year is likely to come in China, where the government is making an all-out effort—including higher government procurement prices—to reverse a four-year decline in the rice area. Early estimates indicate China's rice crop could rise from 115 million tons to 122 million tons this year. Allowing for modest gains in other rice-producing countries, an increase of 12 million tons over last year's harvest appears within reach.
Estimating the world harvest of corn, used mostly for feed, starts with the United States—which accounts for 40 percent of the crop. The U.S. area planted to corn is expected to be roughly the same as last year. Since the U.S. corn harvest is largely rainfed, and thus vulnerable to both heat and drought, yield can vary widely. It is doubtful that American farmers can match last year's record corn yield, but we will optimistically assume they can and that better crops elsewhere will be enough to raise the 2004 world corn crop by 10 million tons.
For the minor grains—barley, rye, oats, sorghum, and millet—where production has been falling in recent years, we will assume a 3-million-ton gain.
Combining the estimated increases of 35 million tons for wheat, 12 million tons for rice, 10 million tons for corn, and 3 million tons for other grains gives an increase of 60 million tons over last year's harvest. This is an improvement, but it would still be 60 million tons short of what we need to close the gap. And if we include the goal of modestly rebuilding stocks, we will be short by 90 million tons.
As noted earlier, falling water tables and rising temperatures are making it more difficult for farmers to expand grain production. Water tables are falling and wells are going dry under the North China Plain, which produces a third of China's corn and half of its wheat; in most states in India, including the Punjab, its breadbasket; and under the southern Great Plains and southwest of the United States. In addition, farmers in all three countries are losing water to cities.
Beyond this, in dozens of smaller countries farmers are also losing irrigation water to aquifer depletion and to cities. Record or near-record temperatures have withered crops in key food-producing regions of the world in each of the last two years. Since 1970, the earth's average temperature has risen 0.6 degrees Celsius. Three of the four warmest years on record came during the last four years—years of crop shortfalls. This year's average global temperature will almost certainly be above the norm (defined as the average for 1950-80). What we do not know yet is how much above it will be and which food-producing regions will be most affected.
If the estimated 2004 shortfall of 60 million tons materializes, it will take the world into uncharted territory. Either grain stocks will drop by 12 days of consumption, falling to an all-time low of 47 days, or food prices will rise and force a reduction in consumption—something that will be particularly difficult for the 3 billion people who live on less than $2 a day. In reality, the shortfall will be covered by some combination of declining stocks and rising prices.
A shortfall on the scale projected almost guarantees the emergence of a politics of food scarcity in 2005 of the sort that occurred in the early 1970s, when exporting countries such as the United States restricted grain exports in order to curb the rise in domestic food prices.
There are already early signs of this. In September 2002, Canada—on the heels of a heat-reduced harvest—announced it would limit wheat exports to assure that domestic needs were satisfied. Two months later, Australia, also experiencing a drought-reduced harvest, limited exports to its traditional customers only. In mid-2003, the European Union stopped issuing grain export certificates for several months. And in January 2004, Russia imposed an export tax on wheat to combat rising bread prices.
The risk is that a year from now, lower grain stocks and soaring food prices could destabilize governments in low-income grain-importing countries on a scale that would disrupt global economic progress. If this lowers the Nikkei stock index, the Dow Jones 500, and other key indicators, we may realize that our economic future depends on a worldwide effort to stabilize population, raise water productivity, and stabilize climate—and at wartime speed.
Copyright © 2004 Earth Policy Institute