---------------------------------------------------------------------------------------------- WORLD FOOD AID NEEDS AND AVAILABILITIES December 4, 1995 Approved by the World Agricultural Outlook Board ---------------------------------------------------------------------------------------------- This report is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. GFA-7 ---------------------------------------------------------------------------------------------- Please note that this release contains only the text of GLOBAL FOOD ASSESSMENT--tables and graphics are not included. ---------------------------------------------------------------------------------------------- . Economics Editor Margaret Missiaen (202) 219-0652 Principal Contributors Anwarul Hoque Birgit Meade Margaret Missiaen Linda Scott Shahla Shapouri Sharon Sheffield Frederic Surls Approved by the World Agricultural Outlook Board. Summary released November 17, 1995. Summaries and report text may be accessed electronically. For details, call (202) 219-0515. INTERNATIONAL AGRICULTURE AND TRADE REPORTS Food Aid Needs Assessment Situation and Outlook Series Contents Summary World Grain Supplies Food Aid Needs Overview Former Soviet Union North Africa Sub-Saharan Africa Asia Latin America List of Tables List of Figures Country Grain Balance Tables Appendices Preface This report continues the series of food assessments begun in the late 1970's. Global Food Assessments were done from 1990 to 1992, hence the GFA series. In 1993, the title was changed to Food Aid Needs Assessment to more accurately reflect the contents of the report, which focuses on selected developing countries with past or continuing food deficits. The format of the 1995 report has been expanded to include data for all 60 countries. For the first time, this year's assessment also includes a discussion of food aid needs in the former Soviet Union. Because of data limitations, needs estimates for the FSU are based on expert assessments rather than the standard estimation method used for other countries. A special research report entitled Food Aid Needs and Availabilities: Projections to 2005 (GFA-6) was published in October 1995. This study focused on the world grain outlook and food aid availabilities and needs for the next decade. Acknowledgments Appreciation is extended to Pat O'Brien, Director of the Commercial Agriculture Division, for his support of the food aid needs work. Birgit Meade helped with the model updates. The programs she wrote to automate the update process will be useful for years to come. The economics editor would like to thank the reviewers, especially Fred Surls, Carol Whitton, Bob Koopman, John Link, Francis Tuan, and Richard Brown, for their comments. Summary Sixty developing countries would need 14 million tons of food aid in 1995/96 to maintain per capita grain consumption at the average of the last 5 years (status quo target). These needs are 12 percent higher than estimated for last year due to sharply higher world grain prices. Nutritional needs, which are much higher than status quo needs, also increased from last year. Food aid needs are defined as the amount of grain needed to fill the gap between what a country can produce plus its capacity to import commercially, and two consumption targets--maintain consumption at the level of the last 5 years or achieve a minimum nutritional standard. There is a large gap between estimated needs and supplies of food aid. With increasing world grain prices and declining food aid budgets, projected food aid supplies will cover less than 40 percent of the needs in the 60 countries. World grain prices are forecast to jump about 20 percent on average in 1995/96. While no global grain shortage is foreseen, agricultural policy reforms and weather problems have reduced stocks in exporting countries and may contribute to increased price volatility. Higher prices affect food aid recipients in two ways. First, the quantity of grain that recipients can purchase with limited foreign exchange falls, and secondly, food aid budgets buy fewer tons of grain. A discussion of food aid needs in the former Soviet Union (FSU) is included in this report for the first time this year. Most FSU countries are experiencing lower grain production in 1995/96, but they should be able to import grain using commercial or concessional credit programs. However, the three countries of the Caucasus region, Armenia, Azerbaijan, and Georgia, in addition to Kyrgyzstan and Tajikistan, in Central Asia, will continue to require food aid. Furthermore, civil war in the break-away republic of Chechnya has disrupted supply and distribution and displaced sizable numbers of persons who now require food aid. Total grain food aid needs in 1995/96 in these areas are estimated at 2 million tons, almost the same as food aid received in 1994/95. Sub-Saharan Africa's food aid needs are the same as estimated last year primarily because of an increase in commercial import capacity despite higher grain prices. Favorable prices for export commodities underlie the increase in West Africa, while Southern Africa's forecast increase in imports is driven by a production shortfall. The largest food aid needs are in East Africa, where production has not kept pace with population growth. Food aid needed to maintain consumption in East Africa in 1995/96 is estimated at 3 million tons, almost 80 percent above food aid receipts in 1994/95. East Africa's nutritional needs are more than double its status quo needs. The large disparity between the two food aid targets underscores the region's inadequate diets. Ethiopia, the largest food aid recipient in East Africa, has status quo needs of more than 1 million tons despite the expectation of a normal grain harvest. In North Africa, 1.5 million tons of grain food aid are needed to meet the status quo target. The region has had no nutritional food aid needs in most years. However, Morocco's disastrous harvest has led to nutritional needs for 1995/96. The severe drought in Morocco and lower production in Tunisia reduced North Africa's 1995/96 grain harvest to 18 million tons from 25 million tons in 1994/95. North Africa has become less dependent on food aid as sustained income growth and increased availability of credit have strengthened the region's commercial import capacity. For the nine Asian countries included in the food aid needs assessment, 1995/96 grain production is expected to reach 286 million tons, slightly above the previous record set in 1994/95. Status quo food aid needs are 4.6 million tons. Because of the region's large population--1.6 billion people--and inadequate nutrition, 9.5 million tons of aid would be needed to meet nutritional requirements. In Bangladesh, slow production growth and declining per capita consumption during the last 5 years have widened the nutritional food gap. Afghanistan continues to have large food aid needs. The food aid needed in Asia, although large in relation to food aid supplies, is less than 2 percent of the region's grain output. For the 11 low-income Latin American countries in the assessment, status quo food aid needs are estimated at 1.4 million tons of grain for 1995/96, 30 percent above last year's receipts. Commercial import capacity is forecast at 5 million tons, down sharply from last year's commercial imports of almost 6 million tons. While trade liberalization and favorable financing from grain exporters contributed to the jump in commercial imports in 1994/95, this year's higher world grain prices are expected to reduce commercial imports. Grain output is forecast to increase slightly in 1995/96 as production recovers from last year's drought. World Grain Supplies World grain prices have risen sharply this year, reducing the quantity of grain that food aid importers can purchase and stressing already-thin food aid budgets. The most likely scenario for next year is larger crops and lower prices. However, a significant demand or supply shock in 1996/97 would mean even higher prices, because low world stocks offer little buffer against production shortfalls. [Frederic Surls] This year's grain price increases are caused by production problems, shifts in world trade, and low stocks. The specifics vary by commodity. Wheat prices in the United States, the leading wheat exporter, are up about 25 percent from 1994/95 (table 1). Prices for importers who have been receiving export subsidies have risen even more, because subsidies like European Union (EU) export restitutions and the bonuses offered by the U.S. Export Enhancement Program (EEP) have been cut sharply or eliminated. Supply developments--very tight exporter supplies--are the main cause of the rise in wheat prices. The United States has had 3 years of average or sub-par wheat production. This year, the U.S. crop is down 6 percent because of smaller area harvested and lower yields. As a result, U.S. stocks are expected to be the lowest since 1973. In relation to use, global stocks are the lowest on record (figure 1). Production among the other major exporters is up slightly this year but is well below that of the early 1990's. Lower area is part of the reason, as acreage has shifted away from wheat in Canada, and the EU has introduced an area set-aside program. In addition, higher consumption in the EU has cut into exportable supplies. Lower support prices have reduced the absolute and relative price of wheat to EU users, at least until this year's tight market conditions. The United States and the EU once held much of the wheat stocks available to the world market. In 1985/86, the two countries held about 70 million tons of wheat stocks, 40 percent of the world total. U.S. policy changes over the last decade have focused on market orientation and reducing stocks, and recent shifts in EU policy have added to the drop in stocks. The two countries will end this year with stocks of about 21 million tons, 21 percent of the world total. World demand changes have not been an important factor in this year's wheat price rise. USDA projects world trade this year at 97 million tons, below last year and the smallest since 1986/87 as higher prices lead some buyers to buy less wheat. However, demand continues strong in many countries, especially the high- income growth markets of Asia and Latin America. For coarse grains, this year's small U.S. crops and the shift in China's corn trade are the major reasons why the U.S. corn price is up 39 percent in 1995/96. This year's U.S. corn crop is below the average of the last decade, and sharply down from last year's record 257 million tons. U.S. coarse grain stocks, which have trended down since 1986, are expected to fall to only 20 million tons by the end of the 1995/96 marketing year. These stocks will be the lowest since 1974/75. Along with the U.S. decline, EU stocks are also down, falling nearly 50 percent from levels only 2 years ago. These factors have contributed to a drawdown of world coarse grain stocks to the lowest level in more than 2 decades, and a stocks-to-use ratio that is the lowest on record. China's dramatic shift from exporter to importer in 1994/95 has played an important role in the tightening of the world coarse grain market. Compared with 1993/94, China's coarse grain exports, largely corn, dropped more than 10 million tons and imports rose 5 million tons. This shift in trade rivaled the size of the largest swings in the trade of the former Soviet Union (FSU) during the 1980's, boosted total world trade by more than 10 percent, and limited the buildup in U.S. stocks. Rice prices are also higher, but the world rice situation is different from that of wheat and coarse grains. The U.S. 1995/96 farm price is expected to increase about 10 percent. The global stocks-to-use ratio for rice is 12 percent, the lowest since 1972/73. China and India account for most of global stocks. Furthermore, China accounts for most of the decline in world stocks over the last few years. However, stock data for China are uncertain. World rice trade in calendar 1995 is expected to exceed 19 million tons, more than 3 million tons above the previous record. Unusually large imports by Bangladesh, China, and Indonesia are important parts of the increase. Additionally, North Korea will be importing nearly 1 million tons, two-thirds of which will be aid shipments from Japan and the Republic of Korea. A large world rice crop, only slightly below the previous year's record, will help hold down rice price increases in 1996. World trade is projected to decline about 3 million tons in 1996. With low global stocks, world price movements will be strongly related to production developments in 1996/97. While the most likely scenario is one of larger supplies and declining prices, a significant further supply or demand shock in 1996/97 would mean larger price increases than occurred in 1995/96. In the United States, 1996/97 grain crops will be larger with normal weather. There is no reason to expect a second year of below-trend yields. In fact, particularly for corn, the long-term record shows that yields have recovered after a down year. A return to normal weather would permit larger corn plantings, because spring weather in 1995 delayed and ultimately reduced plantings. High wheat prices and favorable planting conditions likely meant more wheat acreage was planted this fall. U.S. policy also will facilitate larger grain plantings. In 1995, corn plantings were restricted by a 7.5-percent acreage reduction requirement. The Secretary of Agriculture has announced that, while the Department currently has no authority to regulate acreage beyond 1995, he will institute a 0-percent acreage reduction requirement for grain if legislation covering next year allows him to do so. Overseas, 1995 production was below trend. A return to trend production would raise exporter supplies and moderate import demand. In addition, this year's high prices are likely to mean more planted area and the possibility of exports from non-traditional exporters. Some response to high prices from non-traditional exporters is already evident. India is exporting 3 million tons of rice from state stocks. Syria has begun to export wheat from stocks, and Romania and Hungary are also exporting from their large crops. While the immediate concern is low stocks and high prices, a year or two of good world harvests or weaker world demand than we now anticipate could change the situation radically. Two years from now the main concerns could again be low prices, low farm income, and weak exports. Food Aid Needs Overview Rising world grain prices have triggered a 2-million-ton increase in 1995/96 grain food aid needs for 60 low-income countries. An estimated 14 million tons are necessary to maintain per capita consumption at the recent 5-year average. About 27 million tons of food aid would be needed to reach the minimum nutritional standard. Five FSU countries have additional needs of 2 million tons, increasing total status quo needs to 16 million tons. [Shahla Shapouri] Rising world grain prices have reduced commercial import capacity and widened the gap between what low-income countries can produce and/or import and a targeted consumption level. Grain food aid needs for the 60 countries, which have about half of the world's population, are estimated at 13.8 million tons in 1995/96--significantly higher than last year's estimated 12.3 million tons. This amount is necessary to maintain per capita consumption at the recent 5-year average. If the estimated food aid needs for five FSU countries are added, the total increases to about 16 million tons. Almost 27 million tons of food aid would be needed to meet the minimum nutritional standard 1/(figure 2). 1/ The method for estimating nutritional needs is described in Appendix 2. In this report, grain food aid needs are estimated for 60 developing countries in Africa, Asia, and Latin America.2/ In addition, the food market situation of the FSU countries and a projection of their food aid needs are reported for the first time. Because of data limitations, however, estimates for the FSU countries are based on the best available information, often qualitative, rather than the standard estimation method. 2/ See Appendix 1 for list of countries studied. The needs for the 60 countries are calculated using two criteria: 1) status quo needs, which are the amount of grain aid needed to support recent per capita consumption (1990/91-1994/95 average), and 2) nutrition-based needs, which are the grain aid needed to meet a minimum per capita nutritional standard. The two measures indicate the possibility of raising or lowering food aid shipments depending on whether the food aid objectives are to provide consumption stability and/or to meet a nutritional standard. The estimates are aggregate measures and do not take into account uneven food distribution within a country. Care must be taken in considering food aid shipments that significantly exceed past receipts. In most low-income countries, weak market infrastructure, especially poor roads and inadequate port facilities, limits the capacity to absorb imports that are significantly larger than historical maximums. Several grain exporting countries are making agricultural policy adjustments that reduce support for producers, limit export subsidies, and lower government grain stocks. Lower stocks are likely to contribute to greater grain price volatility. Tight world grain supplies have caused prices to soar for 1995/96. However, no global grain shortage is foreseen and prices are expected to fall in 1996/97. Regionally, commercial imports in North Africa and Asia have declined because of high import prices. Sub-Saharan Africa is the only region with an increase in commercial import capacity in 1995/96. The forces driving this unexpected result are: 1) the sharp growth in export commodity prices since 1993 and 2) the additional financial resources made available to French-speaking countries following the devaluation of the African Financial Community (CFA) franc. Total 1995/96 grain production in the 60 countries shows little growth relative to the previous year (table 2). With trade liberalization and favorable financing from exporters, commercial import growth was expected to continue. However, the sharp increase in world grain prices caused the forecast of commercial imports to drop 4 percent. The estimated grain price for 1995/96 is about 20 percent higher than the previous year. The nutritional food aid needs for the 60 countries follow the historical upward trend and are driven primarily by population growth and the grain price hike. Deep cuts in world food aid supplies are projected in 1995/96. The U.S. fiscal year 1996 food aid budget is expected to decline more than 20 percent from fiscal 1995. With a 20-percent grain price increase, the volume of grains provided by the United States will be less than 3 million tons, down from 4 million in 1994/95. The United States provided about half of world grain food aid in 1994/95. (Commercial credit facilities such as the Export Enhancement Program (EEP) are not considered food aid.) Assuming no change in quantities donated by other donors, food aid supplies could fall to 7 million tons from 8.4 million tons in 1994/95. Furthermore, 1994/95 grain food aid shipments dropped 30 percent from the previous year. Historically, the 60 study countries have received about 75 percent of world food aid shipments (table 3). If this share is maintained, the 5 million tons of food aid available to these countries in 1995/96 will satisfy less than 40 percent of their status quo consumption requirements and less than 20 percent of their nutrition-based needs. If 5 million tons of food aid go to the 60 countries plus 2 million tons to the FSU, all of projected food aid supplies would be depleted, leaving none for possible emergencies. During the last decade, emergency food aid needs have climbed due to an increasing number of political crises and extreme weather events, that displaced soaring numbers of persons. A further increase in emergency needs in 1995/96 would sharply reduce food aid available to the 60 countries. Although Sub-Saharan Africa has only 22 percent of the population of the 60 countries, it has almost half of the status quo food aid needs. Asia, with 69 percent of the population, has the second largest needs, representing 34 percent of the total (figure 3). Projected food aid needs for 1996/97 are significantly lower due to a projected decline in prices. Total needs of 11.4 million tons reflect lower needs in all regions except Sub-Saharan Africa, where rapid population growth and slow growth in agricultural productivity are boosting needs. Despite the gap between food aid needs and supplies, the historical pattern of regional distribution of supplies is similar to the distribution of needs (figure 4). Sub-Saharan Africa's 1995/96 estimated needs are 45 percent of total needs, while 1994/95 receipts were 55 percent of total food aid shipments. Some reallocation of supplies among countries, however, could reduce the discrepancies between estimated needs and actual aid receipts. The case of Afghanistan illustrates this point. Afghanistan needs an estimated 1 million tons of food aid in 1995/96, while in 1994/95 actual receipts were 200,000 tons. North Africa continues to receive food aid, even though its nutritional needs are practically zero in most years. Asia, by contrast, has high and rising nutritional needs, and the 1.6 million tons of food aid received in 1994/95 would still leave 8 million tons of nutritional needs unmet. Most of these needs are in Bangladesh. Asia has the largest number of chronically undernourished people, more than 500 million according to a 1990 estimate. Many Asian governments protect domestic producers by opposing large food imports and encouraging domestic food production and exports. Sub-Saharan Africa's 1995/96 status quo needs are the same as estimated in 1994/95 and are forecast to increase slightly in 1996/97. Higher commercial imports forecast for Nigeria, West African CFA countries, and Southern Africa averted an increase in needs. Declining per capita food production and financial constraints continue to pressure food supplies. During the last decade, Sub-Saharan Africa's grain production grew 12 percent while population increased 23 percent. Commercial imports, while growing, fell short of maintaining per capita consumption. Even with large shipments of food aid, 3 to 5 million tons annually, per capita grain consumption in Sub-Saharan Africa has fallen from 110 kilograms (kg.) in the mid-1980's to 105 kg. in the mid-1990's. Per capita food aid need calculations present a different picture of the relative intensity of needs from one country to another. For the 60 countries, on average, 1995/96 status quo needs are 6 kg. per capita, up from 5 kg. last year (table 4). Per capita nutrition-based needs remain at 11 kgs. per capita. Sub-Saharan Africa has the largest total food gap, but the largest per capita gap is in the 11 low-income Latin America countries covered in this report. The per capita food gap in Latin America declined slightly from 19 kg. in 1994/95 to 18 kg. in 1995/96. Per capita grain consumption in Latin America, averaging 108 kg. in the mid-1980's, has fallen to an average of 98 kg. during the last 5 years. Sub-Saharan Africa has the second highest per capita food aid needs, although there is a wide variation in needs among sub-regions and countries. Southern Africa has the highest per capita status quo needs of 20 kg., while East Africa's nutritional needs are the highest at 40 kg. Ethiopia and Somalia, both in East Africa, have seriously undernourished populations as measured by calorie intake. War-torn Liberia has the greatest per capita needs of any individual country using either the status quo (68 kg.) or nutritional (97 kg.) measure. Zambia and Rwanda also have large nutritional needs. Per capita needs in Asia are low on average, but chronic undernutrition in Afghanistan and Bangladesh have put them among the 10 neediest countries. Among the 60 study countries, Afghanistan's per capita status quo needs are 53 kg., the second highest after Liberia. Per capita food aid needs for 1996/97 reflect the chronic nature of food shortages in many countries where agricultural production growth is slow and financial constraints limit capacity to import commercially. While some of the countries with the largest needs are expected to recover in 1996/97 (Morocco), little short-term improvement is foreseen for others (Somalia, Liberia, and Afghanistan). Former Soviet Union Overview Despite a projected drop in 1995/96 grain output in the former Soviet Union (FSU), imports are not expected to increase from 1994/95. Although grain production in Armenia, Georgia, and Tajikistan is not expected to fall, these countries will require food aid in 1995/96 because of lower production in Russia and Kazakhstan and continued supply and distribution disruptions due to military conflict. Lower 1995/96 harvests in Azerbaijan and Kyrgyzstan will also increase the need for concessional credit and donations. [Sharon S. Sheffield] As of November, USDA projects 1995/96 (July/June) FSU grain production at 127 million tons, 11 percent lower than the estimate for 1994/95, and the lowest in 20 years. Lower sown area and drought-depressed yields are the primary factors behind lower output. Gross imports, including trade among FSU countries, are not expected to increase from 1994/95, as consumption and stocks are forecast down 13 and 47 percent. However, lower grain output and reduced stocks in the major producing countries, Russia, Ukraine, and Kazakhstan (usually a net exporter of 5-6 million tons), will mean lower intra-FSU and therefore higher extra-FSU grain trade. Most of the FSU countries (primarily Russia) experiencing lower grain production in 1995/96 should be able to import grain and other agricultural products using commercial or concessional credit programs. However, the three countries of the Caucasus region, Armenia, Azerbaijan, and Georgia, in addition to Kyrgyzstan and Tajikistan (both located in Central Asia) will continue to require food aid. In addition, civil war during much of 1995 in the break-away southern Russian republic of Chechnya has disrupted supply and distribution and displaced sizable numbers of persons who now require food assistance. Total food aid required for these regions in 1995/96 is estimated at 2 million tons of grain (out of a total 3 million tons of projected imports), about the same as supplied in 1994/95. Despite falling agricultural output since the breakup of the Soviet Union, the food aid and export credits provided to these countries are not expected to return to the high levels of the early 1990's. The primary reason is the realization by donor nations that food problems in the FSU are largely the result of limited import capacity in some low- to middle-income FSU countries, reduced consumer purchasing power, and supply disruptions caused by regional conflicts. Moreover, price liberalization in the FSU has led to higher prices and lower grain use, especially for feed, relative to Soviet-era levels. Therefore, for most of the FSU countries, lower production is being offset by lower use, and food aid will not be necessary. Lastly, despite reduced consumption of livestock products, overall caloric consumption remains above nutritional minimums and is still high relative to other food aid recipients. However, Armenia, Azerbaijan, Georgia, Kyrgyzstan, and Tajikistan continue to be highly dependent on grain imports to maintain adequate levels of consumption. Limited ability to earn hard currency (except for Azerbaijan, which has oil to export), the end of Soviet centralized imports and grain distribution, and military conflicts that have disrupted agricultural production and trade necessitate the provision of food aid to these countries. Reports indicate that food supplies in the Caucasus region, Tajikistan, and Kyrgyzstan have improved over the past year, in large part due to considerable efforts by donor nations and assistance groups. However, low purchasing power is still a widespread problem and the share of vulnerable groups (those with fixed incomes, special nutritional needs, refugees and displaced persons) in the total population remains between 20 and 50 percent. Much of the food aid supplied to these countries is being used to generate funds to provide income and other support to vulnerable groups. Forecast 1995/96 grain production in the Caucasus nations of Armenia, Azerbaijan, and Georgia is 1.5 million tons, slightly lower than the 1994/95 estimates (table 5). Despite stable grain output, the region's grain needs remain high. Of the 1.8 million tons of estimated grain imports for 1995/96, the Caucasus' estimated status quo food aid needs total 1.2 million tons. These countries, particularly Armenia and Georgia, have consistently received a large share of aid provided to the former Soviet Union, because several years of civil war have impeded trade flows in this food-import-dependent region. Although military hostilities have recently subsided, shipment blockades and the closing of the Russia-Caucasus border continue to disrupt food imports and distribution. Unlike Armenia and Georgia, Azerbaijan should be able to commercially import as much as half of its grain needs in 1995/96. While 1995/96 projected grain output in Tajikistan is little changed from 1994/95, Kyrgyzstan's production is forecast down 5 percent. Like the Caucasus nations, Tajikistan and Kyrgyzstan are dependent on food imports. Although Kyrgyzstan has made progress in economic reforms since 1992, the country has few natural resources to export for hard currency, and in a year when crop production is down, it must rely on donations to meet about half of its grain import requirement. Tajikistan has made less progress in reform, and much of its post-Soviet existence has been marked by civil war and political instability. Tajikistan's projected 1995/96 grain imports are 750,000 tons, and over half of this amount will be required in the form of food aid due to lower production of traditional export commodities--cotton and aluminum. The United States and the European Union (EU) have provided a large share of total assistance to these five nations and are expected to continue their support in 1995/96. To date, programmed fiscal year 1995 U.S. assistance to the FSU region is $218 million, with $119 million in assistance (including approximately 400,000 tons of grain) for these five FSU countries. Fiscal 1996 food aid programming will probably remain near the 1995 level. In July, the EU announced an assistance package of ECU 110 million ($90 million) for 1995/96 that will provide approximately 656,000 tons of grain, accounting for 30 to 40 percent of the region's food aid needs. In 1994/95, the EU provided over 1 million tons of food products, valued at ECU 204 million, to these countries plus Moldova, where adverse weather sharply reduced 1994/95 grain production. The World Food Program of the United Nations has also provided assistance to the region. North Africa Overview North Africa's 1995/96 food aid needs are 1.1 million tons for the drought-affected countries of Morocco and Tunisia. Record commercial imports are estimated for 1995/96 due to higher imports in Morocco and a steady increase in commercial import capacity in Egypt. [Linda Scott] North Africa's 1995/96 status quo food aid needs are limited to the drought-affected countries of Morocco and Tunisia, where the 1.5 million tons needed to maintain grain consumption are 25 percent lower than food aid shipments to the region a decade ago (table 6). Although poverty persists in rural areas, average per capita caloric availability is above the minimum requirement, and nutrition-based food aid needs are zero for Algeria, Egypt, and Tunisia. Morocco's nutritional needs of 869,000 tons are driven by the production shortfall. Severe drought in Morocco and a second year of below-average rainfall in Tunisia will reduce North Africa's grain output to 18 million tons in 1995/96, down 27 percent from last year's harvest (figure 5). Such annual fluctuations in output are typical of the region where grain production is largely rain-fed. In 5 of the last 10 years, the region's grain harvest has been significantly reduced by drought, except in Egypt, where most grains are irrigated. Commercial imports of 18 million tons are estimated for 1995/96 mostly due to higher imports by Morocco. Wheat will account for about three-fourths of total grain imports, while corn, used mainly for livestock feed, will comprise a 20-percent share. Barley imports fluctuate widely with weather conditions and will increase this year to mitigate the impact of poor pastures in drought-affected countries. Rising per capita incomes, rapidly expanding urban populations, and frequent production shortfalls have made North Africa one of the world's largest and fastest growing grain markets. In recent years, the market has also become more competitive as grain exporters, including the United States, the EU, Canada, and Australia vie for market share through the use of export initiatives such as the U.S. EEP and General Sales Manager Programs (GSM 102, 103) and the French COFACE program. Favorable price and credit terms have enabled the region's traders to import an increasing share of their grain without using food aid. While increased dependence on supplier export programs has improved the region's commercial import capacity, it has also made the economies vulnerable to changes in the international grain trading environment. Tighter world wheat supplies in 1995/96, which have reduced stocks to their lowest level in 20 years, have sharply increased world wheat prices and reduced favorable supplier financing. For example, EEP bonuses for U.S. wheat, typical of those offered in North Africa, declined from $60 per ton in January 1994 to zero in October 1995 3/. In 1994, the United States supplied about half of the region's wheat imports. The EU, with a 20-percent market share in 1994, has suspended subsidized wheat exports. Morocco and Egypt recently imported wheat at an unsubsidized world price for the first time since 1989. In October 1995, world wheat prices exceeded $185 per ton, compared with an average of $100 per ton during the past decade. 3/ "Drop in U.S. wheat Output Boosts Prices," Ed Allen. Agricultural Outlook. Sept. 1995. Algeria has the capacity to import commercially the grain needed to meet status quo and nutritional consumption targets. (Country tables begin on page __.) Large petroleum reserves and substantial debt rescheduling have sustained the government's import capacity despite political instability and 5 years of declining per capita incomes. Over the next several years, the government hopes to use price and production incentives to boost domestic output. However, rapid population growth--2.6 percent per year in 1994--and yield constraints, including limited fertilizer use, lack of infrastructure, and poor seed quality, are likely to continue to fuel import demand. In 1995/96, imports will supply about 70 percent of Algeria's grain use, compared to 60 percent a decade ago. Timely rainfall increased wheat output and boosted Algeria's 1995/96 grain production following 2 years of below-average harvests. The recovery in grain production will reduce commercial grain imports to an estimated 5.4 million tons, easing budgetary pressures associated with large grain imports during 1993-95. (Commercial imports for Algeria are USDA data.) As Egypt has taken advantage of favorable supplier financing, food aid declined as a share of the country's grain imports--from 32 percent in 1990/91 to 3 percent in 1994/95. An infusion of foreign capital and debt relief following the Persian Gulf War strengthened commercial import capacity. Declining rice production offset a sharp increase in wheat output to reduce Egypt's 1995/96 grain harvest to 13.5 million tons, after a decade of successive record harvests. Egypt's grain output has nearly doubled since 1980 because of strong production growth in wheat and feed corn. Fewer production and marketing controls for wheat and a steady rise in production and consumption of animal products are largely responsible for the grain sector's dynamic performance. Despite recent production gains, changing consumer tastes, limited land and water availability, and the continued importance of bread in the diet will maintain Egypt's dependence on grain imports. Egypt is the world's fourth largest wheat importer with purchases of 6 million tons forecast for 1995/96. A severe drought has devastated Morocco's 1995/96 grain harvest and increased status quo food aid needs to over a million tons, the highest in a decade. With rainfall more than 50 percent below average, grain production fell to 2 million tons, the smallest crop since 1981/82. Although large carryover stocks will temporarily ease supply pressures, commercial grain imports are likely to exceed 3 million tons during 1995/96 as stocks are depleted later in the marketing year. Because of agriculture's importance in Morocco's economy, drought-related production shortfalls have a strong multiplier effect on the economy. This year's drought is expected to reduce agricultural GDP by 7-8 percent, contributing to a 5-percent decline in real income. The government has initiated programs including subsidized and accelerated feed grain imports and public works programs to alleviate the drought's effect on rural residents and livestock producers. Tunisia will import a below-average share of its grain needs on commercial terms in 1995/96 with status quo food aid needs estimated at 22 percent of total grain imports, more than four times 1994/95 food aid receipts. In recent years, robust growth in non-agricultural sectors has sustained Tunisia's import capacity despite frequent variation in rainfall and grain output. While drought has reduced 1995/96 grain production to one-third of normal for the second consecutive year, higher world grain prices will reduce commercial grain imports. Sub-Saharan Africa In Sub-Saharan Africa, 1995/96 status quo food aid needs are 6.2 million tons, compared with last year's receipts of 3.5 million tons. Nutritional needs are more than double status quo needs. The driving forces behind these needs are declining per capita production and higher world grain prices. [Margaret Missiaen] Sub-Saharan Africa's 1995/96 status quo food aid needs are 6.2 million tons of grain, compared with last year's food aid receipts of 3.5 million tons and record receipts of 5.4 million tons in 1992/93. Nutritional needs are more than double status quo needs (figure 6). Food aid needs are highest in East Africa, which accounts for almost half of Sub-Saharan Africa's needs. Two major forces are driving these needs. First is the slow growth in grain output. During the last decade, per capita grain production fell from 121 kg. to 104 kg. Per capita food use declined 5 percent during the same period, despite a record grain harvest in 1994/95 and a million-ton increase in imports (table 7). Second, high world grain prices in 1995/96 will reduce the quantity of grain that Sub-Saharan African countries can purchase with their limited foreign exchange. On average, grains contribute about half of calorie supplies in Sub-Saharan Africa. Other important foods are roots and tubers, oilseeds, and livestock products. These items are not included in this study because of data limitations. If availability of nongrain foods follows the same trend as grains, food aid needs would be higher than estimated here. Normal 1995/96 grain crops are expected in all regions except Southern Africa, where weather conditions were unfavorable during the last two growing seasons. Southern Africa's food aid needs are 56 percent higher than last year's receipts. However, relief efforts are expected to prevent widespread food shortages. South Africa and Zimbabwe--the major corn exporters--are not expected to have surpluses in the local 1995/96 marketing year 4/. South Africa's 1995/96 corn crop is less than half of last year's good harvest, meaning that the other countries in the region must import grain from overseas. Moreover, the preferred grain, white corn, is often not available on world markets. The lingering effects of civil wars in Angola and Mozambique continue to constrain grain output in these countries. Rainfall was plentiful in most regions into October, and yields may be better than forecast. 4/ Southern Africa's 1995/96 marketing year (April-March) corresponds to the Northern Hemisphere's 1994/95 marketing year. Sub-Saharan Africa's 1995/96 commercial import capacity is 6.5 million tons, 10 percent lower than forecast last year, because higher world grain prices more than offset small increases in import capacity in value terms. Actual commercial imports, however, will probably again be lower than estimated, except in Southern Africa. In West Africa, commercial import capacity is up due to increased prices for export commodities, including coffee, cocoa, and cotton. In Nigeria, trade restrictions hold commercial imports below what could actually be financed. While the January 1994 devaluation of the CFA franc has increased import prices, debt forgiveness and increased support from donors have strengthened the financial position of these countries. Southern Africa's 1995/96 food aid needs are 1.5 million tons, compared with peak food aid receipts of 3 million tons in 1992/93 following a devastating drought. Production in 1992/93 fell by almost half at a time when stocks were low in most countries. This year the picture is quite different--the production shortfall is much less and stock drawdowns are expected to meet about 600,000 tons of the shortfall. Food aid needs in 1995/96 are 17 percent of targeted food use compared with 12-14 percent in 1993/94 and 1994/95. Mozambique, Zambia, and Zimbabwe have the highest status quo needs. Angola, Mozambique, and Zambia have the greatest nutritional needs. Southern Africa's grain harvest, which was completed by mid-1995, is estimated at 7 million tons, down 10 percent from 1994's poor harvest. Grain production is below normal in all countries, except Malawi and Mozambique. Import requirements for 1995/96 are almost 3 million tons, compared with actual imports of 2 million tons in 1994/95. Abundant rains in Central Africa during the growing season benefited grain crops. Food aid needed to maintain consumption is well above 1994/95 receipts. Nutritional needs are three times higher than status quo needs. Per capita grain use is only 45 kg. because roots are the most important food crops. In Zaire, the food supplies remain tight due to economic and political disruption that have affected markets in urban areas. The food supply in the Rwandan refugee camps in northeast Zaire has improved with regular deliveries, but the security situation remains tense as attempts are made to force refugees to return to their homes. Food aid needs in East Africa are 3 million tons, compared with receipts of less than 2 million tons in 1994/95. East Africa's nutritional needs account for more than half of the continent's needs, reflecting the inadequacy of diets in the region. Nutritional needs average almost 40 kg. per person, with needs in Ethiopia and Somalia exceeding 70 kg. per person. Good July rains improved prospects for the 1995 main season grain crops in Kenya and Somalia, where dry weather was a problem early in the season. A second straight bumper corn crop appears likely in Kenya. In Ethiopia, Eritrea, and Sudan early season rainfall was adequate, and average harvests are expected. (Data are not available separately for the Ethiopia and Eritrea.) Grain harvests were good in Tanzania and Uganda. Ethiopia's 1995/96 food aid needs of 1.2 million tons reflect the chronic nature of food shortages and the limited capacity of the country to import commercially. During the last 5 years, the food aid share of total food use ranged from 14 to 22 percent. Favorable weather, absence of major pest attacks, and record sales of fertilizer all indicate good prospects for this year's main harvest. In Rwanda, favorable weather conditions and seeds and tools provided by donors enabled farmers to increase plantings. However, production was down significantly compared with the last good harvest in 1991. Population displacements will continue to limit agricultural recovery into 1996. Food production in Burundi improved during early 1995 because of the return of some displaced persons to their fields. However, fresh waves of population displacement threatened to again disrupt food production and supplies in late 1995. In West Africa, food aid needed to maintain consumption is 1.5 million tons, double last year's receipts. Nutritional needs are twice the status quo needs. The 1995/96 harvest is expected to be near last year's record of 23 million tons. Widespread rains covered most of West Africa's agricultural zones through August, the end of the critical growing period in the drought-prone Sahel. Soil moisture reserves are sufficient for crop development except in Senegal and northern Burkina. In the coastal countries along the Gulf of Guinea, coarse grains and rice benefited from abundant rains. In Liberia and Sierra Leone, persistent civil strife limited area planted. Asia Overview The food aid needs for the nine Asian countries covered in this report are concentrated in Afghanistan and Bangladesh. These two countries need 2.8 million tons of grain food aid to maintain consumption. Commercial imports for the region were at an alltime high in 1994/95 at 13 million tons. Grain output of 286 million tons is forecast in 1995/96, up slightly from last year. [Anwarul Hoque] The food aid needs for the nine Asian countries covered in this report are concentrated in the two poorest countries--Afghanistan and Bangladesh. These two countries together require 60 percent of Asia's status quo needs. The long civil war in Afghanistan greatly hampered crop production and economic growth, and if it continues unabated, Afghanistan will need an estimated 1.1 million tons of food aid in 1995/96. Bangladesh, with 1.7 million tons of needs under the status quo forecast, and 6.6 million tons under the nutrition-based forecast, remains the neediest country in Asia. Flooding and fertilizer shortages reduced grain production and increased commercial imports in 1994/95 to a near-record level. Despite increases in production and imports in 1995/96, Bangladesh still needs food aid to maintain consumption for a growing population. Although Asia's needs are a third of world food aid needs, they are less than 2 percent of the region's food use (figure 7). Most food aid needs reflect the chronic nature of food problems in the poorest Asian countries rather than emergencies caused by production shortfalls. Grain output in the nine Asian countries covered in this report increased to 286 million tons in 1995/96, up slightly from last year (table 8). Although it still is a record for the region, the growth in production was smaller than the year before. Grain production in all countries, except Afghanistan, is forecast to either increase or continue at levels similar to last year. Weather conditions in the region were favorable during the growing season early this year, but heavy monsoon rains in mid-1995 have caused floods in some parts of Bangladesh, India, and Pakistan. Estimates of crop damage are low. Commercial imports for the region in 1994/95 were a record 13 million tons. Sustained income growth, availability of credit under such programs as the U.S. GSM 102 and 103, and increased foreign exchange reserves strengthened the commercial import capacity of these countries through 1994/95. Higher production and commercial imports in 1994/95 contributed to a leveling off of food aid receipts at 1.6 million tons. Higher world grain prices prevailing this year will lower commercial import capacity in 1995/96 (figure 8). Population growth across the region and the inability of some food-deficit countries to increase commercial imports due to balance of payments difficulties have increased status quo food aid needs for 1995/96 to 4.6 million tons--almost three times higher than last year's receipts. Nutrition-based food aid needs for the region are estimated at 9.5 million tons, more than double the status quo estimate. Indonesia, the Philippines, and Nepal received small amounts of food aid in the last few years. Indonesia and the Philippines generally import wheat every year. In recent years, Indonesia also has become a major rice importer. In 1994/95, Indonesia's grain imports were a record, and the Philippines imported a near-record 2.4 million tons. Indonesia's 1995/96 commercial import capacity is pegged at 4 million tons, because of higher world prices and a low grain share of total imports in the past. Both countries are expected to increase imports in 1995/96. Sri Lanka has long received food aid because of war-related production disturbances. Despite the civil war, crop production is projected to reach a record in 1995/96. With commercial import capacity of almost 900,000 tons, Sri Lanka has no food aid needs in 1995/96. India has had good monsoons in recent years that have helped produce record harvests. A strong government procurement program generated grain ending stocks of 24-25 million tons, about 15 percent of production. This is more than enough to support the Public Food Distribution System. India exported 3 million tons of rice and wheat from stocks in 1994/95. A drop in rice production in 1995/96 will lead to status quo food aid needs estimated at more than 900,000 tons--only about 0.5 percent of production. But given that surplus food stocks held by the government after several record harvests are more than sufficient to meet this shortage, it is unlikely that India will need to receive this amount of food aid. In addition, with more than $20 billion in foreign exchange reserves, India is capable of increasing food imports if needed. Pakistan and Vietnam export surplus rice and import wheat to meet gaps between consumption and production. Each of these countries expects to export over 1 million tons of food grains this year and has sufficient foreign reserves to pay for commercial imports. Because of their large trade volume and foreign exchange reserve situation, they have much better commercial import capacity and are less dependent on food aid than other countries in the region. Pakistan's production in 1994/95 was lower than the previous year due to bad weather, but in 1995/96, production is expected to rebound to a record level. The need for multilateral and bilateral food aid, mainly to feed Afghan refugees, has declined in recent years. Pakistan almost always imports wheat commercially. Imports have been over 2 million tons in each of the last 3 years. With higher production expected this year, Pakistan will likely reduce wheat imports. In Vietnam, another record rice crop in 1995/96 is expected to maintain rice exports of 2 million tons. Wheat imports are forecast to increase slightly. Vietnam has no food aid needs. Overall, economic reforms and policy changes undertaken by India, Pakistan, and Vietnam have accelerated economic growth and enhanced macroeconomic conditions, including each country's balance of payments. With favorable weather conditions, the region's food production is rising and will ultimately lead to greater food self-sufficiency. The food availability situation has improved in all but a few countries. Nevertheless, there remain pockets where supply/distribution problems continue to cause food aid needs. Furthermore, export earnings and easy credit facilities available bilaterally have helped raise commercial imports of food grains and reduce dependence on food aid. Latin America Overview Grain food aid needs for the 11 low-income Latin American countries included in this report are estimated at 1.4 million tons for 1995/96, about the same as last year's estimated needs. This year's high grain prices are responsible for the reduced volume of grain that can be imported commercially. Production is forecast to recover from last year's drought. [Birgit Meade] Status quo food aid needs for the 11 countries 5/ included in this region are 1.4 million tons of grain for 1995/96, almost the same as last year's estimate. These forecasts represent the amount of grain needed in addition to production of 7 million tons and commercial imports of 5 million tons. The nutrition requirement is almost double status quo needs (table 9). The lack of change in projected needs is results from two offsetting developments: increasing import capacity, fueled by economic growth and trade liberalization, and high grain prices. 5/ Bolivia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, Panama, and Peru. Grain output is forecast to increase slightly in 1995/96 as production recovers from last year's drought in El Salvador, Guatemala, Honduras, and Nicaragua. The increase will be just enough to keep pace with population growth, but not sufficient to satisfy demand resulting from rising incomes. While favorable weather may contribute to increases in production, as in the Dominican Republic, trade liberalization in Costa Rica, El Salvador, and Honduras increases the incentive to use grain imports to meet domestic consumption requirements. This year, however, high grain prices have dashed hopes for increases in commercial grain imports. Despite strong economic growth, Bolivia, Guatemala, Honduras, Haiti, and Peru continue to rely on food aid. During the past decade, these countries received between 800,000 and 2 million tons of food aid annually, while commercial imports ranged from 2 to 6 million tons. Domestic grain production increased from a low of 6.2 million tons in 1991/92 to a record 7.2 million tons in 1993/94 (figure 9). Per capita food use declined from 114 kg. in 1985/86 to less than 100 kg. in recent years. Poor weather and slow economic growth contributed to the temporary decline. This trend has bottomed out, and economic recovery is expected to boost consumption in the next few years. Latin American governments are reforming their economies to encourage production, liberalize trade, increase exports, reduce debt, expand investment, and raise incomes. However, maintaining political stability is also important for long-term economic growth, especially in Nicaragua, Guatemala, and Haiti. Countries showing strong tendencies to liberalize markets include El Salvador, Honduras, Jamaica, and Peru. Most Latin America nations depend on a few traditional exports for most of their foreign exchange earnings. Recently, however, nontraditional exports such as shrimp and fresh fruit have increased and helped diversify export portfolios. For example, in Honduras, the ratio of traditional to nontraditional agricultural exports fell from 6 to 1 in 1990, to only 2 to 1 in 1994. Peru, with one quarter of the region's population, has 1995/96 status quo food aid needs of 283,000 tons, the same as projected for last year. Peru's economic performance is outstanding, with 13 percent real GDP growth in 1994 and 8-9 percent growth forecast for 1995. This growth was stimulated by economic reforms begun in 1990, that introduced free market mechanisms, budgetary discipline, and trade liberalization. As Peru's economic situation improved, the country's commercial grain imports rose from 1 million tons in 1988/89 to 2 million tons in each of the last 2 years. Though commercial import capacity remains strong, this year's high grain prices will cause a decline in the quantity of grain imports. Peru with very limited arable land--only 3 percent of the total --cannot produce enough grain for its large population, and its 2 million tons of commercial grain imports are more than one-third of commercial imports of the 11 Latin American countries studied. Peru's nutritional needs of 903,000 tons represent one-third of the region's nutritional needs. The gap between status quo needs and nutritional needs is particularly large in the case of Peru because average caloric intake is less than 1,900--the lowest after Haiti and well below the minimum caloric requirement. More years of economic growth are needed to enable the Peruvians to fulfill their nutritional needs. Haiti's economic activity contracted 30 percent from 1991 to 1994. With President Aristide's return in October 1994, economic sanctions were lifted and talks began to design a program for economic recovery. Haiti is the poorest country in Latin America with per capita GDP of $260 in 1994. Despite prospects for 5 percent GDP growth in 1995, widespread poverty persists. Only a slight increase in grain output is expected because inputs are scarce and expensive. Status quo food aid needs are 195,000 tons. Nicaragua has status quo food aid needs of 67,000 tons. After a 20-percent decline in GDP in the 1980's and slow growth in the early 1990's, economic growth is projected to exceed population growth for 1995-97. A drought in 1991 and a slump in prices of coffee and other exports as well as security problems in the countryside slowed growth in 1992 and 1993. The 1994 reform program aims at reducing inflation and increasing economic activity and international reserves. A drought in 1994 led to a deterioration of public finances and a sharp increase in commercial imports, which are expected to be more in line with historical levels in 1995/96. Weather conditions for the 1995/96 grain crops have been favorable, and output is expected to recover. Bolivia, Guatemala, and Honduras, with a combined population of more than one quarter of the 11-country total, have status quo needs of 570,000 tons--40 percent of the region's needs. All three countries had annual GDP growth of around 4 percent in the early 1990's that has not been enough to make them independent of food aid. Honduras suffered 3 consecutive years of drought, which caused a precipitous decline in water levels at the country's primary hydroelectric dam. The ensuing energy crisis and fiscal deficit were responsible for the 1.4-percent decline in real GDP in 1994. Agriculture contributes 20-30 percent to GDP and employs up to 60 percent of the labor force, but none of the countries is self-sufficient in grain. Imports account for more than 50 percent of grain consumption. Jamaica, though not as poor as the above countries, relies heavily on food aid because its own production is close to zero and commercial imports are inadequate to meet needs. Costa Rica's economic growth has averaged 5 percent a year since the mid-1980's. It has to import three times its own grain production. Dominican Republic, El Salvador, and Panama require little food aid to meet their grain needs. However, they must import commercially wheat and other small grains to supplement their own rice production. List of Tables 1. World grain prices 2. Summary of forecast food aid needs 3. Historical grain food aid receipts and projected needs for 1995/96 and 1996/97 4. Per capita food aid needs by region, 1995/96 and 1996/97 5. Grain balances for selected FSU countries 6. Summary of grain balances for North Africa 7. Summary of grain balances for Sub-Saharan Africa 8. Summary of grain balances for Asia 9. Summary of grain balances for Latin America Summary of grain balances for: 10. Algeria 11. Egypt 12. Morocco 13. Tunisia 14. Central Africa 15. Cameroon 16. Central African Republic 17. Zaire 18. East Africa 19. Burundi 20. Ethiopia 21. Kenya 22. Rwanda 23. Somalia 24. Sudan 25. Tanzania 26. Uganda 27. Southern Africa 28. Angola 29. Lesotho 30. Madagascar 31. Malawi 32. Mozambique 33. Swaziland 34. Zambia 35. Zimbabwe 36. West Africa 37. Benin 38. Burkina 39. Cape Verde 40. Chad 41. Cote d'Ivoire 42. Gambia 43. Ghana 44. Guinea 45. Guinea-Bissau 46. Liberia 47. Mali 48. Mauritania 49. Niger 50. Nigeria 51. Senegal 52. Sierra Leone 53. Togo 54. Afghanistan 55. Bangladesh 56. India 57. Indonesia 58. Nepal 59. Pakistan 60. Philippines 61. Sri Lanka 62. Vietnam 63. Bolivia 64. Costa Rica 65. Dominican Republic 66. El Salvador 67. Guatemala 68. Haiti 69. Honduras 70. Jamaica 71. Nicaragua 72. Panama 73. Peru List of Figures 1. World grain stocks 2. Food aid needs in 1995/96 3. Population and food aid needs 4. Food aid necessary to maintain consumption 5. North Africa - Grain supply sources 6. Sub-Saharan Africa - Grain supply sources 7. Asia - Sources of grain in 194/95 8. Asia - Grain imports and food aid needs 9. Latin America - Grain supply sources Appendix 2--Guide to the Assessment Tables and Methodology For estimation purposes, the 60 countries included in this report have been summarized in seven regions: Central Africa, East Africa, North Africa, Southern Africa, West Africa, Asia, and Latin America. Food aid needs are estimated on an aggregate basis for each region from individual country data. Detailed assessments of food aid needs are provided for selected countries listed in appendix 1. The selection was based on several criteria, including emergency aid needs, extraordinary refugee situations, and the importance of the country in the region. Historical Data Historical supply and use data for 1985/86 to 1994/95 for most variables are from USDA. Food aid and commercial import data are from the Food and Agriculture Organization (FAO). Historical nonfood-use data, including seed, waste, processing use, and other use, are estimated from the FAO Food Balance series. Commodity Coverage This report assesses the food aid needed to meet grain consumption requirements. Because of data limitations, accurate estimates of the supplies of nongrain foods such as pulses, roots and tubers, vegetable oils, and milk frequently are not available. The omission of nongrains from this analysis may misrepresent food aid needs in those countries where grains are a small share of the diet. However, in many low-income countries, grains account for at least 50 percent of all calories consumed (see appendix 1). In addition, the bulk of all international food aid is provided in the form of grains. Food Aid Needs Definition Food aid needs are defined as the gap between target consumption and the availability of grains for food use. The first step in assessing food aid needs is to project the availability of grains for human consumption. This is decomposed into two parts--supply of grains and allowance for nonfood use. Supply is defined as production, plus stocks, plus commercial imports: Supply = production + beginning stocks + commercial imports (1) Nonfood use includes exports, feed use, other nonfood uses (such as waste, seed use, and processing), and stock accumulation: Nonfood use = exports + feed use + other nonfood use + ending stocks (2) The quantity of grains available for food use is equal to supply less nonfood use: Food availability = supply - nonfood use (3) Finally, food aid needs are computed as the gap between target food use and food availability: Food aid need = target food use - food availability (4) Food Aid Needs Projection Methodology Food aid needs are determined by calculating the gap between target consumption and the availability of grains for food use. Target consumption is derived from two alternative objective measures of per capita food use. Target Food Use Projections The procedures to estimate (project) target consumptions are: 1) Status quo food use target. The objective of the first consumption target is to support average per capita consumption of the recent past. The most recent 5-year average is used to estimate per capita consumption and eliminate short-term fluctuations. 2) Nutrition-based food use target. Nutrition-based grain needs are derived from the minimum daily caloric intake standards recommended by the United Nations. These country-specific caloric requirements are based on several variables, including the age and sex distribution of the population and the physical size of the people. Caloric requirements also vary with assumed physical activity levels. The caloric requirements used in this assessment are those necessary to sustain life with minimum food-gathering activity. They are comparable to the activity level for a refugee--they do not allow for play, work, or any activity other than food gathering. In addition, the caloric requirements are regional averages rather than country specific. The status quo measure embodies a "safety-net" criteria by supporting food use at recently achieved levels. The nutrition-based target assists comparisons of relative well-being. When status quo needs exceed nutrition-based needs, it is an indication of a relatively high standard of well-being and a less urgent need to support consumption with food aid. When status quo needs are below nutrition-based needs, it is an indication of a more urgent need to support consumption with food aid, if it can be effectively absorbed by the local economy. It should be noted that all assessments are based on national aggregate data and may mask acute needs resulting from uneven food distribution within individual countries. Food Availability Projections The calculation of grain availability for human consumption is based on estimates of production, nonfood use (including exports, feed, seed, and waste), beginning and ending stocks, and commercial imports. Production. Production for 1995/96 is based on USDA estimates as of October 1995. For most countries production in 1996/97 is projected assuming normal weather and no external world macroeconomic shocks that could affect production. However, expected trends in domestic producer incentives and policies are factored into the production projections. Exceptions to this method are cited by the authors. Nonfood use. Historical nonfood use for seed and waste are estimated using the FAO Food Balance series. Export and feed use figures are USDA data. Except in the case of a country where an internal structural change called for the use of a different base period, exports, seed, feed, and other nonfood use are projected using a 5-year average (exceptions are cited by the authors). This method assumes that nonfood use of grains will continue at historic rates and increase in aggregate terms at the same rate as population growth. Stocks. For 1995/96, ending stocks are based on USDA forecasts. For 1996/97, ending stocks are determined based on projected production levels relative to those of 1995/96, and on the level of 1995/96 ending stocks relative to historical maximum and minimum levels in the past 10 years. If 1996/97 beginning stocks are below the historical minimum, stocks are raised to the minimum. If beginning stocks are above the historical maximum, stocks are lowered to the maximum. If beginning stocks are within the range of the minimum and maximum, stock adjustments depend on projected production. If production is at, or above, that of the previous year, stocks are allowed to build towards the maximum. If production is forecast to decline, stocks are reduced towards the minimum to augment domestic supplies. The allowance for stock use or buildup is made under the assumption that stockpiling of grains in normal production years can help reduce fluctuations in grains available for food use in poor production years and, therefore, help stabilize food aid needs. Exceptions to this method are cited by the authors. Commercial Import Projections. The procedure for calculating commercial import capacity relies on historical economic relationships. For most countries the current method of forecasting commercial grain imports for 1995/96 and 1996/97 uses the total value of merchandise imports and the total value of grain imports. Total merchandise imports are first estimated for 1995/96 and 1996/97 using time-trend regression. The projections of the value of total merchandise imports are based on 10 years of data and a log-log form regression is used: Commercial grain import values for 1995/96 and 1996/97 are found by applying a 5-year constant share of grain imports to the value of total merchandise imports. Using a 5-year constant share of commercial grain imports ensures that year-to-year fluctuations in grain imports, due to weather or other factors, will not skew the projections. The quantity of total grain imports is estimated using the projections of total grain import values explained above, and grain prices. From 1983/84 to 1992/93, the unit values (prices) were found by dividing the value of total grain imports by their quantity. For the projected years, a unit value for grain was calculated using the USDA reference price for specific crops, weighted by the importance of that crop in the value of total grain imports (a 5-year share). Using the unit values, the quantity of total grain imports for 1995/96 and 1996/97 was then found by dividing the total grain import value by unit value. The exceptions to this method are cited by the authors. Tables Entitled "Summary of Grain Balances for Region/Country" Production Historical data to 1994/95. Forecasts for 1995/96-1996/97. Beginning stocks Historical data to 1994/95. Forecasts for 1995/96-1996/97. Commercial imports Historical data to 1994/95. Forecasts for 1995/96-1996/97. Food aid receipts Historical data to 1994/95. Food aid needs Forecasts for 1995/96-1996/97. Exports, feed and other nonfood use Historical data to 1994/95. Targets for 1995/96-1996/97. Ending stocks Historical data to 1994/95. USDA estimates for 1995/96 and 1996/97 forecasts. Availability net of food aid Grains available for human consumption before food aid. This is the sum of production, beginning stocks, and commercial imports, less the sum of exports, feed, other use, and ending stocks. Historical data to 1994/95, and forecasts for 1995/96 and 1996/97. Food use, per capita food use Historical data to 1994/95, with status quo and nutrition-based targets for 1995/96-1996/97. Population Historical data to 1994/95. Forecasts for 1995/96-1996/97. . END-END-END