WORLD FOOD AID NEEDS AND AVAILABILITIES--SUMMARY November 17, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. Text of the full report will be available in 7-10 days. ----------------------------------------------------------------------------- Higher World Grain Prices To Drive Up Food Aid Needs 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 Chechnia has disrupted supply and distribution, and displaced sizable numbers 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 status quo 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. Printed copies of Food Aid Needs Assessment (GFA-7) will be available in about 2 weeks. For more information, contact Shahla Shapouri (202) 219-0644. Text of the report also will be available electronically. For details, call ERS Customer Service (202) 219-0515. END-END-END