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Appendix D Outlook for Grains and Soybeans to 2000 D ONALD O . MITCHELL * The WorId Bank, Washtugton, D. C. INTRODUCTION This paper evaluates the global outlook for wheat, coarse grains, rice and soybeans to the year 2000. This includes forecasts of production, consumption, net trade and stocks by major regions and world prices. The primary assumptions regarding GDP growth, population, inflation rates and exchange rates were specified by the organizers of the session. A minimum set of simulations were requested and included a base run using the assumptions specified and a set of sensitivity runs using alternatives to the basic assumptions. This paper will simulate the base run and a high demand and low demand simulation. The base simulation attempts to strictly follow the specified base line line assumptions. The two alternative simulations used the high GDP/high population alternative and the Tow GDP/Iow population alternative. These three simulations seem to provide a reasonable upper and lower bound to the base simulation. The three simulations will be referred to as Base Run, High Demand, and Low Demand. When the simulations are actually attempted, it becomes obvious that the assumptions do not reflect the most reasonable assumptions which could be chosen. For example, all developing countries are assumed to have real GDP growth of 4.5~o per annum (p.a.~. This ignores the differences between developing countries such as the large foreign debt of many Latin American countries, the stagnate and sometimes negative growth of many Central African countries, and the relatively more rapid growth of many Asian countries. MODEL DESCRIPTION The simulation model used in this exercise is the International Commodity Markets Division's world grain and soybeans model., The model is a global, partial-equilibrium, net-trade model of the grains and soybeans markets. Fifteen of the major grain producing, iDonald 0. Mitchell. 1985. `'A World Grains and Soybeans Models. Division Working Paper No. 1985-7, Commodity Studies and Projections Division, The World Bank, December 1985. 122

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consuming and trading countries are modeled individually and the remaining countries are grouped into nine regions. The model is econometrically estimated using primarily OLS from annual data over the period 196~1984. The model is linear in both the variables and parameters. The main country-level exogenous variables are population, GDP, exchange rates and the consumer price index. World fertilizer prices are also exogenous to the model. The commodities included in the mode! are wheat, rice, coarse grains (maize, oats, barley, sorghum, rye, millet, and mixed grains), soybeans, soymeal and soyoil. Individual models have been estimated for each commodity and country or region with cross linkages between commodities. Soybeans are modeled in terms of beans on the production side but in terms of oil and meal in the consumption and trade components. Production for each country or region is determined as the product of separately- est~mated harvested area and yield equations. Harvested area is determined by a two-stage process wherein total area harvested is determined first and then allocated among competing crops on the basis of lagged per hectare revenues. Yields are estimated as a function of the ratio of lagged crop prices to current fertilizer prices, the proportion of area planted to high-yielding varieties in the case of rice and wheat and a linear trend. Per capita imports of each commodity are estimated directly for importing countries as a function of population, income, domestic supply and prices. Ending stocks are estimated as a share of consumption and prices. Total consumption is obtained as an identity. Net exports are estimated for exporting countries as a function of the level of each commoclity available for export and world prices. Consumption in the exporting countries is estimated as a function of population, income and prices. A single world price is assumed for each commodity, and the mode! is solved simulta- neously for this price. The price in each country or region is then defined as the export price converted to local currency and deflated by the consumer price index of the country. Regional exchange rates and consumer price indexes are constructed as weighted averages of the data for individual countries. A price equation is used to solve the mode} for the nominal export price for each commodity. The equation for wheat and corn are specified as functions of the U.S. crop loan rates and the ratio of stocks-to-utilization for the major exporting countries. This specification reflects the role of U.S. government policy as the determinant of the U.S. and world price floor, because the loan rate programs of the United States effectively bid grain away from the world market at the price floor or loan rate. For rice and soybeans, the U.S. loan rates are less important determinants of price and the price equations for these commodities depend upon the ratio of stocks-to-utilization and the prices of substitute commodities. Specific policy information is included for the United States on variables such as diverted areas and support prices. Agricultural policies for other countries are not included in the model. ASSUMPTIONS The following assumptions were provided by the session's organizers. Based on these assumptions, three simulations were run corresponding to a Base Run and High Demand and Low Demand alternatives. The High Demand simulation paired the high GDP growth alternative with the high population growth alternative, while the Low Demand alternative paired the low GDP growth alternative with the low population growth alternative. 123

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1 Base Case Real GDP Growth (Percentage P.A. Growth) Historical Predicted 1973-80 1980-86 1987 1988 1989 1990 1990-95 1995-2000 Industrial 2.8 2.3 2.5 2.5 2.5 2.3 3.1 3.3 Developing 5.0 3.3 4.5 4.5 4.5 4.5 4.5 4.5 CPEs USSR 3.4 2.6 2.3 2.3 2.3 2.3 2.3 2.3 Other E. Europe 2.9 1.8 2.1 2.1 2.1 2.1 2.1 2.1 2 Test Ranges for GDP Projection Assumptions Industrial: D eveloping: CPEs: -0.5~o p.a. on either side. -1.0~o p.a. on either side. 0.5% p.a. on the downside, 1.0~o p.a. on the upside. 3 Base Case Population Growth (Percentage P.A. Growth) Historical Projections 1973-80 1980-86 1986-90 1990-95 1995-2000 Industrial 0.7 0.5 0.5 0.4 0.4 Developing 2.2 2.0 2.0 1.9 1.8 CPEs 0.8 0.7 0.7 0.6 0.6 World 1.8 1.7 1.7 1.6 1.6 4 Test Ranges for Population Projection Assumptions Industrial: D enveloping: CPEs: 0.1%0 p.a. on either side. 0.2~o p.a. on either side. 0.1~o p.a. on either side. 5 Base Case Inflation Projections (Percentage Change P.A.) 1987-90 1990-2000 5.5 4.0 6 Exchange Rates Constant real exchange rates in 1986 levels were assumed. 7 Policy Changes—The Common Agricultural Policy of the EEC and the US farm policy contained in the 1985 Farm Bill were assumed to remain unchanged through 2000. SIMULATION RESULTS The results of the three simulations are reported by major economic region: industrial, developing and centrally planned countries. This does not reflect the mode] aggregations (which includes substantially more detail) but was a convenient format for presentation. The simulated prices are shown in Table 1 for the three alternatives. The Base Run projects rising nominal prices through 1990 for the grains and then a decline through 1995. Soybean prices are projected to rise through 1989 and then decline in 1990. Nominal prices rise for all grains and soybeans from 1995 to 2000. In real 1987 dollars, all prices are 124

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projected to decline from 1990 to 2000 after rising from 1987 to 1989 or 1990. By 2000, real wheat prices are projected to decline 23%0 relative to 1987. Maize prices are projected to decline 16~o, rice prices are projected to decline 13.4~o, and soybean prices are projected to decline 32~o relative to 1987. These projected declines are very much in line with historical trends over the last several decades. The High Demand simulation would increase real prices of wheat, maize, rice and soybeans by 18~o, 16~o, 22~o and 22~o respectively in 2000 relative to the Base Run. Production is shown for the three country groups for selected years in Tables 2-4. Several interesting results emerge. First, projected growth rates over the 1985-2000 period are generally Tower than over the historical 1970-85 period. This reflects both the results of starting from a higher base in the second period and a slower increase in actual growth over the second period. For example, in the industrial countries production under the Base Run for wheat and coarse grains are projected to grow 2.4~o p.a. and 1.7~o p.a., over the 1985-2000 period, compared to 4.1~o and 3.5~o p.a., respectively, over the 1970-85 period. Over the first period, wheat and coarse grain production increased 85.4 million tons and 169.5 million tons respectively while during 1985-2000 wheat ancl coarse grain production is projected to increase 80.5 million tons and 121.0 ganglion tons respectively. Therefore a slightly smaller incremental production increase in wheat is projected for 1985-2000 and a greater slowdown in incremental production for coarse grain production is forecast. For the developing countries, wheat, coarse grains, rice (paddy), and soybeans produc- tion increased 108.2, 46.7, 154.6 and 24.3 million tons respectively during 1970-85. For the 1985-2000 period, these crops are projected to increase 110.5, 77.1, 178.5 and 32.8 million tons respectively. The slower growth rates shown in Table 2 still result in larger incremental production projected for 1985-2000 than for the previous 15 years. The centrally planned countries' production has grown slowly during 1970-8~except for rice which starts from a very small base. For the main crops which are wheat and coarse grains production increased only 33.4 million tons during 1970-85 or .9~o p.a. A shift of area harvested away from wheat and into coarse grains has taken place during the period while yields have not increased significantly. For the forecast period 1985-2000, production is expected to further emphasize coarse grain production while wheat production remains nearly constant at 118 million tons. The two simulation alternatives show little production response relative to the Base Run in the developing and centrally planned economies but relatively greater response in the industrial countries. The industrial countries are able to increase land devoted to crops easily by either converting pasture land or, in the case of the United States, by reducing the land diverted from production under the government programs. The developing and centrally planned countries do not have diverted area or large pasture lands which can easily be brought into crop production. In fact, land which is suitable to crops is already being used for crops in most developing countries, and bringing new land into crops often requires clearing forests, draining lowlands, terracing or other capital intensive activities. These investment activities are not likely to be captured by a short term area adjustment model, and in fact this is a weakness of the model used in this analysis. Finally, the ceteris paribus assumption associated with short run supply response estimates are not met because all model crops are allowed to adjust. This reduces the supply response because the relative crop prices do not change significantly as all the prices tend to move together. Since relative crop prices determine the allocation of land between crops, this elect is cancelled out and results in Tower supply response estimates. Further evidence of the Tow total elasticity of 126

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1 1 0 1 1 1 1 0 1 1 1 1 0 1 ~ ~ u~ O ~J ~ ~ ~— 0 ~ ~ ~ 1 I I C~ | · e e e e e e · · · · e | 1 1 1 1 ~ c~ _ ~ ~ ~J ~ ~) ~ 1 1 oe 1 1^ 1 1 1 0 1 0 1 1 1 ~ 1 ~ 1 1 1 ~ 1 ~ 1 1 1 =: 1 1 1 1 1 1 1 1 ~ 1 1 1 1 v 1 U~ 1 1 3 1 0 1 u~ ~ w~ o 1 0 1 1 1 · · · ~ - · 1 1 ~ 1 0 1 1 C~ ~J ~ ~ — 1 1 C~ 1 ~— 1 1 1 1 a~ 1 1 1 1 — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 ~ ~ U~ C~ ~ ~J C~ O CJ, ' ~ ~D ~ 1 1 1 0 1 · - - · ~ - · ~ ~ · - - 1 1 1 0 1 0 0 1— C~ ~ ~— ~ ~ ~ — — — 1 1 1 ~ 1 _ ~ — O — O 1 1 1 1 _ _ _ C~ ~ ~ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~ 1 1 1 1 11) 1 U~ 1 ~ ~— 0 ~D O u~ o _ _ ~ u~ ~ 1 I 1-J I C~ | · · · · e · e e · · · · I 1 ~ 1 ~ 1 ~ 0 0 ~ ~ O ~ ~ ~ _ — _ 1 1 eJ 1 _ 1 _ ~J — C~ 1 1 ~1 1 ——— ——— 1 1 0 1 1 1 1 14 1 1 1 1 P4 1 1 1 1 1 1 1 1 1 0 1 ~ O ~— ~ ~ ~ _ ~ ~ ~ 1 I I ~ | · · · · ~ · e · · · I 1 1 0\ 1 ~— 0 ~— ~ ~ ~ ~ — — _ 1 1 1 — 1 _ — — ~ ~ 1 1 1 1 _ — _ — _ _ 1 · 1 1 1 1 — 1 1 ~ 1 1 1 1 ° 1 1 1 1 1 1 c0 1 0 — 1 1 1 ·~ 1 1 1 0 ~ 1 1 0 1 · · · · 1 ·_ 1 1 C~ 1 C~ ~ ~ 1 1 1 _ 1 0 U~ 1 1 1 1 — — 1 1 1 1 1 ~ 3 3 i 3 °O 1 1 0 1 ~— ~ 0\ _ 1 ~ I 1 0 1 · · e ~ I 1 1 0\ 1 ~— — ~ — 1 ~ 1 1 — 1 ~ ~ 1 :^ 1 ~4 1 1 _ — 1 ° 1 ~ 1 1 1 v, 1 ~ 1 1 1 1 ~ 1 1 1 1 u 1 1 1 1 <1: 1 ~ 1 u~ ~D ~ — 1 ~ 1 1 ~ 1 · · · · 1 ·~e 1 1 ~ 1 0 ~ ~ — ' 1 s~ 1 1 — 1 C~ _ 1 U 1 1 1 ~ 1 1 1 1 1 a, 1 1 1 1 4) 1 1 1 1 1 1 1 1 1 1 0 1 0 ~ ~ ~ 1 ~ 1 1 r— 1 · · · · 1 ° 1 1 C~ 1 ~ ~ — 1 V 1 1 _ 1 — — 1 1 1 1 — — 1 1 1 1 1 1 1 ~ 1 1 ~ — 1 1 1 >, 1 1 ~ ~ ~:1 ~ 1 _ 1 1 ~ ~ ~ ~ ~ ~ ~ ~ 1 `0 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 I I ~ E ~ ~ ~ E ~ ^ ~ 6 ~ ~ E E ~ ~ ~ E ~ ~ ~ E 1 1 CC ~ (V ~1 Cd ~ 0 ~1 =; ~ ~ C~ ~ ~ 1 v I :- I a ~ a ~ a ~ I 1 ~ 1 ~ ~ C~ 41) ~ c5 IV ~ 0e ~ ~C 1 1 ' - 1 0 0e 3 ~ oe 3 ~ a, to 3 ~ ~ ~ 3 1 1 ~ 1 40 ~ O ~ ~ ~ O — ~ ~ O ~ ~ . - 0 1 I O I v ~ :~: .1 oe ~ X ~ ~ = J o ~ = ~ I I 6 I ~ ~ ~ D I 1 6 1 ~ ~ ~ :- 1 1 0 1 ~: O ~ 0 1 1 ~ 1 :x C~ ~ U] 1 129

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agricultural supply is provided by Binswanger et al.2 In this study, the estimated total agricultural supply elasticity was (.06). Consumption is given in Tables 5-7 for the three country groups. The results are largely as expected both within the Base Run and between the two simulation alternatives and the Base Run. However, as a precusor to reviewing the results it is important to remember that income, population and prices are all changing between the three simulations and the relative magnitudes of the price and income elasticities become important in determining the magnitude and direction of consumption changes. The industrial country results for the Base Run show a continuation of past trends with wheat consumption growing at 1.4~o p.a. over the forecast period, coarse grain consumption projected to crow at 1.8 o.a. and soybean meal and oil consumption crowing at 3.3~o v . ,^ _ · .. .. . , ~ · ~ · . . . . - · . - · p.a. Rice consumption continues to decline due mainly to declining consumption In Japan which accounts for most of the rice consumption in the industrial countries. Under the High Demand simulation, the level of wheat consumption declines while coarse grains, soybean oil and meal increase and rice consumption remains unchanged. The decline in wheat consumption in the High Demand simulation reflects a combination of lower consumption due to higher prices and low or negative income elasticities which offset the more rapid population growth under this simulation. Wheat consumption remains nearly constant in the Low Demand and Base Run simulations. Rice consumption also increases under the Low Demand simulation relative to the other simulations reflecting the negative income elasticity of demand in Japan. The developing country results show that wheat consumption and soybean oil and mean consumption are the most responsive to the alternative simulations. Under the High Demand simulation, wheat consumption in 2000 is 8.7~o higher than in the Base Run while soybean meal and oil are 13.9%0 and 14.4~o higher, respectively. Coarse grain consumption is 5.9~o higher in 2000 under the High Demand simulation relative to the Base Run while rice consumption is only 1.2~o greater. The trends in consumption in the developing countries in the Base Run suggest that soybean oil and meal will continue to grow the most rapidly during 1985-2000 as during 1970-85. Soybean oil is projected to grow 4.4~o p.a. during 1985-2000 and soybean meal will prow a projected 4.2~o. Wheat consumption is projected to grow 3.5~o ma. during ~ . .~ . . . ~ _ . ~ 1985-2000, while coarse grains and rice wads grow an estimated 2.4V~o p.a. The centrally planned countries are projected to have very slow wheat consumption growth under the Base Run. However, coarse grains, rice and soybean products are projected to grow at 2.3-3.3~o p.a. Under the High Demand simulation, consumption would grow substantially more rapidly. Under the High Demand simulation, wheat consumption would increase from 0.3~o p.a. in the Base Run to loo. Coarse grain consumption would increase from 2.3%0 to 2.9~o for the same case and soybean meal and oil would increase from 3.2~o to 4.6~o and from 3.3~o to 4.3~o respectively. Soybean meal and oil consumption also increase under the Low Demand simulation reflecting the trade off between price and income elasticity. Under the Low Demand simulation, prices remain low relative to wheat and coarse grains and this stimulates exports. The High Demand simulation also results in larger imports than for the Base Run because of higher income growth which offsets the higher prices. The net exports or imports shown in Tables 8-10 are largely a reflection of the previously 2 Hans Binswanger, Yair Mundlak, Maw-Cheng Yang and Alan Bowers. 1985. "Estimation of Aggregate Agricultural Supply Response from Time Series of Cross Country Data." Division Working Paper No. 1985-3, Commodity Studies and Projections Division, The World Bank, December 1985. 130

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1 1 0 1 1 1 1 0 1 1 1 1 0 1 ~ ~ ~J 0 0 U~ ~ ~ C~ ~ c~ C~ ~) ~—0 1 I I t~ I ~ e e e e e e e e e ~ e ~ e ~ I 1 1 1 1 _ _ '_ _ ~ _ _ _ 1 ~ ~ C~ ~) ~ C~ 1 1 ~ 1 ~ 1 1 1 1 1 ~ 1 0 1 1 1 v 1 ~ 1 1 1 ~ 1 ~ 1 1 1 ~ 1 1 1 1 1 1 1 1 eC 1 1 1 1 ~ 1 ~ 1 1 1 3 1 0 1 ~4 ~D 0 0 I I | e e e e 1 ~ 1 0 1 — — 1 ~ ~ 1 1 C~ 1 ~ 1 1 1 1 C~ 1 1 1 1 _ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 ~— _ ~ ~ ~ u~ 0 0 ~ _ C~ ~ 1 | ~ e e e e e e e ~ e e ~ e e 1 1 0 1 ~ O ~ 0 0` ~— O O ~ 0 ~—~ ~ ~ ~ 1 1 1 c~ 1 ~ ~ t~ ~ U~ ~ _ _ ~ ~ 0 I_ ~ _ _ 1 1 1 1 ——— ~ ~ ~J 1 1 1 ~ 1 1 1 1 1 1 ~ 1 1 1 1 ~ 1 ~ 1 ~ — ~ ~ `0 ~ 0 a~ ~ ~ ~ a, 0 ~ ~ 1 I ~J I ~ I ~ ~ ~ e e ~ e e ~ e e ~ ~ e e I 1 L1 1 ~ 1 U~ ~ ~ ~ ~ ~ _ _ C~ ~ o _ 0 ~ 0 1 1 ~ 1 _ 1 ~ ~J ~ O — ~ ~ — — ~ D ~ — — 1 1 ~—~ 1 1 — — — ~ ~ ~ 1 1 0 1 1 1 1 .~ 1 1 1 1 t4 1 1 1 1 1 1 1 1 0 1 ~ ~ 0 — ~ 0 0 0 0 `00 ~ ~ ~ 1 I I ~ | ~ e ~ e e e ~ ~ e ~ e ~ e · · I I I cr~ I ~ D ~ ~ O ~ ~ ~ ~ ~D ~ ~ ~ 0 1 1 1 _ 1 _. _ _ 1— 0 ~— _ _ _ ~ u~ U~ 1 1 1 1 — — ~ ~ ~ ~ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~ 1 1 1 1 o 1 ~ 1 1 1 1 ~ 1 1 1 1 o 1 1 ~ 1 - ) ~ U~ ~D — 1 ·_ 1 1 0 | ~ ~ e ~ e I — 1 1 ~ 1 0 ~ ~ ~— 0 1 ~ 1 ~ — 1 0 ~ — ~ 1 --' 1 1 1 _ ~ 1 ~ 1 1 1 1 ° ~ 1 1 1 ·- 1 1 1 1 Pc 1 1 1 1 1 1 0 1 ~ ~ ~ ~ 0 1 . I 1 0 | ~ e e e e I 0 1 1 ~ 1 ~ ~ _ ~— 1 o 1 1 _ 1 C~ O — ~ 1 V 1 ~ 0 1 ~ I 1 ~ 1 1 1 1 ~ 1 1 1 1 u 1 1 1 1 ~ 1 ~ 1 `0 ~ ~ — ~ 1 I | I~ | ~ e e e e | 1 1 ~ 1 ~D O ~— ~ ~D ' 1 1 1 — 1 0 0 _ ~ 1 1 1 1 ~ 1 ~ 0 1 1 , ~ 1 1 1 1 ·~e 1 1 1 1 L4 1 1 0 1 ~ D `0 ~ 1 '~ | e e ~ ~ ~ I '1 1 ~ 1 0 ~ U~ ~D ~ 1 -~ , 1 - I ~ ~ _ c~ 1 1 1 1 1 1 v 1 1 1 `'s 1 1 ~ ~ ~ ~ ~ 1 ._ 1 1 ~ ~ ~ ~ ~ ~ ~ ~ C ~ 1 L 1 1 40 C: ~ ~ C; ~1 ~ ~ ~ ~ 18 ~ 1 a~ I I ~ £ ~ ~ ~ E ~ ~ E ~ ~ ~ E ~ ~ E ~ I I ~ ~ ~ . - ~ ~ E ~ ~ E ~ ~ ~ ~ ~ ~ ~ E a: ~ ~ ~ cr; a ~ cr: ~ ~ £ a: ~ ~ ~ a; :^ I a ~ ~ ~ a —~ 1 ~ 1 (V eC C:~ ~) S ~ eC 0 ~ ~ 41 aC 1 ~ 1 ~ 1 ~ oo 3 cn oG 3 ~ so 3 C oe ~ 3 ~ ~ ~ ~ 1 ,~ I ~ I a ·— O ~ · ~— O · ~— O ~ a ~— O ~ —e^ O I ,4 1 0 1 ~ ~ :~: ~ on ~ ~: ~ t~ ~ O ~ :~: ~ 11) t~ ~ ~ 1 m I ~ 1 ~ ~ ~ ~: 1 0 1 ~: O ~ O 0 1 1 ~ 1 :x ~ C~ U~ U) 1 131

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1 1 0 1 1 1 1 0 1 1 1 1 0 1 ~ O 0` %;J 0 ~ ~ ~ ~ c~ _ ~ ~;t ~ ~ 1 I I c~ | ~ e e e e e e e e e e e e e e I 1 1 1 1 ~ ~ c~ c~ c~ ~ ~ c~ C~ ~ L~ ~ ~ U~ ~ 1 1 ~ 1 ~ 1 1 1 ~ 1 0 1 1 1 ~ 1 C~ 1 1 1 ~ 1 _ 1 1 1 =: 1 1 1 1 1 1 1 1 ~ 1 1 1 1 v 1 U~ 1 1 1 3 1 0 1 ~ ~ 0 '~ e e e e e I 1 ~ 1 0 1 ~ (~ ~ U~ ~D 1 1 t~ 1 ~— 1 1 1 1 ~ 1 1 1 1 ~ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 ~) ~ ~ ~4 ~ ~ t—0 ~— ~ ~ ~ 0 1 | ~ e e e e e e e e e e e e e e I 1 1 0 1 ~ ~ ~ ~ ~ ~D C~= ~ ~ 0 1— ~ ~D ~ 1 1 1 C~J 1 ~ ~D ~ ~— ~— ~ ~ ~ ~ ~ ~ — — — 1 1 1 1 ~ ~ t~ ~ ~ ~ ~ ~ ~ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~ 1 1 1 1 ~ 1 V~ 1 ~ — ~ ~ O ~ ~ ~D 0\ 0 0 ~ ~D 0 ~— 1 I v 1 0` 1 e e e e e e e e e e 4~ e e e e | 1 u 1 ~ 1 _ C~ ~ O ~ C~J ~ ~ 0 ~ 1— _ — ~ 0 1 1 IV 1 — 1 ~D 0 ~ ~ ~ ~ 0 0 ~— ~ ~ ~ — — — 1 1 ~—~ 1 1 - ) - ) ~ ~ ~ ~ ~ ~ ~) 1 1 0 1 1 1 1 ~ 1 1 ' 1 1 P4 1 1 1 1 1 1 1 1 1 0 1 _ a' 0 ~ ~) ~— ~ U~ 0 c~ ~ — ~ 0 ~ 1 I I ~ | e e e e e e e e e e ~ e e e e | 1 1 ~ 1 ~ ~ ~ ~ ~ ~D ~ ~ ~ ~D ~ C~ 0 1 1 1 _ 1 0 — ~ — C~J — ~ ~) - 1 ~ C~ C~ 1 1 1 1 ~ ~ C~J ~ ~ ~ ~ ~ ~ 1 1 1 1 1 1 1 1 ' 1 1 1 1 1 1 1 ~ 0 1 1 o 1 1 1 1 1 1 1 1 1 o 1 1 1 1 ·- 1 1 ~ 1 0 U~ t— ~ ~D 1 — 1 1 0 1 · · · · · 1 1 ~ ~ 1 ~ ~ ~ ~ ~ 1 1 1 _ 1 ~ 1— t~ ~ 1 1 1 1 ~ ~ ~ 1 ° 1 1 1 1 ·- 1 1 1 1 P. 1 1 1 1 1 1 1 ~ 1 1 0 1 ~ ~ ~ ~ ~ 1 ~ 1 1 0 1 · · · · · 1 o 1 1 C~ 1 ~ ~ U~ 0 ~ 1 V 1 1 _ 1 0 ~D ~ — 1 1 _ 1 1 ~ ~J c~ 1 1 ~ 1 1 1 `d 1 ~ 1 1 1 1 ~ 1 1 1 ~ 1 U 1 1 v, I I '~ I ~ e e ~ °~ 1 1 0` 1 ~ — O —~ ~ 1 1 1 _ 1 ~ ~ ~ — 1 1 1 1 ~ ~ ~ 1 1 1 1 1 ~ 1 1 1 1 ·~6 1 1 1 1 L. 1 1 1 1 1 1 0 1 ~ u~ ~ O ~ 1 I | ~_ | ~ ~ ~ e 4, 1 1 0` 1 C~ C~ 0 0 C~ 1 · - 1 1 _ 1 _ ~ 0\ — 1 s" 1 1 1 — — — 1 1 1 1 1 1 1 v 1 1 1 b4 1 1 1 ~ 1 1 ~ ~ ~ ~ ~ 1 'Q. 1 1 C ~ ~ ~ C ~ C ~ ~ ~ 1 o 1 1 ~ ~ ~ ~ ~ ~ ~ ~ C ~ ~ 1 ~ I I `:: ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ E ~ ~ E ~ I I I ~ ~ ~ . - ~ ~ E ~ ~ e 1 1 Ct: ~ a, ~ a: ~ ~ ~ ~ ~ ~ c~ ~ ~ ~ a: ~ ~ 1 1 :` 1 ~ ~ ~ ~ :~: ~ O ~ 1 1 v 1 (U x; ~ O ~ O ~C dV eC ~ aC 1 OCR for page 122
1 1 0 1 1 1 1 0 1 1 1 1 0 1 ~) O ~ ~ ~ ~ ~ ~ ~ ~ ~D ~ ~ ~ 0 1 I I c~ | ~ e e e ~ e e ~ e e ~ e e e e | 1 1 1 1 _ ~ C~ C~ C~ t~ _ ~ ~ ~ t~ ~ t~ 1 1 al 1 ~ 1 1 1 ~ 1 0 1 1 1 V 1 ~ 1 1 1 110 1 ~ 1 1 1 a; 1 1 1 1 1 1 1 1 aC 1 1 1 1 ~ 1 ~ 1 1 1 3 1 00 1 ~ ~ 0 ~ ~= 1 I O I I | ~ e e e ~ I 1 ~ 1 0 1 ~D ~ 0` 1 1 ~ 1 ~ 1 1 1 1 ~ 1 1 1 1 _ 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 I J I I 1 1 ~ 1 1 1 1 1 1 1 1 1 1 1 0 1 C~ ~ ~ D — 0 ~ ~0 ~—~ O ~ U~ ~ 1 I I O | ~ e e e e e e e e ~ e e e e e | 1 1 0 1 ~— ~ ~D ~ ~ 0 ~ ~ ~ ~ ~ ~ — — — 1 1 1 ~ 1 ~ ~ ~ ~ `0 ~ —— ~ 1 1 1 1 ~ — — ~ ~ ~ 1 1 1 ~ 1 1 1 1 1 1 1 1 1 1 ~ 1 1 1 1 ~) 1 U~ 1 0 ~— — ~D O ~ ~ ~ ~1 0 ~ ~D — ~ ~ 1 I ~1 1 c~ I · e e e e e e e e e e e e e ~ I 1 ~ 1 C~ 1 ~ ~ ~ ~— ~ ~ ~) ~ O — — — _ _ 1 1 ~ 1 _ 1 ~ ~ ~ _ ~ C~ ~ — — 1 1 ~—7 1 1 ~ _ _ C~ ~ ~ 1 1 0 1 1 1 1 ~ 1 1 1 1 ~4 1 1 1 1 1 1 1 1 1 0 1 0 ~ — t—~ t~ o _ 0 ~ o ~ o O o 1 I I 0` 1 ~ ~ e e e e e e e e e ~ e e e I 1 1 0\ 1 ~ U~ ~ O ~ ~ ~ ~ ~ 0 0\ C~ _ — — 1 1 1 _ 1 ~ ~ ~ ~ ~ CJ~ 1 1 ~ 1 — — — ~ ~ — 1 ~ 1 1 1 1 o 1 1 1 1 1 1 1 o t I I ·- 1 1 1 1 1 1 ~ 1 1 1 '-' 1 1 1 1 1 1 1 o 1 1 ~ 1 — ~ ~ ~ 0 1 ._ I 1 0 1 e ~ ~ ~ ~ I 1 1 C~ 1 ~ C~ c~ 1 - 1 1 1 — 1 ~ ~ 1 ~ 1 1 1 — ~ 1 °s 1 1 1 1 o 1 1 1 1 r~ I I I I 1 1 1 1 ~ 1 1 0 1 ~ ~ ~ ~ ~ 1 c~t I 1 0 | ~ ~ e e ~ I 1 1 C~ 1 ~— ~ _ 1 - 1 ~Q 1 1 — 1 ~ ~ 1 :^ 1 _ 1 1 — — 1 co t ~ O t 1 ~ 1 1 1 1 ~ 1 1 1 ~ 1 - : 1 ~ 1 ~— 0 ~ ~D ~ 1 `: | I t_ | e e ~ e e I cts 1 1 ~ 1 ~ U~ ~ ~ 1 L4 1 1 ~ 1 — — 1 1 1 1 — — 1 1 1 1 1 .~ I t t I L4 1 1 1 1 1 1 0 1 ~ ~ O ~ ~ 1 I I ~~ | ~ e e ~ e | ° 1 1 C~ 1 ~ O — — 1 V 1 1 — 1 ~ ~ 1 1 1 1 — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~, 1 1 ~1 =1 ~ ~ ~ 1 _ 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 c~ 1 1 ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ 1 I I ~ E ~ ~ ~ 6 ~ ~ E ~ _ ~ ~ ~ ~ ~ ~ I e .- ~ ~ 6 ~ ~ ~ ~ ~ ~ E ~ ~ ~ ~ I ~ 1 1 Ct; ~ ~ ~ Ct: ~ dL) a; ~ 11) (V ~ ~ ~ ~ ~ IV 1 v I :- I a ~ a ~ :~: ~ 0 ~ I 1 ~ 1 61 eC ~ {V eC ~ aC dV aC ~ x: 1 t_ 1 . - 1 0 C~ 3 ~ ~ 3 ~ b0 3 ~ a, C~ 3 ~ ~ b0 3 1 r~ I ~1 1 40 . - O ~ ~ ~ O ~ . - 0 .1 ~ . - O 40 ~ . - O I 1 0 1 ~ ~ X ~ 0 ~ X ~ ~ ~ ~ ~ ~ ~ _1 ~ a: ~ _1 1 I ~ I ~ ~l ~ D eD I m I e I ~v ~ 1 0 1 ~ O .^ O 0 1 1 :~ ~ ~ UO cn 1 133

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discussed trends in production and consumption. However, because of stock changes, the figures do not equate to the residual of consumption minus production. As shown in Table 7, the industrial countries are large net exporters of wheat and coarse grains. Wheat net exports are projected to increase by 107X0 over the forecast period from 64.6 million tons in 1985 to 133.6 million tons by 2000. This large increase in net exports is due to the developing countries while the CPE's imports remain nearly constant. Coarse grain net exports from the industrial countries are also projected to grow rapidly reaching 90.7 million tons by 2000. The largest portion of the increase is expected to go to the developing countries, although the CPEs are expected to nearly double net imports during 1985-2000. Rice exports from the industrial countries are expected to grow to 5 million tons by 2000 under the Base Run. Due to slower consumption growth over the forecast period, the developing countries are expected to remain largely sel£sufficient in rice, and rice exports are not expected to undergo the rapid growth projected for wheat and coarse grains. Soybean meal net imports are projected to grow to 5.3 million tons by 1990 and then fall to 3.2 million tons by 2000.3 The industrial countries are net meal importers due to the large exports from Brazil, Argentina and other Latin American producers to the EEC, Japan and other industrial countries. Soybean of! exports (soyoil plus the oil equivalent of soybeans) are projected to grow due to imports from both the CPEs and developing countries.4 World stock levels are shown in Table 11. Under the Base Run simulation, stock levels would decline through 1990 and then rebuild over the balance of the decade. Stock levels would remain relatively high but below the large levels of 1985-87. The High Demand scenario would Tower stock levels but not to a severely Tow level. The Low Demand simulation would lead to stock levels nearly as large as during the last several years. CONCLUSIONS The historical data and the results from the simulations show a number of trends which have emerged over the period since 1970 and which are expected to continue. These trends have important implications for trade levels, food security, export earnings and expenditures if they continue. One of the most predominate trend which emerges from the historical data and the forecast ~ the increasingly widening gap between grain production and consumption in both the developing countries and the centrally planned economies. This gap is supplied primarily by exports from the industrial countries. In the developing countries the wheat gap is large and projected to grow larger in the future. The level of wheat net imports in the developing countries has grown from 28.7 million tons in 1970 to 51.6 million tons in 1980. By 1990 it is projected to rise to 71.6 million tons and to 114.7 million tons by the year 2000 under the Base Run. The developing countries were net exporters of 7.4 million tons of coarse grains in 1970, but imported 14.7 million tons in 1980 under the Base Run. They are projected to be net importers of 57.5 million tons by the year 2000. The rice gap is relatively small because production and consumption are concentrated in the developing countries. The developing countries continue to be net exporters of soy products because of the large South American exports. The centrally planned economies have also faced a widening import gap since the 1970s. 3Soybean meal is measured as the meal equivalent of beans plus soybean meal. 4Soybean oil is measured as the oil equivalent of beans plus soybean oil. 134

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1 1 0 1 1 1 1 0 1 1 1 1 0 1 O O ~) ~ 0 ~ ~J u~ u~ _ ~ ~— _ O 0 1 I I ~ | ~ ~ ~ ~ ~ e ~ e e e e e ~ ~ e | 1 1 1 1 ~ ~— ~ ~ ~ _ u~ ~n ~ ~ u~ 0 ~ ~ ~ 1 1 ~ 1 u~ 1 _ _ _ _ _ —~ _ 1 1 ~ 1 0 1 1 ' 1 1 ~ 1 ~ 1 1 1 .1 1 _ 1 1 1 a: 1 1 1 1 1 1 1 1 ~C 1 1 1 1 JJ 1 U~ 1 1 3 1 0 1 t~ ~ '~ I O I I | e e ~ e 1 ~ 1 0 1 L~ ~ ~ ~ ~ 1 1 ~ 1 1 - 1 1 1 1 1 1 ~ 1 1 1 1 — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 ~ ~ ~ C~ ~ O ~ O ~ O — 0 0 _ 1 | I O | ~ ~ ~ ~ ~ e e e ~ ~ ~ ~ ~ ~ e | 1 1 0 1 ~ 0 ~ O c':) ~ ~ 0\ ~4 ~ U~ c~ t~ ~ C~ 1 1 1 ~ 1 ~ ~—O ~ ~J CO 1 1 1 1 1 —~ — — — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~1 1 1 1 1 IV 1 ~ 1 ~ 1—~ 0 1—~ 0 C~ ~ ~ ~ ~ U~ D 1 I ~ I ~ | ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ I 1 ~ 1 C~ 1 0 ~D ~0 ~ ~ ~D ~ ~ '~ 1 — C~ ~— 1 1 (U 1 — 1 0 ~ ~ ~D 0 ~D 1 ' 1 1 . - 1 1 — — 1 1 0 1 1 1 1 )" 1 1 1 1 ~4 1 1 1 1 1 1 1 1 1 0 1 0 ~ u~ ~ u~ ~ ~) CO ~ ~ -;t ~) ~D C~ t~ 1 I I ~ | ~ e e e e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ I 1 1 ~ 1 ' ~ 0 0 ~ ~D ~ _ c~ ~ ~ _ _ c~ _ 1 1 1 ~ 1 a' ~ ca ~ ~ ~ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~ 1 ~ — ~ ~ 0 1 1 1 CO 1 · · · · · 1 1 1 0` 1 ~ ~D — 1 1 1 ~ 1 `8 — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 `0 0 ~ — ~D 1 1 1 0 1 · · · · · 1 1 1 ~ 1 0 C~ ~) O — 1 1 1 _ 1 ~— ~ 1 1 ~1 1 1 1 ~ I ~ 1 1 5 1 ~ 1 1 1 1 ~ 1 1 1 1 <: 1 ~ 1 ~ ~ _ U~ , 1 ~ | I t~ | ~ ~ ~ e ~ I ° 1 1 ~ 1 0 ~ — — 1 U] 1 1 — 1 ~ ~ 1 1 ~5 1 1 1 1 ~ 1 1 1 1 '6 1 1 1 1 ~ 1 1 1 1 ·c~ 1 1 1 1 ~ 1 1 0 1 _ u~ ~ c~ o~ ~ I I ~ | e e e e ~ I 1 1 0~ 1 0 ~ ~ — 1 1 1 _ 1 ~ 1 1 1 1 1 1 L4 1 1 1 1 1 1 ~ 1 1 1 ° 1 1 1 V 1 1 1 — 1 1 ~ ~ ~ ~ ~ 1 .'. 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 os i I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ E ~ ~ ~ ~ I I I ~ ~ E ~ ~ ~ ~ ~ ~ E ~ ~ ~ ~ — ~ ~ e ~r a ~ ~ ~ ~ ~ ~ ~ ~ ~ a; a ~ ~ a: a ~ a ~ x: 1 ~ 1 ~ eC ~ O ~: O eC O ~C 1U eC 1 oo 1 e~ 1 o' a0 3 ~ ~ 3 os os 3 `: 0 ~ 3 c: ~ ~D 3 1 1 ~ 1 a. - O ~ ~ ~ O 40~ - 0 ~ .1~ - 0 ~ a. - 0 1 1 0 1 V ~ ~ ~ o' ~ :~: ~ 1= ~ ~ ~) ~ ~ ~ ~ ~ :~: ~ 1 ~ I E I ~ ~ ~ ~ ~ I m I ~ I ~ ~ ~ ~ :^ l — 1 0 1 aC O ~ O 0 1 ~ 1 ~ 1 ~ ~ a: cn u~ 1 I35

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l o l l 1 1 0 1 1 1 1 0 I 0 0 — ~ 0 ~ ~ 0\ a~ ~ 0 ~ C~ D 1 I | ``J I · · ~ ~ e ~ ~ e ~ ~ ~ ~ e e ~ I 1 1 1 1 U~ ~ ~t 00 0 ~D ~ 0 ~ ~ 1 ~D ~D O 1 I U) 1 ~ 1 _ ~ C~ _ 1 1 ~ 1 1 61 1 0 1 1 1 ~ 1 C~ 1 1 I ~ I _ 1 1 1 ~ 1 1 1 1 1 1 1 I aC 1 1 1 I ~ 1 ~ 1 1 1 3 1 0 1 ~ ~ ~ crt 1 0 1 1 1 · · · · · 1 1 ~ 1 0 1 ~ 0 U~ 1 1 ~ 1 ~— 1 1 ~ 1 1 1 C~ 1 1 1 1 1 — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 ~ C~ ~ ~ _ ~— O a' C~ ~ 0 _ ~ 0 0 1 1 1 0 1 · ~ ~ · - ~ ~ · ~ · ~ ~ · ~ ~ 1 1 1 0 1 ~ ~ ~ ~ C~J ~ 0 _ ~ 0 ~ ~ ~ _ 1 1 1 ~J 1 _ ~ 0 U~ '_ ~ _ 1 _ 1 1 1 1 ~— 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ~ 1 1 1 I 11~ 1 ~ t ~ 0~ ~ 0~ 0~ ~ ~0 ~~ ~ t~ ~ ~ ~D t~ t~ I I ~ | ~ ~ ~ ~ ~ · ~ · e e e ~ ~ ~ ~ ~ ~ I 1 ~ 1 ~ 1 ~ ~ O O ~ ~ ~ ~ ~1 0 ~ _ ~ 1 1 0 1 — 1 0 0 ~— ~ U~ ~ . ~ _ ~ 1 1 ~—~ 1 1 — 1 ~ 1 1 1 0 1 1 1 1 ~ 1 1 1 1 P. 1 1 1 1 1 1 1 1 1 0 1 . ~D ~ ~ . 0 1 - — ~1 ~ _ ~ ~ ~ 0` ~ U~ 1 I I C~ I · · · ~ ~ · ~ · e ~ ~ ~ ~ ~ ~ I 1 1 C~ 1 — — ~ O ~ ~— _ C~J ~ _ t~ ~ 1 1 1 — 1 ~ 0 ~D ~ ~ ~ — — — 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 u~ 1 a, 0 ~J _ _ 1 1 1 o0 1 · · · · · 1 1 1 ~ 1 ~ ~— 1 ~— _ 1 1 1 _ 1 ~ _ 1 - 1 1 1 1 1 1 1 1 1 o I t I 1 1 1 1 1 1 0 1 ~ ~ ~ ~ o 1 1 1 a' 1 · · · · · 1 4, 1 1 0\ 1 — ~ ~ ~D — 1 ; 1 1 _ 1 U~ _ 1 1 1 ~ 1 1 1 t .1 1 1 I `6 1 ~ 1 1 1 o 1 v 1 1 1 1 ~) 1 1 1 1 ~ 1 ~ 1 ~) ~ ~ ~ — 1 O I ~ , ~ ~ _ U~ I ~ 1 1 —~ 1 ~ 1 1 ~ 1 1 1 1 ·C~ I I I ~ 1 1 o I ~ ~ ~ ~ ~ 1 _ 1 1 ~— 1 · · · · · 1 (l, 1 1 C~ 1 ~ 1 - — 1 1 ·- 1 1 — 1 e~J 1 1 1 1 1 1 1 1 1 1 1 1 v 1 1 1 b~ 1 1 1 ~ 1 1 ~ ~ ~ ~ ~ 1 ·p. 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 o 1 1 ~ C cn ~ ~ ~ ~ ~ ~ ~ ~ 1 4,, I I ~ ~ ~ ~ ~ E ~ ~ ~ ~ ~ ~ E E ~ ~ ~ ~ ~ ~ E a: ~ ~ ~ ~ a ~ =: a ~ ~ c': ~ ~ ~ ~ a :^ I ~ ~ a a x: a 1 JJ 1 ~ aC ~ O S ~ J; ~ S O aC 1 1 .~4 1 0 ~ 3 ~ ~ 3 °0 ~ 3 ~ ~ ~ 3 ~ ~ ~ 3 1 1 ~ 1 —.^ O 1U · ~— O a ·— O ·0 — ~— 0 ·1 · ~— 0 1 m I ~ I ~ 3: ~ ~ ~ :s: ~ - ~~, ~ :~: ~ D m s 1 c~ 1 ~ ~ s cn ° 136

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1 1 0 1 1 1 1 0 1 1 1 1 0 1 _ ~ _ ~ _ 0 ~ ~ _ ~— u~ _ ~ _ 1 I I ~ | · ~ e · ~ · e ~ e e e e · e e I 1 1 1 1 ~) ~ ~— ~ ~ ~ ~ ~ ~ ~ ~ U~ ~ 1 1 a, 1 ~ 1 1 1 1 1 (V 1 0 1 1 1 v 1 ~ 1 1 1 10 1 _ 1 1 1 a: 1 1 1 1 1 1 1 1 x: 1 1 1 1 ~ 1 ~ 1 1 1 3 1 0 1 C~ o ~ ~ ~ 1 1 0 1 1 1 · · · · · 1 1 ~ I o I ~ ~ ~ o ~ I 1 1 0\ 1 1 1 1 _ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 0\ ~ ~ ~ O ~ O ~ ~ U~ ~ 0 — ~ — 1 I I O I · · · · e · · · · · · · · · · I 1 1 0 1 0 ~ ~ ~ C~ 0 1 0 ~ ~ _ — _ 1 1 1 c~ 1 — ~ — ~ ~ ~ — — _ 1 1 1 1 1 1 1 ~ 1 t I I I 1 1 1 1 1 ~ 1 1 1 1 ~ 1 ~ 1 ~ 0 ~ 0 0 ~D ~ ~ _ 0 ~ U~ 0\ 0 ~ 1 I ~ I ~ | e e e e e e ~ ~ e · · e e e · I 1 ~ 1 ~ 1 ~ c~ ~D ~ ~ C~ 0 0 0 _ 1 1 ~ 1 — 1 — ~ — ~ ~ ~ — — 1 1 ~—~ 1 1 1 1 0 1 1 1 1 ~ 1 1 1 1 P4 1 1 1 1 1 1 1 1 1 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ O ~ 0 ~ 0 1 I I ~ | · ~ e · · · · · · · · · · · · I 1 1 0\ 1 ~ 1~ D ~ O ~—0 0 1 1 1 ~ 1 — _ — — — ~ 1 1 1 1 1 o ~ 1 j I ~ 1 1 1 o 1 1 1 _ 1 1 1 ·— 1 1 1 ~ 1 1 1 '- 1 1 1 m | I I I 1 1 ~ 1 _ U~ ~— iD ~ 1 O I 1 0 1 · e · · · I Q~ 1 1 C~ 1 0` ~— ~D 1 1 1 _ 1 ~ _ 1 1 1 1 1 ~ 1 0 1 1 ~Z 1 1 1 1 m | I I I ~ 1 1 0 1 ~ — ~ ~ ~ 1 ~V I 1 0 | · · e e e | .O 1 1 ~ 1 0 0 _ `0 1 :>. 1 1 — ) — 1 ° 1 ~ 1 1 co 1 .1 1 1 1 1 ~ 1 1 1 1 ~ 1 1 1 '0 1 0 1 1 1 ~ 1 <: 1 U~ 1 ~ CN U~ ~ ~ 1 ·— I | | | e e e · · I ~ 1 1 ~ 1 ~ — ~ 1 c5 1 1 0 O' 1 ^m I I I I .~ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 ~ ~ ~ ~ 0 1 O I I '~ | ~ ~ e e e | V 1 1 0\ 1 ~ — — O 1 1 1 _ 1 1 (,, 1 1 1 1 1 1 1 1 1 1 '. 1 1 1 — 1 1 1 1 1 1 ~ 1 1 ~1 ~ ~ ~ ~ 1 — 1 1 ~ ~ C ~ ~ ~ ~ ~ ~' ~ 1 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 1 1 c: E ~ ~ `: 6 ~ ~ 6 ~ _ C 6 ~ ~ 6 ~ 1 ~ I I :' ~ E ~ ~ ~ E ~ ~ E! ~ ~ ~ E _ :, V I -~ I cr ~ ~ to ~ ~ ~ ~ ~ a :~: ~ ~ a o o 1 v 1 ~ x: t~ 1U ~C (U ~ ~ eC ~ aC 1 ~4 1 -4 1 0 e~ 3 0 ~ 3 ~o ~ 3 ~ m a0 3 C 0 0~ 3 1 r ~ I ~ I ~ ~ O ~ ~ ~ O ~ ~ ~ O ~ ~ - / O ~ ~ - 1 0 | ~4 1 0 1 V ~ ~ _1 o~ ~ 5: - 1 ~ :~: ~ ~ ~ ~: ~ ~ ~ :r: ~ 1 I F I ~ ~ O D ~ I m I ~ I ~ ~o u :- :^ l ’ 1 0 1 ~ 0 ~ 0 0 1 1 ~ 1 :x ~ a: u~ U~ 1 137

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In 1970, the centrally planned economies exported 0.6 million tons of wheat and imported 2.9 million tons of coarse grains. By 1980, imports of wheat reached 18.9 million tons and coarse grains reached 28.1 million tons. By the year 2000, coarse grain imports are projected to rise to 33.3 million tons under the Base Run while wheat imports are expected to remain near the 1980 level of approximately 19 million tons. The reasons for this divergence between consumption and production are different for the developing countries and the centrally planned economies. The developing countries have increased imports in spite of very rapid increases in domestic grain production. For example, from 1970 to 1985, grain production grew at 2.8~o p.a. while consumption grew at 3.2~o p.a. Income growth permitted both greater quantities of grains to be consumed and also a different mix of grains. Imports in many developing countries are also the only source of wheat because it cannot be grown in tropical areas. The demand for wheat imports has grown more rapidly than the demand for rice or coarse grains. This trend is expected to continue until the year 2000, but can be expected to change when consumers' incomes in developing countries rise enough to allow more livestock and poultry products to be consumed, which will lead to increase coarse grain imports. The centrally planned economies have increasingly relied on imports because production has grown slowly. From 1970 to 1985, total grain production grew at .93% p.a. while consumption grew at 1.42~o p.a. Unlike the developing countries, grain imports reflect stagnant production more than rapid demand growth. Over the longer term, the demand for coarse grains is projected to grow faster than wheat to satisfy the demand for livestock and poultry products. A second trend which is projected to emerge is the slowing of the growth rates of production in the developing countries. Total grain production is projected to grow at 2.3~o p.a. from 1985-2000 compared to 2.8% p.a. from 197~85. This reflects a number a factors which primarily relate to the growth of yields and the maturing of the "Green Revolution". Since the first high-yielding varieties were released in 1965, the "Green Revolution" has allowed rice and wheat production to grow much faster than population. This was possible because the improved crop varieties were able to yield twice as much as traditional varieties when heavily fertilized and properly irrigated. This technology has now been extended to nearly all the best land and further expansion will be difficult. Investments in new irrigation systems have slowed, and expanding harvested area is constrained by the availability of suitable land not already cropped. Consequently, grain production is likely to grow more slowly in the future than during the period since 1965. This will further increase the demand for imports. Much of the slowdown in the growth of grain production will be in Asian rice production. This leads to an interesting question: Will rice imports and prices increase sharply as countries turn to the world market to supplement domestic rice production? In my view, this will not be the outcome. Instead, countries will turn to wheat imports to satisfy domestic demand because wheat prices are typically 5~60~o of rice prices and because many consumers in developing countries prefer wheat to rice to add variety to the diet. Wheat is also readily available from a number of major exporting countries. Rice imports are further complicated by the large number of types and qualities of rice and the difficulty of matching consumer preferences and market supplies. These trends suggest increasing dependence of the developing and centrally planned countries on industrial country exports of grain. However, this does not necessarily imply increasing real grain prices. The simulations suggest that the industrial countries and certain of the developing countries can supply these requirements at real prices which are below 1987 levels- even under the High Demand simulation. 139