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Appendix F Food Aid Needs During the 199Os RONALD G. TROSTLE* U.S. Department of Agriculture' Washington, D. C. Fifteen years ago, the developing countries had a $15 billion agricultural trade surplus. That surplus has now disappeared. Self-sufficiency for most categories of basic commodities has declined, indicating a growing gap between consumption and production. The volume of food aid to these nations has risen sharply during the last decade. These trends raise some disturbing questions about the future. Will the food production-consumption deficit in developing countries continue to widen? Will the developing countries' reliance on food imports and food aid grow? If so, will food supplies and Tow prices, and food aid funding be available to accom- modate the need? This paper presents a set of 10-year projections for production, consumption, and trade of agricultural products for the world and for developing countries. The underlying long- term trends in world agricultural production, consumption, and trade suggest abundant supplies during the coming decade. However, increases in production anct consumption will not be evenly spread among all countries. A rising reliance on food imports ant] food aid is expected in a number of low-income countries. The projections are based on assumptions about production technology and resource use, agricultural and trade policies, world commodity price levels, and international eco- nomic growth and credit availabilities. These assumptions appear to have a relatively high probability of occurrence compared to other scenarios. However, other developments, such as changes in international economic and financial integration or developing country growth in non-agricultural exports and foreign exchange could also have an impact. Agricultural production in developing countries has trended upward about 2.9 percent a year since 1950. The per capita rise was 0.8 percent a year, but demand increased even faster, and the growth in agricultural imports exceeded exports. Self-sufficiency S. ervlce *Chief, Commodity and Trade Analysis Branch, Commodity Economics Division, Economic Research 154

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(production/consumption) for total cereals fell from more than 55 percent in the early 1960s to nearly 50 percent in the 1980s. Self-sufficiency also declined for vegetable oils (from 128 to nearly 100 percent) and for cotton (from 160 to 125 percent). Agricultural imports by the developing countries has climbed 3.2 percent a year since the m~-1970s. Food aid flowing to these countries has risen about 3.7 percent a year and has been accounting for an increasing proportion of total agricultural imports. GLOBAL DEMAND AND SUPPLY FACTORS During most of the 1980s, most world agricultural commodity markets are characterized by large stocks and low prices. The 1988 North American drought's impact on production and prices is assumed to be a short-term digression from Tong-term trends. The projections presented here assume that the trend towards excess supplies will cause minor changes to be made in agricultural or trade policies in the major producing/exporting countries. Combined with the drought effects, these policy changes will help balance world markets during the next five years, but will fall short of a degree of trade liberalization that would help sustain a balance in world markets. World Demand Forces that generate demand such as population and income growthwere weaker in 1981-86, compared with 1970-81 (Table 1~. Population growth has generally slowed, except in Tow- and middIe-income developing countries. Per capita income growth has fallen and even slipped to negative values. Only the centrally planned economies have seen growth. Export growth has similarly declined, except for low-income and centrally planned economies. And, prices for agricultural products, increasing in 1970-81, declined sharply in 1981-86. These forces, their weakened states combined, imply declines or smaller increases in agricultural trade. Can we anticipate a strengthening in these forces? The answer is "yes" for some forces, but "no" for others. World demand for agricultural products will likely grow more slowly during the coming decade than during the boom of the 1970s, but faster than in the past five years. Several conflicting forces shape this outlook: . World population growth peaked during the 1960s at nearly 2 percent a year. The trend to slower population growth, now about 1.6 percent a year, is expected to continue. But even that relatively slow rate will produce about 80 million more people to feed and clothe each year, a significant demand-building fact of life. Many countries will experience slower income growth than in the 1970s. But income is likely to grow faster than in the early 1980s, particularly in developing countries. Most commodities will be available on world markets at Tow prices during the 1990s, frequently with favorable credit terms. The debt problem will continue to constrain both income and import demand in debtor countries, but to a lesser degree over time as debt is retired, restructured, forgiven, or otherwise resolved. Total and per capita demand growth will continue to be fastest in the developing countries, particularly in the newly industrialized countries. Growth of agricultural demand in developing countries has been projected at 3 percent per year, well above that of the middle-income countries (FAO 1987~. Demand growth will continue to be strong in the centrally-planned economies, especially in China. 155

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TABLE 1 Determinants of Global Agricultural Demand Item D evloping D eveloped World Total Low High Total EC U.S. income income Centrally planned economies Share of world population, 1986 100 54.51 42.15 Annual population growth rates (percent) 1970-81 1981-86 GDP per capita (1980 dollars) 1970 1975 1980 1986 Annual growth rate in GDP per capita (percent) 1970-81 1981-86 Exports per capita (1980 dollars) 1970 1975 1980 1986 Annual growth rate in exports per capita (percent) 1970-81 1981-86 Change in agricultural import prices 1970-81 1981-86 1.84 2.41 2.45 1.65 2.39 2.45 2,363 837 2,576 974 2,808 1,084 2,931 1,073 1.61 .80 376 441 526 603 3.14 2.68 2.40 1.32 -.23 -.06 236 245 270 263 .92 .14 8.59 9.67 -3.46 -4.88 112 111 93 84 -2.97 .81 9.82 -5.42 12.37 14.72 5.35 5.07 2.31 0.77 2.19 .54 420 2,217 468 2,658 482 3,104 484 3,082 3.11 -.15 646 694 863 873 2.72 .10 0~34 1.05 .10 .92 8,496 9,453 10,803 12,027 8,249 9,186 10,521 11,356 2.34 2.21 1.87 1.60 1,293 1,658 2,166 2,746 5.11 4.20 9.61 9.59 -4.56 -2.84 1,818 2,375 3,056 4,059 5.18 5.09 9.59 -2.91 30.76 1.48 .93 9,790 10,534 11,805 13,056 1.93 1.56 674 908 1,197 1,018 5.16 -2.78 1,407 1,577 1,694 1,869 1.72 1.94 101 128 141 180 2.72 5.82 8.58 6.21 -1.64 -2.62 SOURCE: Lee and Shane; updated. Demand for agricultural products is not only growing but also shifting to higher quality and more highly processed foods. More of the worId's population will seek higher quality diets. We will see a continuing gradual shift toward higher valued and processed products, particularly in developing countries. Distribution and processing margins will account for a growing share of total food expenditures. People with rising incomes will want more protein, generating a growing demand for feedstuffs. World use and trade of feed grains are expected to climb faster than for food grains. Developing countries use 35 percent of their wheat and coarse grain for feed and they will likely increase that percentage. Many middle-income developing countries will maintain imports of feed grains rather than meat in order to generate employment at home. World demand for high-protein feedstuffs will rise even faster than for feed grains. Livestock feeding in the centrally planned economies is inefficient, principally because of the composition of feed rations. The average protein content is low, particularly in the USSR and Eastern Europe. The ratio of high protein feeds to feed grain there is about 6 percent, compared with more than 25 percent in Western Europe. 156

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250 240 230 220 210 200 190 180 170 160 150 140 130 120 110 100 - / i Total / ~ _' / _ _ Per Capita 1 1 1 1 1 1950 1955 1960 1965 FIGURE 1 World Agricultural Production World Supply rate: 1970 1 975 YEAR 1980 1985 1990 World agricultural production trended steadily upward between 1950 and 1986 at 2.4 percent a year (Figure 1~. The per capita increase averaged 0.5 percent a year. Growth in production was not evenly distributed: some countries and regions became large surplus producers while others experienced rising deficits. Although the growth in production has fallen below the long-term growth rate during the last seven years, it is unclear that this represents a slowing in production growth. Technical change and increased use of purchased inputs have significantly affected production. Area for major crops increased substantially in the l950s and 1960s, but most production increases over the last 15 years were due to increasing yields per acre (see Figures 5 and 8~. Government-supported research and extension programs helped boost productivity as did price support programs. World grain and soybean yields have risen an average 2.3 and 1.8 percent a year during the last 25 years. We have seen most of the effect of the "Green Revolution" in rice and wheat, but other technologies and productivity enhancing production practices continue to emerge. The growth in crop yields has recently shown minor signs of slowing down, perhaps responding to lower world producer prices rather than the lack of technical innovations. Increasing feed efficiency will likely continue to boost livestock productivity. There are a number of new technological developments for the livestock sector, although their dissemination and adoption will likely be slow because of environmental and health concerns and constraints imposed by investment or management requirements. The growth in agricultural production will likely fall below the last decade's 2.~percent 157

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Some countries enjoyed high growth rates during the last 10 years which will be difficult to sustain. Examples are China, Malaysia, Saudi Arabia, and the Ivory Coast. Low world prices and slower demand growth will probably slow yield growth rates. Average yields for wheat and rice will likely climb at a slower pace than in the past 15 years, during which use of high-yielding varieties rapidly expanded in major producing areas. The growth in coarse grain yields may also slide below the 2.3 percent Tong-term trend. Low world market prices are likely to discourage countries with rapidly expanding production and self-sufficiency from becoming significant a~ric.~,lt,~ra1 ~~nort~r~ China and India are exa~nples. . . ... . O O _ O ~ _ ~ Low world prices watt also deter production expansion in other countries, particularly those with high costs of production. The Soviet Union, China, and the European Community (EC) will play critical roles in world production. The Soviet push for greater efficiency will probably not result in the same type of fundamental restructuring and investment in agriculture that caused China's spurt in output. And China will find it difficult to sustain recent trends in agricultural output and trade. The EC will likely continue to restrain its production incentives; its rate of growth in output will probably slow. World Trade Prospects Even with little multilateral movement toward trade liberalization, a confluence of factors are moving us towards the Tong-term rising trend in world agricultural trade 3.5 percent a year since 1960, faster in the 1970s, but slower in the 1980s (Figure 2~. There has been a trend toward world integration of agricultural markets. In addition, world commodity and financial markets are becoming more closely linked. During the early 1980s, a number of countries responded to balance-of-payments and debt problems by curtailing imports, income growth, and investment. The debt problems are being slowly resolvecl. Full resolution, though not likely within the next 5-10 years, will mean brighter trade prospects. The tendency to accumulate surpluses implies relatively low agricultural prices for some time. Thus, we can expect: . Somewhat slower growth of supply than in the last decade. Somewhat faster consumption growth than during the 1980s. A shift of the production/consumption balance so that the current large stocks of grains gradually drop. Growth in world trade moving back toward historical rates. The gains in world agricultural trade flowing from this scenario will be gradual. Prices, particularly for grains, are likely to remain relatively depressed. World trade in farm products may expand 3-4 percent per year, below the 4-5 percent of the 1970s, but well above the stagnation of the 1980s. World demand for wheat should continue to show strong growth, particularly in the developing and centrally planned countries. China will account for the largest increment of world wheat demand as the per capita consumption gains of the last decade continue. Expanding feed use is a relatively new factor contributing to the growth prospects for wheat. With consumption growing, the several-year-old recovery of world wheat trade will continue. World trade has recovered three-fourths of the 22-million-ton drop of 1985/86. Although gains will be slower, the upward trend is clear. World wheat trade will probably 158

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160 150 140 130 120 100 80 70 60 50 1960 1964 1968 1972 1976 110 _~ YEAR FIGURE 2 World Agricultural Export Volume Trend'/ it' / ~ Actual / 1 1 1 1 1 1980 1984 1988 1985 grow about 3 million tons over each of the next five years, only slightly slower than the pace of the 1970s and early 1980s. Demand for livestock products will expand at a somewhat slower rate than in the 1970s as slower growth in incomes and population offset consumer preferences for improved diets. Beef will continue to dominate world trade in meat. But, poultry meat trade should expand, with the major poultry meat importers of North Africa and the Middle East together with several Asian markets providing much of the gain. Poultry meat will likely account for virtually all of the per capita increase in the worId's meat consumption. Growing feed-use will account for all of the gains in coarse grain use. Large gains in feed use are expected in Mexico, North Africa, the Middle East, and East Asia as poultry and livestock operations expand to supply the meat demand generated by growing population and income. Large gains are also expected in the centrally planned economies. World coarse grain trade has shown virtually no increase over the last 2 years after its precipitous decline in 1984/85. But, an anticipated increase in demand for coarse grain in importing countries will translate into growing world imports. Developing country markets, where consumption is rising, are particularly likely to increase feed imports, as will China and newly industrialized countries in Asia. Total world trade in coarse grains is likely to increase by 2.3 million tons a year, roughly half the rate of the 1970s. Large supplies of feed-quaTity wheat on world markets will add to the pressure on coarse grain prices. Competition among various feed grains will be intense. Growing world demand will expand trade in oilseeds and products. although growth will be restrained by the EC's continuing move toward selsufficiency. The strongest growth in import demand is likely to come from the centrally planned economies whose increasing oilseed and protein meal imports will enable them to more efficiently use feed grains. World cotton trade over the last 2 years diners from the grain pattern. Cotton trade 159

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360 co o By o - FIGURE 3 Wheat Prices: Hard Red Winter 340 320 300 280 260 240 220 200 180 160 140 120 100 80 \' 60 1960 1 96fi 1970 1975 Actual ~ ~ Trend _ _ _ __ _ _ __ 1980 1985 1990 1995 YEAR has jumped to a record level, world stocks have dropped precipitously, and prices have strongly recovered. Cotton trade will expand only modestly over the next decade because trade levels are already high and consumption is growing slowly. Trade grew by only about 100,000 bales a year during the 1960s and 1970s. Growth is unlikely to greatly exceed those gains. Increasing barriers to textile trade will mean a smaller volume of world cotton trade and Tower prices for the worId's cotton exporters. Excess Capacity Remains While grain, oilseed, and cotton stocks are beginning to drop, world agriculture will continue to have excess capacity for the rest of this century, particularly in the developed exporter nations. Growth of agricultural production in the developed market economies would need to be cut to approximately 1 percent per year, half of the projected expansion in productive capacity, to balance output with domestic and export demand according to FAO (1985~. Prices Fierce competition between exporters for world markets burdened with surpluses have caused a sharp drop in world prices in the 1980s. Average cereals prices during the last 3 years, measured in 1982 constant dollars, were 40-50 percent below levels of the early 1960s. Soybean and soybean of! prices declined 35-40 percent and cotton prices are 45 percent lower. Wheat prices have trended downward at about 2 percent a year since 1960 (Figure 3~. Other cereals and oiTseeds have followed similar trends. Price patterns have been erratic however. After a sharp but short spike in prices in the 160

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mid 1970s, prices of most commodities have continued to decline sharply in the 1980s. Just as the 1970s price peak was an anomaly, the current low prices are below long run market- clearing equilibriums. Prices are expected to rise during the next several years as some of the current surpluses are worked off. However, the major producing/exporting countries will have problems in idling excess production capacity and will continue to compete for foreign markets. Other countries will promote exports to earn badly needed foreign exchange. Aloud, wo~-;u Or; are ~xpecteu to remain low Ior an extended period unless major regional production problems emerge. AL 1 ~ ~ . ~ . ~ ~ . ~ ~ OUTLOOK FOR DEMAND, SUPPLY, AND TRADE IN DEVELOPING COUNTRIES Developing countries are increasing their food production, but growth in population and per capita consumption are causing food use to rise faster. The growth in production and in food demand is unequally distributed among the developing countries. Some countries are gradually becoming more self-sufficient, but the food gap in other Tow income countries is widening. Some parts of Africa and Latin America will probably become more dependent on food aid in the coming decade. Demand in Developing Countries Growing demand would brighten prospects for global agricultural exports if sustainable economic growth generated the revenues to pay for increased food imports while meeting debt payments. However, despite the recovery from the world recession of 1981-82, the debt repayment problem continues to constrain developing countries' agricultural imports. Resolution of this problem is one major precondition for the return to a normal world trading environment. The process of adjusting to the over accumulation of debt in the 1970s has had several major consequences. For the developing countries, there has been a decline in per capita income growth, a direct result of policies to constrain imports at least partially by inhibiting aggregate demand. Imports have also declined as countries attempted to control balance-of- trade deficits. Falling prices for their exportable products have been an additional constraint on many countries' ability to buy imports with export revenues. Export revenues have not grown as expected, partly because of increased competition for export markets. The increasing competition, resulting from various attempts to generate revenues for debt repayment, has driven down commc~clilv nrir..~ f,~rt.h~r ~Y~rPrh~tino. the repayment problems. ~ ~ ~ ~ ~ w ~ ^~^ t) ~ ^^ ~ Renewed growth in developing countries will require investment in new industries or in existing export industries. The world's creditor nations have withdrawn credit or been reluctant to extend more credit to the debtor nations. This has resulted in reductions in gross domestic capita] in the debtor countries. The ability of the developing countries to generate renewed growth is predicated on their capacity to increase investment and exports. Therefore, if a substantial number of countries are simultaneously reducing their capital formation as well an their imports, increased export sales could become extremely difficult. Such has been the case since 1982., iFor a more complete discussion of the effect of the Third World debt problem on agricultural trade see Shane and Stallings (1987~. 161

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300 280 260 240 CC LL 220 200 180 160 140 120 100 Total _ ~ .'~ 1950 1955 1960 1965 1970 / ~- - YEAR FIGURE 4 Agricultural Production in Developing Countries Supply in Developing Countries Per Capita ~V 1975 1980 1985 1990 Agricultural production in all developing countries rose steadily during the last 35 years, averaging 2.9 percent a year, compared with 2.4 percent for the world. Per capita production rose nearly 0.8 percent a year (Figure 4~. Although production has risen faster than population growth. consumption has risen even faster. As a result, self-sufficiency has tended to decline for a number of commodities, and imports have risen. The cereals sector is the best, and most important, example of these trends. Between 1960 and 1987, the growth in production of total cereals averaged 2.7 percent a year in developing nations. The 1.9-percent growth rate of average yields contributed more to increasing production than did the average 0.8 percent annual expansion in area (Figure 5~. The growth in area tapered off during the 1980s and average yields have not risen for the past three years. However, the long-term outlook is for cereals production to continue to rise, although at a slower rate. Self-sufficiency in cereals in developing countries has declined from an average of more than 55 percent in the early 1960s to about 50 percent during the 1980s (Figure 6~. Net cereal imports by these nations increased from less than 10 million tons a year during the early 1960s to more than 50 million tons last year. Net cereal imports climbed slightly more than 8 percent a year since 1960 (Figure 7~. During the 1980s, net cereals imports have risen about 2.5 million tons a year. The rate of increase in cereal imports is expected to slow slightly. Oilseeds present a similar story (Figure 8~. Total oiTseed production has increased rapidly since 1973, averaging 3.5 percent a year. Increasing average yields, l.~percent growth rate, contributed more than did area expansion, 1.6 percent. OiTseed area climbed 162

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210 200 190 180 ~~ Production ~ ~ ~ \ / Z 160 t Yield 150 ~ , / ~ 140 _ ~ ~ / 130 _ 120 _ 110 '' 100 1 960 Area 1965 1970 1975 YEAR FIGURE 5 Total Cereals: Area, Yield, Production 60 58 56 54 ~ ~2 By . ~ tr 50 LL 48 46 44 42 _ 40 1960 1965 1970 1975 _ ~ j-__) Actual 1980 1985 1990 ~ I_ Trend _ __ 1980 1 985 YEAR FIGURE 6 Cereals Self-Sufficiency in Developing Countries 163 1990 1 995

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1 1 0 100 90 80 YEAR FIGURE 7 Net Cereals Imports in Developing Countries / Trend / 70 60 50 40 30 20 10 / Actual ~=~ ~ 7, A ~ 1, ~ , / / 1 1 1 1 1 1 o 1960 1965 1970 1975 1980 1985 1990 1 995 significantly faster than cereals area. Average oilseeds yields, as with cereals, have not risen for three years. Although developing country self-su~ciency in oilseeds has remained relatively con- stant, self-sufficiency for the byproducts vegetable oils and protein mealshas declined (Figure 9~. The self-sufficiency ratio in vegetable oils declined from about 128 percent in the late 1960s to nearly 100 percent in 1980, but recovered to 108-112 percent in recent years. Vegetable oil net exports declined from the 1965-75 average of 1.2 million metric tons to less than 1 million tons in the early 1980s (Figure 10~. Vegetable oil exports have risen during the last three years as Malaysian palm oil production and exports increased and are expected to continue rising in the l990s. Cotton has been a major export crop for some developing countries. Yield increases contributed to nearly all of the 2-percent growth rate in output, since planted area changed little. As with cereals and vegetable oils, both cotton self-sufficiency and reset exports declined. Self-sufficiency fell from more than 160 percent in the early 1960s to around 120 percent in the last several years. Net exports fell more than 15 percent during the same period. Natural Resource and Technology Concerns Future agricultural production gains in the developing countries will depend on land use and the continued adoption of yield-enhancing technology. The expansion in area planted to major crops (cereals, oilseeds, and cotton) has fallen well below the 0.7-percent long term growth trend during the last six years (Figure 11~. Although productivity gains continued to boost production, the future for technological advances is uncertain. 164

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180 170 160 111 CC 140 150 130 120 110 _ 100 ~ ~ / 1 1 1 1 1 1 1973 / Production / ~ - ~ ~ _k 1975 1 977 - Yield Area - 1979 1981 1983 1985 1987 1989 YEAR FIGURE 8 Oil~eeds: Area, Yield, and Production in Developing Countries Land is being used more intensively in the developing countries. Multiple cropping and increasing intensity of stash and burn agriculture are mining soil fertility and, in some cases, causing permanent loss of productive capacity, as well as siltation of downstream irrigation and flood control infrastructure. Deforestation and desertification are resulting from intense competition for food and fuel. It is unlikely that changes in land use will make significant additional contributions to production in the future unless producer prices increase significantly. Gains in agricultural output will depend more on technological advances because of the constraints on increasing planted area. However, the "green revolution" technology has already been widely distributed. Indeed, appropriate application rates for fertilizer ant] pesticides have been exceeded in some areas. And, there does not appear to be radical technological breakthroughs immediately on the horizon which can have the same impact on output as did the high yielding varieties. Management constraints and health concerns will limit the use of livestock growth hormone technologies in the developing countries during the next 10 years. Meat production will likely rise, even on a per capita basis, but only as a result of better management of traditional production and feeding practices. bade Prospects for Developing Countries In the 1960s, the developing countries' total net agricultural exports averaged $15 billion (in real 1974-76 dollars). Since the early 1970s, the trade surplus has disappeared (Figure 123. The volume of agricultural imports by developing countries has risen at a 3.2-percent compound growth rate since 1967, while exports grew at only 2.1 percent. The gap widened rapidly in the late 1970s and early 1980s as rising per capita income and the availability of international credit boosted demand. Commercial agricultural imports by developing 165

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134 130 126 122 ' 1 18 ILL CL 114 110 106 102 100 it, _~ Actual ~ 1 1 1 _ Trend _ - - - /~/'~` V A - 1 1965 1970 1975 1980 1985 1990 YEAR FIGURE 9 Vegetable Oil Self-Sufficiency in Developing Countries countries declined in 1985 and 1986 as the debt problem intensified and the growth in credit slowed. Food aid shipments to developing countries trended upward at a 3.7-percent growth rate (1974-87~. The volume of all food aid products (13.3 million tons in 1987) has grown an average of 350,000 tons a year during the last decade (Figure 13~. An estimated additional 19.7 million tons of cereals are needed in 69 developing countries in 1987/88 to meet minimum nutritional standards. Increases in food aid to meet nutritional need are largest in South Asia (6 million tons) and in East Africa (5.7 million) (ERS, 1987~. Although cereals dorn~nate total food aid (92 percent of volume during the last three years; Figure 14), contributions of dairy products and other noncereals have been growing much faster. During the last 10 years, the trend growth rates for cereals was 1 percent, compared with 9.7 percent for dairy products and 13.7 percent for other noncereal products. Food aid as a percentage of total imports rose significantly the last several years. During the late 1970s and early 1980s, cereals imported as food aid accounted for 12.18 percent of ~ ~ . ~ . ~ . ~ An ~ . ~ . . . . . ~~ total cereals imports. Mace the mlu-lu5Us, cereal tOOd ald comprised more than zu percent of total imports. One of the reasons for increased food aid in recent years has been the limited foreign exchange that developing countries have had available for commercial imports. In 1984 and 1985, 69 developing countries spent about 10 percent of their collective foreign exchange availabilities (defined as foreign exchange reserves plus export earnings minus debt service obligations) on commercial food imports; 30 countries used more than 10 percent, 8 used more than 20 percent, and 2 more than 30 percent. 166

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Oh Zo By o l 3.0 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 _ 0.0 1 1955 1970 Actual ,~ 'I - ~1 - Trend 1975 1980 1985 1990 1995 YEAR FIGURE 10 Vegetable Oil Net Exports in Developing Countries 410 400 390 Oh LL a: Lo I A A 360 380 370 350 340 _ 330 1970 1975 1980 1985 1990 1995 - Trend ~ - - ,~ Act u,/ me' . ~ 1 1 1 1 1 YEAR FIGURE 11 Area Planted to Major Crops in Developing Countries 167

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20 15 12 co 8 - ~ 4 o ~ O m fig 4 -8 -12 -16 1960 1965 1970 1975 - - ` Actual \ ~ ~ 1 " Trend ~ 1980 1985 1990 1995 YEAR FIGURE 12 Real Agricultural Net Exports in Developing Countries 14 13 12 11 ad O 10 By o 9 8 7 6 _ - \ _ - ~ ~y _ ~ - W~ , _ Trend __ Actual /\ , _ _ _ 1 975 FIGURE 13 Volume of World Food Aid Shipments 1 980 YEAR 168 1 985 1 990

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(14.0%) Coarse Grains ~~ ) Rice AVERAGE ANNUAL TOTAL VOLUME = 1 1.4 MILLION TONS FIGURE 14 Composition of World Food Aid CONCLUSIONS Many of the Tong-term trends, interrupted in the 1970s and 1980s, may reemerge during the coming decade. World agricultural production will continue to rise during the next decade, but at a slower pace than in the past. Surpluses will continue to persist, but will gradually decline from their current high levels. Real agricultural prices will rise slowly from current depressed levels, but excess production capacity in major exporting countries will keep real prices Tow for an extended period. International agricultural trade will pick up again, but not reach the growth rates of the 1970s. Demand growth in developing countries will rise from current depressed levels, but stay below the 1970s because of Tower population and income-growth rates. A few middle- income developing countries will enjoy rising per capita consumption, as well as quality improvements in diet. For the bulk of the low income countries, however, per capita consumption will stagnate. The growth in agricultural output will slow slightly as land resources increasingly become a constraint to expanded output. Productivity increases could slow somewhat during the next decade because "green revolution" technology is already widely distributed and no major new readily applicable technology breakthroughs are on the immediate horizon. Developing countries will continue to shift from being net agricultural exporters to becoming net importers. The need for both commercial food imports and food aid will rise significantly if current nutrition levels are to be maintained in the Tow-income countries. REFERENCES Economic Research Service. 1987. World Food Needs arid Availabilities, 1987/88. Washington, D.C: U.S. Department of Agriculture. Food and Agriculture Organization of the United Nations. 1987. Agriculture: Toward 2000. Rome: FAO. Lee, J.E., Jr. and M.D. Shane. 1987. "U.S. Agricultural Interest and Growth in the Developing Economies: The Critical Linkage, in U.S. Agriculture and Third World Economic Development: Critical Interdependency. Washington, D.C.: National Planning Association. pp. 54-78. Longmire, J. 1987. "Longer-Term Developments in the World Cereals' Markets: Looking Towards 2000,~ Mimeo, June. Mexico: CIMMYT. 169

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Shane, M.D. and D. Stallings. 1987. 17`c Third World Debt Crisis arid Its Resolution. FAER-231. Washington, D.C.: U.S. Department of Agriculture, Economic Research Service. Vocke, G. 1987. "The Outlook for Cereal Production in the Third World," Agricultural Outlook. Washington, D.C.: U.S. Department of Agriculture, Economic Research Service. 170