OECD Agricultural Outlook: 2003 2008 9264103023, 9789264103023

The ninth edition of the OECD Agricultural Outlook analyses how global and domestic forces are shaping agricultural mark

434 80 1MB

English Pages 210 [211] Year 2003

Report DMCA / Copyright

DOWNLOAD PDF FILE

Recommend Papers

OECD Agricultural Outlook: 2003 2008
 9264103023, 9789264103023

  • 0 0 0
  • Like this paper and download? You can publish your own PDF file online for free in a few minutes! Sign Up
File loading please wait...
Citation preview

«

OECD Agricultural Outlook 2003-2008

2003

© OECD, 2003. © Software: 1987-1996, Acrobat is a trademark of ADOBE. All rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction, lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materials and any elements thereof like any other copyrighted material. All requests should be made to: Head of Publications Service, OECD Publications Service, 2, rue André-Pascal, 75775 Paris Cedex 16, France.

OECD Agricultural Outlook 2003-2008

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy. – to contribute to sound economic expansion in member as well as non-member countries in the process of economic development. – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention).

Publié en français sous le titre : Pe rpe ctive s agricole s de l’OCDE 2003-2008

© OECD 2003 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online (www.copyright.com). All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.

FOREWORD

The OECD Agricultural Outlook provides a medium term assessment of future trends and prospects in the major agricultural commodity markets, including sugar on this occasion, of OECD countries. The report is published annually, as part of a continuing effort to promote informed discussion of emerging policy issues. This ninth edition of the OECD Agricultural Outlook 2003-2008, is set against the background of continued weak global economic activity at the beginning of the Outlook period, as well as a new US Farm Act, prospective changes in EU farm policy and the planned finalisation of multilateral trade negotiations under the Doha Development Agenda in 2005. The Outlook for agricultural commodity markets shows diverging trends for crop and livestock markets in the short term but a gradual strengthening in market conditions for all commodities over the period to 2008. But these outcomes are highly conditional on the geopolitical and global economic situation, on the evolution of domestic policies and policy settings, particularly in OECD countries, on the outcome of current multilateral trade negotiations in the WTO and, on future developments in regional and preferential trade arrangements. These developments have not been anticipated in this report. The projections to 2008, presented in the Outlook, constitute a plausible medium-term future for the markets of key commodities. They are the result of close co-operation between the OECD Secretariat and experts in member countries, and some Non-Member Economies (NMES), and hence reflect their combined knowledge and expertise. This year’s report also includes a set of sugar market projections, established with a newly developed stand-alone sugar model that may be included in the Secretariat’s Aglink model in the future. The commodity projections are based on a number of assumptions relating to current or announced agricultural and trade policies in OECD countries, the underlying macroeconomic environment and its expected evolution, as well as developments in major NMEs. The OECD’s Aglink model is used to guarantee internal consistency in the projections. The model is also used to generate scenarios around the Outlook baseline so that sources of uncertainty in relation to key assumptions and selected policy issues can be analysed. Thus, the report includes – inter alia – an assessment of the market impacts of the US Farm Security and Rural Investment Act of 2002, an evaluation of the implications for commodity markets of the economic crisis in Argentina and two separate analyses of how China’s WTO accession may affect sugar and meat markets. It also presents results of ongoing work on the introduction of stochastic elements in the baseline generation through a sensitivity analysis of yield variability. Finally, the report includes two background sections where issues of importance for the medium term outlook are discussed. The first one, contributed by the European Commission, provides an assessment of the likely implications for agricultural markets of the EU enlargement to 25 member states on 1 May 2004. The

© OECD 2003

3

second special focus section discusses the main driving forces in Ukraine’s future agriculture and trade development. The fully documented outlook database, including historical data, projections and selected scenario results, is available on CD-ROM. This publication is prepared by the Directorate for Food, Agriculture and Fisheries of the OECD with the active participation of all member countries. The policy assessments provided in this report is supported and extended by another annual report prepared by the Directorate: Agricultural Policies in OECD Countries: Monitoring and Evaluation 2003 (July 2003). The OECD Agricultural Outlook is publishe d unde r the re sponsibility of the Se cre tary-Ge ne ral of the OECD. The vie ws e xpre sse d and conclusions re a c he d in this re p o rt d o no t ne c e s s a rily c o rre s p o nd to tho s e o f the gove rnme nts of OECD me mbe r countrie s.

Acknowledgement This edition of the OECD Agricultural Outlook was prepared by the following team of economic analysts from the OECD Secretariat: Loek Boonekamp (team leader), Garry Smith (co-ordinator), Pete Liapis, Grégoire Tallard, Wyatt Thompson, Pavel Vavra and Martin von Lampe. Research and statistical assistance were provided by Armelle Elasri, Ane Kathrine Christensen, Gaëlle Gouarin and Claude Nenert. Secretarial services and co-ordination were provided by Christine Cameron. Technical assistance in the preparation of the Outlook database CD-ROM was provided by Serge Petiteau and final revisions to the report were translated by Armelle Elasri, Gaëlle Gouarin and Claude Nenert. Many other colleagues in the OECD Secretariat furnished useful comments on earlier drafts of the report. This year’s report includes a new chapter on the outlook for OECD and world sugar markets based on projections from a standalone, policy specific, sugar model developed in the Secretariat with the assistance of the Food and Agriculture Organisation (FAO) of the United Nations. The theme section for this edition of the Agricultural Outlook report is based on a consultancy report on future agricultural and trade developments in Ukraine by Professor Stefan von Cramon-Taubadel of Göttingen University, Germany. Finally, the European Commission provided an assessment of expected market developments following the enlargement of the European Union with the accession of ten new member states in May 2004, for inclusion in this report.

4

© OECD 2003

TABLE OF CONTENTS

Acronyms and Abbre viations .................................................................

6

The Outlook in Brie f ..............................................................................

7

Ove rvie w ................................................................................................

9

Economic and Policy Assumptions ........................................................

19

Ce re als ...................................................................................................

35

Se nsitivity Analysis of Yie ld Variability ..................................................

55

Oilse e ds .................................................................................................

63

The Main Driving Force s in Ukraine ’s Future Agricultural and Trade De ve lopme nt....................................................................

69

Sugar......................................................................................................

87

Me at .......................................................................................................

99

Dairy Products .......................................................................................

109

De ve lopme nt of Agricultural Marke ts in the EU afte r Enlarge me nt ....

121

Me thodology ..........................................................................................

127

Re fe re nce s .............................................................................................

193

Annexes Anne x I. Statistical Table s ...................................................................

129

Anne x II. Glossary of te rms ...................................................................

203

LIST OF BOXES

© OECD 2003

Box 1. Se nsitivity analysis: e ffe cts of change s in income growth..............

26

Box 2. Arge ntina: Marke t implications of the e conomic crisis..................

42

Box 3. Marke t implications of the 2002 Unite d State s’ FSRI Act .............

47

Box 4. China: a white knight for the world sugar marke t?........................

96

Box 5. Impacts of China’s WTO acce ssion on me at marke ts ....................

105

Box 6. Country of origin labe lling for me at products.................................

107

Box 7. Trade impacts of alte rnative milk marke t price support me asure s.............................................................................

115

5

ACRONYMS AND ABBREVIATIONS Acronyms ABARE ALIC AMAD AMS ASEAN BSE CEEC CAP CCP CIS CoOl CPI CMO CRP DEIP DMLP DPC EBA ECB ECU EEP ERS EUROSTAT FAIR ACT FAO FMD FAS FSRI ACT FTAA GATT GDP GM GMO HFCS HS IMF MAF MAFF MERCOSUR MLAP MLC MFN MPC MTR NAFTA NIS NME NTBs NZDB OECD OIE OMB OTMS PFCP PSE R&D RR RRAC RTAs SARS SMP SPS me asure s STE TRQ UK UNCTAD UNESCO URAA US USDA VAT WMP WPC WTO

Australian Bureau of Agricultural and Resource Economics Agriculture and Livestock Industry Corporation Agricultural Market Access Database Agricultural Marketing Service Association of Southeast Asian Nations Bovine spongiform encephalopathy Central and Eastern European Countries Common Agricultural Policy (EU) Counter-Cyclical Payments (US) Commonwealth of Independent States Country-of-Origin Labelling Consumer price index Common Market Organisation for sugar (EU) Conservation Reserve Program (US) Dairy Export Incentive Program (US) Dairy Market Loss Payment (US) Direct Payments for Crops (US) Everything-But-Arms Initiative (EU) European Central Bank European Currency Unit Export Enhancement Program (US) Economic Research Service of the US Department for Agriculture Statistical Office of the European Communities Federal Agriculture Improvement and Reform Act (US) of 1996 Food and Agriculture Organisation of the United Nations Foot and mouth disease Foreign Agricultural Service of the US Department for Agriculture Farm Security and Rural Investment Act (US) of 2002 Free Trade Area of the Americas General Agreement on Tariffs and Trade Gross domestic product Genetically modified Genetically engineered or modified plant, animal, micro-organism or virus High Fructose Corn Syrup Harmonised Commodity Description and Coding System International Monetary Fund Ministry of Agriculture and Forestry (New Zealand) Ministry of Agriculture, Forestry and Fisheries (Japan) Common Market of the South Marketing Loan Assistance Program (US) Meat and Livestock Commission (United Kingdom) Most Favoured Nation Milk protein concentrates Mid-Term Review of the CAP (EU) North American Free Trade Agreement Newly Independent States Non-member Economies Non-Tariff Barriers New Zealand Dairy Board Organisation for Economic Co-operation and Development Office International des Epizooties Office of Management and Budget (United States) Over Thirty Month Scheme Production Flexibility Contract Payments (US) Producer Support Estimate Research and Development Roundup Ready seed varieties Relative Risk Aversion Coefficient Regional Trading Arrangements Severe Acute Respiratory Syndrome Skim milk powder Sanitary and phyto-sanitary measures State Trading Enterprises Tariff rate quota United Kingdom United Nations Conference on Trade and Development United Nations Educational Scientific and Cultural Organisation Uruguay Round Agreement on Agriculture United States United States Department of Agriculture Value added tax Whole milk powder Whey protein concentrates World Trade Organisation

For an explanation of technical terms, see the Glossary

Abbreviations and symbols ARS AUD Bn CAD c.i.f. CNY cts/lb Cwe Dw ECU

6

Peso (Argentina) Dollars (Australian) Billion Dollars (Canadian) Cost insurance freight Yuan (China) US cents per pound carcass weight equivalent Dressed weight European currency unit

Euro f.o.b. Ha JFY JPY Kg kt L lw mha

European currency unit Freight on board Hectare Japanese fiscal year (beg. 1 April) Japanese yen Kilogram Thousand tonnes Litre Live weight Million hectares

mn mt NZD pw rse rtc rw t t/ha USD

Million Million tonnes Dollars (New Zealand) Product weight Raw sugar equivalent Ready-to-cook Retail weight Tonnes Tonnes per hectare dollars (United States)

© OECD 2003

THE OUTLOOK IN BRIEF

• World production of agricultural products is projected to continue to expand over the period to 2008 with the mix of outputs shifting towards a larger share of livestock products and feedstuffs and a lower share of food grains. Continued productivity increases will account for the largest share of production growth. Most of the additional production of agricultural products over the Outlook will take place in non-member Economies (NMEs). However, their food consumption will grow even faster and will provide opportunities for increased production and trade with OECD countries, particularly for higher value processed products and feedstuffs. • An expected rebound in OECD economic growth and revival of the world economy from 2004 onwards, supported by continuing, albeit slowing, population growth in NMEs leads to an increase in global demand for agricultural products. Much of the growth in world demand is expected to be reflected in increased consumption of coarse grains and oilseeds, with a shift away from wheat and rice based staple foods towards more processed food and higher protein products such as meats. The shift in consumption patterns is due mainly to higher per capita incomes and dietary changes in NMEs with only slow growth in food demand expected in mature OECD markets. • Drought induced production adjustments and low demand lead to some divergence between cereal and livestock product prices at the beginning of the Outlook. As production rebounds, cereal and oilseed prices fall, improving the profitability of livestock sectors. Higher demand growth with the revival of the world economy leads to rising agricultural product prices over the medium term. Increasing crop and livestock product supplies over the Outlook period, and some rebuilding of global stocks, moderate the extent and pace of future price increases for most commodities. • Trade in bulk and processed food products will continue to expand. The highest growth in net trade of OECD countries will be for cereals, followed by dairy products, when compared to the average volumes for 1997-2001. Some slowdown in OECD meat exports is expected due to faster internal consumption and intra-OECD trade, as well as increased competition in international markets. • High farm support and protection in the OECD area and trade restrictions in a number of NMEs, continue to have a major impact on international agricultural markets. The pace of agricultural reform for particular commodities continues to be mixed, proceeding for some products and in some countries, but having slowed or halted for others. Further improvement in market orientation and lower market protection would improve the functioning of world commodity markets and the prospects for most participants. The WTO negotiations underway on agricultural trade offer an opportunity to pursue these goals. However, success in reaching an agreement acceptable to all participants and one which promotes a more liberal trading environment will require continued international cooperation and leadership by OECD countries.

© OECD 2003

7

OVERVIEW

Outlook at a glance Price trends for crop and livestock markets diverge in the short term…

… but all commodity markets strengthen in the medium term

The geopolitical and economic situation remain major sources of uncertainty

© OECD 2003

The latest set of medium term projections for OECD Agriculture to 2008 suggest divergent market prospects for the crop and livestock sectors in the near term. Reduced global crop supplies as a result of droughts in North America and Australia and some rundown of world stocks, have led to sharply higher cereal and oilseed prices at the start of the Outlook. These prices are expected to decline initially as production rebounds and then firm slowly over the period to 2008, with strengthening demand. Rice is the exception with world prices currently below trend, but these should increase substantially over the medium term in line with a decline in stocks. Increasing sugar supplies and exports from low cost producers as well as continuing high support and protection in many OECD countries, imply that sugar prices on the residual world market will remain low in the medium term. In contrast to the situation of cereals and oilseeds, world markets for many livestock products are subdued in the near term as a result of increased production induced by droughts, lower demand and higher feed prices. World prices for most meats and dairy products are expected to rise over the Outlook to above near term levels as production adjusts and demand strengthens. But increased supplies due to higher productivity are expected to moderate the extent of price increases. Anticipated higher economic growth from 2004 onwards in the OECD area and particularly the developing countries with their faster growing populations, leads to stronger demand and provides the foundation for increased consumption, trade and world prices for many agricultural products. There are clearly uncertainties in relation to the Outlook for agricultural markets. The most crucial in the short term is the impact of current geopolitical developments on overall economic prospects that are not very positive. With weak growth in Europe and Japan, the momentum for recovery in the OECD area is increasingly reliant on the performance of the US economy. However, a growing US federal budget deficit could delay or dampen OECD economic recovery, and the expected revival of the world economy. A renewed effort to ease trade tensions and improve international co-operation between the major trading countries is now required, so that progress towards a more liberal world economy can be made. A longer period of global economic downturn with continuing levels of trade distorting support and protection to agriculture will mean lower trade and world commodity prices than is currently anticipated.

9

Main features of the Outlook Sluggish growth in OECD economies delays revival of world economy

OECD agricultural projections illustrate how global and domestic forces are shaping the agricultural sector. Forces at the global level are led by the assumption of an unfavourable macroeconomic environment in the short term that becomes more favourable over time. The world economy is currently mired in the aftermath of a burst stock market bubble, external imbalances and weak demand in Japan and the euro-zone. As a result, a third successive year of low global growth is likely to be posted in 2003. Many countries in the OECD area remain stuck in below trend growth. Sluggish growth in the near term is partly related to geopolitical uncertainties created by the Iraqi conflict. In contrast to the protracted period of low growth in the major OECD countries, the economic performance of a number of developing countries has remained relatively robust. This is particularly the case in Asia, although the severe acute respiratory syndrome (SARS) outbreak is starting to have some adverse affects on economic activity, growth and trade in this region.

But headwinds holding back OECD growth are abating…

There are indications, however, that the headwinds holding back OECD recovery have abated somewhat in the early months of 2003 as financial conditions have improved and oil prices ease down. Provided current difficulties can be overcome, better performance by the United States economy will be the main engine helping to lift OECD area activity, as economic growth is expected to be modest in the euro-zone and to fall in Japan. Looking further ahead, the OECD area is projected to grow at rates comparable to the 1990s over the remainder of the Outlook period. Many developing countries of Asia and Latin America are expected to record stronger growth over the medium term as well. Economic growth in these countries is projected to average above a strong 4.5% per annum over the medium term. Exchange rate movements will be another important element affecting the performance of agricultural sectors of OECD countries, by influencing competition in trade and the volumes of agricultural products moving across borders. Weakening exchange rates will also intensify competition from agricultural powerhouses in the developing world such as Brazil and Argentina. Box 2 examines how Argentinean agriculture is expected to respond to the economic difficulties and currency depreciation that are affecting the country. This limited analysis suggests some refocus of agricultural activity towards the crop sector and exports and away from livestock production, following the massive currency devaluation.

… with stronger growth world-wide from 2004

Growing populations and incomes change diets and lift food demand in developing countries…

… while food demand slows in “mature” OECD markets

10

Rising incomes and on-going migration of rural populations to large urban centres in developing countries, often lead consumers in these countries to diversify their diets, away from cereals and staple foods, to include more animal-based proteins, fruits and vegetables and processed food products. In addition to improved economic performance, high, although slowing, population growth rates that remain nearly double those of the OECD area are another factor contributing to increased food demand in developing countries. In contrast, food demand in many OECD countries is reaching saturation levels and is expected to show only the slow growth associated with mature markets. Slowing global population growth over the projection period and mature markets in many OECD countries have several implications for

© OECD 2003

agricultural markets. First, developing countries will become more important in driving the growth of international demand for agricultural products. And second, the dominant position of population growth in explaining increased food use will gradually recede in favour of rising per capita incomes in determining demand for agricultural products. These shifts in consumption patterns and demand taking place in developing countries lay the foundation for increased imports of food and feedstuffs and higher prices for many agricultural products. Box 1 examines the effects of economic growth in OECD and some NMEs on world commodity prices and consumption. This suggest larger adjustments in prices and consumption, in general, for livestock products and feed inputs where demand is more responsive, either directly or indirectly, to income changes. Cereal and oilseed prices to decline in near term

World prices for wheat, coarse grains and oilseeds are projected to decline sharply in 2003 as production rebounds from drought reduced levels in North America and Australia. Thereafter, prices should rise only gradually together with growth in production and some rebuilding of stocks, particularly in the main exporting countries. The situation for rice is different from the other cereals. Large stocks overhanging the market, particularly in China, have kept prices under pressure despite consecutive years during which global consumption exceeded production. As a result, world rice prices are expected to rise strongly over the medium term in nominal (and real) terms as global stocks are drawn down further. World cereal prices in real terms have been on a long term downward trend with short price spikes occurring periodically in reflection mainly of crop shortfalls in major producing or trading countries. These price spikes are followed by the re-establishment of the downward trend as production recovers. This trend in commodity prices reflects improvements in yields or more generally gains in productivity. Cereal productivity improvements are expected to continue over the projection period and mainly account for the projected increases in world wheat and coarse grains production, of around 15%, from 2002 to 2008.

Expanding livestock industries to increase feed demands

The main driver for cereal demand is expected to come from increased feed use of grains and oilseeds by expanding livestock sectors, particularly in the developing world where diets change in favour of higher value-added and processed foods, such as meat and dairy products. As a result, cereal and oilseed consumption should expand in the developing countries as livestock production increases. Wheat and coarse grain use for feed in NMEs is projected to grow by around 19% from 2002 to 2008. While food consumption of wheat and coarse grains is virtually stagnant in OECD countries, disappearance in the NMEs, which account for about two-thirds of global consumption, is projected to increase at slightly faster than the population growth rate. World oilseeds consumption is projected to increase by 17% to 288 million tonnes by 2008, with the fastest growth taking place in the NMEs. These countries will be responsible for the bulk of the growth in vegetable oil consumption as well.

Low world sugar prices expected over medium term

Changes in the structure of the world sugar market suggest little respite from historically low world sugar prices and price volatility over the medium term. Brazil has emerged as the leading low cost producer, with a competitive sugar industry about the same size as the tonnage

© OECD 2003

11

currently traded on world markets. Figure 1. OECD e xports The impact of low production costs is (2008 compared to 1997-2001 averages) further enhanced by a weak Real 30 exchange rate, contributing to a Total exports % Exports to rising wave of low-cost export non-OECD countries supplies from Brazil over the medium term. At the same time, the 20 world sugar market continues to be affected by a wide range of domestic and trade policies in many countries. 10 B r a z i l ’s e t h a n o l p r o g r a m m e , f o r example, can have a large impact on t he f in a l a l lo c a t i o n o f s u g a r c a n e 0 supplies and, thus, on world sugar price determination. In the OECD area, some of these policies contribute to export supplies which -10 would not have existed in their absence; others lead to trade restrictions, limiting the size of world -20 markets and exacerbating price Cereals Skim Other Meats v o l a t i l i t y. F u r t h e r m o r e , s o m e milk dairy powder products member countries’ trade policies (milk give guaranteed access to high equivalent) priced OECD markets for some of the poorest developing countries. The Source: OECD Secretariat. developing countries hold the key to continuing consumption growth, and its ability over time to improve the balance between supply and demand, by eating into the large stocks of sugar that overhang the world market. However, per capita consumption varies widely between countries, even in the developing world. China provides an example of a country with apparent scope to increase per capita consumption and imports as incomes improve, although other factors, such as the availability of artificial sweeteners and the large continuing role of government in import decisions, need to be considered, as illustrated in Box 4. Meat markets to gradually strengthen

12

World markets for many meats are relatively subdued at the beginning of the projection period. This reflects adjustment on the part of producers to lower returns from increased meat supplies due to drought induced slaughter in several countries, lower demand and higher feed prices. The droughts in North America and Australia have led to a significant increase in cattle turnoff and higher beef and veal production. Once these droughts break, cattle prices are expected to increase as producers withhold stock to rebuild herds leading to lower beef production in 2003. Beef and veal prices are projected to rise in following years to at least 2006, as demand strengthens and the profitability of cattle production improves with only moderate increases in feed prices. Limited increases in cereal and oilseed prices also improve the profitability of pork and poultry production. Further productivity growth is expected to moderate the extent and pace of price rises for these two meats. Consumer

© OECD 2003

preferences in OECD countries are expected to continue to favour the consumption of white over red meats, as reflected in a rising share of consumption expenditure on poultry meat and declining expenditure shares for beef in particular. Meat consumption per capita is projected to increase in the NMEs with faster economic growth as the Outlook proceeds. China provides an example of a potentially larger market (see Box 5). This analysis suggests that accession to the WTO is not expected to induce significant changes in the volume of Chinese meat imports or world meat prices. World prices for most meats are expected to be well above 2002 levels by the close of the Outlook period, as demand increases with faster economic growth (see Figure 2). But only modest increases in world dairy product prices

World dairy product prices should increase in the beginning of the Outlook in response mainly to lower supplies in Oceania. A recovery in milk production in this region will likely slow the pace of further price increases. Increasing global supplies of milk, due to higher productivity, and slower growth in world demand also act to limit price rises for dairy products over the medium term. The largest increase in milk production is expected to take place in the NMEs and those OECD countries not subject to production quotas. OECD area demand for dairy products is likely to increase only modestly, even with a return to higher projected income growth. In terms of the individual product categories, consumption in the OECD area is expected to increase for whole milk powder and cheese, to be flat for butter and to decline for skim milk powder.

Trade in some commodities driven by the developing countries…

The changing demand and supply conditions in NMEs provide scope for an expansion in OECD exports to these destinations for some products as well as increased competition for others. A number of countries in the nonOECD region have emerged as significant exporters in recent years. Ukraine is an example of an exporter which is having an increasing impact on cereal markets. The prospects for Ukraine agriculture are reviewed in a special section of this Agricultural Outlook report entitled, “The main driving forces in Ukraine’s future agricultural and trade development”. This discussion suggests that Ukraine will consolidate its position as a net exporter of cereals over the medium term, although rainfall could be a limiting factor in some years. Furthermore, that Ukraine is likely to remain a net exporter of beef a small net importer of poultry and to switch to a small net exporter of pig meat with improved feed efficiency in coming years.

… OECD exports led by cereals…

In terms of OECD trade changes, a comparison with average results for the period 1997-2001 reveals that the highest growth in net trade is projected for cereals, particularly coarse grains which may expand by 45% by 2008 (see Figure 1). Wheat trade for food and feed purposes is projected to increase by nearly 12%. The OECD as a whole, experiences an increasing deficit with respect to oilseeds and oilseed meals with growing net imports from NMEs by 2008. At the same time, there continues to be a shift to more trade in processed foods and high value products, primarily exported by OECD countries. A prominent example is provided by dairy products, particularly exports of whole milk powder and butter, which rise by over 20% and, to a lesser extent, cheese exports by 2008. In contrast, net exports of meat products to NMEs are lower at the close of the Outlook than the average

… and with increased exports of higher value processed products a well

© OECD 2003

13

Figure 2. Outlook for world price s to 2008 (Index of nominal prices, 1996 = 1) 1.4

1.4

1.2

1.2

1.4

1.2 Vegetable oil

Coarse grains

1.0

1.0

1.0

Rice

White refined sugar

Oilseed 0.8

0.6

0.8

0.8

0.6

0.6

Wheat 0.4 1996 Source:

1998

2000

2002

2004

2006 2008

0.4 1996

Raw sugar

Oilseed meal 1998 2000

2002

2004

2006 2008

0.4 1996

1998

2000

2002

2004

2006

2008

OECD Secretariat.

volume of shipments for the period 1997-2001. This reflects a combination of slower growth in OECD meat production, higher growth in domestic consumption (notably with a recovery in BSE affected beef demand in the European Union), and more intra-OECD trade. Increased trade between OECD member countries for the different meats, particularly for high value products, takes precedence over shipments to the NMEs, where competition from other suppliers is expected to intensify.

Policy settings have a major impact on markets

14

Support and protection of OECD agriculture remains high…

Current policy settings in OECD countries, and their slow evolution, are a major factor contributing to market outcomes over the medium term. While some OECD countries have reduced support to agriculture, others have increased it and in the majority of countries and for particular commodities, support levels remain very high. In addition, most of the support continues to be provided in ways that stimulate production and distort trade, although some countries are moving in the direction of providing support that is less distorting. Government intervention in domestic markets have encouraged higher production by making payments to farmers that are well above ruling world prices, while trade policies have insulated them from world price signals. This means that market shocks take more time to work their way through the system as producers in many OECD countries do not, or only partly, react to world market developments or the actions they provoke.

… and the USA, EU and Japan have the most impact

Within the OECD area, government support and protection policies of the United States, the European Union and Japan, due to their sheer size as major agricultural producers and/or traders can have a significant impact on the medium term outlook for agricultural markets.

© OECD 2003

Figure 2. Outlook for world price s to 2008 (cont.) (Index of nominal prices, 1996 = 1) 1.4 Beef

1.2

1.0

1.4

1.4

1.2

1.2

1.0

Whole milk powder

1.0 Cheese

Poultry

0.8

0.8

0.6

0.6 Pigmeat

0.4 1996 Source:

0.8

1998

2000

2002

2004

Skim milk powder

0.6 Butter

2006 2008

0.4 1996

1998 2000

2002

2004

2006 2008

0.4 1996

1998

2000

2002

2004

2006

2008

OECD Secretariat.

New farm legislation in the USA increases support and its commodity coverage…

In the United States, a new six year farm bill known as the Farm Security and Rural Investment Act of 2002-2007 was signed into law in May 2002. Under the new Act an increase in expenditure authority, above the former FAIR Act of 1996 initial allocation, was provided of USD 73.4 billion over a 10 year period, with much of the additional payments directed towards increased coverage of the crop sector within commodity programmes. Under these commodity programmes, additional funding is available for counter-cyclical payments, additional direct payments and marketing loan assistance programmes. Country of origin labelling is to be introduced. Box 6 describes the new country of origin labelling programme (CoOL). This is expected to improve information for consumers but it is uncertain whether there will be additional health and food safety benefits. A tariff rate quota, marketing allotments and non-recourse loans continue to support and protect US sugar production at prices double world levels. Milk and dairy products are supported by minimum prices, government purchases, marketing payments, border measures and export subsidies.

… estimated world price impacts are relatively small when compared to the FAIR Act, but are highly dependent on world market conditions

An analysis of the impact of commodity programmes of the FSRI Act on world markets is included in Box 3. This analysis, which compares the new Act with what would have happened under a continuation of the former FAIR Act’s programmes and provisions, suggests that the legislation leads to greater support particularly for grains, and to an increase in the area under the Conservation Reserve Program. In total, the FSRI Act results in a slightly smaller area harvested. The impact on average world prices of cereals and oilseeds under the projected market conditions are relatively small at between –1% for coarse grains and +1% for oilseeds compared to world price levels that would have occurred with a continuation of the FAIR Act provisions. The magnitude of the impacts depends importantly on the constellation of world price projections, with lower world prices giving a larger effect for grains, and lower world prices a smaller impact for oilseeds.

© OECD 2003

15

EU policy reform has moved towards more market orientation…

Policy reforms over the last decade have put in motion a change in the way support is provided in some sectors in the direction of less distorting policies. Thus, high support prices for cereal and oilseed producers have been reduced over the last decade under a series of CAP reforms, while direct payments have been introduced towards providing compensation of farmers for price cuts and mandatory set-aside. Border measures were also lowered to give increased market access, but recently new TRQs have been introduced that restrict market access for some cereals. For sugar producers, the major change has been a reduction in production quotas to meet export subsidy limit commitments from the URAA, while the high support price has remained unchanged in nominal terms for many years. Some changes to the EU dairy programme which go beyond those agreed under the Berlin CAP reform agreement of 1999 were proposed by the European Commission in 2002. These include an increase in milk quota and a reduction in support prices for butter and skim milk powder over the period 2004-08 to improve EU competitiveness.

… but some major sectors remain insulated from world market signals

While a number of these reforms are moving in the direction of increased market orientation, producers in some major sectors remain heavily insulated from world market signals and continue to receive very high levels of support. As a result, farm sector support in the European Union continues to be amongst the highest in the OECD. In this context, the proposals of the European Commission for a long term reform perspective for sustainable agriculture, as released in January 2003, represent an opportunity to further reduce the production and trade distortions of the CAP for a number of EU commodity sectors.

Support levels remain high in Japan

Japan is a major importer of agricultural products in the OECD area. Overall, domestic agriculture in Japan is relatively small scale, uncompetitive by international standards and with farmers continuing to receive very high support and protection that is well above OECD average levels. Support is mainly provided through border measures, primarily tariff rate quotas, and supply management regimes for milk production and rice land diversion. No reform measures have been scheduled for introduction in the Outlook period.

Despite some progress, most support in OECD countries continues to distort markets

In relation to the composition of support, while a number of OECD countries have shifted toward providing support to their producers in a way that is less distorting, market price support is still dominant. This form of support, in addition to being among the most production and trade distorting, tends to be the least effective in transferring income to producers and with a majority of support going to a small group of the largest farms. The latest estimates of support based on the PSE methodology indicate a little change in recent years. Within the OECD area, milk and beef production continue to receive the most support in monetary terms. Support to rice production ranks third amongst the measured commodities. When support is measured as a share of producer receipts, rice with a % PSE of 80% is the most supported commodity. Many OECD milk and sugar producers are also very dependent on government programmes for their economic well being. The level of support within commodity categories, however, continues to show wide variation across countries. Furthermore, for some countries and

16

© OECD 2003

commodities the extent of price transmission from world markets remains low due to border measures. This reduces the ability of market signals to influence the composition and level of (over) production, and lowers the welfare of consumers of agricultural products. It also has the effect of lowering world prices and tends to exacerbate the extent of price volatility. In these cases, the reform of trade policies becomes a prerequisite for more fundamental changes in commodity support arrangements. Bilateral and regional trade agreements are multiplying

Many countries are pursuing regional and other preferential trade arrangements that can also impact world markets and possibly domestic support arrangements for particular commodities down the road. The vast majority of WTO members are party to one or more regional trade agreements and by 2005, the number of RTAs in force might well approach 300. Ten Central and East European countries are due to join the European Union on 1 May 2004 to create an EU-25. Although enlargement of the European Union is not taken into account in this set of Outlook projections, the European Commission has released an assessment of the likely implications for agricultural markets and this is summarised in a section in the report entitled “Development of agricultural markets in the EU after enlargement”. Under the European Agreements negotiated between the European Union and the 10 applicant countries of Central and Eastern Europe plus Romania and Bulgaria, reciprocal improvement in market access was agreed. In addition an “Everything But Arms” (EBA) initiative was taken by the European Union to improve access for the least developed countries. Discussions continue on a Free Trade Area of the Americas which is due to be operational by 2005. In addition, the United States and Australia are discussing the possibility of a free trade agreement between themselves, to mention only a few of the negotiations that are underway. It remains an empirical question whether these regional and bilateral trade initiatives will lead to a more open world trading system and improved trade rules, compared to the outcome of the multilateral trade negotiations in the WTO.

Outcome of the Doha negotiations remains uncertain…

A successful conclusion of the Doha Development Agenda of multilateral trade negotiations currently underway in the WTO is expected to have a longer term positive impact on agricultural trade, leading to less distortion and improved functioning of world markets. As the outcome of these negotiations is unknown and will only likely impact agricultural markets towards the end of the Outlook period, no account of these trade negotiations is included in the baseline projections. The Chairman of Committee on Agriculture in the WTO has circulated a first draft (followed by a revised draft on 18 March) of modalities. At the time of drafting this report no agreement had been reached on modalities for negotiations on further commitments on agriculture in the WTO that was due to be established by 31 March 2003, as part of an agreed schedule for completion of the negotiations by 2005.

© OECD 2003

17

Missing the modalities deadline is unfortunate…

… and underscores the need for greater international cooperation to reach a new accord

18

When Ministers initiated the Doha Development Agenda it was widely recognized that the reform of farm trade was one of the most important benefits to be delivered to the world’s poor nations from a successful outcome to the negotiations. A tight schedule was imposed for the completion of the negotiations on the expectation that it would give a new boost to global integration and growth. Missing the deadline for an agreement on modalities for furthering the negotiations on agriculture is thus unfortunate. The WTO trade negotiations on agriculture are now at a critical juncture, with a need for all countries to show some movement in their negotiating positions. This flexibility will be required to deliver on the promises made in the Doha Ministerial Declaration of November 2001. Otherwise, in the absence of a renewed spirit of international cooperation, fostered by a strengthening of political and trade relations, there is a risk that the enormous opportunity, overall, for trade expansion, growth and development benefits for the world’s poor nations from farm trade reform will be delayed or, at worse, missed.

© OECD 2003

ECONOMIC AND POLICY ASSUMPTIONS

Key economic assumptions • An expected rebound of global economic activity in 2002 did not materialise. OECD GDP growth will not exceed 1.5% in 2002 and is not expected to be above 2¼% in 2003. Robust growth of 3.5% is expected from 2004 onwards. Real GDP growth in developing countries was also unimpressive. World GDP grew by only 1.7% in 2002 and is forecast to register above 3% from 2004. • Inflation in the OECD area is expected to continue being well contained despite an increase in oil prices in early 2003. By 2004, inflation is expected to fall to 1.6% per annum. Inflation in some non-member Economies important for the Outlook, for example Argentina, is not as favourable. • After strong appreciation over the last few years, the US dollar depreciated rather significantly against most major currencies in 2002. The yen is expected to continue appreciating against the US dollar during the Outlook period while the Euro is expected to stabilise. The US dollar however is expected to continue appreciating relative to the Russian rubble, the Argentine peso and the Brazilian real. • Long term trend in agricultural productivity and average weather conditions to continue.

Key policy assumptions • The Outlook assumes continuation of existing or announced agricultural and trade policies in OECD member countries and those non-member Economies important to the projections. The new FSRI Act of 2002-2007 signed into law in May 2002 is incorporated in this Outlook as is the EU’s 1999 Berlin Agreement (on the Agenda 2000 CAP reforms), Mexico’s PROCAMPO programme, China’s WTO commitments, and Russia’s newly announced tariff rate quotas on beef, pigmeat and poultry. • Full compliance is assumed with commitments under multilateral and regional trade agreements such as the Uruguay Round Agreement on Agriculture (URAA) and the North American Free Trade Agreement (NAFTA). When commitments are fully implemented these remain unchanged until new agreements are made. • The baseline does not include eastward enlargement of the European Union, the Doha Development Agenda multilateral negotiations in the WTO, or the mid-term review (MTR) of the Agenda 2000 CAP reforms.

© OECD 2003

19

Notes 1.

Historical data on leading macroeconomic indicators such as GDP growth rates, inflation and exchange rates are consistent with those published in the OECD Economic Outlook, No. 72, December 2002. The assumptions made about the future paths of these variables are based on information provided by the Economics Department of the OECD. The World Bank has been used as the source for growth assumptions for non-member Economies.

2.

Detailed description and evaluation of national agricultural and trade policies, including estimates of the level and composition of support, can be found in the OECD annual report Agricultural Policies in OECD Countries: Monitoring and Evaluation, 2003.

A se le ction of future agricultural policy e ve nts

20

2003

EU target date for review of milk quota scheme Expiry of the “peace clause” in the URAA on 31st December Country commitments under Doha Development Agenda negotiations due by 31 March

2004

Completion of URAA reforms in developing countries Enlargement of the European Union in conformity with the Nice summit

2005

Target date to conclude negotiations for Free Trade of the Americas Agreement (FTAA) Target date for launch of EU Berlin Agreement changes to dairy policies

2006

Expiry of financial framework for EU CAP reforms under the Berlin Agreement

2008

Target date for elimination of waiver for EU Lomé Convention Target date for start of GHG emissions trading Target date for completion of United States-Mexico portion of NAFTA Target date for completion of EU Berlin Agreement reforms for dairy products Target date for application in European Union of higher welfare standards for poultry

2009

Completion of duty free access to the European Union for least developed countries

2010

Target date for open trade and investment among developed APEC countries

2015

Target date set by 1996 World Food Summit to reduce the number of undernourished people from 800 million to 400 million

© OECD 2003

Review of Economic Assumptions Agricultural markets operate within the overall economy. Consequently, they not only react to factors that are specific for agricultural commodities but to macroeconomic variables such as income growth, inflation, interest rates and exchange rates. Agricultural markets are also affected by the policy context within which they operate. This section presents a brief summary of key macroeconomic developments during 2002 and expectations of developments over the Outlook period. In addition, some of the key agricultural policy developments are discussed.

Globally a hesitant economic recovery Robust growth delayed

Following a rather lack lustre 2001, economic growth was expected to pick up again in 2002. Indeed, economic activity rebounded strongly at the start of the year, but lost momentum as consumer and business confidence deteriorated. In the United States, corporate accounting scandals may have contributed to falling consumer confidence. The apparent slowdown in economic activity led some to fear the possibility of a double dip recession in the US. However, it appears unlikely that OECD economies will fall back into a recession. But, geopolitical uncertainty and a further slide in world equity markets have been weighing on confidence. OECD GDP growth will not exceed 1.5% in 2002 and a broad based recovery is unlikely to emerge until current uncertainties dissipate possibly well into 2003. Only in 2004 would the output gap start narrowing. Recent developments have also featured large differences in income growth between North America, Continental Europe and Japan. But, the OECD Economic Outlook suggests that there is not a “cyclical divergence” across OECD countries. Rather, it suggests that the recent cycle is highly synchronised. What is being observed can be called “structural divergences” with potential growth in North America far exceeding what can be observed and expected in other OECD regions.

Monetary policies have been accommodating

Monetary authorities, worried about a possible double-dip recession (growth falling back into negative territory) in the US and Europe have been very accommodating. The Federal Reserve in the US has lowered interest rates repeatedly and is currently maintaining the federal funds rate at a historically low 1¼% and is ready to act again. The Eurosystem having kept its policy-controlled rate unchanged at 3¼% for most of the second half of 2002, lowered it to 2.5% in early 2003 in response to growing concerns on growth prospects. The European Central Bank (ECB) has signalled that it is not as worried about inflationary pressures and may be willing to further reduce interest rates in the short run to help spur economic growth. Fiscal policies too have been very supportive in many OECD countries. In Europe, automatic stabilisers have provided added demand stimulus while the US has used discretionary stimulus to bolster aggregate demand. It seems likely that structural policies will become an integral part of the policy mix. As the experience of successful countries show, good structural

© OECD 2003

21

Figure 3. Expe ctations of GDP growth for se le cte d countrie s 8

8 %

8 %

%

6 US

6

Canada

Union européenne

4

4

4

2

2

2

0

0

0

-2 1984 Source:

1990

1996

Japon

6

2002

2008

-2 1984

1990

1996

2002

2008

-2 1984

Australie

1990

1996

2002

2008

OECD Secretariat.

policies can provide a decisive contribution to short-term stabilisation, thus giving greater room for monetary and fiscal policies to balance more effectively their short and long-run commitments. Forward-looking indicators suggest that a solid recovery may be slow to materialise. In the United States, factory output is contracting while auto production schedules are being cut back. In the Euro zone, manufacturing may be sliding into recession and in Japan, recovery may be weakening. Business expectations also deteriorated in the second half of 2002 in both the Euro zone and in the United States, falling to levels normally associated with declining production. Continuing political uncertainties regarding the after effects of the war with Iraq and uncertainties regarding developments in oil prices are also weighing down on prospects for robust economic growth. An additional factor that may affect short-run economic prospects is the recent outbreak of the severe acute respiratory syndrome (SARS), especially for Asian economies most affected. Growth in large OECD economies continues to be led by the United States…

The global recovery is slow and its momentum is heavily dependent on developments in the United States. Growth in the large OECD economies continues to be led by the United States as its growth remains faster than that of the others leading to an ever-larger gap in total GDP between the United States and other countries. Growth in 2003 is not expected to differ materially from the 2.3% growth recorded in 2002, but growth in 2004 is expected to jump to 3.6% and average 3.5% for the rest of the Outlook period.

… while that for the EU and Japan lags behind

In the European Union, GDP growth is expected to increase from a more tepid 0.9% in 2002 to 1.9% in 2003. Growth is expected to average a more robust 2.7% in 2004 while dropping back to average about 2.4% per annum growth during the rest of the Outlook period. Developments in Japan are less positive. Following a continuation of negative GDP growth in 2002, growth is expected to reach positive territory in 2003 and 2004. But at 0.8% and 0.9% respectively, growth is not very robust. Growth is expected to average about 1% per annum during the rest of the Outlook period.

22

© OECD 2003

Figure 3.

Expe ctations of GDP growth for se le cte d countrie s (cont.)

16

16 %

8

0

Argentina

%

China 8

0

Russia

Brazil -8

-16 1984 Source:

-8

1990

1996

2002

2008

-16 1984

1990

1996

2002

2008

OECD Secretariat.

Economic growth for some of the other OECD economies important for certain agricultural markets is expected to be rather strong (see Figure 3). The economic outlook for the OECD economies hinges on the answers to three fundamental questions and one major uncertainty. The questions are: • How far are OECD economies from the restoration of healthy financial fundamentals? • Do stabilisation policies provide the appropriate cushion to prevent economic activity from undershooting in the short run, in the form of a double-dip? • Have sufficient structural reforms been undertaken for other parts of the OECD area to resume the catch-up process with North America? The major uncertainty relates to geo-political developments and their impacts on consumer and business confidence, and hence on the strength of future economic activity.

Growth prospects for some non-member Economies also slowed Similar problems that confronted the developed economies, insufficient investment spending, and financial and geopolitical uncertainties are impacting economic growth for non-member Economies and growth in developing economies seems to be weaker in 2003 than initially expected. One of the exceptions is China. China is expected to continue registering impressive economic growth averaging about 7.2% per annum through 2006 and then jump to above 8% per annum during the last two projection years. Of the other nonmember Economies included in this report, economic growth in Russia is expected to moderate slightly during the outlook period averaging about 3.5% per annum. Growth in Latin America in general and Argentina in particular has lagged behind other regions. Argentina’s financial and other macroeconomic woes are expected to have caused a drop in GDP of about 12% in 2002. But, growth is expected to reach positive territory in 2003 and average about 4.5% per annum the rest of the Outlook period. Brazil’s growth in 2002 is expected to

© OECD 2003

23

be barely positive, but is expected to pick up strongly in 2004 and average about 3.6% per annum for the duration of the period. The World Bank expects world GDP to increase by 1.7% in 2002 and to register above 3% growth in 2004. Lower growth in incomes, holding everything else constant, implies smaller increases in consumption especially for high-valued, income sensitive products such as meats and dairy. Varying income growth rates across regions also have different implications for agricultural markets. The sensitivity of the baseline to changes in relative GDP growth rates between OECD and non-member Economies is discussed in Box 1. US dollar weaker relative to some other OECD currencies…

Exchange rates are a major determinant of agricultural trade by individual countries. The relative rate of the US dollar is especially important for many agricultural products in world markets as their price is denominated in dollars. The year 2002 saw some important changes in nominal exchange rates. After strong appreciation over the last few years, the US dollar depreciated rather significantly against most major currencies. Relative to the Euro the value of the dollar at the end of 2002 was about 15% lower (and substantially lower compared to its peak value in 2002) compared to its value on the first of January 2002 and about 10% lower against the Japanese yen. The dollar also depreciated relative to the currencies of OECD member countries that are major agricultural exporters. Relative to the New Zealand dollar, the US dollar depreciated some 21%, while depreciating almost 10% relative to the Australian dollar from 1 January to 31 December 2002. Such currency realignment could enhance the competitive position of US agricultural products on world markets. But, the US dollar remained relatively stable against the Canadian dollar, depreciating only 1% during 2002. The Outlook assumes that exchange rates for OECD countries remain constant in real terms relative to the US dollar (taking into account differences in relative inflation among US and other OECD member). Thus, it is expected that the Euro will hold steady at about parity with the dollar in the medium term. The yen is expected to appreciate relative to the dollar during the projection period averaging about 2.5% per year, with the dollar falling to Y 107 to the dollar in the last year of the outlook from an average of Y 125 per dollar in 2002.

… but remains strong relative to those for non-member Economies

The US dollar however appreciated relative to the currencies of the many non-member Economies in the Outlook while retaining its value relative to the Chinese yuan renmibi. Relative to the Russian rouble, the dollar appreciated almost 5% during 2002 (again comparing the exchange rate on the first of January 2002 to the value on the last trading of December 2002). The financial crisis in Argentina and Brazil resulted in very large depreciation of each currency relative to the dollar. The Argentine peso dropped dramatically relative to the dollar after it was floated, falling more than 240% while the Brazilian real fell 47%. In the medium term, it is expected that in nominal terms, the Argentine peso will further depreciate relative to the US dollar by 32%, the Russian rouble will depreciate by 31% and the Brazilian real by almost 9%. Movements in nominal exchange rates for selected countries are depicted in Figure 4.

24

© OECD 2003

Figure 4. Nominal e xchange rate proje ctions Foreign currency/USD 240

6

210

5

1.8

180

4

1.5

1.5

150

3

1.2

1.2

120

2

90

1

2.4

2.4

2.1

2.1

1.8

Canada

Australia (left scale)

Argentina

Brazil

EU 0.9 0.6 1984 Source:

0.9

1990

1996

2002

2008

0.6 1984

Japan (right scale) 1990

1996

2002

60 2008

0 1984

1990

1996

2002

2008

OECD Secretariat.

Inflation pressures expected to remain mild Inflation is expected to continue being well contained in OECD economies in spite of oil price increases in late 2002 and early 2003. In the United States, the GDP deflator is expected to average 1.1% in 2002 rising slightly to 1.3% in 2003 and staying at around that level for the rest of the Outlook period. The European Union is expected to experience falling inflation as the GDP deflator is expected to fall to less than 2% in 2004 and remain at about 1.8% for the duration of the Outlook. Japan, on the other hand, is expected to continue experiencing deflation as its GDP deflator is expected to fall by 1% in 2002 and to continue in the negative territory in 2003 and for the rest of the Outlook period. Inflation for all of the OECD countries is expected to fall to 1.6% by 2004. If the high inflation countries such as Turkey are excluded, the average for the remaining OECD countries falls to 1.2% in 2004. Low inflation rates imply that income gains are not eroding, purchasing power of consumers is expanding, and producer profitability is not compromised from high input costs. But not in Argentina

© OECD 2003

Except for Argentina, inflation is expected to be fairly moderate in the nonmember Economies. The financial problems experienced by Argentina are expected to lead to an inflation rate of about 38% in 2002, jumping to more than 50% in 2003 before tapering off to about 5% by the end of the Outlook period. In Brazil, the inflation pressures do not seem to be as pressing as in Argentina. The GDP deflator is expected to average almost 8% in 2002, increase slightly in 2003 before falling during the Outlook period to around 3%. Inflation in Russia is expected to increase slightly over the Outlook period. The GDP deflator is expected to rise from 5.5% in 2002 to 8.5% by 2008. Price pressure is also expected to increase in China but from very low levels. At the end of the Outlook period, the GDP deflator is expected to be about 3%. 25

Box 1.

Se nsitivity analysis: e ffe cts of change s in income growth

The Outlook achieves its detailed projections for commodity markets by using one set of assumptions for variables such macroeconomic conditions. It does not recognise the relative impact of each assumption, that is, the extent to which some may affect the results more than others. Partly to highlight key assumptions, the Secretariat provides scenario analyses and special focus sections throughout the Outlook report. Two years ago, a new section on sensitivity analysis was added to evaluate the effects of certain variables on the projections. This year, the sensitivity analysis focuses on how sensitive the results are to income growth projections and to what extent assumed changes in income growth among OECD and non-member Economies (NMEs) affects agricultural markets. The experiment consists of arbitrarily selecting a growth factor and applying it uniformly to the growth rate of each country’s GDP. In contrast, actual growth rates could be selected from their underlying distributions which would allow the association of market impacts with the probability attached to that particular growth rate. Selected market impacts of such a partially stochastic sensitivity analysis based on random variations in yields is represented elsewhere in this report. In the final scenario presented here, the GDP growth rate is augmented by an additional 10% in each year of the Outlook period so that the GDP growth rate for each OECD modelled country is 10% greater than it would have been otherwise. The second scenario applies the same increase in the GDP growth rate for the modelled non-member Economies, while in the third scenario the GDP growth rate for all modelled countries is increased by 10% per cent each year. Selected results are shown in Tables 1 and 2. Table 1.

10% shock on GDP growth rate : Effe cts on consumption % change in 2008 Scenario Non-member Economies2

All3

0.3 0.7 –0.2 0.3 0.7 0.8

–0.2 –0.1 0.0 0.4 0.1 –1.5

0.1 0.6 –0.2 0.7 0.8 –0.7

0.7 0.7 –0.1 0.6 –0.1 0.5

0.0 –0.1 0.0 –0.1 0.0 0.0

0.7 0.6 –0.1 0.5 –0.1 0.4

0.0 –0.1 0.0 0.1 –0.4 –0.1

0.3 0.4 0.0 0.5 1.0 1.8

0.3 0.3 0.0 0.6 0.6 1.6

–0.1 –0.1 0.0 –0.2 0.0 –0.1

1.4 2.0 1.0 0.2 0.5 1.4

1.3 1.9 1.0 0.1 0.5 1.4

OECD

Modelled OECD countries Wheat Coarse grains Rice Oilseeds Oilseed meal Vegetable oil Beef Pork Butter Cheese SMP WMP Modelled non-member Economies Wheat Coarse grains Rice Oilseeds Oilseed meal Vegetable oil Beef Pork Butter Cheese SMP WMP

1

1. Modelled OECD countries are Australia, Canada, EU, Hungary, Japan, South Korea, Mexico, New Zealand, Poland and USA. 2. Modelled non-member Economies are Argentina, Grazil, China, Russia and Rest of the world. 3. All modelled countries OECD and non-member Economies mentioned under 1 and 2. Source: OECD.

26

© OECD 2003

Box 1.

Se nsitivity analysis: e ffe cts of change s in income growth (cont.)

Higher income, assuming everything else is constant, should lead to an increase in demand and an increase in price for normal goods. In a short box such as this, it is difficult to present the results of the sensitivity analysis for all commodities and for all countries in all periods. This would require taking into account the complexity of the interactions across different countries’ markets and commodities, as well as interactions between policy trigger prices and quantities. Consequently, results presented focus on the implications of higher income growth for consumption and world commodity prices. Table 1 shows the effects of the experiment on consumption in 2008, the last year of the projection period and the year with the largest gains in income relative to the baseline. Each column indicates where the income growth is taking place. The first column of the table shows the effects on consumption in 2008 from greater income growth only in the subset of OECD member countries modelled in the Secretariat’s Aglink model. The second column shows the consumption effects of a 10% increase in the GDP growth rate for non-member Economies (also modelled in Aglink), while the last column shows the effects on consumption from a 10% increase in the GDP growth rate for all modelled countries. The top portion of the table shows the effects on consumption for the modelled OECD countries, while the bottom half shows the change in consumption in all non-member Economies, when compared to baseline results. The results suggest that the effects on consumption are relatively small, even when incomes in all modelled countries expand. Furthermore, even though the effects are miniscule, consumption for some commodities contract. When additional income growth accrues only to OECD member countries, (column 1) consumption in all modelled OECD countries expands modestly relative to the baseline for most products other than rice, butter and SMP. The change in the consumption of rice, butter and SMP is close to zero but slightly negative. The relatively low milk supply elasticity and the production relationship among the various dairy products may explain this. Higher income leads to changes in the relative demand for the various dairy products. A major input in the production of the different dairy products is milk. Given the low milk supply response in many OECD countries, additional demand for one product can be satisfied by lowering the supply of another. But, technical requirements provide a limit on how much of the product can be shifted. In this case, milk is shifted to producing relatively more cheese and WMP leaving less available for butter and SMP. The slightly negative consumption effects for rice suggest that it may be an inferior good in some OECD countries. This is the case in Korea, Japan and the EU and the decline in these countries dominate. Interestingly, the impact on the non-member Economies is also not very large. Reading down the first column, in the bottom part of the table, consumption by the non-member Economies is little affected by the larger income growth rate of the OECD countries. As expected, higher world prices that result from this experiment lead to lower consumption by the non-member Economies, but the magnitude is insignificant. When additional income growth occurs in non-member Economies, (column 2, bottom half of table) consumption, as expected, expands. In contrast to the previous case, when incomes increase in all NMEs, consumption of all modelled commodities expands. The relative impact of the various products however differs. Looking at the bottom half of the table, pork consumption expands the most, followed by consumption of vegetable oil and beef and veal, products with relatively high income elasticities in these countries. The impact on consumption in the OECD area, top half of the table, column 2, is mostly negative but minuscule. The relative changes in world prices relative to the baseline are small enough so that consumption is little affected. The last column again suggests that the impacts are additive. Additional income leads to additional consumption, which results to higher world prices. When the additional income accrues only to OECD economies, the world price increase for most products is 1% or less. Column 1 suggests that when additional GDP growth is only in the OECD economies, the world price of beef and pork respond the most. The world prices of animal-feeds, coarse grains and oilmeals, also increase relatively more than other products. This may seem counter intuitive as one would expect the higher valued products with higher income elasticities (dairy) to increase more. Because of the complex interactions, it is difficult to isolate the reasoning but the results are most likely due to increased feed demand from larger demand for meat products (beef and veal and pork) and to a lesser extent from dairy products. When the increase in income is only in the non-member Economies, world prices also increase, but the commodities experiencing the larger price response differ from those in column 1. In this case, column 2 indicates that the world prices of fats (butter and vegetable oil) increase the most, and in contrast to the first scenario, the changes in the world prices of most commodities are more substantial.

© OECD 2003

27

Box 1.

Se nsitivity analysis: e ffe cts of change s in income growth (cont.)

Column 3 shows the results on world prices when the income growth rate is augmented by 10% in each modelled economy. In this case, the results suggest that the effects are mostly the sum of the previous scenarios. There does not appear to be synergistic or countervailing effects. Table 2. 10% shock on GDP growth rate : Effe cts on world marke t price s % change in 2008 Baseline level 2008

OECD1

Non-member Economies2

All3

Wheat Coarse grains Rice Oilseeds Oilseed meal Vegetable oil

144.7 109.6 256.3 243.5 164.1 558.5

1.1 1.9 0.4 1.0 1.8 0.6

1.4 1.6 0.8 1.4 0.0 5.3

2.5 3.5 1.2 2.4 1.8 5.9

Beef Pork Butter Cheese SMP WMP

257.7 128.7 137.4 199.1 170.5 178.9

3.4 2.1 0.5 0.4 0.5 0.2

0.2 0.4 7.8 1.8 1.2 3.2

3.6 2.5 8.4 2.2 1.7 3.4

1. Modelled OECD countries are Australia, Canada, EU, Hungary, Japan, South Korea, Mexico, New Zealand, Poland and USA. 2. Modelled non-member Economies are Argentina, Grazil, China, Russia and Rest of the world. 3. All modelled countries OECD and non-member Economies mentioned under 1 and 2. Source: OECD.

In conclusion, this sensitivity analysis confirms that market outcomes are affected by changes in income growth rates. The impacts differ considerably between commodities and depending on where the income shock took place. Meat and associated feed demand is relatively more affected when higher income growth rates prevail in OECD countries. But, when stronger growth is taking place in the non-member Economies, demand and world prices for dairy products is relatively more affected. The results also indicate the importance of policy instruments. This becomes more apparent in the case of the dairy market results when milk supply response is restricted in the presence of production quotas in many countries. Combined with relatively strong income elasticities for certain dairy products (e.g. cheese and WMP), less milk is available for other products and consumption of butter and SMP fall, despite higher incomes.

Policy developments and assumptions Agricultural policy assumptions used in the Outlook are based on measures in place or announced within well-defined programmes. The projections therefore, assume a continuation of current agricultural and trade policies except when new policies have been announced for implementation at a future date which is within the Outlook period. The following section provides a brief overview of major policy developments in OECD countries of importance to the Outlook. (For more details see: Agricultural Policies in OECD Countries: Monitoring and Evaluation 2003.) 28

© OECD 2003

New US Farm Act came into effect New farm Act tends to shift support to more distorting forms…

On the domestic front, an important change took place in US agricultural po licy as a result of The F arm Security and Ru ral Investment Act of 2002 (2002 Farm Act) which was signed into law in May 2002 and will apply until 2007. The 2002 Farm Act contains many titles. The brief summary here focuses on major programmes of title I (Commodity Programs) plus selected provisions in title III (Trade). The 2002 Farm Act continues the marketing assistance loan program for cereals, oilseeds and upland cotton and extends the coverage to peanuts, wool, mohair, dry peas, lentils and small chickpeas. Loan rates specific for each commodity are set for each year of the Act’s life. Direct payments to farmers are provided under Direct Payment for Crops (DPC), and CounterCyclical Payments (CCP). DPC payments are based on pre-determined rates and past production while CCP payments are based on current prices and past production. The 2002 Farm Act permits the updating of base acres used for determining direct and counter-cyclical payments. Farmers are given great latitude in deciding which crops to plant. Payment limitations are established at USD 40 000 per person per crop year for direct payments and USD 65 000 per person per crop year for countercyclical payments. The payment limitation on marketing loan gains and loan deficiency payments is USD 75 000 per person per crop year. Under the three entity rule, the maximum payment that an individual can receive is USD 360 000 per year. (Westcott et al.). A tariff-rate quota, together with provisions for non-recourse loans supports sugar. Milk and dairy products are supported by minimum prices with government purchases of butter, SMP and cheddar cheese, and a payment per ton of milk marketed, as well as by tariffs, tariff-rate quotas and export subsidies. The 2002 Farm Act also contains provisions concerning product labelling requirements and organic production.

… but at the start of the Outlook, support provided by US programs remain below OECD average

The 2002 Farm Act continues and modifies agricultural export programmes designed to develop and expand commercial outlets. It reauthorises the Export Enhancement Program although limited use has been made in recent years. The trade provisions of the 2002 Farm Act are not expected to greatly alter trade flows for agricultural commodities. But, programmes continue to operate. In 2002, the total value of export credit guarantees under the Export Credit Guarantee Program increased by 5% to USD 3.4 billion. Foreign food aid however, decreased by about 26% in volume and by 8% in value to USD 1.5 billion. Overall, for 2002, the US pro vided mor e than US D 39 billion (€ 41.9 billion) to support agriculture a drop of more than USD 12 billion from the 2001 level. US agricultural policies are estimated to have provided an implicit subsidy for consumers of USD 6.8 billion (€ 7.3 billion). This is in contrast to most of the other OECD countries that on average tax their consumers. The new Act is incorporated into this year’s baseline. An analysis was undertaken by the Secretariat to determine the effects of the new Act by comparing the results assuming continuation of the 1996 FAIR Act. That analysis is reported in greater detail in Box 3.

© OECD 2003

29

EU support shifting toward increased market orientation EU support has moved towards more market orientation…

In the EU, market price support and area and headage payments are the main policy instruments. Market price supports, where applied, are provided through institutional prices, export subsidies, tariffs, and tariffrate quotas, and is often combined with production quotas or land setaside. But, there are no intervention prices for oilseeds and protein crops, livestock products and certain cereals. Area payments for oilseeds were reduced in order to align them with payments for cereals and set-aside land. In July 2002, the Commission put forward proposals for CAP reform in a communication to the Council and the European Parliament. A legal text containing revised proposals on “A long-term perspective for sustainable agriculture (previously called “Mid-Term Review”) was released at the end of January 2003. The Council will discuss them in the course of 2003. The proposal calls for decoupling of payments from production and shifting funding towards environment and rural development programs. The new EU food law agreed in 2001 came into force. It combines and clarifies existing requirements set out in seventeen separate Directives. Among other modifications, the “rapid alert system” for notification of food risks was revised and now includes contamination in animal feed. A new European Food Safety Authority was created, and a Hazard Analysis Critical Control Point system was adopted as a means to identify points in the production chain where control is critical for food safety. All food of animal origin will bear an identification mark of approval from an identified food business operator and all meat carcasses will bear a mark confirming the approval of official veterinary services.

… despite the introduction of new tariff rate quotas for low quality wheat

The total amount spent by the EU on export subsidies in 2002 is estimated to have been close to € 3 billion (USD 2.8 billion). On market access, tariff quotas on a number of products were under-utilised. A new import quota regime for wheat of low and medium quality was introduced in January 2003. The level of the import quota was set at 2 981 million tonnes. Most of the quota (2 371 million tonnes can be sourced from any country, 572 000 are allocated to the US and 38 000 are allocated to Canada. For imports within the quota a tariff rate of € 12/tonne (USD 11/tonne) will apply while imports that exceed the quota will be assessed a rate of € 95/tonne (90/tonne). A global tariff-quota for barley for 300 000 tonnes was also established with an in-quota tariff of € 16/tonne (USD 15/tonne). A separate tariff quota of 50 000 tonnes was established for malting barley with an in-quota tariff rate of € 8/tonne (USD 7.5/tonne). The tariff rate on imports exceeding the quota is set at € 93/tonne (USD 88/tonne). The TRQs on cereals other than low quality wheat and barley that were in place continue. Overall, agricultural policy developments in the EU are characterised by a modest improvement in market orientation, although the total level of support by over € 8.7 billion in 2002 to € 107 billion (USD 101 billion). The implicit tax on consumers is estimated at € 52.7 billion (USD 49.6 billion) in 2002, an increase of € 6.6 billion (USD 8.3 billion) from 2001.

30

© OECD 2003

Japan’s support remains high In Japan, support is primarily provided through administered prices, border measures and supply management regimes. The Agricultural and Livestock Industries Corporation, a state-trading agency, operates price stabilisation schemes for beef and pigmeat. Tariff-rate quotas are utilised to control the imports of rice, barley, wheat and some dairy products (butter, SMP and other dairy products). Supply controls include quotas on milk production and the diversion of land from rice to other crops. Because of the BSE found in domestic cows and several other food safety problems, the government decided to create a Food Safety Commission and to reorganise the Ministry of Agriculture, Forestry and Fisheries in order to implement significant reforms to improve the country’s food safety administration. The new Commission will be established in 2003 along with a new bureau for risk management. In December 2002 the government also announced a plan to improve the special and preferential tariff treatment for least-developed countries. The plan, to be implemented as of April 2003 will provide duty-free and quota-free access to almost all agricultural and fishery products originating from the least-developed countries. Market orientation in Japan remains limited

Overall, Japanese agriculture is characterised by high support levels and limited market orientation. The policies pursued by the Japanese government are estimated to have provided almost USD 44 billion (€ 46.6 billion) of support to Japanese farmers. The share of receipts provided by government policies has not changed very much since the late 1980’s. The limited market orientation is illustrated by the fact that about 90% of the support provided to agricultural producers is through market price support, and this share has not changed in the last 12 years. The large share of market price support is reflected in costs (implicit tax) imposed on consumers. Estimates for 2002 imply that Japanese consumers spent almost USD 54 billion (€ 57 billion) above world price levels. Several other countries also proposed or began implementation of agricultural packages encompassing a broad range of policy issues. Canada’s Agriculture Policy Framework was signed by Federal and Provincial agricultural ministers in 2002 and contains five pillars of environment, food safety, sector renewal, science and innovation, and business risk-management. In November 2002, Mexico announced a new framework titled Actions of Agro-Food and Fisheries Policies for Strengthening the Sector. This package contains new crop payments, legislation on quality and labelling, inspections and certification to strengthen food safety and health, and a restructuring of the rural financial sector. Korea introduced a Direct Payment Scheme for Rice Income Stabilisation, which covers 80% of the participating farmers’ income loss if market prices fall below the five-year average calculated by excluding the highest and the lowest price.

Total support increased slightly Overall, OECD member countries are estimated to have provided more than USD 318 billion in total support to agricultural producers, 1.2% of OECD GDP in 2002. This is about USD 13 billion more than was provided in 2001. Of the total estimate, the Producer Support Estimate (PSE) was almost USD 235

© OECD 2003

31

billion leading to an average percentage PSE of 31%. This overall average is estimated to be similar to the value for 2001 and has changed very little over the last four years. However, the average has fallen relative to the 1986 to 1988 average of 38%. The share of output based support (market price support and output payments) and input subsidies, remained relatively stable at 76% in 2002. These measures are among the most production and trade distorting, and are the least effective in transferring income to farmers. Conversely, consumers in OECD countries were implicitly taxed about USD 137 billion (€ 146 billion) representing a % CSE of 24%. This value has declined significantly relative to the average value of 33% for the 1986 to 1988 period as market price supports have become relatively less important.

Most support provided to milk and beef Looking to which commodities are the most protected, the 2002 estimates suggest that although total support provided to milk did not change materially relative to 2001, milk continues to be the most protected commodity, with OECD governments providing more than USD 41 billion (€ 43.6 billion) to milk producers. The second most supported commodity with almost USD 31 billion (€ 33 billion) of support is beef and veal while rice, with almost USD 23 billion (€ 24 billion) is in third place. As a share of producer receipts however, rice, with a % PSE of 80%, is by far the most supported commodity. Milk and sugar, with government payments representing almost half of producer receipts (% PSE of 48%) are also very dependent upon government programmes. In contrast to rice however, government support for milk and sugar as suggested by the PSE has declined over the last decade. The average % PSE in 1986 to 1988 for milk declined from 59% to 46% average for the 2000 to 2002 period while that for sugar declined from 54% to 47% during the same period. The % PSE for rice during the 2000 to 2002 period was 81%, unchanged from the 1986 to 1988 period. Although many OECD countries have moved toward providing support to their producers that is less distorting than market price support, support levels are still relatively high and in some countries and markets, price transmission is muted. This reduces the ability of market signals to indicate optimal resource allocation and it reduces consumer welfare. For the Outlook, production for many products in some countries is greater than it would have been otherwise while consumption is lower.

Proposed modalities for concluding the Doha Development Agenda Another development that is expected to have a long-term impact on world agricultural markets is the discussion currently underway at the WTO as countries try to conclude the Doha Development Agenda. The deadline for agreeing on the modalities (targets and rules to achieve the objectives set out in the Doha Ministerial Declaration) for the three pillars – market access, export competition, and domestic support – at the end of March 2003 was missed. Since discussions are still underway as this report is 32

© OECD 2003

written and no decisions have been made, potential agreement on reforms is not part of the Outlook. The Chairman of the Committee for Agriculture in the WTO, Stuart Harbinson, circulated a first draft followed by a revised draft on 18 March that could be used to increase market access through reducing tariffs and expanding tariff rate quotas; reduce and eventually eliminate export subsidies, place disciplines on export credits, and food aid; and reduce expenditures on trade distorting domestic support policies. The proposed modalities continue the URAA practice of providing special and differential treatment for developing countries. In addition to pursuing multilateral discussions for a new agreement at the WTO, many countries are pursuing regional and other preferential trading arrangements that can also impact world agricultural markets. The vast majority of WTO members are party to one or more regional trade agreements. The surge in RTAs has continued unabated since the early 1990s. Some 250 RTAs have been notified to the GATT/WTO up to December 2002, of which 130 were notified after January 1995. Over 170 RTAs are currently in force; an additional 70 are estimated to be operational although not yet notified. By the end of 2005, if RTAs reportedly planned or already under negotiation are concluded the total number of RTAs in force might well approach 300. To mention just a few examples, ten new countries will join the EU starting in 2004 making it an EU of 25 countries. The impact of this is not included in the Outlook projections although an assessment of EU accession by the European Commission is summarised below. In North America the US and other countries continue discussions on forming a Free Trade Area for the Americas while also pursuing bilateral deals such as the one between the United States and Chile. The United States and Australia are also discussing the possibility of a free trade agreement between them and China and ASEAN countries are also pursuing talks. In addition, the EU struck a free trade deal with Chile which will fully liberalise 90% of trade in farm products between the two parties within 10 to 12 years following ratification while Norway and the EU agreed to further liberalise farm trade as of July 2003. In the context of the European Agreements the EU is granting duty free concessions to Bulgaria and Romania. It is still an open question whether regionalism and preferential arrangements help or hinder the multilateral system. What it means for the Outlook

© OECD 2003

The medium term projections that are analysed in the Agricultural Outlook rest on a large number of assumed developments. This section has focussed on those regarding future macro economic trends and the setting and possible developments in domestic and trade policies. The economic outlook is far from certain, and if a weaker context than that assumed for the outlook would prevail, this would be reflected in market developments. Markets for commodities with relatively high income elasticities and in particular in non-member Economies would be more affected. In general, however, as food is a prime necessity, the impacts of changes in income growth should not be over estimated. Large swings in exchange rates are probably of more importance, in particular for developments in individual countries and changes in market shares.

33

Current policies and changes therein are of major importance in determining market outcomes over the medium term. While some OECD countries have reduced support to agriculture, in the majority of countries and for certain commodities in particular, support levels remain very high. In addition, most of support continues to be provided in their most distorting form. This means that market shocks, as such resulting from changes in macro economic conditions, take more time to work their way through the system as producers in many countries do not, or only partly, react to the world market developments they provoke. With respect to the policy context, the outcome of the current trade negotiations under the Doha Development Agenda will be important in determining future market trends. Further reform of market distorting trade policies will affect market outcomes in particular if they are linked with coherent reform in domestic policies.

Note Paul C. Westcott, C. Edward Young, and J. Michael Price, “The 2002 Farm Act: Provisions and implications for Commodity Markets” USDA, ERS, Agricultural Information Bulletin No. 778, November 2002.

34

© OECD 2003

CEREALS*

Main projections – outlook in brief • Lower world cereal prices are projected over the Outlook following 5-year highs in 2002. Although prices are expected to remain well above the low levels observed in the years immediately prior to 2002 due to low stock levels, they are not projected to strengthen significantly over the period as faster growth in global production than consumption allows for a gradual rebuild of wheat and coarse grain stocks. In real terms, world wheat and maize prices are expected to remain largely unchanged after 2003. • Large stocks of rice, particularly in China, have kept international rice prices at relatively low levels even though demand has exceeded supply for several years in a row. As global production catches up to consumption only after 2006, rice prices rise more strongly in the medium term compared to prices of other grains. In real terms, rice prices are projected to rise by almost 4% per year over the projection period. • After the recent area and yield reductions due to drought and economic upheavals in some countries, world grain production is expected to continue its long-term growth. Compared to 2002, global wheat and coarse grain production will each increase by 15% by 2008. Output growth will be significantly stronger within the OECD than in non-member Economies, in effect catching up from the recent lows. As in the past, most of the additional grain output is expected from increased yields as area expansion is limited. Global rice production should grow by 13% over the period to 2008, with most of it occurring after 2005. Little growth in rice production is projected within the OECD. • World consumption of wheat and coarse grains expand by 11% and 10%, respectively, between 2002 and 2008, while rice use increases by 7%. Despite lower production over several years and rising prices, rice consumption growth continues largely unchanged, leading to some draw down in initially large stocks. The majority of additional demand for wheat, coarse grains and rice over the Outlook, representing 78%, 67% and 99% respectively, is projected to come from non-member Economies. • Global wheat and coarse grains stocks are expected to increase by 7% and 9% and to reach 231

and 153 million tonnes, respectively, by 2008. Rice stocks are projected to decline a further 17%, bottoming-out by 2007.

* All crop data are provided on a marketing year basis.

© OECD 2003

35

World market trends and prospects

36

Current market prices unusually high…

Current wheat and coarse grain markets are significantly influenced by extraordinarily low harvests in a number of major producing areas. Droughts in North America and Australia, together with the economic disturbances in Latin America, have resulted in the fifth year in a row of declining global wheat crops (see Box 2). Coarse grain production also significantly declined from the preceding year. At the same time, with consumption hardly being reduced, global stocks have been reduced by another 29 and 33 million tonnes, respectively, with coarse grain stocks at their lowest level since 1983. Consequently, international wheat and coarse grain prices increased significantly, with quotations for the standard US Hard Red Winter wheat peaking at more than 197 USD/t in October 2002 (IGC). Even though prices have since declined significantly, average wheat and maize prices for the crop year 2002 are estimated to be much higher than those in 2001. With increased grain exports from the Black Sea region, Europe faced prices well below those given by the US trade in 2002. The high US prices are not expected to be maintained over the projection period, but they should, nevertheless, be well above the levels observed in the years immediately prior to 2002. At the same time, it is assumed that the gap between US and Black Sea prices will not be maintained over the projection period.

… but long-term trends not substantially changed

Except for the lower stocks, however, the fundamentals in world grain markets have not significantly changed. Consistent with the usual assumption of normal weather, crop productivity is likely to increase throughout the period at a relatively strong pace. At the same time, food consumption of cereals increases only moderately due to a declining rate of population growth and, with increasing incomes, some shift of preferences away from staple cereals to higher value added cereal products. Prices for wheat and coarse grains in 2003 and beyond are therefore expected to be significantly lower than in 2002, though still well above their 2001 levels. The return of prices to more moderate levels is enforced by strong supply response to current high prices. With global production growing faster than consumption, world cereal prices are expected to rise only moderately from 2003 to 2008. Neither wheat nor maize prices are expected to reach their 2002 levels again within the projection period (see Figure 5).

Feed use in developing countries drives markets

The main growth driver for cereal demand continues to be feed use by the livestock industry, which is expected to grow particularly rapidly in the developing world. With non-ruminant meat production in China, Latin America and other parts of the world quickly expanding, feed use of wheat and particularly coarse grains in non-member Economies keeps rising. Coarse grain use for feed in the NMEs is projected to increase by 20% by 2008, compared to 2002. Feed use of wheat in these countries is projected to grow less rapidly at 14%, based on a significantly smaller quantity. These numbers compare to growth in food consumption of cereals which is hardly above population growth rates outside the OECD. Still almost two-thirds of global wheat consumption continues to disappear as direct food use in non-member Economies.

© OECD 2003

Figure 5. World grain price s slowly rise afte r 2003 240

200 USD/tonne

400 USD/tonne

USD/tonne

Ricec

Maizeb

Wheata 180

150

300

120

100

200

60 1984

1988

1992

1996

2000

2004

2008

50 1984

1988

1992

1996

2000

2004

2008

100 1984

1988

1992

1996

2000

2004

2008

a) No. 2 hard red winter, ordinary protein, wheat, USA, f.o.b. Gulf Ports. b) No. 2 yellow corn, USA, f.o.b., Gulf Ports. c) Milled, grade b rice, f.o.b. Thailand. Source: OECD Secretariat.

World wheat and coarse grains stocks to recover

Together with increased global production, world stocks of wheat and coarse grains are projected to recover from their current lows and to increase by 7% and 9%, respectively. Most of the new stocks would be held in North America and, to a lesser extent, Australia, where they were significantly affected by the recent low harvests. Wheat and coarse grain stocks in China, on the other hand, are projected to decline over the outlook period, even though at lower rates than those observed in the recent past. Excess supplies lead to additional stocks in Brazil and Russia.

Rice markets marked by large stocks

Despite global rice production being significantly lower than consumption in 2002, international market prices have not shown any significant increases yet. Thai rice prices have shown some increases in early 2003, but clear trends have been missing. As production is projected to fall short of consumption until 2006, however, world rice prices are expected to rise more significantly than those for other grains, with an increase of 34% projected between 2002 and 2008, in nominal terms. Even in real terms, rice prices are expected to increase considerably (see Figure 6).

OECD recovers from recent drought

OECD grain market projections are strongly influenced by the recent droughts in Australia, Canada and the United States. Production in 2002 in these countries has been far below the levels observed in previous years. However, as domestic use of cereals generally has responded only to a limited extent, both cereal stocks and trade from these major exporters have been reduced significantly. Production in these countries is expected to recover by 2003, but exports in many cases will increase to previous levels only with some delay as supplies will first be used to rebuild stocks.

EU subsidised exports continue for some coarse grains…

Despite slight increases in world prices, and lower support prices following the Agenda 2000 reforms, the European Union is not expected to export significant quantities of feed grains without subsidies. While malting barley exports should remain unsubsidised, and food aid quantities assumed to

© OECD 2003

37

Figure 6. Re al price s hardly change afte r 2003 for whe at and maize , but incre ase for rice 250

300 Million tonnes

USD/tonne

Whe at

Real world wheat pricea 250

200

200 150 150 100 100 50

50

0

0 1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

300

250 Million tonnes

USD/tonne

Coarse grains

250

Real world maize priceb

200

200 150 150 100 100 50

50

0

0 1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008 500

160 Million tonnes Real world rice pricec

140

USD/tonne

Rice

400 120 100

300

80 200

60 40

100 20 0

0 1984

1986

1988

1990

1992

Non-OECD area stocks

1994

1996

1998

2000

2002

2004

2006

2008

OECD area stocks

Note: All prices deflated to 2002 USD using the US GDP deflator. a) No. 2 hard red winter, ordinary protein, wheat, USA, f.o.b. Gulf Ports. b) No. 2 yellow corn, USA, f.o.b., Gulf Ports. c) Milled, grade b rice, f.o.b. Thailand. Source: OECD Secretariat.

38

© OECD 2003

Figure 7.

EU e xports whe at without subsidie s, but fe e d grains e xports re ly on re funds

200

24 000 Euro/t

Total EU wheat exports Export subsidy limit

160

EU price

200

Thousand tonnes

Whe at

24 000 Euro/t

20 500

Total EU coarse grains exports Export subsidy limit

160 EU price

World price

120

17 000

Thousand tonnes

Coarse grains

16 000

World price

120

20 000

12 000 80

40 1994

1996

1998

2000

2002

2004

2006

2008

13 500

80

10 000

40

8 000

4 000 1994

1996

1998

2000

2002

2004

2006

2008

Notes: World price s: From 1993 to 2001 historical prices FOB Rouen, calculated as simple averages of monthly prices. From 2002 to 2007, projection values are Aglink world market prices for wheat and coarse grains, adjusted for quality differences, expressed in Euro per tonne. For 2002, lower wheat prices from the Black Sea region taken into account. EU price s: Adjusted Aglink domestic producer prices for wheat and barley, taking into account domestic transport costs. In addition, corrections reflect that producer prices are average prices of soft and durum wheat, and of feed and malting barley, respectively, expressed in Euro per tonne. Source: IGC and OECD Secretariat.

… but not for wheat and malting barley

EU rice policy becomes unsustainable as stocks grow substantially

© OECD 2003

remain flat, exports of both rye and feed barley depend on export refunds. Total coarse grain exports are therefore not expected to reach the high levels observed in the 1999 to 2002 period, within the next few years. Declining areas under production particularly for barley, however, helps to prevent accumulation of large intervention stocks of coarse grains, which are projected to be about as large in 2008 as in 2002. In contrast, as world prices are sufficiently high, export subsidies are not expected to be necessary for large parts of EU wheat exports, which should exceed 19 million tonnes by 2008 and thus eliminate any need for longer-term intervention stocks (see Figure 7). The European rice policy is projected to become unsustainable in the near future. The reduction of import tariffs for significant amounts of rice originating in some of the least developed countries in Asia and Africa, following the signature of the Everything But Arms (EBA) initiative, the EU is expected to direct an increasing share of domestic production into intervention stocks. The market projections, which are based on a continuation of the policy stated in the Berlin Agreement of 1999 (Agenda 2000), show a steep increase in both rice imports and stocks after 2006. By 2008, one year before the EBA induced tariff reductions are scheduled to be complete, imports would reach 1.4 million tonnes, almost 70% of domestic consumption. Because domestic use is expected to respond little even to the sharply lower prices and producers are shielded from price falls (therefore keep slowly increasing both area and yields), about half the 2008 production would go into stocks which are projected to reach 1.8 million tonnes, three times the current level.

39

Australia production and exports to rebound

Australian wheat and coarse grain exports are projected to rebound after their current drought-induced declines. A large part of this sharp recovery occurs in 2003, when yields come back to trend levels. With domestic use largely stagnating, increasing barley and oats yields allow for a 4% p.a. growth in coarse grain exports between 2003 and 2008 despite declining areas. The area is projected to be shifted to wheat, and together with steady but slow yield progress, would allow wheat exports to exceed 16 million tonnes in 2008.

As Japan’s grain markets mature, imports fall

With Japan’s population size estimated to reach its maximum in 2004, grain consumption in this country is projected to fall over the outlook period. As Japanese livestock production is projected to be largely unchanged, both wheat and coarse grain use for feed are expected to continue their gradual decline which is not offset by some shift from rice to wheat-based, westernstyle food. Wheat imports should therefore continue to fall gradually, so that the Japanese tariff rate quota remains to be under-filled slightly, while coarse grain imports are projected to remain flat after recovering from the 2002 decline. Rice consumption is expected to continue its downward trend. Together with some growth in production due to productivity gains (assuming unchanged area under the rice land diversion programme), this should cause imports to decline by almost one-fifth over the Outlook period and to just under-fill the TRQ for rice.

Exports by Brazil and Argentina grow, but at a slower pace

The expansion of harvested area, in addition to yield growth, allows Brazil and Argentina to significantly increase their cereal production. Even though most of the new crop land goes to oilseed production in Brazil (see the Oilseed chapter for details), Argentina and Brazil are expected to extend their cereal area by 4% and 6% over the Outlook period, respectively, giving rise to additional production of 21 million tonnes. While domestic use of cereals in these countries increases as well, there is considerable scope for rising exports of maize from Brazil, and particularly wheat from Argentina.

China’s grain TRQs not filled, despite rising imports

With almost 20% of global wheat, coarse grain and rice production and consumption, China has become a member of the WTO in 2002. With increasing tariff rate quotas for wheat, maize and rice (among other commodities) and a decreasing role of government-run trade enterprises, the country has taken steps to potentially open-up domestic markets for significant grain imports. Within the projection period, China is not foreseen to fill the quotas, however. Nonetheless, this vast market is expected to more than quintuple its wheat imports and to almost triple coarse grain imports. By 2008, China is projected to be a significant net importer of both wheat and coarse grains, although the role of imports remains small compared to the dominant share of consumption drawn from domestic production. Rice imports are also projected to increase significantly in relative terms, but at low levels, and the country should remain an important net exporter of rice due to slowly declining consumption.

Increased livestock production to boost feed use in Russia

With pork and poultry production increasing by 11% and 54%, respectively, the Russian livestock industry is projected to absorb large quantities of feed grains. Particularly wheat use for feed is set to expand significantly, as the lower-quality supplies may become more difficult to sell

40

© OECD 2003

Figure 8.

Growing ne t ce re al imports of non-me mbe r Economie s 150

1 400 Million tonnes

Million tonnes

Consumption Production

1 300

Net import (right scale) 1 200 100 1 100

1 000 50 900

800

0

700 1994

1996

1998

2000

2002

2004

2006

2008

Note: Cereals compose: wheat, coarse grains and rice. Source: OECD Secretariat.

on international markets. Coarse grains feed use should increase less rapidly between 2002 and 2008. With further small increases in food consumption, and yield growth limited by a shortage in capital and other inputs, current levels of grain exports are unlikely to be maintained. Net wheat exports are expected to decline by 3.4 million tonnes or 54%, while the current coarse grain surplus should disappear altogether. Increasing OECD exports to NMEs…

… except for rice

© OECD 2003

Global trade in cereals is projected to increase. While non-member Economies have gained increased shares in wheat exports over the last two decades, and particularly in the recent past following lower harvests in the OECD, NME wheat exports should not change much in the next years. Meanwhile, trade from major OECD exporters should recover from its current low quantities. As virtually all of the additional wheat trade would go to NMEs, the net exports from OECD countries to other regions are projected to increase substantially. In contrast, NME exports of coarse grains are projected to decline only slightly in favour of larger OECD exports. World trade in coarse grains should continue to increase at a moderate pace, while net OECD exports of coarse grains are expected to more than double between 2002 and 2008. Growth in rice trade is projected to slow down as consumption grows at a slower pace. With the opening of EU rice markets to the least developed countries, and subsequent large imports to the EU, the OECD net rice exports are projected to drop significantly after 2006 (see Figure 8).

41

Box 2.

Arge ntina: Marke t implications of the e conomic crisis

Introduction The financial and economic crisis in Argentina, starting with the float of the Argentinean Peso early last year, has brought about considerable changes in the overall economy of the country. Not only has the exchange rate to the US dollar more than tripled and is expected by the World Bank to further depreciate, but other macroeconomic indicators show significant changes as well. This box provides an analysis of the changes both in the macroeconomic environment and the agricultural markets of Argentina, based on the OECD Agricultural Outlooks of 2002 (which essentially excluded these developments) and 2003 (which takes them into account). Even though not all changes in the most recent developments and in the projections can be attributed to the economic shock and continuing macro disturbances, an examination of the differences in these projections, which are largely driven by Argentina’s market expectations, may help to understand the market implications in a qualitative way. This may be superior to an analysis based on simulations with models which generally are suited for small shocks only, such as the Aglink model. Figure 9.

De ve lopme nt of the Arge ntine an e xchange rate in 2002

4.00 3.50 3.00 2.50 2.00 1.50

Source:

03

00

20

2

1. 1.

00

.2 12

11

.2

.2 10

1.

1.

00

2

2

02 1.

02

20 9. 1.

02

20 8. 1.

20

02

7. 1.

02

20 6. 1.

5.

20

02 1.

4.

20

02 1.

3.

20

02 1.

20 2. 1.

1.

1.

20

02

1.00

Data from Bank of Canada (2003).

The macroeconomic environment As can be seen from Figure 9, the exchange rate of the Argentinean Peso, which used to be fixed to the US dollar at a rate of 1:1 until early 2002, rapidly depreciated to more than 3.5 Pesos/USD before levelling of in the second half of the year 2002. In fact, the 2003 Outlook assumes a further devaluation to 5.9 Pesos/USD by 2008, based on the latest World Bank projections. At the same time, other macroeconomic indicators are significantly affected as well. Not only does inflation rise with the depreciating currency, but economic growth is expected to suffer significantly as well (see Figure 10). Figure 10.

Main macroe conomic assumptions for Arge ntina in the OECD Agricultural Outlooks 2002 and 2003

3.0 2.5 2.0

6

1.5 Consume r price inde x 1995 = 1

1.3

GDP inde x 1995 = 1 Outlook 2002

5 4

Outlook 2003

1.1 0.9

1.0

42

2

Outlook 2003

0.5

Source:

Outlook 2003

3

1.5

0 1990

Exchange rate (ARS/USD)

0.7

Outlook 2002

1996

2002

2008

0.5 1990

1

1996

2002

2008

0 1990

Outlook 2002 1996

2002

2008

OECD Secretariat.

© OECD 2003

Box 2.

Arge ntina: Marke t implications of the e conomic crisis (cont.)

Changes in the projections for Argentinean markets To evaluate the implications of these major economic turbulences, model simulations, though seeming straightforward at first glance, cannot give reliable answers. Even though the Aglink model takes into account changes in production costs that are projected to increase significantly due to depreciating exchange rates, the model cannot be expected to properly respond to a reduction of the real exchange rate of more than 60%. The projections made last year and published in the 2002 edition of the OECD Agricultural Outlook, and the current baseline, are largely driven by Argentina’s market expectations. A comparison between these projections might therefore be expected to give some useful insight as to the likely agricultural market impacts of the large macro changes. It should be clear, however, that some differences are caused by other factors as well, including differences in international price projections when country results are combined in making a consistent set of world and OECD wide projections. The analysis presented in this box should therefore not be taken as a complete economic analysis of sectoral adjustments resulting from large macro economic shocks.

Crops Grain production in 2001 (i.e. before the devaluation) has generally been revised downwards. Nonetheless, the current baseline projections for a similar period of 2002 to 2007 significantly exceed those published last year under a context of stable macroeconomic projections. Wheat, coarse grains and oilseed production has shifted upwards by between 7% and 20% in the current baseline, relative to last year’s, with larger increases for oilseeds and coarse grains than for wheat, and a comparatively stronger shock in 2002 than thereafter (see Figure 11). This may partly be attributed to higher international grain and oilseed prices, but the magnitude of the shift indicates that the higher domestic prices due to the weaker exchange rate are only partly offset by increased production costs (through inflation), which would increase in nominal terms in line with the ongoing depreciation of the Peso for tradable inputs, and depending on inflation for non-tradable ones. Clearly, both output price and input cost changes matter, with a final effect of increased net returns that boost domestic crop supply. Figure 11. Arge ntine an crop production: Historical de ve lopme nt and proje ctions in the OECD Agricultural Outlooks 2002-2007 and 2003-2008 (million tonne s) 25

35 Million tonnes

30

Whe at

20

45 Million tonnes

25

Outlook 2003 15

40

Coarse grains

35

Outlook 2003

30

20

Outlook 2002

Outlook 2002

Outlook 2003 Outlook 2002

20 15

10

10

5

5

0 1990 Source:

Oilse e ds

25

15

10

Million tonnes

1996

2002

2008

0 1990

5 1996

2002

2008

0 1990

1996

2002

2008

OECD Secretariat.

Due to the deterioration in income and higher meat prices for consumers, however, consumption of the basic foodstuffs grains is also projected to rise above the levels foreseen in last year’s Outlook. Therefore, the scope for an increase in grain exports is lower than suggested by the boost in cereal production.

© OECD 2003

43

Box 2.

Arge ntina: Marke t implications of the e conomic crisis (cont.)

Livestock Meat production is affected by several factors related to the economic situation in Argentina, as well as by other external forces. Higher output prices in domestic currency terms following the devaluation are offset to some extent by increased feed prices in terms of the profitability of livestock production, particularly for nonruminant meats. Beef and milk production from pasture additionally face competition against increased profitability of crop production that tends to expand by reducing the amount of pasture land. Declining domestic demand for higher-value processed products due to lower purchasing power of domestic consumers following the devaluation additionally puts pressure on livestock producers in terms of lower demand. Increased competition with Brazil, whose meat exports have also become more competitive due to the devaluation of the Real, reduces some of Argentina’s advantage in international markets in terms of a weaker currency. Finally, beef production is also on the path to recovery from the recent outbreak of the food and mouth disease (FMD), although little change is foreseen for the size of the cattle herd and most of the projected increase in beef meat supply would come from increased animal weights. Overall, livestock production, and particularly poultry and pork supply, is projected to be well below last year’s Outlook figures. Poultry production in 2002 was 24% lower than expected for this year in last year’s baseline, and milk production was 14% lower. While relative changes between baselines in the beef and pork trade projections are small, the reduced poultry consumption also results in increased poultry exports, which could now represent up to 10% of Argentinean production. Figure 12. Arge ntine an live stock production: Historical de ve lopme nt and proje ctions in the OECD Agricultural Outlooks 2002-2007 and 2003-2008 3.2

1.4 Million tonnes cw Outlook 2003

Poultry

Outlook 2002

1.0

2.8

Milk

Outlook 2002

9

0.8

8

0.6

7

2.6

Outlook 2003

Outlook 2003 6

0.4 2.4 1990 Source:

Outlook 2002

Million tonnes 10

1.2

Be e f and ve al

3.0

11 Million tonnes eviserated wt

1996

2002

2008

0.2 1990

1996

2002

2008

5 1990

1996

2002

2008

OECD Secretariat.

Conclusion The ongoing depreciation of the Argentinean Peso, together with other large perturbations in other macroeconomic variables, has significant implications for the agricultural markets. Higher prices (in domestic currency terms) and lower real incomes reduce food consumption of livestock products, and boost the profitability of crop production and exports. This can largely be seen in the comparison between the two sets of projections provided in last year’s Outlook and the current baseline. However, several other factors also create different market outcomes, most notably higher international crop prices, and the increased competitiveness of Brazilian agriculture after the further devaluation of the Real. It should be noted that the analysis shown in this box can only give a rough idea of production effects for crops and livestock products, and should not be taken as a scientific analysis of market impacts and resource implications due to large macro economic upheavals. A strict comparison variable by variable may therefore not always give a clear picture on the impact of the macroeconomic shock. It is for this reason that the discussion in this box was largely restricted to supply responses.

44

© OECD 2003

Key issues and uncertainties EU Mid-Term Review may affect the outlook…

The European Commission has published a communication for the MidTerm Review (MTR) on the Common Agricultural Policy in July 2002, and in January 2003 the Commission adopted a formal proposal. As no decision has been made at the time of writing this outlook, the policies signed in the Berlin Agreement of 1999 are assumed to continue for the outlook period. Yet changes in grain policies due to the MTR could be substantial. Lower intervention prices and higher payments in a more decoupled form would affect domestic production, use and trade of wheat and coarse grains. Even more importantly, the proposed cut in the rice intervention price by 50% accompanied by increased direct payments and their partial decoupling are likely to help prevent the unsustainable increase of intervention stocks discussed earlier.

… as may enlargement of the European Union

Any enlargement of the European Union, scheduled to begin in 2004, is not taken into account in these projections. Impacts of the accession can be expected to be rather different across accession countries, depending on the current policies relative to those in the EU, structure of the agricultural sector and other factors. In general, however, as most accession countries have already started to adjust their policies towards those in the EU, implications for international markets might be relatively small. A special section in this Outlook report, provided by the European Commission, evaluates the market impacts of the EU enlargement.

Under different settings, the FSRI Act may have more pronounced impacts on world markets

The US FSRI Act has relatively little impact on world markets in the context of the current world price projections, as Box 3 shows. Prices for coarse grains are somewhat lower, and those for oilseeds slightly higher, than what would have been the case had the FAIR Act provisions been continued to be applied, while wheat prices are hardly affected at all. However, this to a large degree depends on the settings on international markets. With crop prices lower than projected, the 2002 Farm Act would cause significant cereal price reductions, whereas the increase in oilseed prices would be less pronounced. On the other hand, with higher price projections, the Farm Act’s implications for world markets would virtually vanish altogether.

Impacts of China’s WTO accession remains uncertain

The implications of the Chinese WTO membership still remain uncertain. While the projections outlined above include some increase in grain imports, none of the expanded import quotas for wheat, maize and rice is expected to be filled within the projection period, mostly due to administrative and other barriers. The implications of these quotas being filled on grain and meat markets is discussed in the Box 5.

Productivity growth remains an issue…

International grain prices are projected to remain largely unchanged in real terms after 2003. This is largely due to the continued growth assumed in crop productivity (see Figure 13), as well as from some new land coming to grain production in Latin America. While there are no indications that productivity growth would change dramatically in the short term, longer term projections are subject to significant uncertainty. The rate of yield growth

© OECD 2003

45

Figure 13. Ave rage ce re al yie lds to continue ste ady growth 4

7 t/ha

Whe at

6

OECD

3

5

6 t/ha

t/ha

Coarse grains

5 OECD

Rice

OECD

4

4 3

2 3 Non-OECD

1 0 1973 1978 1983 1988 1993 1998 2003 2008 Source:

2

2

1

Non-OECD 1 Non-OECD

0 1973 1978 1983 1988 1993 1998 2003 2008

0 1973 1978 1983 1988 1993 1998 2003 2008

OECD Secretariat.

depends on potential progress of new breeding technologies, environmental pressures, as well as economic incentives and disincentives. … particularly in Russia

This Outlook expects a relatively modest growth in Russian crop yields, somewhat below the high levels observed in the recent past. However, as discussed in the last OECD Agricultural Outlook 2002-2007, massive improvements in capital availability and the use of inputs due to increased engagement of capital donors outside the agricultural sector itself could gradually change the situation. It is obvious that with stronger productivity growth, Russia could maintain its exports particularly of wheat. Similarly, other countries of the Former Soviet Union have exhibited considerable export potentials in the recent past. While none of the other FSU countries are treated individually in the projections, a special section of this Outlook report discusses the driving forces behind market projections for the Ukraine.

Uncertain growth of livestock consumption and cereal feed use

Much of the increase in grain use is projected to stem from increased livestock production. Indeed, there remains a great deal of potential for more meat and dairy consumption in many developing countries in light of income growth. However, the expansion in cereal feed use may be undermined by lower economic prospects or smaller-than-expected income responsiveness, as well as a shift towards the more feed-efficient poultry meat. In consequence, this may lead to lower growth in net imports by non-member Economies than projected.

Huge Chinese stocks could flood grain markets

Chinese grain stocks have increased substantially during the last three decades and reached stock-to-use ratios in the late 1990s well above global averages. More recently, the Chinese administration has seemed to be willing to reduce expensive stockholding, and wheat, coarse grain and rice stocks have declined significantly. While the projections include a further reduction at lower rates, stock-to-use ratios remain high compared to other countries. A faster and more far-reaching depletion of grain stocks would change market outcomes to a considerable degree. In particular, if the additional supply

46

© OECD 2003

Box 3.

Marke t implications of the 2002 Unite d State s’ FSRI Act

Introduction In May 2002, the United States Farm Security and Rural Investment (FSRI) Act was signed into law to replace the Federal Agricultural Improvement and Reform (FAIR) Act of 1996. The 2002 Farm Act comprises a wide range of programmes for commodities, conservation, trade, nutrition, credit, rural development, research, forestry, and energy. While a broader discussion of the new Farm Act is contained in the 2003 edition of the report on Agricultural Policies in OECD Countries: Monitoring and Evaluation, this box summarizes the main results of the market impact analysis.1 As such, it is restricted to a subset of programmes including the Marketing Loan Assistance Program (MLAP), the Direct Payments for Crops (DPC), Counter-Cyclical Payments (CCP), and the Conservation Reserve Program (CRP), as well as dairy price supports and direct payments to milk producers. In addition, the discussion in this box is limited to the commodities represented in the Aglink model, grains, oilseeds and dairy, while effects on the meat markets are ignored. As a significant implication of both the MLAP and the CCP is the change in revenue risk faced by farmers, the Aglink model was modified not only to capture the new policy measures, including the associated risk elements. On the other hand, the effects of the CRP expansion on individual crop areas are taken into account by exogenous assumptions based on preliminary work done by the US Department of Agriculture. It should be noted that the impact of the 2002 Farm Act, as it is estimated in this analysis, strongly depends on a number of assumptions, most notably the degree of farmers’ risk aversion, and the settings of world markets as indicated by international commodity prices (see results of the sensitivity analysis). Indeed, the analysis was based on a preliminary baseline prior to this Outlook report, which projected slightly higher world prices, and therefore results in somewhat smaller impacts particularly on coarse grain markets compared to what would have been the case under final baseline conditions. The analysis also ignores some elements of the Farm Act, in particular the issue of Country of Origin Labelling (see Box 6), and the farmers’ option to update base acreage and yields, which could have some production increasing effect if farmers anticipate further update possibilities in future legislation.

Main provisions of the FSRI Act The marketing loan assistance program (MLAP) for cereals, oilseeds and other commodities is re-authorised with modified loan rates, and extended to some additional products in the FSRI Act. Loan rates are set at a fixed level for the years 2002 and 2003 and then reduced slightly for the period 2004-07 for many commodities. For most products, loan rates are higher than those in 2001 throughout the entire period, with the exceptions of rice (unchanged rate) and soyabeans (reduced rate). Direct payments for crops (DPC) replace the production flexibility contract payments (PFCP) provided under the 1996 Farm Act. In addition to grains, cotton and rice, the DPC are extended to other crops, including oilseeds. DPC are based on fixed rates, multiplied by base yields and 85% of base areas for each crop. Payment rates by commodity as set for the 2002-07 period are higher than those paid in 2001. Counter-cyclical payments (CCP) represent a new form of support for grains, oilseeds and other commodities, replacing the ad hoc Market Loss Assistance Payments provided during the 1998-2001 period. Target prices specific to each commodity are set initially for the years 2002-03 and then increased for the period 2004-07 for most commodities. Unlike the DPC, the CCP rate for a given crop depends on market prices and is calculated as the difference between the target price minus DPC rates and the higher of the loan rate and the market price. For both DPC and CCP, farmers may opt to update their base areas by choosing between two alternative ways of calculation. If they do update, they are also allowed to update base yields applicable for CCP (but not for DPC). The dairy market price support programme and the Dairy Export Incentive Program (DEIP) are extended in the new legislation. The milk marketing order system was left unchanged, and a new deficiency payment is added. Dairy market price support will be continued. The support price for milk remains at USD 218 per tonne, and the Commodity Credit Corporation (CCC) will continue to buy any butter, cheddar cheese, or non-fat dry milk that is offered at announced prices. A new National Dairy Market Loss Payment Program is introduced for the period 2002-05 to provide a monthly payment to dairy farm operators equal to 45% of the difference between a target price fixed at USD 373.5 per tonne of milk and the monthly Class I price in Boston. This annual payment is limited to a maximum of 1 089 tonnes of milk per operation. Finally, among other conservation programmes, the Conservation Reserve program (CRP) is expanded. Maximum set-aside area under the CRP is increased from 14.7 million hectares under the 1996 Act to 15.9 million hectares.

© OECD 2003

47

Box 3.

Marke t implications of the 2002 Unite d State s’ FSRI Act (cont.)

Incentive price effects for crops Both the MLAP and the CCP have significant counter-cyclical dimensions. In other words, lower prices would trigger higher payments under both programmes and vice versa, thus reducing revenue risk faced by farmers. As farmers are assumed to be risk-averse (based on recent studies on farmers’ risk behaviour2), they have an incentive to increase production for commodities showing reduced revenue risk. This analysis takes advantage of recent work in the OECD Agricultural Directorate to calculate risk premiums. The risk premium reduces producer prices in the calculation of crop returns. The higher the relative risk aversion and the greater the revenue risk, the more the risk premium reduces incentive prices for producers and, thus, provides a disincentive for the production of a particular crop. The MLAP and CCP are treated differently in the risk assessment for two reasons. First, the target prices of the CCP are additional to loan rates. They are used to supplement market prices that lie between the loan rate and the target price. Marketing loans are triggered when market prices are close to or lower than loan rates. Second, marketing loans provide payments which are tied to current production while the calculation of CCP payments are based on historical area and yield. Their impact on risk is different. Due to these two differences, the risk related impacts of CCP are, in general, smaller than those of marketing loans. However, if area allocated to a crop falls far below the level in the base period, the risk reducing impacts of CCP become larger, preventing production from falling. Figure 14 provides an overview on the impact that the new Farm Act has on incentive prices. It shows that in addition to direct price effects risk effects represent an important element of the total picture. For the main cereals maize and wheat, reduced risk increases incentive prices by 2% and 3%, respectively, on average, due to rising loan rates and the introduction of CCP. At the same time, the lower loan rates for soyabeans leads to an increase in the risk premium (and a decrease in incentive price) by 0.5% on average. Increased DPC, additional CCP and the increase in loan rates result in larger total benefits for grain producers, particularly for minor coarse grains where significant marketing loan benefits occur.3 Total payments (DPC and CCP) increase by 62%, on average, for 2002-2008, when compared to the former PFC payments provided under FAIR Act provisions. Additionally, the reduction in risk further increases incentives to produce grains. In contrast, benefits for soyabeans decline due to the reduction of the loan rate, and the increased risk. In total, incentive returns (i.e. after taking risk into account) decrease by some 5% on average for soyabeans, but increase by more than 10% for some coarse grains. Figure 14. 2002 Farm Act impact on ince ntive price s Average 2002-2008 16 12

%

Price effects Risk effects

8 4 0 -4 -8 Maize Source:

Sorghum

Barley

Oats

Wheat

Soyabeans

OECD Secretariat.

Crop market implications Increased direct payments encourage an expansion of total cropped area or, conversely, prevent area decreases in response to falling prices. The expansion of CRP area influences total land allocation in the opposite direction. The net result is that total area harvested for grains and oilseeds falls by 0.5% on average from 2002-2008 as a result of the 2002 Farm Act. Relative to what would have happened under the 1996 FAIR Act

48

© OECD 2003

Box 3.

Marke t implications of the 2002 Unite d State s’ FSRI Act (cont.)

scenario, area slightly declines for wheat and expands for coarse grains, particularly for barley, oats and sorghum. At the same time, some decline in the area planted to oilseeds is attributable to the new policies (Figure 15). Production changes reflect the changes in support over the projection period, as loan rate support drops for oilseeds and increases for the less significant coarse grains. The CRP also has significant effects (as shown below). Market differences between the 1996 FAIR Act and the new FSRI Act generally peak in 2006, although they fluctuate slightly as producers react to lagged returns. Consumption effects occur exclusively in reaction to market price effects and are minor. Overall, the net effect is higher coarse grain exports, whereas wheat and oilseeds exports decline, when compared to the 1996 FAIR Act scenario. Figure 15. 2002 Farm Act impact on crop marke ts Average 2002-2008 4 3

Wheat Coarse grains

%

2

Oilseeds Total area

1 0 -1 -2 -3 -4 -5 -6

Source:

Harvested area OECD Secretariat.

Production

Exports

World price

The world price effects are also shown in Figure 15. The world wheat price is marginally increased, on average, over 2002-2008, with an initial reduction followed by some price increase towards the end of the simulation period under the 2002 FSRI Act relative to the 1996 FAIR Act scenario. World maize and barley prices average 1% lower under the FSRI Act, again with stronger price reductions in early years than in the later years. In contrast, world oilseed prices are 1% higher under the new farm legislation due to reduced US exports. As a consequence, world prices for oilseed meals and, to a lesser extent, vegetable oils are higher as well. When looking at the decomposition of the total impact, it becomes obvious that changes in the loan rates are responsible for a large part of the market changes4 (Figure 16). In fact, these changes alone account for a 1.2% Figure 16. Composition of the 2002 Farm Act impact on harve ste d are a Average 2002-2008 1.5 1.0

%

0.5 0.0 -0.5

+1.0%

-1.0 -1.5 -0.9%

-2.0

(Fixed) direct payments Loan rate changes Counter-cyclical payments Risk premium change CRP expansion

-2.5 Wheat

Source:

Coarse grains

-0.5%

-2.0% Oilseeds

Total

OECD Secretariat.

© OECD 2003

49

Box 3.

Marke t implications of the 2002 Unite d State s’ FSRI Act (cont.)

area reduction for oilseeds, and a 0.8% area expansion for coarse grains, on average, for 2002-2008. As the loan rate increase for wheat does not become effective due to market prices exceeding both the new and old loan rates, the increased rates for coarse grains result in a significant reduction in wheat plantings. A second large factor is the change in risk due to both changed loan rates and the CCP. These risk changes cause a 0.4% increase in both wheat and coarse grain areas, on average, and a 0.5% reduction for oilseeds. The CRP expansion reduces total harvested area by 0.4%, on average, with stronger impacts for wheat than for coarse grains and oilseeds. Both DPC and CCP have relatively little impact on the area allocation, as the discussion below will show, under the projected levels of prices on international markets.

Sensitivity analysis on crop markets The results outlined above have been found to be relatively sensitive with respect to two factors, i.e. the degree of risk aversion of farmers, and the conditions on world markets. Obviously, changing the assumption with respect to the degree of risk aversion mainly changes the risk element of the impact analysis, while different price projections would cause differences due to several mechanisms. A sensitivity analysis with respect to the Relative Risk Aversion Coefficient (RRAC) shows that, if risk neutrality was assumed (RRAC = 0), the area increasing effect for wheat and coarse grains due to risk reduction would become zero, as would the area reducing effect due to the increased risk for oilseeds. Consequently, the 2002 Farm Act would lead to an even stronger reduction in wheat area, while the area expansion for coarse grains as well as the reduction for oilseeds would be less pronounced. A stronger risk aversion (RRAC = 5), in contrast, would result in the opposite effect: the reduction of wheat area would become almost zero, while the increase in coarse grain area and the decline in oilseed area would become stronger. The impacts on world prices would therefore be quite different under different risk aversion assumptions. With risk neutrality, wheat prices would increase by 0.4% on average while the reduction of maize prices would be 0.3% only on average over 2002-2008. On the other hand, with strong risk aversion the FSRI Act provisions reduce maize prices by almost 2%, on average, while increasing oilseed prices by 1%. Despite the lower production and exports, wheat prices would be slightly reduced as well due to cross price effects with maize. The results prove to be even more sensitive with respect to the world market environment (see Figure 17). Under baseline conditions, loan rates for soyabeans are effectively supporting production, while the loan rates Figure 17.

Se nsitivity of world price e ffe cts: marke t impacts at 10% lowe r and 10% highe r price proje ctions Average 2002-2008 US harve ste d are a

World price s

5 4

2 %

Wheat Oilseeds

Coarse grains Total

Wheat

%

Maize

Soybeans

1

3 0

2 1

-1

0

-2

-1 -3

-2 -3

-4 Low

Source:

50

Base

High

Low

Base

High

OECD Secretariat.

© OECD 2003

Box 3.

Marke t implications of the 2002 Unite d State s’ FSRI Act (cont.)

for most grains are below market prices. A 10% lower market price projection for 2003-2008 would therefore mainly change the impact of the higher loan rate for cereals, which now would result in significantly higher loan benefits and hence support, while the decrease in oilseed benefits is largely equal to the difference in loan rates. Both wheat and coarse grain area would be more strongly increased by the new Act (+0.5% and +2.0%, respectively, compared to –0.9% and +1.0%), while oilseed area reduction would not be much different from the main results above. In contrast, a 10% higher price projection would mainly change the impact of the loan rate decrease for soyabeans. As the market prices of soyabeans would then exceed the loan rates under either policy in most years, the difference in loan benefits becomes less significant. At the same time, the increase of cereal loan rates continues not to have much impact as prices would be well above the rates. In consequence, changes in harvested area would become much less pronounced for all crops. Wheat and oilseed area would be reduced by –0.7% and -1.0% on average, respectively, while coarse grain area would go up by 0.3% (compared to –0.9%, –2.0%, and +1.0%, respectively, if in the context of baseline prices). Under both higher and lower price projections than those in the baseline, the increase in world prices for oilseeds would therefore be smaller than those under baseline conditions. Similarly, while with higher price projections the increase in wheat prices would hardly be different from those under baseline projections, the new Act would result in a significant price reduction under low-price conditions. Maize prices would be reduced by 3% on average in this latter case, while a higher-price environment would lead to hardly any price reduction at all due to the 2002 Farm Act.

Dairy market implications The main dairy market effects of the new Farm Act relative to the 1996 FAIR Act are presented in Figure 18. The additional support provided in the form of new direct payments, (assuming they are implemented strictly) and extended market price support has relatively small effects on US milk production. Milk production does rise by about 0.5% and milk market price falls by a little more than 1% as compared to the FAIR Act levels, but this is a transitory change and by the end of the Outlook period there are indications that these differences will not be sustained. Figure 18. US dairy re sults de pe nding on payme nt limit imple me ntation 1 % 0

-1

-2 Market price – strict limit Production-strict limit

Market price – double limit Production-double limit

-3 2002 Source:

2003

2004

2005

2006

2007

2008

OECD Secretariat.

There are two factors limiting the impacts of the 2002 FSRI Act on the US dairy markets. First, despite the fact that the FAIR Act does assume an elimination of dairy price support, the policy levers that are used to implement this scheme were expected to remain in use. Thus, the projected quantities and prices for US dairy markets would not change significantly as dairy product exports would continue to be supported through the DEIP and dairy product imports prevented through existing tariffs and tariff-rate quotas. The second factor is the assumption that the new dairy payment will end in 2005, as mandated. Thus, from 2006, the effective producer price at the margin will no longer be above the market price. With producers responding only to domestic price signals, and production expanding in response to the higher effective price of the early years of the new Farm Act implementation, returns to producers are expected to be lower than they would

© OECD 2003

51

Box 3.

Marke t implications of the 2002 Unite d State s’ FSRI Act (cont.)

have been under the 1996 FAIR Act. Allowing some time for adjustments in production, these effects may become quite small over time. Of course, the temporary nature of the dairy payments may be questioned, particularly in light of the routine continuation of market price support despite termination provisions in the 1996 Act. A sensitivity test has been made regarding the assumption that the payment limit will not be circumvented. Results are presented in Figure 18. In the scenario it is assumed that each operation is divided into two, thereby effectively doubling the 2.4 million pound limit to 4.8 million pounds. As a consequence, production increases by an estimated 0.74% relative to the 1996 FAIR Act. Higher production leads to lower prices, which are shown to fall by an estimated 2.16%. The payments provided to farmers above the limit might increase dairy product export subsidies or public stocks which follow from the rising production and falling prices.

Summary The 2002 FSRI Act covers a broad range of provisions, of which only a subset were considered in this market impact analysis. While loan rates for soyabeans were lowered, and the area under conservation reserve program expanded, other support measures, including higher loan rates for most other commodities, as well as increased direct payments and the new counter-cyclical payments, could stimulate expansion of crop production and therefore put additional pressure on world market prices. Under the conditions of the baseline projections, US wheat and oilseed production and exports decline slightly, while the supply of coarse grains would increase somewhat. It is shown that, in addition to the changes in the loan rates and the CRP area, differences in revenue risk represents an important factor for these impacts. Therefore, the results are sensitive with respect to farmers’ behaviour with respect to risk: higher or lower risk aversion than assumed in the analysis will result in a stronger or less pronounced response in changes in revenue risk. Even stronger sensitivity is found with respect to conditions on world markets. Indeed, the slight increases in wheat and oilseed prices, and the small decrease in coarse grain prices, are due to the particular levels of projected world prices. With lower price projections, the FSRI Act would result in more pressure on international grain markets, while higher prices would reduce the price increasing impact for oilseed markets. Market impacts of changes in dairy policies are shown to be small and temporary. This conclusion is sensitive to the assumption that the payments limit for dairy farms will be enforced. If this is not the case, the impacts would be larger. The FSRI Act tends to increase support to farmers, and to shift some support towards more distorting forms, while at the same time reducing the impact of increased support by setting aside crop area. The new US farm legislation institutionalises the Market Loss Assistance Payments that have been provided on an ad hoc basis since 1998, reduces risk for farmers and demonstrates a marked shift away from the goal of greater market orientation embodied in the 1996 legislation. Although the impacts of the 2002 Farm Act simulated in this analysis are small, the new Farm Act risks to accentuate production distortions and trade tensions and is not in line with the long-term OECD policy reform objectives.

1. The discussion of both the provisions of the FSRI Act and the market impacts in this box highlights the main findings. For details and references see the main study. 2. Available literature shows, that a plausible range for the Relative Risk Aversion Coefficient (RRAC) is between 0 (risk neutrality) and 5. The baseline assumes an RRAC of 2. 3. The FAIR Act scenario assumes maximum loan rates provided by the Act, and no further ad hoc market loss assistance payments. 4. Note that, when individual policy measures are discussed in this box, the associated risk effects are excluded, the total of which is treated separately. This is consistent with the representation in the Aglink model.

52

© OECD 2003

would not be used for larger livestock production, but to substitute for imports (or even for exports), the available quantities could put significant pressure on international grain prices for several years. While not treated explicitly in this outlook, Indian wheat stocks have reached large quantities as well, and despite the persistent problems in the grain marketing and handling infrastructure, further developments in these stocks represent a significant uncertainty for the market projections as well.

© OECD 2003

53

SENSITIVITY ANALYSIS OF YIELD VARIABILITY The Outlook projections assume that there will be normal weather. This assumption is necessary to generate a set of baseline results that can be used to understand market trends and also can serve as a basis for policy analysis. At the same time, it is widely understood that weather will not, in fact, be normal. Here, we investigate some implications for cereal markets by reporting on preliminary, partially stochastic work resting on random yield variations.

What is “partially stochastic”? The OECD Outlook is deterministic in the sense that fixed external factors give an outcome that corresponds to a particular market environment. Thus, the Outlook that is summarised in this publication represents a single outcome that is contingent on a single set of input data. There are many inputs, including exchange rates and policy variables, of course, but also the assumption of normal weather. This last factor is reflected in the tendency of world-wide yields to be consistent with long-run trends. Instead of deterministic, the process could be stochastic (or random), at least in part. In this case, some of these external factors would be defined not by a single value or assumption, but by a range of possible results each with an associated probability. Simulations of the model underlying the baseline results would be repeated many times, each time pulling a new set of values for these variables from their distributions. In place of a single outcome, the simulation results would give many different output values allowing for many different market situations, each based on different input data. The Food and Agricultural Policy Research Institute at the University of Missouri, Columbia (FAPRI-UMC) has recently produced stochastic work focusing on US markets. Techniques pioneered at that institute demonstrate the ability of such a process to paint a broader picture of agricultural commodity markets. FAPRI-UMC reports also offer a new facility in policy analysis whereby stochastic results illustrate how policies work in a variety of market environments. Whereas the FAPRI-UMC stochastic work is very well developed, the focus on the US markets may limit its applicability to wider issues. Here, the OECD provides a first look at stochastic work which, though more limited in terms of the number of input variables represented by distributions, incorporates stochastic yield effects in almost all countries. In this example, the assumption of normal weather and trend yields is replaced by a range of yield results around the long-run trend. The Outlook necessarily relies on a neutral assumption about yields, so as to make the baseline results as general as possible, though deterministic. By replacing this deterministic method with a partially stochastic simulation technique, the results may offer more information by allowing for a wider range of possible yields and, consequently, production, trade and prices. The first step of this process is to identify yield distributions for crops represented in Aglink.1 The variability of each yield series around the long-run

© OECD 2003

55

trend is estimated. The technique tests the degree to which variability changes over time and the dependence on previous year’s variation. Where present, these effects are estimated and reproduced, as is correlation across crop yield variability within a country or region. Thus, a distribution is created for each yield based on historic performance, but with a view to represent likely distribution of variations in the projection period. The process is represented in Figure 19. The usual, deterministic approach is illustrated on the left-hand side of the diagram. The process begins by taking a given set of input data, including yields and other factors (macroeconomic variables and policies included). Typically, for the baseline Figure 19. De te rministic and stochastic base line s

DETERMINISTIC Yield variation around trend

Other factors

=0

Model

STOCHASTIC Yield variation around trend

=

Other factors

Source:

Model Simulation results

Simulation results World maize price in 2008 = 112 USD/tonne

0

World maize price in 2008 =

Mean

OECD.

simulation, a single starting value based on the long-run trend without any variation from weather is assumed for each yield in each year. (For that matter, a single value must be assumed for every other exogenous variable in each year.) Then, the model is simulated based on these data. The output that is generated (production, consumption, trade, prices) also provides a single value for each variable in each year. A partially stochastic process is shown on the right-hand side of the diagram. Here, instead of a single value for the variation of each yield, namely zero, a distribution is assigned. Repeated draws from this distribution give many different possible constellations of world yield variations. Each one is fed in turn to the model and, along with the other factors, as before, the model is simulated. The results of multiple simulations are, of course, multiple outcomes for each variable in each year. Here, as an example, the maize price in 2008 is no longer a set value. Instead, we are presented with a range of maize prices associated with the range of yield variations, represented here by a distribution of prices around some mean (which may or may not equal the value of the baseline). The goal of this work is to widen the range of relevance of Outlook results. This method would replace ad hoc treatment that has been used in the 56

© OECD 2003

past to show how policies work under varying market conditions. Instead, ranges of prices would be developed which correspond to distributions of key input data. The implications are of particular interest in the presence of policy variables that set a nominal trigger price, such as intervention prices and loan rates, or quantity limits, as agreed on in the URAA, which dictate an asymmetric policy response. Many policies are designed to behave differently under different market conditions. Preliminary development of partially stochastic simulations based on yield distributions has taken place. In the text below, these results are briefly summarised for coarse grain and oilseed markets based on 20 solutions, even though these are too few to provide much more than an illustration. The simulation results presented below are based on randomly chosen values from the distributions of yields around baseline values presented in this Outlook report.

Example 1: Coarse grain markets The output of partially stochastic simulations is, again, multiple results for each price in each year. Thus, for the maize price in 2008, for example, we can view any of several outcomes. However, it must be understood that each particular price is an outcome of a particular set of yield variations; no single one set of yields should be given too much importance relative any other one. Of course, it may be impractical to show the results of all simulations, as doing so threatens to show too much data while communicating very little. Instead, summary statistics can be used, taking averages, standard deviations and medians across observations in each year. Below, results are presented in several different formats. Figure 20 shows the world maize price average across simulations. The vertical line in each year represents the range from the average plus one standard deviation to the average minus one standard deviation. That is to say, this provides a summary of the range of outcomes for the world maize price when yields vary around the baseline levels. The range defined here shows that most of the results for the world maize price lie within about 20% of the average of these simulations. (Of the simulation results for this variable, 60% lie within the range defined here in 2003 and 65% in 2008.) The average itself is very close to, though less smooth than, the values of the Outlook. The average and standard deviations give part of the story, but it is important to remember that each simulation will tend to have some price peaks and some price lows. Figure 21 repeats the information of the first, but adds the world maize price found in two arbitrary simulations, each one following from a particular pattern of yields. This is not intended to place undue emphasis on these particular results, but rather to highlight the fact that neither the relative calm of the mean nor the extremes defined by a single standard deviation are likely to be reflected in any of the individual simulations. The implications for world prices of varying yields depend on the distribution of the yields, of course, but also on the response of market participants and policies. The larger the elasticities of demand and supply (in

© OECD 2003

57

Figure 20. World maize price : ave rage ±1 standard de viation 160 USD/tonne 140

120

100

80

60 2002 Source:

2003

2004

2005

2006

2007

2008

OECD.

Figure 21. World maize price ave rage with two arbitrary solutions 160 USD/tonne 140

120

100

80

60 2002 Source:

2003

2004

2005

2006

2007

2008

OECD.

Figure 22. EU coarse grain price s in 2003 and 2008 155 Euro/tonne 145 Simulation results

135 125 115

Intervention price

105 95 2002 Source:

58

2003

2004

2005

2006

2007

2008

OECD.

© OECD 2003

absolute terms), the more the effects of a yield variation will be dampened. For example, a swing upwards in production due to unusually high yields is met by price decreases to balance the market. Greater elasticities (in absolute values) indicate that a smaller price reduction is necessary to induce a sufficient increase in consumption and stocks to offset the greater production, whereas weak demand elasticities indicate that a larger fall in price is required before consumption and stocks rise to meet higher production. Of course, lower prices also discourage production, though to a limited extent as current prices have small effects on yields or area. The more significant supply response to price changes follows with some delay and, along with stock-holding behaviour, create dynamic effects that can lead to swings in prices. The role of policies may be to introduce asymmetry. For example, the EU intervention price for coarse grains will limit the extent to which EU market prices change, whether due to movements in world prices or to changing domestic supplies, following yield variations. Figure 22 shows the results of all the simulations for internal EU coarse grain prices in two years.2 The cluster of observations is determined in large part by the intervention prices; it is only in rare cases that prices can rise far above intervention prices as there are typically several million tonnes of intervention stocks that must first be sold. Conversely, pressure to lower prices relative to intervention levels is countered by the accumulation of greater intervention stocks. Thus, the EU policies narrow the range of EU coarse grain price outcomes and, in addition, allow for little possibility of extremely low domestic prices.

Example 2: Oilseed markets Figure 23 shows the average world oilseed price across all simulations. As in the case of the world maize price, a band is given defining the range of the average plus and minus one standard deviation. Here, again, the bars indicating the spread around the average price level could give the false impression that solutions may exist that would yield uniquely high or exclusively low prices throughout the period. However, this need not be the case and, indeed, would be a highly unlikely outcome. Three factors tend to push prices back towards baseline levels. First, yields tend to move with only some positive dependence on the previous year’s variations so there is not much likelihood that yield problems persist in most regions. Second, supply responds to high prices. Farmers will tend to place more area into a crop when its relative price is higher. Finally, the third factor limiting price movements is stock-holding. Stocks will tend to increase in years of high production and fall when production is low, due to both speculation and transaction motives, which should also tend to spread out the effects of variations across years. Figure 24 provides the results for world oilseed production of two simulations chosen at random, which represents the combination of yield variations and crop producers’ decisions. These are shown along with the average world oilseed production of all simulations and the range defined by the average plus or minus one standard deviation. Clearly, without placing

© OECD 2003

59

Figure 23. World oilse e d price : ave rage ±1 standard de viation 300 USD/tonne 280 260 240 220 200 180 2002 Source:

2003

2004

2005

2006

2007

2008

OECD.

Figure 24. World oilse e d production ave rage with two arbitrary solutions 310 000 Kt 300 000 290 000 280 000 270 000 260 000 250 000 240 000 2002 Source:

2003

2004

2005

2006

2007

2008

OECD.

Figure 25. USA soybe an re turns pe r tonne : USA soybean price plus soybe an loan gains 210 USD/tonne 206 Mean 202

198

Median

194 Baseline 190 2002 Source:

60

2003

2004

2005

2006

2007

2008

OECD.

© OECD 2003

undue emphasis on this pair of particular results, the mean and standard deviations likely hide considerable variations that occur with any given solution as yield variations, policies and agents’ behaviour combine to trace out an often wobbling path. Figure 25 provides the baseline value of US producer revenues per tonne of soybeans sold, as well as partial stochastic results, represented in terms of mean and median. Here, the data show the sum of the US soybean producer price plus the marketing loan benefits to soybean producers. (Direct payments based on area are not shown.) The fact that the mean always exceeds the median is not surprising. Falling prices trigger greater support for US soybean producers; extremely low prices lead to marketing loan benefits that rise well above the baseline level. At the other extreme, however, rising prices will lead to zero marketing loan benefits, but cannot lower them further. Given the presence of extreme positive values but no offsetting extreme negative values, the average revenues per tonne are raised relative to the median. This is clearly demonstrated as the median is generally close to the baseline value, implying that the US oilseed price is near or less than the loan rate in at least half of the simulations. In these cases, as in the Outlook in most years, loan benefits are incurred so the total revenues per tonne are roughly equal to the loan rate itself. On the other hand, the average is raised by the remaining simulations where the US producer price substantially exceeds the loan rate. That is to say, the average is includes many simulation results where the revenues per tonne equal the loan rate, plus a smaller number in which the revenues per tonne are driven by an unusually high producer price that exceeds the loan rate. Of course, skewed response in total revenues per tonne to US oilseed growers follows from the marketing loan policy which is asymmetric by design: it pays when prices are low, but cannot be negative when prices are high. The consequences for US soybean producers are to offset disincentives to oilseed production when prices fall relative to the loan rates in simulations, yet to allow full transmission of the incentive to expand production when prices are high relative to loan rates.

Summary This preliminary work on partially stochastic simulation hints at the potential for more robust consideration of policies, particularly the many policies that have a set trigger value, be it price or quantity, and asymmetric response around that trigger. EU intervention prices and US loan rates provide obvious, but hardly unique examples. As the process is developed, there may be scope for further enriching the Outlook with discussions such as those provided in this chapter and also for applications in the context of analysis quantifying the market impacts of new or proposed policies. This partially stochastic work may thus lead to more generally relevant Outlook and scenario results.

© OECD 2003

61

Notes 1. The yields of most countries and regions are included, but not all. The most notable exception in terms of the likely effects on world markets is Other Independent States (former Soviet Union less Russia), but some minor OECD producers are also excluded. 2. Results in other years are omitted to make the graph more easily understood. The challenge of finding useful ways to summarise results is daunting, as each of the several simulations has as many variables as the Outlook itself.

62

© OECD 2003

OILSEEDS*

Main projections – outlook in brief • The oilseed baseline is best characterised as follows: after a rebound in supply in 2003 crop year, strengthening demand for oilseed products caused by a recovery in the macroeconomic environment is met by continued eTxpansion of soybean area in Brazil and sustained production in OECD member countries. Supplies largely satiate the oilseed meal market at low prices and, with growth in palm oil production, suffice to meet the growing demand for vegetable oil at flat prices. • World oilseed production is set to rise by just over 18% over the period and consumption rises by less than 18%. World oilseed prices drop at first, but then stabilise. At the end of the forecast period, they are 4% lower than in 2002. In real terms, this represents a more substantial decrease of 11%. • The expansion in area in Brazil, though not limitless, looks set to continue rising quickly over the projection period. Expanding area and somewhat higher yields raise Brazilian oilseed production by 40%, on top of the 18% increase in 2002 alone. At the same time, OECD oilseed production grows 19% over the period, but half this increase takes place in 2003 as production in some countries recovers from current poor growing conditions. • World oilseed meal use rises by 17% over the projection period. But slowly rising feed demand is barely sufficient to offset rising supplies, and oilseed meal prices are relatively flat, falling initially but then rising slowly over the period to end near 2002 nominal price levels. In real terms, oilseed meal prices fall by 8%. • Global vegetable oil output and use rise by 21% and 19%, respectively. Continued strong demand may be sufficient to sustain the recent price rise, despite a return to normal weather and some supply response. Prices are expected to rise by a further 2% by 2008, which corresponds to a decrease of 5% in real terms. Capital investments in palm oil production that come on-line in 2005 lead to an atypically large increase in vegetable oil availability in that year. This pushes down prices of vegetable oil and oilseeds in that year. Supply response in the form of a drop in the oilseed area will lead to the opposite price effects the next year. This effect is exacerbated as a sharp change in Brazil’s exchange rate impacts on relative prices such that oilseed area expansion there briefly pauses in 2006.

* All data provided in this chapter are on a crop year basis unless otherwise specified. All statements of per cent growth over the Outlook period are calculated as the 2002 value, unless otherwise specified.

© OECD 2003

63

Figure 26. Flat nominal world price s for oilse e ds and oilse e d products 400

300 USD/tonne

700 USD/tonne Ve ge table oilc

USD/tonne Oilse e d me alb

Oilse e ds a

350 250

600

200

500

150

400

300 250 200 150 100 1984 1988

1992

1996

2000

2004

2008

100 1984

1988 1992

1996

2000

2004 2008

300 1984 1988

1992 1996

2000

2004

2008

a) Weighted average oilseed price, Europe. b) Weighted average oilseed meal price, Europe. c) Weighted average price of oilseed oils and palm oil. Source: OECD Secretariat.

World market trends and prospects Current prices increase sharply as weather problems persist, but prices should fall if weather improves

Persistent weather difficulties have reduced supplies, creating pressure for higher prices for oilseeds and oilseed products in world markets. Moreover, after world oilseed stocks fell from over 9% of use in 2000 to only about 7% in 2001, much more significant rises in prices in 2002 were required to reduce stocks further towards 6% of use and to restrict consumption. However, the medium-term outlook is not dominated by current weather; weather is assumed to return to average. As such, with yields back at trend levels and area planted growing in response to recent high prices, world oilseed production should rise by 18% over the period. These averages mask a significant increase in 2003 due to yield recovery and to supply response, amounting to almost 10% in OECD member countries or half their total production increase over the baseline. W hile glob al pr oduction exp ands, the stable macroeconomic environment assumed during the projection period favours steady demand growth for oilseeds and oilseed products. After an initial decrease of 10% in 2003, nominal oilseed prices rise somewhat to end the projection period down 4% relative to 2002, or off 11% in real terms.

Demand helps vegetable oil prices keep much of their recent strength even as supplies expand

64

World consumption of vegetable oil is projected to remain strong during the Outlook period, rising by 19%. Alongside continued growth in OECD member countries, amounting to a 13% increase, a good macroeconomic environment in non-member Economies with rising incomes and stable, even strengthening, exchange rates, helps consumption of vegetable oil to rise by 23% in these countries. As such, the vegetable oil price in world markets is expected to remain at the current, weather-induced peak, and ends the period 2% higher in nominal terms. This implies a real price decrease of 5%. This demand strength maintains prices over time despite the production increase

© OECD 2003

Figure 27. We ak re al world oilse e d and oilse e d product price s 400 350

400

1 000 USD/tonne

USD/tonne Oilse e ds a

350

300

300

250

250

200

200

150

150

900

Oilse e d me alb

USD/tonne Ve ge table oilc

800 700 600

100 1984 1988

1992

1996

2000

2004

2008

100 1984

500 400

1988 1992

1996

2000

2004 2008

300 1984 1988

1992 1996

2000

2004

2008

a) Weighted average oilseed price, Europe, deflated by USA GDP deflator 2001= 1. b) Weighted average oilseed meal price, Europe, deflated by USA GDP deflator 2001= 1. c) Weighted average price of oilseed oils and palm oil, deflated by USA GDP deflator 2001= 1. Source: OECD Secretariat.

in 2003, following recent price increases, and a second rapid supply expansion in 2005, due to an anticipated increase in palm oil production capacity. Oilseed meal demand may keep up with growing supplies

A similar – though less pronounced – demand increase is likely for oilseed meal. World prices for oilseed meal are projected to be similar to oilseed prices, with an initial decrease of 13% followed by a gradual increase in nominal terms. By the end of the period, prices are to be about the same as in 2002, representing a decrease in real terms of 8%. Relatively flat nominal prices and rising meat production encourages global consumption of oilseed meal, which rises 17%.

World trade expands, but less so for OECD members

OECD exports of oilseeds and oilseed products grow over the projection period. As is the case with oilseed production, a large portion of the total change occurs in 2003 alone. Of the total increase in both OECD oilseed production and exports over the forecast period, about 40% occurs in 2003. Similarly, a significant share of the growth in exports of oilseed meal and oil from OECD members also takes place early on. In later years, growth is more modest. Nevertheless, trade by some OECD member countries grows throughout the period. Examples are the rapid expansion of oilseed and oilseed meal imports by Mexico, the fast-growing vegetable oil exports from the European Union and changes in sometimes relatively small levels of trade on the part of central European countries. Nevertheless, the majority of growth in oilseed and oilseed product trade appears to be taking place among nonmember Economies. In particular, Brazilian and Argentinean exports of these commodities rise rapidly, while imports of oilseeds and oilseed products to China and some other non-member Economies continue to grow at a fast pace.

Recent deviations from the norm create short-term uncertainty

The Outlook projections are set against an environment which is unlikely to produce many sudden shocks. In particular, the projections assume average weather, no further exchange rate shocks in key producing or consuming regions and no change in policies other than those announced. Of

© OECD 2003

65

these conditioning factors, sensitivity analysis conducted this year allows yields to vary based on historic distributions in order to give some sense of how deviations from average weather could affect crop markets. The results of this analysis are reported elsewhere in this report. Even in this stable environment, there is uncertainty about the nature of recovery in several key producing areas that are currently suffering weatherrelated difficulties. Both Australian and Canadian exports of oilseeds and oilseed products are likely to rebound, given a return to normal yields and harvested areas. Similarly, as US yields recover in 2003 so should production. But the increase is less than that in yields, given that area is not expected to return to the levels induced by the higher loan rates preceding the implementation of the FSRI Act (see Box 3). It is this recovery that largely explains the sharp increase in OECD oilseed production in 2003 and, along with supply response in the form of more area allocated to oilseeds, the price decrease in that year as well. Spill-over effects from BSE in Japan may continue to be significant

Possibly as a side effect of the recent BSE crisis in Japan, recent data hint at a break in the downward trend of poultry production and, in addition, better prospects for domestic pork production. These events help to create a mild increase in oilseed meal demand for feed, which corresponds to a relatively large increase in oilseed meal imports into Japan. However, this increase in feed demand may prove transitory and a reduction in oilseed meal consumption back towards previous levels and fewer imports should not be excluded.

The South American soybean boom must have an end, even if it is not in sight

Observing the surging oilseed output of South America, common sense dictates that this must, at some point, slow down or even stop. At the same time, few observers see much likelihood of a stopping point in the mediumterm. While the cultivatable area of Brazil may indeed be finite, the potential for more land to be pulled into oilseed production remains substantial. The Outlook for world prices may not be particularly strong, but even the relatively lower levels of the recent past were sufficient to encourage area expansion, once combined with a general decreasing trend for the Real. Thus, by 2008, the Outlook projections show another 5 million hectares oilseed area on top of over 2.5 million hectares added in 2002 alone. Notwithstanding this reduced pace of expansion relative to the recent past, oilseed production of Brazil ends the period 40% larger than in 2002. On the other hand, no strong additional growth in total area in agriculture is foreseen in Argentina and, moreover, little possibility for further reductions in pasture area in the face of significant increases in beef and milk production. In the Outlook period, oilseed area expands at a much slower pace than in the past and production increases by 11% – which is modest after having more than doubled from 1996 to 2002. Although the fact that total area is indeed restricted at some point, it may prove that there remains potential for further significant expansion, including in the area allocated to oilseeds. This would pressure prices lower.

A “sneeze” in a major producing area can have effects in world markets

66

Weak exchange rates following devaluations, in Brazil in the late 1990s and in Argentina in 2002, can encourage an export-led increase in oilseed production. The oilseeds and oilseed products can be exported directly or, in the case of oilseed meal, indirectly through livestock products. A further crisis in exchange rates may lead to short-term disruption, due to disarray in

© OECD 2003

financing markets or infrastructure, but could give a medium-term boost to the exports of either of these two countries. On the other hand, if currencies were to strengthen against those of other countries, then the world market prices would be less attractive and exports less profitable. The Outlook projections highlight this sensitivity: the sharp change in Brazil’s exchange rate in 2004 along with the slight weakness in world prices in 2005 induce a serious slow-down in the area expansion of Brazil towards the end of the period. This slower rate of growth in Brazilian oilseed production, falling to under 2% in 2006 as compared to the average rate of 6% for the projection period, exacerbates the global supply response to the 2005 prices, leading to a significant and opposite price shock in 2006 as well. Palm oil represents a growing share of vegetable oil

Palm oil production has risen steadily to become a third of the total vegetable oil production as defined in the Outlook. By the end of the projection period, global palm oil production is seen to rise by more than 30%. Indeed, it is the 2005 realisation of earlier palm production investment decisions that generates a sufficiently large increase in total supply so as to bring world prices lower. More generally, as palm oil is not produced in OECD member countries, production is determined in part by local agricultural policies, whether subsidising or taxing agriculture, and by macroeconomic stability – as well as by the evolution of world prices.

The stage is set for strong, but almost separate, growth in supplies of meal and oil

The net effect of strong production capacity of soybeans in non-member Economies, particularly Brazil and Argentina, is significant competitive pressure in international markets. This is not only so for oilseeds, but also for oilseed meal given soybeans’ high meal content. As long as capital investment in palm oil producing countries continues in the context of a reasonably stable macroeconomic environment, there is a likelihood of steady long-term growth in capacity. At the same time, and also with the same caveat regarding the context in terms of exchange rate and financing and suchlike, Brazil’s expansion also rests in part on continued investment, in particular in infrastructure that reduces the costs of transporting soybeans to ports.1 In all, there clearly exists a probability of greater supply of soybeans, with their high yield in meal, and of palm oil that can be exported at low prices in the future.

Support policies play a significant role in the face of competition

Policies of some OECD member countries can insulate their producers from at least some part of this pressure, largely by adding direct payments atop market returns so that OECD producers are more likely to continue selling oilseeds than they would be if they faced price signals alone. These sorts of payments raise oilseed producer revenues in the European Union and the United States, for example. In the latter case, the price signals are almost completely lost throughout the 2003-2008 period, as US policies provide producers with a per unit level of return that exceeds the market price. Indeed, this explains why oilseed production in the United States and Japan, for example, remain at recent levels with little regard to the variations in world prices during the projection period. This is in particular an important issue regarding the United States, which produces one-third of total world oilseed output. Thus, at the expense of tax-payers, OECD supply potential may be encouraged even in those cases where crop products could be supplied more efficiently by another producer.

© OECD 2003

67

Consumers of oilseed products at world market prices are to be counted among the beneficiaries of the supply potential in non-member Economies and, to a certain extent, of the tax-payer funded support to producers. Despite the fact that global stocks are projected to remain low relative to total consumption, the world market prices for oilseeds, oilseed meal and vegetable oil are projected to decline in real terms. This is clearly to the benefit of consumers of these goods directly and others goods, such as livestock products, which are made in part from oilseed products.

Key issues and uncertainties Policies to be decided in the future will affect producer incentives

It is certain that some countries will adjust their agricultural policies, in detail of application or more fundamentally, during the course of the Outlook. Those amendments that are known in advance are mostly incorporated in the projections, as in the case of the US FSRI Act, but these reflect only a small part of what might reasonably be expected in the next six years. The European Commission’s CAP reform proposal is under discussion and, in any case, accession of many central European countries is looming. Japan’s slowly evolving agricultural policies will likely have implications for local oilseed production, particularly if even more incentives are provided to rice-growers who reallocate land to soybean production. More generally, world-wide agricultural policies of producer support and border measures may be challenged by a successful conclusion to the Doha Round of WTO negotiations.

What will be the role of transgenic organisms?

The future role of transgenic oilseeds and their products in world markets remains a matter of some uncertainty. The Outlook assumes that the market for oilseeds does not change substantially relative to the current setting. At the same time, trend rates of yield growth are typically used, implying that technological progress continues in some form. Clearly, deviations from our neutral assumption about the use of transgenic crops are possible and could impact on oilseed and oilseed product markets in the medium-term future.

The surrounding context is key

Of course, the Outlook projections for oilseed markets depend on external factors, including the results of the other sectors. As mentioned before, the macroeconomic and weather assumptions are critical factors. In addition, the projections call for declining real cereal prices, save rice, so competing land uses are unlikely to be more attractive than oilseed area. There is also a growing demand for oilseed meal to be used as an input to rising livestock production, as will be discussed later.

Note 1. A USDA report reported that total-farm costs of production were 20-25% lower in Brazil and Argentina as compared to those of the USA in calculations based on late 1990s data. This same report highlighted the greater transportation costs of moving soybeans from the interior of South America to port facilities. (See Agriculture in Brazil and Argentina, WRS-01-3.) 68

© OECD 2003

THE MAIN DRIVING FORCES IN UKRAINE’S FUTURE AGRICULTURAL AND TRADE DEVELOPMENT In the following assessment of the major forces driving agricultural policy and trade in Ukraine in the coming years, we begin with a brief assessment of Ukraine’s comparative advantage in agriculture. This is followed by a discussion of the main macroeconomic, sector- and product-specific factors that will influence Ukraine’s future agricultural trade and development. We close with some simple projections of Ukraine’s future production and trade in grains.

1.

Comparative advantage

Ukraine has a considerable physical agricultural potential. It combines a large area (33.3 and 7.5 million hectares of arable land and permanent pasture, respectively) with fertile soils (roughly 40% of the world’s black soils), year-round ice-free ports and proximity to key import markets in the Middle East, Northern Africa and, potentially, the EU. The mention of Ukraine still conjures up visions of boundless fields of grain, of a European breadbasket. At the onset of transition, many observers expected that the combination of this physical potential with improved technology and market driven allocative efficiency would lead to agricultural growth and the rapid emergence of a new “global player” on world markets. However, between 1991 and 2000, gross agricultural production declined by 39% (in 1996 constant prices). Moreover, the share of agriculture in Ukrainian GDP shrank from 20% in 1990 to only 11% in 2000. This has led some to conclude that the potential of Ukrainian agriculture has been overstated, that Ukraine’s soils have been damaged by decades of misuse, and that recurrent droughts and harsh winters represent a major constraint. Others conclude that the amount of institutional reform and enterprise restructuring required to tap Ukraine’s potential is much larger – and that the country’s emergence as a global player will take correspondingly longer – than initially anticipated. Which view is correct? Does Ukraine have a true comparative advantage in agriculture? To answer these questions it is helpful to look beyond averages. Farm performance in Ukraine is very heterogeneous due to differences in how farmers have attempted to overcome the rigidities of the transition period and in their management skills. At least until 2000, the technical efficiency of Ukrainian farms decreased on average,1 while at the same time becoming more heterogeneous.2 STRIEWE et al. demonstrate that data on the average profitability of all farms in Ukraine masks a great deal of variability between farms (for example from –92% in the first quintile in 2000 to 69% in the fifth quintile in 2000).3 Of course, farm sectors are heterogeneous everywhere. But there is reason to believe that this is especially true in transition economies where market disciplines that lead to exit – such as bankruptcy and competition for scarce resources such as land – do not yet function fully.4 Hence, in order to cast light on the true competitive potential of Ukrainian agriculture, it is important to

© OECD 2003

69

Figure 28. Whe at yie lds in Ukraine , the US and the EU, 1992-2002 (1992 = 100) 140 Wheat yields (1992 = 100)

EU

120 100

United States

80 60

Ukrainia

40 20 0 1992

Source:

1994

1996

1998

2000

2002

FAO database (www.fao.org); own calculations.

avoid the pitfalls of data on average performance and focus instead on those farms that have succeeded in performing well in recent years. From this perspective it would appear that Ukraine does indeed have a significant comparative advantage in grains and oilseeds as well as milk production. Domestic Resource Cost (DRC) analysis of average vs. best practice farms in Ukraine demonstrates that while the former remain uncompetitive, the latter have emerged from the financial crisis and key agricultural policy reforms in 1999-2000 able to produce grains and oilseeds competitively.5 A similar analysis of best practice farms points to competitive milk production.6 There are also indications that as the availability of domestically produced feedstuffs increases, competitive pork and poultry production will emerge as well. Sugarbeet appears to be one major crop that is not competitive without government support, although there may be some potential for local concentrations of production in the neighbourhood of sugar processing plants that are able to process imported raw sugar in the off-season.7 I n r e t r o s p e c t i t do e s a p pe a r t h a t m a n y o b s e r v e r s o r i g i n a l l y underestimated the amount of restructuring, modernisation and institutional change that would be required to tap Ukraine’s agricultural potential. And it is clear that both precipitation and winter conditions will continue to be factors that can significantly limit production in any given year. 8 As Figure 28 illustrates, crop yields are considerably less stable in Ukraine than in the EU and the US. The corresponding risk increases costs of production in Ukraine and could reduce its reliability as a supplier on world markets. On the other hand, the great majority of Ukrainian farmers are not applying existing technologies that can mitigate climate-induced variability, and not all of the variability in Figure 28 can be attributed to climate; some is due to the agricultural crisis triggered by the onset of transition and aggravated by subsequent policy failures. In summary, there is evidence that Ukraine does have a potential comparative advantage in agriculture. The key question is how quickly might the current distribution of Ukrainian farms “shift to the right” in terms of performance and competitiveness? In other words, how quickly will less 70

© OECD 2003

Figure 29. Change s in re al GDP in Ukraine , in % to pre vious ye ara 15 % 10 5 0 -5 -10 -15 1995

1996

1997

1998

1999

2000

2001

2002

2003

a) 2003 is forecast. Source: State Statistics Committee of Ukraine (various years).

efficient farm structures and managers be forced to exit, freeing resources to be used by others? There are indications that the distribution began to shift quite rapidly in 2000, as Ukrainian agriculture entered its recent phase of dynamic growth. Whether this growth and the unfolding of Ukraine’s agricultural potential continues will depend on a series of factors that are largely determined by policy. In the following section, the most important of these factors are presented and discussed.

2.

Factors that will influence future agricultural growth and trade

2.1. Macroeconomic stability and growth It is not surprising that the recent resurgence of agriculture in Ukraine coincides with an improvement in overall economic performance. Of course, the underlying causalities are complex and mutual, with agriculture both contributing to and benefiting from overall economic performance. Since the financial crisis in 1998/99, Ukraine has enjoyed three years of macroeconomic stability. Inflation has fallen to relatively low levels, the exchange rate has been stable and Ukraine is running trade and current account surpluses.9 Most importantly, after almost a decade of economic decline following Independence, Ukraine has experienced three successive years of economic growth (Figure 29). The forecasts for 2003 and beyond are, of course, conditional, but most analysts are calling for continued GDP growth of between 2.5% and 4.6% in 2003. Continued growth and macroeconomic stability would encourage continued agricultural development in Ukraine. As an activity that requires significant investment in specific and durable inputs, agriculture is very sensitive to macroeconomic instability in the form of exchange rate, inflation and interest rate fluctuations. Agricultural decline in the early to mid-1990s was exacerbated by hyper-inflation that made even short-run planning within a single crop cycle next to impossible. In recent years, private banks and

© OECD 2003

71

input suppliers have cautiously begun to provide agricultural producers with credit. Continued macroeconomic stability would further reduce the risk premium component of real interest rates which – coupled with continued reform of Ukraine’s banking sector – would lead to further increases in lending to agriculture. Future rates of growth will also influence incomes and, hence, domestic demand for food in Ukraine. Continued robust growth would translate into increasing derived demand for grains and oilseeds as feedstuffs in the livestock and dairy sectors, thus moderating the potential growth in grain and oilseed export surpluses. Calculations based on anticipated changes in demand for livestock products as a function of income, and incorporating plausible assumptions regarding feed conversion, all demonstrate, however, that it is unreasonable to expect increasing demand for meat and milk to actually threaten Ukraine’s position as a net exporter of grain and oilseed products (see section 3 below). Note as well that in some projections of future feed use and livestock supply/demand, Ukraine becomes a net exporter of meat products, especially pork and poultry. Continued growth and increasing incomes could also have an important impact on the political economy of agricultural support in Ukraine, increasing both the demand for and supply of protectionist measures. As food has a weight of roughly 65% in the Ukrainian consumer price index (CPI), policy makers in Ukraine have until recently tended to pay little more than lip service to agricultural price support. Indeed, for staple products such as bread, regional authorities have tended to be primarily concerned with enforcing price ceilings. Increasing incomes would tend to reduce the share of food in the Ukrainian consumer price index and with it, the sensitivity of consumers to food price increases. Increasing incomes would also lead to increasing tax revenues and thus relax the budget restriction that has, to date, proved to be the single most effective factor disciplining agricultural policy makers in Ukraine. Given an improved tax base and a reduced share of consumer spending on food, it is reasonable to expect that political pressures in Ukraine would lead to the adoption of a broad array of agricultural support tools. In some regards, the situation in Ukrainian agriculture today resembles that which prevailed in many industrialised countries following the Second World War. True, in the industrialised countries farms had to become larger while in Ukraine many farms are too large to be manageable. However, in political economic terms, the agricultural population in Ukraine is large, and agriculture is in desperate need of modernisation and restructuring that will inevitably result in significant labour shedding, regardless of whether or not farms downsize. In the industrialised countries, policy makers responded to this pressure on excess labour in agriculture with measures – such as the EU’s Common Agricultural Policy – that were designed to attenuate or at least delay and smooth reallocation. Recent policy developments in Ukraine (the implementation of sugar quotas, an intervention system for grain and import protection for meat products) suggest that similar forces are at play here as well.

72

© OECD 2003

Figure 30. De ve lopme nt of nominal (NEER) and re al e ffe ctive e xchange rate s (REER) in Ukraine , 1996-2002 a 200 1995 Q4 = 100 160

120

NEER

80 REER 40

0 1996 Q1

1997 Q1

1998 Q1

1999 Q1

2000 Q1

2001 Q1

2002 Q1

a) Both nominal and real effective exchange rates are calculated using approximate trade weights of one third each for the Russian Federation, the USA and the euro zone. The REER is defined as the NEER multiplied by producer price indices (PPI) in the trade partners divided by consumer price index (CPI) in Ukraine. Source: Own presentation based on UEPLAC (March 2002), Ukrainian Economic Trends, TACIS Project in Ukraine; National Bank of Ukraine (www.bank.gov.ua); US Department of Labour (www.bls.gov); European Central Bank (www.ecb.int) and Central Bank of the Russian Federation (www.cbr.ru).

2.2. Exchange rate developments The exchange rate is a macroeconomic parameter that deserves special consideration in the context of agricultural performance. Exchange rate changes will continue to exert an important influence on the development of agriculture and agricultural policies in Ukraine. There is general agreement that the recent phase of economic growth in Ukraine was at least triggered by the significant nominal and real depreciation of the Ukrainian Hryvnia (UAH) that followed the Russian financial crisis in late 1998. Producers of tradable products – including many agricultural commodities and processed food products – benefited from a significant increase in competitiveness as a result of this depreciation. The exchange rate between the UAH and a basket of the most important foreign currencies (USD, Euro and Russian Rouble) has been relatively stable since mid-2000, and the same can be said of the real effective exchange rate (Figure 30). Given Ukraine’s economic growth, its trade and current account surpluses, and its fiscal discipline in recent years, current real exchange rate developments would appear to be sustainable. However, any return to the sort of real exchange rate overvaluation that developed in the course of the mid-1990s would have a negative impact on Ukraine’s export oriented agriculture which, in the absence of significant support – for example in the form of export subsidies – must be based on cost leadership. 2.3. Population A final macro-factor of considerable importance is the Ukrainian population. According to the United Nations” Population Division, Ukraine has the fastest decreasing population of all countries in the world with an annual growth rate of –0.3%. In a medium fertility forecast, the share of

© OECD 2003

73

Ukraine’s population aged 60 years and above will increase from 20.5% in 2000 to 27.5% in 2020 and 38.1% in 2050.10 Currently, 36.3% of the rural population is composed of pensioners, compared with roughly 24% in urban areas. Both the shrinking and the aging of the Ukrainian population will dampen domestic food demand. Unless policy makers succeed in instituting a viable social security system including punctual and sufficient pensions, a high and growing share of pensioners in rural areas will increase the burden on farms to continue providing social services for former employees. An ageing population could also imply shortages of the skilled and trained labour that is required in modern, capital-intensive agriculture. While domestic demand restrictions due to population decline would tend to increase exportable surpluses, a shortage of skilled labour would represent a significant threat to the continued modernisation of agriculture in Ukraine and the growth of competitive agricultural exports. 2.4. WTO membership WTO membership would improve the overall economic environment within which Ukrainian agriculture operates. Most important, it would contribute to continued economic reforms in Ukraine – for example in the banking sector – that would also benefit agriculture. Specifically in agriculture, WTO membership would have a number of important implications. First, as a WTO member Ukraine would have access to the dispute settlement mechanism. When the EU recently imposed import quotas on Ukrainian grain it was able to do so unilaterally as Ukraine is not a WTO member.11 Second, as a WTO member Ukraine would be able to add its voice to those of other small-country exporters who cannot compete with the subsidies paid in larger exporting countries, but rather must compete on the basis of cost leadership. These countries are especially dependent on a level playing field, and the stronger their position within the WTO, the greater the chance that future negotiations will lead to meaningful disciplines on the unfair use of subsidies and support. Ukraine’s agricultural negotiations with its WTO working party are focussing on the specific issues of market access, domestic support and export subsidisation that structured the Uruguay Round Agreement on Agriculture. In the area of market access, Ukraine has offered tariff reductions that would lower its average tariffs from roughly 30 to 14% (Figure 31).12 Of course, as Ukraine increasing evolves into a net exporter of major agricultural products (sugar possibly being an important exception, see below), the level of its import tariffs on agricultural outputs will lose significance. Indeed, a potentially much more important issue to watch will be market access for imports of key agricultural inputs such as agri-chemicals and machinery. These imports are currently subject to both tariff and extensive non-tariff barriers, for example in the form of complex and sometimes arbitrary certification requirements. These barriers tax Ukrainian agriculture and reduce its competitiveness by increasing the production costs and slowing the adoption of modern agricultural technology and know-how. The most contentious agricultural issue in Ukraine’s current WTO negotiations with its working party is that of domestic support. Ukraine is currently requesting an aggregate measure of support (AMS) of 74

© OECD 2003

Figure 31. Curre nt import tariffs and tariffs propose d by Ukraine in its ne gotiations on WTO me mbe rship, se le cte d agricultural products. 60 Current

Offered

50 40 30 20 10

su ga r

M

ea

t

l Su no i

Bu tte r

Fl ou r

ta to es Po

ee d ns Su

Co

ar

se

W

gr ai ns

he at

0

Source:

Von Cramon-Taubadel, S. and S. Zorya (2002), The implications of WTO-Accession for Ukrainian Agricultural Policy, Paper presented at International Conference “Ukraine’s WTO Accession: Challenge for Domestic Economic Reforms” on December 11-12 in Kyiv, Ukraine.

USD 1.38 billion based on a 1994 to 1996 base period. Some members of the working party are insisting that a 1997 to 1999 base period be used instead; this would reduce the bound AMS to merely USD 0.0607 billion (USD 60.7 million), severely limiting domestic support policies in the future.13 According to KOBUTA and SHEVZOV, Ukraine’s AMS amounted to 1.88 billion UAH in 2001. In addition, 1.06 billion UAH of green box spending took place, for a total of 2.94 billion UAH of agricultural support (equivalent to roughly USD 0.55 billion). 14 If tax exemptions granted to agriculture are considered as well (see below), total agricultural support in 2001 increases by 1.87 billion UAH to 4.81 billion UAH or USD 0.91 billion. This figure corresponds to roughly 7% of gross farm receipts in 2001. If the Ukrainian government had in 2001 been in a position to provide the full USD 1.38 billion of support that it would like to see bound in the WTO, total support would have amounted to 11 rather than 7% of gross farm receipts. Perhaps most significantly, in its ongoing negotiations Ukraine has already accepted that as a WTO member it would not be permitted to use export subsidies. Coupled with the fact that Ukraine is likely to be a net exporter of most important agricultural commodities, this restriction will greatly reduce the number of options available to agricultural policy makers in the future. If a country is a net exporter of a given commodity, then any form of price support inevitably creates a need for implicit or explicit export subsidisation. If this subsidisation is not permitted, then price support is not a feasible option. This point has escaped many Ukrainian policy makers so far; many of those who espouse WTO membership for Ukraine are, at the same time, proponents of the intervention and pledge price systems for grain that were implemented in 2002. Of course, at the moment the government of Ukraine cannot afford extensive price support measures. Regardless, perhaps the single most important implication of WTO membership for Ukraine is that

© OECD 2003

75

the repudiation of export subsidies will force Ukrainian policy makers to consider alternatives to price support policies, if and when these policies become affordable. As price support policies are known to be among the most inefficient and distortive means of providing agricultural support, repudiating export subsidies could generate significant gains for Ukraine in the long run. Russia is also negotiating WTO membership. Russia and Ukraine are each wary that the other might successfully conclude its negotiations first, because this country could then join the working party responsible for the remaining negotiations with the other, burdening these with bilateral Ukrainian/Russian is s u e s . S ta b le a g ri c u lt u ra l t ra d e re la t io n s w it h R u s s ia a n d o th e r Commonwealth of Independent States (CIS) members would be beneficial to Ukraine. Despite much talk of free trade agreements, agricultural trade within the CIS continues to be subject to all manner of ad hoc barriers and restrictions.15 A free trade agreement has been ratified by the Ukrainian Rada but not by the Russian Duma. An important agricultural trade issue between Russia and Ukraine at the moment concerns the Russia’s new import quotas for meat and dairy products coupled with significantly increased tariffs on out-of-quota imports. This new system does not (yet) apply to imports from Ukraine, but it nevertheless represents a significant threat, as 95% (60%) of Ukraine’s beef (milk) exports are destined for Russia. 2.5. The taxation of agriculture As outlined above, roughly 50% of the total support currently provided to farmers in Ukraine (1.87 of 3.75 billion UAH, excluding green box measures) is provided in the form of tax exemptions which are not included in AMS calculations. Currently, farms pay what is referred to as a “unified agricultural tax” of 0.3-0.5% of the value of their land calculated as the product of land area and an artificial price that depends on land quality. This taxation regime is scheduled to expire at the end of 2003, and whether it is extended or replaced by some other type of system is likely to be one of the most controversial agricultural policy topics in the near future. The low unified agricultural tax on land represents a sizeable implicit subsidy to agriculture, especially to the profitable farms that would otherwise have to pay some form of earnings or performance-based tax. It is also biased in favour of livestock operations – for example in poultry production and pork finishing – that use little land. A shift from the current land-based to a profitor earnings-based taxation system in agriculture would significantly redistribute the tax burden, especially towards those perhaps 15% of the farms in Ukraine that are competitive and profitable. While there is a general consensus that agriculture should be making a greater contribution to tax revenues in Ukraine (although agriculture currently contributes roughly 13.4% of Ukraine’s GDP, it accounts for only 1.5% of total tax revenue), there is considerable political pressure for the extension of the unified land tax beyond the end of 2004. A current draft law calls for the extension of the “unified agricultural tax” until 2010, coupled with a change in the definition of “agricultural enterprise” that is used to determine eligibility for this tax. Under the current system, enterprises that derive at least 50% of their revenues from agricultural sales are considered “agricultural” for taxation 76

© OECD 2003

purposes,16 this would increase to 75% under the proposed law. The “unified agricultural tax” represents one of the few ways in which Ukrainian policy makers can provide a significant volume of support to agriculture, and this support is not included in AMS calculations. Proponents of the current system argue that i) it is very simple and does not require detailed bookkeeping by farms, and ii) that farms are heavily taxed indirectly in the form of their responsibility for the so-called “social sphere” in rural areas, i.e. the provision of many basic services to pensioners, maintaining school facilities, etc. The former objection is questionable: Most agricultural land in Ukraine is farmed by a relatively small number of large commercial farms (roughly 14 000) and a positive side-effect of a profit- or earnings-based tax system would be that it would force these farms to keep accurate books. As banks begin to implement stricter Basel II standards 17 when evaluating lending risks and determining lending conditions, these farms will need proper bookkeeping systems anyhow if they are to access affordable credits to modernise and grow. The second objection, however, is better founded. Regional and local governments in Ukraine are chronically under-funded, and in many rural areas farms are expected and effectively required to provide social services that would normally fall under the jurisdiction of these levels of government. According to estimates made under similar circumstances in Russia, the provision of these services increases farm costs by 10 to 30%.18 Whether or not Ukraine succeeds in improving its system of fiscal federalism and disburdening its farm enterprises of many implicit and explicit social tasks will have an important medium and long-term bearing on the competitiveness of Ukrainian agriculture. 2.6. Farm restructuring – bankruptcy and land markets Beside the future system of agricultural taxation in Ukraine, the future implementation of farm bankruptcy proceedings and land market developments in Ukraine will play an important role in the restructuring of Ukrainian agriculture. Official data suggest that roughly 58% of all large commercial farms in Ukraine made losses in 2002. The corresponding shares were 85, 52 and 33% in 1999, 2000 and 2001, respectively. Of course, this data must be interpreted with caution. It is largely based on Soviet accounting principles including, for example, unrealistic allowances for depreciation. Furthermore, farms must assume that any data they make available will end up with the tax authorities, so their reports will be biased. Nevertheless, most observers will agree that perhaps one-third of the large commercial farms in Ukraine are not viable and have been accumulating losses since at least the mid-1990s. These farms remain in operation because they are permitted to accumulate tax arrears and/or do not pay wages and land rents in full. Under the conditions prevailing in a market economy, these farms would have to declare bankruptcy, which would lead to a reallocation of the resources that they employ towards more profitable enterprises. As the gap – especially in terms of management – between the perhaps 15% “best practice” farms in Ukraine and the “average” farms is very large indeed, the current misallocation of resources represents a very significant source of latent agricultural potential in Ukraine.19 Since 2001, the earlier moratorium

© OECD 2003

77

on bankruptcies in agriculture has been formally suspended. In practice, however, very few if any bankruptcy proceedings have been initiated, and some policy makers are pushing for a reinstatement of the moratorium. As a result, farm restructuring is occurring at a considerably slower rate than would otherwise be the case. Along with the bankruptcy issue, the future development of Ukraine’s market for agricultural land will play an important role in determining the rate of structural change. While a Land Code that provides for the purchase and sale of agricultural land as of 2005 was passed in October 2001, policy makers in Ukraine cite roughly 30 pieces of subordinate legislation and regulations that must be adopted to complete the institutional framework for a functioning land market (for example establishing a cadaster system, providing for land mortgage, etc.). The importance of a market for the purchase and sale of agricultural land is sometimes exaggerated at least as regards the short and medium term. As the profitability of agriculture in Ukraine is low, land prices are low as well, which limits the value of land as collateral for credit. Furthermore, farms are undercapitalised and will not be in a position to make significant land purchases in the foreseeable future. Hence, the most important land-related issue in Ukrainian agriculture in the coming years will be the continued development of the rental market for agricultural land. A functioning land rent market provides efficient farms with a means of expanding that does not depend on access to long term credit. It also puts less efficient farms under pressure to either improve performance or exit the sector. Ensuring that land rent markets function efficiently and equitably will, however, likely prove difficult. While the former collective farms are large, individual ownership shares in the land pertaining to these farms are small (on average roughly 4 hectares).20 Under these conditions it is easy to imagine that the land rental market will be characterised by significant information and power asymmetries, and that individual land owners will often find that there is no real competition for their holdings. Farm managers are often in a position to exert considerable pressure on individual land owners to make them accept long term lease agreements and otherwise reduce the competitive pressure that a functioning lease market could generate, especially if transactions need not be recorded and registered. 2.7. The implicit taxation of agriculture While policy makers in Ukraine often refer to the need to support farmers, two important policy measures in recent years have effectively imposed a significant tax on agriculture. The first of these is the question of export value added tax (VAT) arrears. For roughly two years now, the tax authorities in Ukraine have delayed VAT refunds to exporters. By September 2002, total VAT arrears amounted to 6.4 billion Hryvnia (or 3.6% of GDP) of which roughly 2.2 billion UAH were overdue. As might be expected given the elastic demand for Ukrainian export products on world markets, grain and oilseed traders have reacted by reducing the prices that they are willing to pay farmers for produce by a corresponding amount, so that delayed or outstanding VAT refunds act as an implicit tax on agriculture. The second of these measures is the export tax on oilseeds in Ukraine. This tax was instituted in response to pressure by oilseed crushers and has 78

© OECD 2003

Figure 32. De ve lopme nt of milling whe at price s in Ukraine , 1999-2002 1 200 UAH/t 1 000

Ukrainian price (food wheat III class, EXW)

World market price (US HRW #2, fob Gulf)

800 600 Trend + Marketing costs

400

World market price trend 200 Trend – Marketing costs 0 1999

Source:

2000

2001

2002

USDA Wheat Market Outlook, various issues; UkrAgroConsult Weekly Market Report, various issues.

been in effect for several years. It currently amounts to 17% and has a similar effect as the VAT arrears, reducing farm gate prices for sunflower seed. Sunflower seed exports are affected by both measures, of course. The elimination of these respectively implicit and explicit taxes would increase farm gate prices and thus provide a considerable boost to Ukrainian crop production, leading to increased export surpluses. 2.8. Marketing infrastructure On agricultural markets, a key factor influencing future competitiveness will be policy vis-à-vis the development of marketing infrastructure. As illustrated in Figure 32, Ukrainian grain prices have in recent years behaved more or less in accordance with theory, lying below world market prices in years for which Ukraine was a net exporter, and correspondingly above in years for which Ukraine was a net importer. Notable exceptions occurred in early 2000, when the imposition of a grain import tariff led to a price peak that was quickly corrected after tariff rate quotas were introduced, and in late 2002 when US prices no longer acted as the world market reference prices, a role that was largely assumed by Black Sea grain. The important issue is that grain marketing costs are considerably higher in Ukraine than in comparable exporting countries, so that in a net export situation Ukrainian producers receive a much lower share of the world market price than their competitors in other countries.21 Marketing costs are excessive because infrastructure is old and out-dated and was largely geared to moving grain and other agricultural exports from Ukraine “up” to other Soviet republics rather than “down” to world markets via the Black Sea. Marketing costs are also excessive because the allocation of scarce infrastructure such as railcars and harbour terminals continues to be managed in an opaque manner by state and para-statal monopolies, and because until recently foreign investors were not permitted to invest in upgrading harbour and transport facilities and other socalled “strategic” infrastructure. Of course, these latter explanations can be considered a result of policy failure and thus a further source of implicit taxation of agriculture (see section 2.7 above).

© OECD 2003

79

Ukrainian authorities have recently begun to recognise this problem and, in particular, improve the environment for foreign investment in facilities such as harbour terminals. Grain traders are beginning to explore options for using the Dnjepr as a Ukrainian “Mississippi”, bypassing bottlenecks in the railroad system on the way to world markets. In the coming years marketing infrastructure could be one of the most important sources of foreign direct investment in Ukrainian agriculture and the economy as a whole, gradually widening a bottleneck that has limited the efficiency and volume of grain and oilseed exports in recent years. The result would be increasing farm gate prices for major crop products and, hence, increased profits for Ukrainian farms. However, recent actions taken against traders and reform-oriented policy makers, who are accused of causing shortages of wheat and rapid price increases in early 2003 (see Figure 32), could curtail or even put an end to these investments.22 2.9. Price discovery and transparency Roughly 700 exchanges are registered in Ukraine (!). Most exist only on paper, and none has been able to establish a reputation as the undisputed location for price discovery on Ukrainian agricultural markets. Dependable and up-to-date price information is correspondingly scarce. In addition, regional market integration is weak in Ukraine as regional authorities still sometimes interfere in the movement of goods between Oblasts. Especially grain and sugar are still regarded by many as “strategic” commodities, for which information should not be widely or freely available. As a result, farmers have a difficult time collecting accurate information and making the best possible production and marketing decisions. In recent years, regular agricultural newsletters and market reports have emerged and some reliable price and market information has become available. On 16 January 2003, a commodity futures market was founded in Ukraine. It will obviously take some time before this market opens for trade, and it is not yet clear what contracts will be traded, although wheat and sunflower futures are obvious candidates. If this futures market develops, it could prove a very important market institution in Ukraine, providing farmers, processors and traders with both a hedging tool and a source of current, accurate information. It remains to be seen whether this market will be able to attract the required liquidity and acquire the reputation it needs to succeed. This will take considerable time at best and will depend, among other things, on whether or not Ukrainian policy makers resist the urge to misuse this market as a tool for somehow regulating domestic or foreign trade in “strategic” commodities. 2.10.The unique case of sugar Sugar is somewhat unusual among the major crop products in that Ukraine has been a net importer of sugar for several years now. In the mid1990s, when Ukraine was still exporting sugar, export parity prices were correspondingly low and farms increasingly turned to more profitable grain and oilseed crops. Policy makers responded by implementing a quota system based on that used in the EU. In practice, this sugar quota has not yet proven to be binding on production. Sugarbeet production has recovered somewhat 80

© OECD 2003

recently in response to incentives, but this is limited by a variety of factors including the need for specialised equipment and the fact that while grains and oilseeds can generally be sold for cash, sugar refineries tend to pay for sugarbeet with so-called tolling arrangements, i.e. in the form of white sugar. Domestic sugar prices are largely determined by tariff rate quotas for imported raw sugar and by the amount of smuggled sugar that enters from neighbours such as Russia and Belarus. Sugar is the one product for which Ukraine has not offered any tariff concessions in its current WTO negotiations, having requested that its current import tariff of 50% be bound without reduction (see Figure 31). The size of Ukraine’s tariff rate quota for raw sugar – which is likely to be fixed somewhere between 0.20 and 0.26 million tonnes – is currently being negotiated. To the extent that some combination of import controls and production quota maintains sugar prices in Ukraine above the world market level (domestic white sugar prices in Ukraine are roughly 400 USD/t) sugarbeet will continue to compete with export crops such as grains and oilseeds in Ukraine, reducing the production and exportable surpluses of these crops. 2.11. Human capital in Ukrainian agriculture Education in the Soviet Union did not emphasise the analytical and management skills that are needed to guide business and policy decisions in a market economy. While impressive efforts have been made, 11 years of transition have left most of the education system in Ukraine chronically under-funded and plagued by rigidities that make careers in research and education very unattractive for young individuals. Education and research in agriculture – especially in economic disciplines such as farm business management and market and policy analysis – are no exception. Modern agriculture depends on highly skilled and trained individuals, but the educational system in Ukraine is at the moment incapable of providing either the required quantity or, with few exceptions, the required quality. Foreign and domestic investors alike complain that human capital is perhaps the single most important limiting factor in Ukrainian agriculture today. To relax this constraint, Ukrainian policy makers will have to significantly increase spending in the area of agricultural education and research. They will also have to open the current system, making it possible for young scientists and teachers to either move into existing positions of independence and responsibility, or to create new institutions that can compete with and revitalise the old. In the short run they should request more aid from bilateral and multilateral donors to train large numbers of students and young researchers and teachers abroad, and to create “re-entry” opportunities for these researchers and teachers back in Ukraine after they have completed this training.

3.

Projections of production and trade for wheat and coarse grains in Ukraine

Projecting agricultural production and trade is a difficult exercise at best, and especially so in the case of a country such as Ukraine. As outlined above, a great number of policy “unknowns” will influence future performance. The rough projections presented below run from 2003 to 2008. They are generated

© OECD 2003

81

using simple product balance spreadsheets and based on plausible assumptions regarding annual rates of change in supply and disappearance. Neither elasticities nor prices – which are assumed to change in line with the OECD outlook projections – are explicitly considered. In all of the projection scenarios presented below it is assumed that demand will be driven on the one hand by real income growth of roughly 4% per year. On the other hand, the population of Ukraine decreased by 0.8% per year between 1996 and 2002, and it is assumed that it will continue to decline at 0.5% per year, resulting in roughly 47 million inhabitants by 2007. The macroeconomic environment is assumed to remain stable. We assume that there are no major changes in agricultural policy in Ukraine and that current trends – for example improvements in marketing infrastructure and the gradual development of agricultural credit systems – continue. Changes that could lead to more rapid growth in production and trade include a major offensive in the areas of training and education, the stricter enforcement of budget constraints and bankruptcy in agriculture, and the reduction of implicit taxes on farming in Ukraine (e.g. VAT refund arrears). Macroeconomic instability and a reduction in the pace of reform – or even backtracking – represent the most important threats to the projections outlined below. For both wheat and coarse grains a range of projections are provided based on pessimistic vs. optimistic assumptions on the one hand, and 2 different base years on the other. In one set of projections 2002-03 – a good year in agro-climatic terms – is taken as the base year, and in the other set of projections an average of the 1998-99 to 2002-03 crop years is used instead. The result is a two-by-two matrix of projections for both wheat and coarse grains. Average yields, production and exports for 2006-07/2007-08 are presented below. 3.1. Wheat projections In the optimistic scenario it is assumed that production will grow by 2.5% per year through 2005, and by 3% thereafter, driven by increases in harvested area of 1% per year throughout and yield increases of 1.5% and 2% per year up to and after 2005, respectively. In the pessimistic scenario, 0.5% per year increases in the harvested area is combined with yield increases of 1% and 1.5% per year up to and beyond 2005, respectively. The result is annual production increases of 1.5% up to 2005 and 2% thereafter. In the optimistic scenario feed wheat demand is projected to increase by 3% per year as compared with 2% per year in the pessimistic scenario. In both scenarios imports are assumed to remain at 5 000 tons per year, domestic food wheat consumption is assumed to increase by 0.5% per year from a base level of 139 kg/capita, and seed use remains constant at 0.18 tons/ha. In line with historical averages, losses are assumed to amount to a constant 6% of production, and the ratio of final stocks to total disappearance is also assumed to be 6%. 3.2. Coarse grain projections The same area and yield trend assumptions outlined above for wheat above are assumed to characterise coarse grains as well. As in the case of wheat, feed grain demand is projected to increase by 3% per year in the 82

© OECD 2003

Table 3.

Proje ctions of Ukrainian whe at yie lds, production and e xports in 2006-07/2007-08

Base period

Optimistic scenario

Pessimistic scenario

2002-03

Yield = 3.14 tonnes/ha Production = 22.3 mill. tonnes Exports = 7.6 mill. tonnes

Yield = 3.07 tonnes/ha Production = 21.3 mill. tonnes Exports = 7.0 mill. tonnes

1998-99 to 2002-03

Yield = 2.83 tonnes/ha Production = 18.0 mill. tonnes Exports = 4.5 mill. tonnes

Yield = 2.77 tonnes/ha Production = 17.2 mill. tonnes Exports = 4.0 mill. tonnes

Source:

Own calculations using data from UkrAgroConsult.

optimistic scenario as compared with 2% per year in the pessimistic scenario. In both scenarios imports are assumed to remain at 130 000 tons per year, domestic food wheat consumption is assumed to increase by 0.5% per year from a base level of 48 kg/capita, and seed use remains constant at 0.2 tonnes/ha. In line with historical averages, losses are assumed to amount to a constant 7% of production, and the ratio of final stocks to total disappearance is assumed to be 4%. Table 4. Proje ctions of Ukrainian coarse grain yie lds, production and e xports in 2006-07/2007-08 Base period

Optimistic scenario

Pessimistic scenario

2002-03

Yield = 2.31 tonnes/ha Production = 18.6 mill. tonnes Exports = 4.5 mill. tonnes

Yield = 2.26 tonnes/ha Production = 17.8 mill. tonnes Exports = 4.2 mill. tonnes

1998-99 to 2002-03

Yield = 2.01 tonnes/ha Production = 14.7 mill. tonnes Exports = 2.5 mill. tonnes

Yield = 1.96 tonnes/ha Production = 14.1 mill. tonnes Exports = 2.3 mill. tonnes

Source:

Own calculations using data from UkrAgroConsult.

The projections in Tables 3 and 4 highlight the importance of base year assumptions. To the extent that performance in 2001-02 and 2002-03 was due more to good weather than to an improved macroeconomic and policy environment and the resulting restructuring in agriculture, one might expect total Ukrainian grain exports to average between 6 and 7 million tonnes per year by the middle of the current decade. To the extent that the opposite is true, one might expect exports in the range of 11 to 12 million tonnes. Both sets of projections suggest that assumptions regarding yield and feed demand trends (optimistic vs. pessimistic scenarios) are less critical, generally generating differences of no more than 0.5 million tonnes. It must be stressed that yields and other variables cannot be expected to adhere strictly to the smooth trends that underlie these projections; actual performance in individual years could depart considerably from the projections in Tables 3 and 4.

© OECD 2003

83

Notes 1. See Kurkalova, L. and H. Jensen (1996), Production Efficiency in Ukrainian Agriculture and the Process of Economic Reforms, Centre for Agricultural and Rural Development, Iowa State University, September; and Murova, O. (2000): Farm Efficiency in Ukraine and Russia: Comparative Analysis, Ph.D. thesis, Mississippi State University. 2. Lissitsa, A. and M. Odening (2001), Effizienz und totale Faktorproduktivität in der ukrainischen Landwirtschaft im Transformationsprozess, Humboldt-Universität zu Berlin. Working Paper No. 58/2001. 3. Striewe, L., O. Starikov and I. Chapko (2001), Rural Finance in Ukraine – Extending the Frontier, in von Cramon-Taubadel, S., S Zorya and L. Striewe (eds.), Policies and Agricultural Development in Ukraine, Shaker Verlag: p. 53-69. 4. For example, Brümmer and Loy find that in Schleswig-Holstein, Germany, during the period 1987-1994, only 10% of the dairy farms in a panel sample displayed a substantial degree of inefficiency. See Brümmer, B. and J-P. Loy (2000), The Technical Efficiency Impact of Farm Credit Programs: A Case Study of Northern Germany, Journal of Agricultural Economics, Vol. 51, No. 3, p. 405-418. 5. Von Cramon-Taubadel, S. and S. Zorya (2002), (When) Will Ukraine be a Global Player on World Agricultural Markets? Paper presented at X Congress of European Association of Agricultural Economists (EAAE) in Zaragoza, Spain. 6. See Venema, J. (2002), Die Struktur und die Wettbewerbsfähigkeit der ukrainischen Milchwirtschaft: Teil 1 Milchproduktion, Masters Thesis, Georg-AugustUniversität Göttingen. 7. See Benecke, C. and S. Von Cramon-Taubadel (2001), The Present and Future Profitability of Sugar Production in Ukraine, in von CramonTaubadel, S., S. Zorya and L. Striewe (eds.), Policies and Agricultural Development in Ukraine, Aachen, Shaker Verlag. 8. For example, there are indications that a particularly harsh winter in 2002-03 will have a significant impact on the size of the crop in 2003. 9. As a matter of fact, the rate of inflation in 2002 was –0.6%, in large part due to falling food prices. Up-to-date information on macroeconomic performance in Ukraine is compiled by the Institute for Economic Reform and Policy Consulting in Kiev in its Monthly Economic Monitor Ukraine and its Macroeconomic Forecast Ukraine (www.ier.kiev.ua). 10. See Kuhn, A. and S. Starikov (2003), Social Security Challenges in Rural Ukraine – The Case of Rural Pensioners, German Advisory Group Paper, Kyiv. 11. While the EU did offer consultations, Ukraine was not in a position to demand compensation for the effects of the EU’s grain import quotas. 12. Figure 31 and the discussion here only consider ad valorem tariffs. Specific import tariffs also play an important role for some products in Ukraine, for example amounting to a prohibitive ad valorem equivalent of roughly 400% for sugar in 2001 based on average cif import prices. At the same time, however, there is anecdotal evidence that specific and ad valorem tariffs are not applied in a uniform manner in Ukraine, with some imports via socalled “special economic zones” being exempt to a greater or lesser degree. Specific import tariffs would be eliminated as a condition of WTO membership. 84

© OECD 2003

13. In the period 1997-1999 an additional USD 640 million of non-productspecific support was provided to Ukrainian farmers, for example in the form of VAT exemptions and budget loans. As this amounts to less than 5% of gross agricultural output, it falls under the de minimis clause. 14. See Kobuta, I. and O. Shevzov (2002), Domestic Support of Agriculture in Context of Ukraine’s Accession to the WTO, Agricultural Policy for Human Development Project in Ukraine, Working Paper 14. These estimates define an upper limit on actual spending as they are based on budget legislation. Given the rate of budget fulfilment in Ukraine, actual spending was probably lower. 15. See Åslund, A. (2003), A Foreign Trade Policy Strategy for Ukraine, Carnegie Endowment for International Peace, Washington DC. 16. Apparently this provision has lead to the creation of many “artificial” enterprise structures (e.g. partnerships between farms and industrial or service enterprises) for tax purposes. 17. Basel II is the common name for the New Basel Capital Accord, an international agreement that establishes new regulations and standards for risk management on the part of banks. See www.bis.org/publ/bcbsca.htm 18. See Uzun, V. (2002a), Organisational Types of the Agricultural Production in Russia, in IET (eds.), Factor Markets in Russia’s Agri-Food Sector: Frameworks of Further Analysis, Materials of Scientific Conference in Galizino-II at July 6-7, 2002, Institute for the Economy in Transition, Moscow, 16-44. 19. Von Cramon-Taubadel, S. and S. Zorya (2002), (When) Will Ukraine be a Global Player on World Agricultural Markets? Paper presented at X Congress of European Association of Agricultural Economists (EAAE) in Zaragoza, Spain. 20. These shares in the land of former collective farms are distinct from the private household plots that some individuals also own. 21. Abstracting from the impact of export subsidies, a farmer in Germany might expect to receive roughly 70% of the world market price for grain based on representative marketing costs between the farm gate and an fob position. In comparison, a farmer in Ukraine will receive roughly 40%. See Von Cramon-Taubadel, S., Price Determination and Government Policy on Ukrainian Grain Markets, in Von Cramon-Taubadel, S.; S. Zorya. and L. Striewe (2001), Policies and Agricultural Development in Ukraine, Aachen, pp. 103-113. 22. See Von Cramon-Taubadel, S. (2003), Drawing the right conclusions from the current situation on Ukrainian grain markets, German Advisory Group on Economic Reform Policy, Paper S30, Kiev.

© OECD 2003

85

SUGAR

Main projections – Outlook in brief

• Changes in the structure of the world sugar market point to little respite from low world prices over the medium term. The emergence of Brazil as a large exporter of raw and white sugar with considerable reserve capacity to expand exports is expected to be the key factor in determining sugar prices over the medium to longer term. • Low world prices at the start of the Outlook should stimulate consumption and (eventually) slow production growth in some countries responsive to world market signals. This leads to slightly higher prices in the early years of the projection period as the balance between supply and demand improves, following some run down in the large stocks overhanging the market. Increased production and exports in response to a small price spike, lead to some rebuilding of global stocks and lower world prices of just over 7 cents/lb (USD 165/t, raw) in the final year of the projection period. • World production of sugar is projected to increase by around 1.3% per annum, on average, over the entire projection period, and slightly slower than in the last decade, to reach 154 million tonnes in 2008. Production is expected to grow faster in the non-OECD area, and particularly in Brazil where production increases by an average of 4.7% per annum, to reach nearly 30 million tonnes in 2008. • World sugar consumption is projected to increase to 155 million tonnes, growing by an average of 1.9% a year to 2008, slightly above world population growth, and remains the key driver of the global sugar economy. Sugar consumption is projected to grow faster in the non-OECD region, particularly in Asia and South America, due to more rapid population and income growth. Low or negative per capita consumption growth is projected in the more mature sugar markets of North America, the European Union, Japan and Oceania over the period to 2008. • Global sugar stocks are expected to reach about 68 million tonnes in 2008 an increase of about 1% over the 2002 level, but with the stocks-to-use ratio falling from 49% to 44%.

© OECD 2003

87

Figure 33. World sugar price s to re main unde r pre ssure 350 300

450 USD/tonne

Raw sugara

400

USD/tonne

White sugarb

350

250

300 200 250 150

200

100 50 1984

150

1988

1992

1996

2000

2004

2008

100 1984

1988

1992

1996

2000

2004

2008

a) Raw sugar world price, New York No. 11, f.o.b., bulk spot price, Sept./Aug. b) Refined sugar price, London No. 5, f.o.b. Europe, spot price, Sept./Aug. Source: OECD Secretariat.

World market trends and prospects World sugar prices to remain under pressure

Relatively low world prices, by historical standards, during consecutive seasons prior to the start of the Outlook are expected to stimulate global consumption of sugar and slow production in some countries open to world markets. This should lead to a pick-up in world sugar prices in the early years of the Outlook as consumption outstrips production growth and begins to eat into the large global stockpile of sugar overhanging the market. Beyond this period, sugar prices are expected to come under renewed pressure and fall to just over 7 cents/lb, raw (USD 165/t), as a result of increasing production and export availability (see Figure 33). A rising wave of low-cost supplies from Brazil, aided by ongoing currency depreciation is expected to keep market clearing, world sugar prices relatively flat, at around this level in the medium term, and possibly over the longer term as well. However, weather-related production shortfalls, or other events, remain a possibility for improving the world sugar balance and contributing to higher prices in particular years.

Production and trade to expand World market in surplus with only slow production adjustment expected to recent low prices…

88

The world market is in structural surplus at the beginning of the Outlook period after consecutive years of global sugar production exceeding consumption. A central question given this market situation is what might be the extent of any supply response in major producing and exporting countries to a period of historically low world prices. Past events suggest that the world sugar market is not very responsive to downward movements in world prices. Production often exceeds consumption growth causing a cycle of low prices on the world market followed by shorter price peaks. There are a number of reasons for this price behaviour. These price movements are typically seen as reflecting the perennial nature of sugarcane production that results in a muted response of production to lower prices. For those sugar cane producers with shorter crop cycles and sugar beet farmers the supply

© OECD 2003

response can be quicker unless masked by other factors. These include the need to maintain throughput in utilising capital intensive cane transport systems and milling operations. … as some OECD countries insulate their sugar industries with high support and protection

But in addition to these reasons, government support and protection that can shield producers from world price signals goes a long way in explaining the lack of adjustment in what some observers see as a highly distorted world sugar market. One of the key assumptions underlying the Outlook projections is that of a constant policy setting in producing and consuming countries. Within the OECD area, this means that the United States, the European Union and Japan continue to provide high levels of support and protection to their sugar industries, and these policies have a major influence on the world sugar market. While these policies are seen in some quarters as providing an element of stability to domestic sugar markets, this often comes at the cost of lower world prices and high volatility. Sugar production in the European Union is projected to decline slightly with exports to stabilise over the Outlook in line with reduced production quotas conditioned by the stock declassification mechanism of the CMO, and rising imports towards the end of the period. US sugar production continues to expand slowly due to higher yields, although the new FSRI Act of 2002 is administered by USDA so as to ensure that WTO and NAFTA import volume commitments are met. Japanese production is expected to remain largely insulated from the world sugar market and to show little change over the Outlook.

World sugar market structure has changed in response to economic and policy factors…

A third explanation for low world sugar prices is the rather fundamental shifts that have occurred in the structure of the world sugar market over the last decade. These have taken place in response to economic factors and policy reforms that have effectively changed the centre of global production and export growth as well as price determination. As a consequence, most of the growth in the production of sugar for export is now concentrated in a relatively small group of sugar cane producing countries and these generally are those with the lowest costs of sugar production. However even some competitive cane producing countries have been adversely affected by the exceptionally low prices that have occurred over the last two seasons. As a result, the pace of growth of world sugar production is projected to slow slightly in the initial years of the Outlook and to then to begin to accelerate again in response to a temporary, small price spike in 2004-05 (see Figure 34). World sugar production is expected to be nearly 8% higher in 2008, when compared with 2002-03 season. On a year-on-year basis, this represents growth of around 1.3 % per annum over the entire period.

… Brazil has emerged as the price setter in the world market

Brazil is projected to experience the most rapid growth of production of all sugar producers and to increasingly dominate trade in raw and white sugar. Sugar and alcohol policy reforms in the early 1990s and more recent currency depreciation have given rise to a competitive and expanding sugar industry in Brazil, even in a low price environment with sugar production capacity roughly double what it currently exports to world markets. In addition, the expected growth in demand from the country’s large ethanol sector that traditionally absorbs more than half of the annual sugarcane production should provide a stimulus to cane production expansion, contributing to

© OECD 2003

89

Figure 34. World production to e xce e d consumption in most ye ars 50

160 %

Million tonnes 150

Production Consumption

140

45

Stock to use

130

40

120 35 110 100

30 1994

1996

1998

2000

2002

2004

2006

2008

Note: Data are in raw sugar equivalent. Source: OECD Secretariat.

increased sugar availability over the Outlook period. In a deregulated market, this alternative outlet for sugarcane use provides an element of stability to Brazilian producers’ incomes with the choice of end use dictated mainly by relative returns for sugar and ethanol. The projected increase in supply in Brazil amounts to an additional 8 million tonnes of sugar by 2008. This is expected to be sufficient to meet both increased domestic sugar demand and exports of raw and white sugar, and should effectively curb any (persistent) increase in world sugar prices over the medium term. Exports of white and raw sugar are now concentrated in a few countries

90

World sugar trade has become concentrated into the hands of a few major producing countries on the export side. Brazil and the European Union, and to a lesser extent, Thailand are the key exporters of white or refined sugar. Brazil and Australia together with Thailand and Cuba account for the major share of the trade in raw sugar. Of these countries, the European Union is the only one requiring the use of export subsidies to remain competitive on world markets (even though more than 50% is currently exported without subsidies). These are applied to foreign sales of sugar produced under A and B quota within the Community and which is subject to URAA subsidy bindings, as well as to re-exports, after refining, of raw sugar imported under preferential arrangements from ACP countries (of around 1.3 million tonnes). A number of other export competition policies are also in place ranging from the single trading desk for exports in Australia, the Queensland Sugar Corporation, to the use of transport and infrastructure subsidies as an aid to sugar exports in India. Little change is expected in the country composition of sugar trade over the medium term, other than the larger role of Brazil in both the raw and white sugar markets in coming years (see Figure 35). Exports of raw sugar from Brazil are projected to increase more than for white sugar in response to a narrowing of the price differential between raw and white sugar (when measured in domestic currency) over the Outlook. Mexican production and exports of sugar are also expected to show some growth over the medium term and to be directed primarily to the higher priced United States market as trade barriers are lowered under NAFTA.

© OECD 2003

Figure 35. Brazil’s sugar production and total e xports to e xpand 30 25

350

Usd/t

Production Exports

Million tonnes

300 World price, raw

20 250 15 200 10 150

5 0

100 1994

1996

1998

2000

2002

2004

2006

2008

Note: Data are in raw sugar equivalent. Source: OECD Secretariat.

Production in other low cost exporters to expand, as productivity is improved

World price developments largely dictate events in the other main exporters which are expected to rely heavily on the international market over the medium term. Australian production is projected to slow initially, as a consequence of drought and in response to the recent period of historically low world prices and then to grow strongly over the remainder of the projection period as industry productivity improves. Thailand’s production is also expected to follow a somewhat similar pattern with production slowing initially after a bumper harvest in 2002-03 and then start to accelerate with rising exports towards the close of the period; albeit at a lower growth rate than in the last decade. Sugar production in Cuba is likely to continue to contract in the first half of the Outlook period, as much needed rationalisation of processing capacity proceeds, but then to undergo some expansion in latter years as industry costs are reduced and productivity improves. India is another sugar producer with the potential to increase production over the medium term. Most production has historically been directed towards domestic consumption, although with growing stocks some of this sugar will likely be increasingly available for export destinations (as raw, refined and plantation whites), whenever prices are sufficiently rewarding (see Figure 36).

Imports of raw sugar are more concentrated than for white sugar

Imports of raw sugar remain concentrated in a small group of countries comprising Russia, the largest market, followed by the European Union and the United States. Russia’s imports are projected to grow only slowly as domestic production increases aided, in part, by increased barriers to trade. Higher imports are anticipated in both the United States and European Union over the last years of the projection period as import barriers are reduced for sugar from certain country origins. Countries such as Canada, Japan, Korea and Indonesia are expected to remain major sugar importers. Imports are also projected to increase in China beyond recent levels. As part of its accession agreement to the WTO, China established a TRQ for sugar imports, which remains under-filled in the baseline. Box 4 illustrates the likely market implications if China’s TRQ were in fact to be filled. As additional refining capacity comes on stream in a number of countries in North Africa and the

© OECD 2003

91

Figure 36. Large r raw sugar e xports e xpe cte d from low cost produce rs 10 Million tonnes

Average 97/98-01/02

Average 02/03-08/09

8

6

4

2

0 Brazil Source:

Australia

Cuba

Thailand

South Africa

OECD Secretariat.

Middle East, this is likely to lead to some increase in demand for raw sugar as well as creating potential supplies of refined sugar for re-export. World imports of white sugar also increase over the Outlook period, but they are more widely diffused over a large group of countries. Global and regional consumption trends are expected to be supportive of an expanding import requirement for raw and white sugar over the medium term.

Consumption to continue to expand Steady consumption growth is a main driver, helping to reduce huge stocks

Steady and consistent year on year growth in sugar consumption remains a fundamental driver of the world sugar economy over the projection period. Global sugar consumption is expected to increase by around 17 million tonnes over the period to 2008 to reach just over 155 million tonnes. This represent an increase in consumption of about 1.9% per annum, little changed from the growth rate of the last decade. The bulk of consumption growth is expected to take place in developing countries, which will account for nearly 75% of the projected disappearances of sugar. Population growth and rising per capita incomes have been the main factors sustaining the global increase in sugar consumption in developing countries with Asia the leading regional growth centre followed by Latin America. Within these regions there remains wide variation in per capita sugar consumption levels between countries, ranging from nearly 60 kg per person in Cuba to just over 8 kg per person in China in 2008. In contrast, many OECD countries are considered to be mature markets showing little or no growth potential over the Outlook period. Per capita consumption patterns for sugar are illustrated in the Statistical Annex, table 41. An additional factor affecting sugar consumption is the availability of other caloric sweeteners, such as High Fructose Corn Syrup (HFCS) derived from maize which has a large share of the US market, and non-caloric or artificial sweeteners. China is a case in point in that non-caloric sweeteners, mainly saccharin, are an important competitor to sugar and help to explain the low per capita sugar consumption of the country. While world

92

© OECD 2003

consumption of sugar is set to increase, its share of an expanding global sweeteners market is likely to fall as the consumption of the other, cheaper, sweeteners continues to grow. Global stocks to consumption ratio for sugar to decline as production slows in some countries

Another indication of a structural imbalance in the world sugar market is provided by the size of world sugar stocks. At the outset of the projection period, total sugar stocks represent a massive 49% of global consumption. With the projected slowdown in global sugar production combined with faster consumption growth in the early years of the Outlook, the sugar stocks-to-use ratio is set to decline to around 44% in 2008-09 and 44% by 2008-09. A large part of these stocks continue to be held in countries where policies permit only a very limited degree of transmission from world to domestic prices. For instance, sugar stocks increase strongly in the United States as production is maintained and import volumes increase. Closing sugar stocks normally represent around 10-12% of consumption in the European Union due to the operation of the declassification mechanism in the CMO sugar regime. This policy operates to reduce EU sugar production, in the context of existing import commitments and the need to avoid excessive stocks, by temporarily reducing production quotas whenever exports are expected to exceed the WTO subsidy limits. However, in the baseline projections it is assumed that these temporarily adjustments in EU production are not sufficient to offset the growth in imports. As a consequence, closing stocks of sugar in the European Union rise in the later years of the Outlook as supplies of sugar increase, while consumption and subsidised exports are constrained by domestic support policies and URAA commitments. Stocks held by the rest of the world decline slightly over the Outlook period as imports of sugar rise to cover the shortfall in production in meeting increasing consumption requirements.

Key issues and uncertainties Does Brazil’s role imply continuing low world sugar prices? Brazilian exports will partly depend on ethanol demand

© OECD 2003

Brazil has rapidly become the dominant exporter in the world sugar market with large shipments of both raw and white sugar that have a considerable influence on the level of world prices. A key consideration in determining the volume of sugar cane processed into sugar and available for exports, has been the domestic demand for ethanol in Brazil. In this respect, the world sugar market is seen as the residual outlet for sugar cane not required to satisfy Brazil’s ethanol and domestic sugar demand. However, with the on-going devaluation of the Brazilian real, returns from sugar exports have increased, when measured in domestic currency terms, even with low world sugar prices. This has made it more rewarding to increase sugar production and exports to the world market, and partly explains the projected expansion in Brazilian exports in the baseline projections. The other consideration is the likely future demand for ethanol. While domestic demand partly depends on future developments in oil prices, and blending ratios in fuel production, there may also be an opportunity for Brazil to develop an export market for ethanol. The relative profitability of the ethanol/sugar complex will determine how much sugarcane is directed to sugar production and exports in coming years. 93

Existing trade agreements to pressure EU and US domestic policies? Trade commitments may have sown the seeds for further sugar reforms

In March 2001 the European Union extended its existing Generalised System of Preferences (GSP) to give duty free access to all exports except arms, known as the Everything But Arms (EBA) initiative from least developed countries (LLDCs) with some exceptions for sensitive products, including sugar. For sugar, free access is being phased in by a system of annual duty free quotas that increase from 74 000 tonnes in 2001-02 to 197 000 tonnes in 2008-09. For imports in excess of these volumes, duty reductions are being phased in from 2006 to 2009. Any future review of the treatment of sugar in the EBA over the transition period is not considered in this Outlook. In being able to export sugar under these arrangements, LLDC countries will benefit from the Union’s high domestic sugar prices that are well above world market levels. These countries include, for instance, those ACP countries which currently supply sugar to the EU under the longstanding ACP Sugar Protocol or under the temporary Special Preferential Sugar (SPS) arrangements. During the phase-in period to duty-free and unrestricted entry in 2009, there is expected to be no impact of the EBA on the EU sugar market in terms of sugar market balance or budget as it will gradually displace the SPS arrangements. However over the longer term, if EU internal prices remain significantly above those on the world market, the export orientated sugar producers in the least developed countries will likely expand production and exports to the Union. According to Commission estimates, longer term LLDCs sugar exports could reach as much as 2.7 million tonnes. In the light of its existing WTO commitments, the European Union could find it difficult to accommodate this level of trade within its existing sugar policy framework. Possible options include further cuts in production quotas and/or internal prices which would simultaneously reduce EU sugar production and make the European Union a less attractive destination for developing country exports. As part of the NAFTA agreement, the United States is to phase out the existing tariff on raw and refined sugar imports from Mexico over a transition period to duty-free and unrestricted sugar trade in 2008. Once the tariff is eliminated, the Unites States and Mexico will effectively become one combined sugar and sweetener market. The high internal prices for sugar in the United States that are well above world levels can be expected to provide an incentive for increased production and exports from Mexico. Any large increase in imports from Mexico would cause the US price to decline or else increase the likelihood of forfeitures to the Commodity Credit Corporation, if the sugar loan program and current loan rates are maintained. Whether or not the US sugar policy could be maintained unchanged in the light of increasing stocks of sugar then becomes a moot point. Possible options would be to lower loan rates and internal prices to reduce the incentives for domestic sugar production and at the same time make the US market a less attractive destination for Mexican (and for that matter other third country) exports. Other regional trade agreements such as the Free Trade of the Americas Agreement (FTAA) which is currently under negotiation between the countries of North and South America with completion of negotiations scheduled for 2005, may also have an impact on the US sugar programme over the longer term.

94

© OECD 2003

New US FSRI Act reverses some modest earlier reforms for sugar US Farm Act maintains high support and protection

The US sugar program was extended through 2007-08 under the new farm legislation with the same support levels that have applied for years. In addition, some of the reforms introduced by the FAIR Act have been reversed. These included removal of the forfeiture penalty for sugar surrendered to the CCC in repayment of the sugar loan; elimination of marketing assessments; an option exercisable by USDA for the exemption of sugar loans from the one percent interest rate surcharge applicable to other commodities, and a provision that the sugar program is meant to be “no-cost”, to the maximum extent possible. The legislation also authorised a pre-planting payment-in-kind programme to idle planting acreage, if required, and reinstates marketing allotments. The effect has been to maintain support and protection to the domestic sugar industry. However this does not imply a trouble free future for the industry as there are challenges looming from rising imports under NAFTA, slowing domestic demand for sugar and (potentially) on the trade liberalisation front in the WTO. Uncertainties The sugar projections reported in this chapter are conditioned on a number of assumptions. Important amongst these is the assumption of a constant policy environment. However, there are a number of prospective policy developments the outcome of which could have an important impact on sugar markets. These include the scheduled review of the Common Market Organisation for sugar in the European Union, the extension of the CMO arrangements to the 10 new member states following EU enlargement; and also the outcome of the Doha multilateral trade negotiations. Because a large share of sugar production and trade takes place outside the OECD area, future developments in the NMEs are an important source of uncertainty. Apart from Brazil, developments taking place in some other countries could also be important for the outlook. Russia as the world’s largest sugar importer has imposed a TRQ to regulate imports and to encourage domestic beet production. Enforcement of the TRQ quota volume will slow the growth of imports into this important sugar market. China is potentially a larger import market for raw and refined sugar than currently projected, given its low per capita consumption rates. The Chinese government has indicated an objective for imports to account for 20% of consumption and to control the growth of artificial sweeteners, particularly saccharin. The market impacts of increased imports by China are examined in Box 4. Finally, weather-related production shortfalls in major producing countries, or other market events, remain a possibility for improving the world sugar balance and contributing to higher prices in particular years.

Reference International Sugar Organisation, “Key Drivers of the World Sugar Market”, MECAS(02)08, 3 May 2002.

© OECD 2003

95

Box 4.

China: a white knight for the world sugar marke t?

With sugar demand in developing countries traditionally associated with population growth and rising incomes, it should come as no surprise that China as the world's most populous country and fastest growing economy should be seen by sugar exporters as a possible saviour for the depressed international sugar market. In fact China is already amongst the top sugar and sweetener consuming countries with an estimated consumption of over 9.9 million tonnes in 2002. China is also an important sugar cane (which represents the largest share of production) and sugar beet producer. Chinese sugar consumption is estimated at around 7 kg per capita, which is low, by international standards. While this figure may give some indication of the potential for higher consumption, it may not be completely representative of the underlying consumption situation. This is due to the fact that consumption of sugar is affected by the population distribution between rural and urban areas. Rural per capita consumption is low in China, at an estimated 2.5 kg per capita. Sugar thus plays a small part in the diets of the rural population, and compares to an estimated 13 kg per capita for urban consumption. In addition, there is widespread use of artificial sweeteners, particularly saccharin, throughout China.* China became a full member of the WTO in December 2001. As part of its WTO accession agreement, China made a commitment to implement a TRQ for sugar (covering both raw and refined sugar) amounting to 1 764 million tonnes in 2002, rising to 1 852 mil. tonnes during 2003 and then 1 945 million tonnes in 2004. The import duty on these tonnages was set at 20% for raw sugar and 30% for refined sugar, for the first two years falling to 15% in 2004. The over-quota tariff rate was set at 75% (for both raw and refined sugar), falling to 50% by 2004. It is understood that future commitments will be subject to further negotiations. In the baseline projections, it is assumed that rising demand for sugar and stable production should result in a net import requirement for sugar by China. Although total sugar imports are projected to rise over the Outlook period, they, nevertheless, remain below the TRQ level in 2008. The Secretariat's sugar model is used to assess the effects on world markets of increased imports of sugar by China over the projection period. This analysis assumes that the TRQ import quantities become binding. In other words, that total sugar imports rise to 1 852 million tonnes in 2003 and then to 1 945 million tonnes in 2004 and remain at this level in following years to 2008. The bulk of sugar imports are assumed to be raw sugar with the relative shares of raw and refined sugar held constant over the Outlook period at their ratio in recent years (2000-02). Results of analyses The results of the scenario are presented in terms of the percentage change relative to the baseline projection outcomes. TRQ is filled On the assumption that China’s TRQ for sugar is filled, this leads to a surge in sugar imports in 2003-04 with world raw sugar prices (in nominal terms) rising by nearly 7% while those of white sugar increase by just over 2%, when compared to the baseline results (see Figure 37). This surge is followed by a slower expansion to 2004 and thereafter declining imports into China, so the impact on world markets is uneven and leads to an over-adjustment in the early years. As shown in the Table 5, the price surge is followed by smaller price changes in following years as world production and consumption adjust and the gap between the TRQ volume and the level of imports projected in the baseline for China narrows. The higher world prices lead to a maximum 1.3% increase in world production and 0.6% increase in consumption in 2004. Global stocks are initially drawn down and then expand by the end of the Outlook period as production increases. Exports in the main exporting countries, led by Brazil, the European Union, Australia, Thailand and

* Toby Cohen, China the Saviour of the World Market?, C Czarnikow Sugar Limited, FO Licht 6th European Sugar Conference, 2002.

96

© OECD 2003

Box 4.

China: a white knight for the world sugar marke t? (cont.)

Cuba, expand to supply the additional Chinese imports. The analysis reveals that – in view of still large supply potential in certain exporting countries – there is no large, sustained increase in world prices of raw and white sugar as a result of higher imports by China. Although the long-run effect (after the initial surge is resolved) is likely to be slightly higher world prices, despite lower prices in the later years of the Outlook. The extent to which China meets her TRQ commitments is likely to be determined mainly by domestic requirements in the light of adjustments that take place in production and consumption as well as the continuing availability of artificial sweeteners, such as saccharin. Finally, quota allocation in China is another issue that could affect the extent of quota fill as it is understood that only 30% of the TRQ is currently allocated to private traders.

Figure 37. Impact on sugar world price s of an incre ase of China imports to TRQ le ve l 8.0 %

Raw sugar price

White sugar price

6.0

4.0

2.0

0

-2.0 2003 Source:

2004

2005

2006

2007

2008

OECD Secretariat.

Table 5. Effe cts of sugar imports by China at the TRQ le ve l, re lative to the base line (%)

Change in world price Raw sugar price White sugar price Change on the world marke t Production Consumption Closing stocks Change in China marke t Production Consumption Imports Exports Closing stocks Source:

2003

2004

2005

2006

2007

2008

6.5 2.2

1.3 2.1

–1.3 0.2

1.8 0.1

1.5 0.8

–1.5 –0.1

0.0 0.6 –1.3

0.3 0.3 –1.3

1.3 0.4 0.7

0.3 0.3 0.7

–0.1 0.1 0.1

0.4 0.0 1.0

0.0 10.7 60.5 1.7 –10.4

0.0 6.5 54.7 1.8 –9.7

0.0 4.9 45.7 0.5 –7.3

1.6 4.7 28.5 3.2 –5.6

0.3 2.7 18.2 1.6 –4.9

–0.3 –0.3 5.1 –0.4 –1.6

OECD Secretariat.

© OECD 2003

97

MEAT

Main projections – Outlook in brief • The 2002 drought resulted in continued herd liquidation in the United States, reducing beef production towards the middle of the Outlook period. The US beef cycle is expected to turn by 2006, raising output and reducing Pacific beef prices in the later years of the projection period. • Recent introduction of tariff-rate quotas (TRQs) for meat by Russia are raising domestic prices. This could stimulate production and reduce consumption and import requirements. As a result, major exporters are expected to redirect some of their product(s) to other markets. This could result in increased competition in world markets and a fall in traded meat prices, especially poultry. • After the turmoil due to disease outbreaks in the Atlantic market for beef, the Pacific market is experiencing, in turn, a similar effect. Exports of Australian and US beef to Japan are still affected by the decrease in Japanese beef consumption following the discovery of BSE. Nevertheless beef, pigmeat and poultry prices will likely exceed the 2002 level in 2008. • Recent outbreaks of animal diseases have led to the adoption of traceability and health measures by a number of countries. Such measures are likely to increase costs of production and may disrupt trade if not in line with the SPS agreement of the URAA. On the other hand, they increase consumers’ perception of meat safety, and ultimately increase demand • With ongoing devaluation of currencies throughout the projection period, the meat exports of South American countries, especially Brazil, should see a dramatic increase. But this remains contingent upon the animal disease status. • The situation in the EU beef market is expected to recover by the beginning of 2003 from the earlier BSE outbreaks. However, full recovery in Japan is not expected to occur until the end of 2004. • Lamb prices in Oceania should remain strong compared to the levels pre-dating the foot-and-mouth disease outbreak in the United Kingdom. This is partly caused by a decline in EU sheep flocks and lower EU production levels.

© OECD 2003

99

Figure 38. Most me at price s to rise 300

175 USD/100 kg

500 USD/100 kg

NZD/100 kg 400

Porkb

275 150

Beefa

Lambd

300

250 200 125 225

100 Poultryc

200 1984

1988 1992

1996 2000

2004

2008

100 1984

1988

1992 1996 2000

2004 2008

0 1984

1988

1992

1996 2000

2004 2008

a) Choice steers, US, dress weight Nebraska. b) Barrows and gilts , No. 1-3 Iowa/South Minnesota, US dress weight. c) Wholesale weighted average broiler price, ready to cook, 12 cities, US. d) New Zealand lamb schedule price all grade average, dressed weight. Source: OECD Secretariat.

World market trends and prospects Economic situation not good for meat demand

Throughout the Outlook period, slower growth is expected in per capita real incomes in OECD countries, relative to the pace of the late 1990s. Globally, growth in meat consumption should slow down, particularly for red meats which tend to be more responsive to changes in incomes and, moreover, are experiencing a long term decline due to changes in consumer preferences. This decline in demand has mostly been driven by health concerns and has been accelerated by the recent outbreak of Bovine Spongiform Encephalopathy (BSE) and foot-and-mouth disease (FMD) in some countries. This trend towards lower red meat consumption is expected to be exacerbated by the slowdown in income growth in OECD members relative to the 1990s. Despite relatively weak demand growth, beef, pig meat and poultry prices should exceed the very low 2002 levels by 2008 (see Figure 38).

Major drought affected beef production in key producing areas…

The drought which affected Australia, Canada and the United States in 2002 resulted in severe crop losses and lessened the productivity of pasture land. This had a major impact on the supply of meat, especially beef. As a result of these conditions, the number of cattle sent to slaughter increased in 2002. This caused beef production to rise, with lower prices as a result. But higher prices are expected in 2003, triggering some herd rebuilding. This, in turn, leads to a decline in meat production, at least in the short term, and further increases in beef prices, which are likely to peak in 2006. Following this peak, beef prices should decrease until 2008 to USD 258 per 100 kg.

… and also pork production in North America…

The North American pig herd has been in a cyclical expansion because of favourable conditions, particularly low feed costs, in 2000 and 2001. This has led to a drop in prices that neared the market implosion which occurred

100

© OECD 2003

in 1998. The year-over-year decline in pig meat prices of 27% in 2002 is the second largest fall registered over the last 30 years, following the 36% drop seen in 1998. One effect of these low prices will be greater competitiveness of North American supplies in overseas markets. This should lead to a sustained rise in pigmeat exports by both Canada and United States over the Outlook period. The share of pigmeat production sold into foreign markets is already increasing steadily in both countries. For 2008, the Canadian export market will account for more then 53% of pigmeat production. … but the EU remains the largest exporter

Despite the rapid increase in exports by North American countries, the European Union remains the largest pigmeat exporter in the world. The majority of the exports are projected to be unsubsidised. The Russian market seems to be emerging as a promising new market for pigmeat for OECD exporting countries. But competition from Brazil and Russian limitations on import volumes, following the introduction of TRQs, may lead to some re-direction of exports to Asia, even if Japan continues to impose safeguard measures.

Markets are recovering from recent animal disease outbreaks in Europe…

During 2002, government policy responses in those countries affected by animal disease outbreaks sought to restore consumer confidence and to limit the occurrence of further outbreaks. This has led many countries to reopen their borders to beef imports from the European Union, which was the most affected OECD region. The global impact of the BSE and FMD outbreaks, which had severe impacts on supply, demand and trade in meat at the time, now seems to have abated. As a result, the European Union is projected to increase its beef exports from 600 kt in 2002 to 642 kt in 2008. Currently, 80 kt to 100 kt, are exported annually without subsidies and this is expected to continue over the outlook period. At the same time, per capita consumption is back to the long-term, declining trend observed before the latest BSE crisis occurred. Moreover, accumulated intervention stocks are to vanish by 2006. EU exports of live cattle still remain relatively small when compared to the pre-BSE crisis level. Part of this can be explained by new legislation which eliminates export refunds on most of live cattle exports.

… Japan…

Even though two further cases of BSE have, so far, been discovered in 2003, Japan’s consumption of beef is forecast to return to its pre BSE level by 2004. The mandatory test, introduced in October 2001, on all cattle slaughtered for food has tended to reassure consumers about the safety of these meat products. Domestically produced animals have also been favoured by Japanese consumers, and this is leading to an increase in Wagyu beef production throughout the Outlook period. With the help of a programme to buy back unsold domestic beef the government has helped to maintain the beef producer price during the worst moments of the crisis. The slump in imports that took place during 2002 at the height of the BSE crisis should have passed by 2004. Another effect created by the BSE crisis was the lowering of the triggers for beef import safeguards. As a result, the tariff for chilled and frozen beef could increase from 38.5% to 50% in 2003. However, it is assumed that this safeguard measure will not be applied from 2004 onward. Demand for pig meat is expected to remain fairly strong after a long period of little growth and even with consumer demand shifting back to beef as the

© OECD 2003

101

BSE crisis comes to an end. Even with some increase in production and higher imports this should support pigmeat prices in the medium term. … and South America

The FMD outbreak in Argentina was quickly contained in 2002. As a result of a quick and successful response to the problem, the world market mostly re-opened to beef exports from Argentina. This happened much faster then expected, and despite a 5% meat export tax imposed to increase government revenue. With a temporary 10 kt increase in the quota allocation, Argentina can now export up to 38 kt of premium beef to the EU. When precisely the Argentine vaccina ti on programme fo r FMD will end is uncer ta in . Nevertheless, projections suggest that beef exports will regain pre-FMD level by 2005. The destination of the exports between Pacific and Atlantic markets will largely hinge on whether or not FMD vaccination is still continuing by that time. At the same time, however, there are two limiting factors to Argentina’s beef export potential. First, with the recent devaluation of the Real, Brazil has become more price competitive in world beef markets, particularly, compared with Argentina. Moreover, it is foreseen that pasture land in the Argentinean pampas area is expected to diminish by 11% due to land conversion to grain production. This contrasts with the situation in Brazil, which has a large amount of potential pasture land which could be developed in response to higher demand for beef.

Korean imports of beef to remain strong

Korea’s imports of beef increased substantially during 2002 and this is expected to continue over the Outlook period. World beef prices were much lower in 2002, mainly due to drought induced slaughter in North America and a reduction in imports in BSE-struck Japan. Despite high import tariffs, the drop in world prices and the shortage of domestically produced beef helped exporters to expand their market share in 2002. Nevertheless, the extent to which imports rose would not have been possible without the market liberalisation in 2001, which abolished the import quota for beef. Imports are replacing domestically produced beef which is often preferred by Korean consumers but is almost three times the average price of imported beef. It is expected that competitively priced beef imports will negatively affect the development of high cost domestic beef production in the future.

Russia’s new meat import regime will affect markets

One of the major assumptions for the outlook for meat markets is the maintenance throughout the Outlook period of the recently introduced Russian TRQs on meat imports. These new TRQs will affect future trade prospects for many countries. In 2003, countries traditionally exporting meat to Russia may have expected to increase, or at least to maintain, their 2002 meat export levels. However, after the introduction of TRQs, they are more likely to see a decrease in their exports. Access to the Russian meat market will likely be restrained to the quota level, as the new over-quota tariffs are prohibitive. Import restrictions on beef (420 kt), pig meat (450 kt) and poultry (1 050 kt) will adversely affect exporting countries and, of course, Russian consumers.

Rapid Russian demand growth limited by newly introduced TRQs

The restriction on imports will raise domestic prices in Russia. In the short term, this will lead to a stagnation in beef and pigmeat consumption, and possibly a decrease in consumption of poultry. The decline in imports may be accentuated by problems related to quota implementation. However,

102

© OECD 2003

the new policy bias in favour of domestic production should encourage an increase in both domestic and foreign investment in meat production facilities in Russia. These adjustments are assumed to take place gradually over the Outlook period. The overall effect will be to reduce Russia’s meat imports by about 5% by 2008 when compared to the 2002 level. Reduced dependency on imports is the main argument cited for introducing the new trade measures, though, of course, the resulting increase in self-sufficiency imposes higher costs on domestic consumers. Possible implications for meat exporting countries…

Russia’s new trade regime may also affect the source of meat imports. For example, imports from OECD countries could fall, while those from the Commonwealth of Independent States (CIS) could increase because of the preferential trade agreements these countries have with Russia. Setting aside the potential for transhipping meats through these countries and into Russia, which is considerable, an increase in competition is expected, especially for poultry meat, between Brazil, Thailand and the United States in third country meat markets such as Japan, Mexico and the European Union. Trade in pork and beef from the European Union, as mentioned above, is likely to become more stable due to a return to “normality” as the dual problems of BSE and FMD recede. However, Latin American suppliers of meat, namely Argentina, Brazil and Uruguay, all enjoy significant production cost advantages over West European producers. Moreover, the image of Latin American beef has not been tainted by BSE. Thus, competition in markets now supplied by the European Union may increase and this may well continue over the entire Outlook period. With a possible reduction in market returns due to greater competition, and with limitations on the use of export subsidies, EU meat supply could be affected, resulting in lower production.

… trade in sheep meat to decline

The rise in sheep meat imports observed since the BSE crisis and the depletion of flocks in the United Kingdom due to FMD has helped to maintain high lamb prices. A decline in the Australian sheep flock and strong demand from the United States have been additional factors in maintaining prices. Moreover, a formal veterinary agreement, signed in January 2003, will facilitate and secure New Zealand’s current access to the EU market. New Zealand has been filling its quota during the last 5 years and traders have gradually optimised the quota value through substituting frozen lamb for chilled produce and increasing the share exported to continental Europe. Nevertheless, net trade in sheep meat is forecast to decline, mainly due to a decrease in sheep numbers in New Zealand (see Figure 39). This decline comes from various factors including bad weather and changes in land usage. The overall fall in production is predicted to be about 33 kt by 2008, when compared to 2002.

China’s accession to the WTO may affect meat markets

With a population of 1.3 billion and rapidly rising incomes, China’s per capita meat consumption is expected to grow by 14.5% between 2002 and 2008. China’s accession to the WTO may have serious implications for future meat trade and production. In recent years, China has not played an important role in some of the world meat markets, except for poultry. But its influence has not been as large as could be expected given the size of the

© OECD 2003

103

Figure 39.

OECD ne t trade of she e p me at e xpe cte d to de cline

600 Kilotonne 500 400 300 200 100 0 1996 Source:

1998

2000

2002

2004

2006

2008

OECD Secretariat.

country’s population and recent increases in income. This is in contrast to crop markets, where China’s presence has, in some years, been highly significant. As regards the Outlook projections, there is much uncertainty about the extent to which China will continue to import crop products to secure feed supplies for a growing domestic livestock industry. Issues related to future meat imports in China are explored in Box 5.

Key issues and uncertainties US and EU apply stricter labelling rules

The 2002 United States Farm Act has introduced a new country-of-origin labelling (CoOL) requirement which will become mandatory from September 2004. For all beef, lamb and pork, bearing a “United States country-of-origin” label, the animal must have been born, raised and slaughtered in the United States. Once mandatory, the labelling will differentiate all domestic from all imported produce and may have an impact on consumer choice and imports. This could affect the trade of animals and meat from suppliers, such as Canada, Australia, New Zealand and Latin American countries. Canada may be particularly affected as 40% of its net exports of beef and 30% of its pigmeat (both including live animals) are destined for the US market. The meat industry is almost certain to incur additional costs in order to comply with this new legislation (see Box 6). These costs, mostly in maintaining additional records and documentation, would be spread over the whole marketing chain, with some costs imposed on producers (through lower prices) and others passed on to consumers (who might face an increase in prices at retail). In the case of imported products, a share of the cost would be passed on down the supply chain to foreign meat producers. Despite the increased costs, however, it is unclear as to what extent, if indeed at all, consumers will benefit from these labels. It also seems impractical to implement a country of origin rule given that no traceability system has yet been implemented in the United States. .

104

© OECD 2003

Box 5.

Impacts of China’s WTO acce ssion on me at marke ts

As part of its accession to the World Trade Organisation (WTO) in December 2001, China made wide-ranging commitments in relation to agricultural issues in order to make its trade regime more transparent and to increase the role of market forces. More specifically, China agreed to cap the overall level of support to agriculture and eliminate export subsidies. China has implemented new trade policies to improve market access by reducing tariffs and expanding tariff rate quotas (TRQs) for major agricultural commodities. The implications of these trade policy changes for domestic and world markets are difficult to gauge. There is still some uncertainty as to whether China, with expanding incomes and greater world market integration, will be able to satisfy rising domestic demand for meat products and feed stuff largely from domestic sources. Scenario analysis was undertaken to assess the impacts of China’s WTO accession for domestic and international meat markets. While the focus of the scenario is on beef, pigmeat and poultry, it should be recognised that China is also an important market for sheepmeat, producing a quarter of the world’s total while imports represent 4% of global imports. In the scenario, meat exports from China are assumed to remain at the baseline level. This is based on the assumption of no major changes in China’s export competitiveness in international meat markets. China’s meat exports are currently hampered by low quality products and inadequate sanitary measures, coupled with obsolete technology and transportation. In addition, a substantial part of fresh and processed meats exported from China are vulnerable to pathogens, tainted with chemicals or contaminated with impermissible amounts of water or starch. As long as these problems remain unresolved, China’s meat exports are likely to be limited. The Scenario Counterfactual meat tariffs To assess the impacts of the WTO accession, a counterfactual scenario has been implemented. In this scenario, the tariffs for meat represented in Aglink are fixed at the 2001 level, i.e. pre-WTO accession, throughout the projection period. Thus, instead of having declining tariffs over the Outlook period for pigmeat (from 15% to 12%), poultry (from 14% to 10%) and beef (from 27% to 16%), in accordance with China’s WTO accession agreement (as included in the baseline projections), the counterfactual scenario holds the tariffs for these meats constant at 20%, 20% and 40%, respectively, which were the levels prevailing before 2002. Table 6. Sce nario re sults for Me at Baseline 2001

2002

2003

2004

2005

Scenario 2006

2007

2008

2002

Production – kilotonnes

2003

2004

0.00 0.00 0.00

0.01 0.01 0.02

–0.01 –0.04 –0.05

–0.01 –0.08 –0.05

Consumption – kilotonnes

Imports – kilotonnes

65 380 26

80 350 30

88 364 24

103 377 25

Source:

973 1 051 1 305

1 000 1 173 1 376

1 043 1 218 1 445

1 152 1 268 1 544

1 206 1 309 1 626

2008

0.01 0.02 0.02

0.01 0.02 0.03

0.01 0.03 0.03

0.01 0.04 0.03

0.01 0.05 0.04

–0.01 –0.11 –0.07

–0.01 –0.13 –0.06

–0.01 –0.14 –0.07

–0.01 –0.16 –0.09

–0.01 –0.17 –0.10

Imports – % change from Baseline

114 393 29

110 411 35

98 –6.37 –7.09 –7.51 –6.68 –8.02 –9.05 –9.48 410 –1.63 –3.45 –5.01 –6.26 –7.21 –7.98 –9.13 35 –11.06 –13.88 –24.95 –25.34 –23.77 –23.76 –27.84

Domestic producer price (CNY/100 kg)

Pork Poultry Beef

2007

Consumption – % changes from Baseline

Pork 42 325 43 101 44 657 45 025 46 104 46 598 47 895 49 275 Poultry 12 226 13 346 13 735 14 449 15 197 15 957 16 669 17 267 Beef 5 446 5 581 5 841 6 160 6 446 6 632 6 721 6 845

64 473 18

2006

Production – % change from Baseline

Pork 42 400 43 258 44 771 45 061 46 122 46 605 47 909 49 312 Poultry 12 285 13 365 13 787 14 484 15 205 15 928 16 587 17 187 Beef 5 488 5 600 5 851 6 211 6 495 6 673 6 752 6 876

Pork Poultry Beef

2005

1 298 1 353 1 737

Domestic producer price – % changes from Baseline

1 394 1 437 1 891

1 483 1 529 2 047

0.01 0.05 0.03

0.01 0.09 0.03

0.01 0.12 0.05

0.01 0.14 0.04

0.02 0.16 0.04

0.02 0.17 0.05

0.02 0.18 0.06

OECD Secretariat.

© OECD 2003

105

Box 5.

Impacts of China’s WTO acce ssion on me at marke ts (cont.)

In the baseline projections, when tariffs decline under the WTO accession commitments, domestic prices fall and this raises consumption and reduces domestic production. The shortfall is made up by increased imports. A comparison of baseline outcomes with those of the counterfactual scenario shows a moderate increase in meat imports, in particular for beef as shown in Table 6. The increase in meat imports is 20% (10 kt) for beef in 2008, 9% (37 kt) for poultry and 9% (9 kt) for pork. While the percentage changes are substantial, the volume of trade is relatively small due to the low absolute level of imports by China prior to WTO accession. With small impacts on imports, world meat prices hardly changed from those in the counterfactual scenario. Again, this relatively low price effect can be attributed to the small market share that imports currently represent in the total supply of meat in China (and in world trade), as well as the relatively low tariffs that applied in 2001 and their rather limited reduction following membership of the WTO. For meat commodities, China’s domestic market is still rather isolated from the world market. This is partly due to the presence of regulatory measures and other domestic policies that have reduced the influence or transmission of world market signals. This is shown by the small change in domestic meat prices in the scenario. Accordingly, China’s accession to the WTO is not expected to induce significant changes in meat trade or prices.

The European Union has also changed its own labelling requirements by introducing definitions of meat products that are to be harmonised across the Union. This may lead to changes in regional definitions of what is considered to be a certain meat product, so as to ensure consistency with EU rules Animal health and food safety regulations may affect the Outlook

Outbreaks of exotic animal diseases in several major meat producing countries in recent years have led government and industry to question their abilities to prevent the spread of new diseases. Animal traceability and identification are two of the recent measures that are being implemented to contain and prevent possible outbreaks. In both cases, the new measures have increased costs of production, to which producers, consumers or tax payers are to contribute. Whether or not these measures will be implemented in emerging meat markets such as Brazil, China and Thailand may affect the Outlook, especially for trade. Another major concern is related to food safety. Use of hormones and antibiotic products in animal feed are now being strictly regulated in all OECD member countries. Nevertheless, a number of residue scares occurred in 2002. The main effect of these scares, apart from the cost of eliminating stocks of tainted merchandise, has been a strengthening of supply chain control systems. To avoid disruption in international trade, it is important that this evolving control system satisfies agreed international rules. Therefore, the need to improve international communication and coordination between all stakeholders could promote the faster resolution of differences, especially in the face of a crisis.

EU enlargement and MTR proposal may bring a deficit in beef production

European Union enlargement to include countries of Eastern Europe may significantly affect the existing beef trade. The acceding member States have low per capita beef consumption and anticipate an increase in incomes from integration into the European Union (see Figure 40). The increase in per capita consumption in the proposed new member countries is an important

106

© OECD 2003

Box 6.

Country of origin labe lling for me at products

A provision of the 2002 US Farm legislation (FSRI Act) requires USDA to implement a mandatory country of origin labelling programme (CoOL) by October 2004. The commodities covered under the programme are beef, pork, lamb, fish, fruits, vegetables, and peanuts sold at retail. This programme is preceded by voluntary guidelines provided over a two year initial period. Under this provision, only cattle, pigs and sheep born, raised and slaughtered in the United States will be considered as originating from the United States. At present, live animals imported, raised and slaughtered in the United States must be identified by country of origin, but become part of the domestic herd after having been slaughtered. Likewise, all meat imports must also be identified by country of origin. However, once the meat is processed, its country of origin need not be disclosed to consumers. For industry to implement the new CoOL provisions, US producers will need to create and maintain records on the country of origin of livestock in order to provide an auditable recordkeeping trail. Moreover, meatpackers and processors will need to maintain country of origin records and provide country of origin information to retailers, administrative tasks that are not currently common practice. Finally, covered meat retailers will also have the burden of complying with the labelling rules. However, the country of origin labelling law does not apply to food service establishments such as restaurants and when a covered commodity is an ingredient in a processed food item. For firms that are not already keeping track of the country of origin of their products, additional costs as described above, are expected to arise. The costs in complying with this new law will be spread out along the length of the food chain. To make verifiable claims regarding country of origin, producers will need to maintain information on the country where animals were born and raised. In 2002, the United States imported 2.5 million cattle and 5.7 million pigs from Canada and Mexico. One possible way of tracing animals would be to identify each animal with ear tags. The United States Agricultural Marketing Service (AMS) has published an analysis of the cost of developing and maintaining a record keeping system for producers within the whole industry (representing all commercial farms, ranches and fishermen). According to their estimates, it would cost USD 400 million to develop such a system and USD 600 million to maintain it. Meat packers and processors in the United States would also incur additional costs in complying with CoOL. One major aspect contributing to an increase in costs would be the new requirement to maintain accurate records for both domestic and imported covered commodities. AMS has estimated the costs to food handlers (packers, processors, importers, wholesalers and distributors) to develop a recordkeeping system, as well as maintaining these records in compliance with CoOL, at USD 340 million for the first year, and USD 260 million for the following years. Under CoOL, meat packers will need to segregate domestic and imported animals and meat products destined for retail sale. These extra steps could have impacts on the productivity of the plants. Retailers will be responsible for notifying consumers of the country of origin of covered commodities and maintaining a verifiable record keeping audit trail. Cost estimates established by the AMS for the development and maintenance of a record keeping system by retailers are USD 627.8 million for the first year, and USD 565.8 million for the following years. There may also be further costs involved in complying with rules for separated storage facilities, meat segregation by country and meat labelling under CoOL. Finally, there would be costs associated with the monitoring of the new law. Compliance inspections, for which the United States Department of Agriculture (USDA) will be responsible, will need to be carried out and a monitoring system will have to be developed. The magnitude and the distribution, both through the production and marketing chain as well as between domestic and foreign producers of the additional costs associated with the CoOL provisions remain uncertain. In addition, the extent of any trade impacts and the nature of the expected benefits are unclear. A complete understanding of the market impacts of the CoOL provisions of the FSRI Act awaits implementation and empirical analysis.

© OECD 2003

107

Figure 40. Ave rage pe r capita be e f consumption for Cze ch Re public, Hungary, Poland and Slovak Re public 14

Kg rw per capita

12 10 8 6 4 2 0 1984

1988

1992

1996

2000

2004

2008

Note: kg = kilogrammes in retail weight. Source: OECD Secretariat.

factor in the future reduction of the beef surplus produced by a Union comprised of 25 members. Of course, beef production in the accession countries may also rise as producers begin to receive EU subsidies, but this effect may be limited to the extent that EU beef policies are reformed. The Mid-Term Review proposal of the European Commission for decoupled aid would further weaken the link between subsidy and production. This may lead to a reduction in beef output and could accelerate a change in the net trade position of the European Union.

108

© OECD 2003

DAIRY PRODUCTS

• After reaching rock bottom levels of the last decade in mid-2002, world dairy prices are expected to rebound considerably in 2003 as adverse weather causes a tight supply situation in Oceania. Assuming weather returns to normal, supply response to higher prices and gains in milk productivity would reduce the extent of price increases despite the prospect of strengthening demand world-wide. • World milk production is expected to increase by 58 million tonnes or 10.3% between 2002 and 2008. The highest increases are to be expected in the non-OECD area and in that part of the OECD area not subject to production quotas. Most of this additional milk production is expected to be processed into dairy products, as fluid milk consumption should rise only moderately. • The growth in dairy product trade is not expected to match production increases because of the expected growth in local demand. WMP should experience the highest increase in trade, especially in the nonOECD area where it is used for milk reconstitution, displacing SMP and condensed milk. SMP exports are projected higher in the short-term as the United States disposes of its large stocks. • Oceania is expected to further increase its export share on the world dairy markets and the milk production in the region is set to expand by 19%. Imports of dairy products by Russia and Brazil are expected to grow over the projection period, in the case of Brazil partly as a result of policies aimed at eliminating hunger. • The consumption of dairy products in OECD countries should increase only modestly with the main drivers being nutrition and health concerns. Consumption is set to increase for WMP and cheese, but remains flat for butter and declines for SMP. Elsewhere, strong growth in demand for dairy products is driven primarily by growing per capita income, changes in lifestyle, population growth, urbanisation and increasing presence of western retail chains. The fastest growth in consumption (more than 40% over the Outlook) is expected in China. • The innovation taking place in the milk protein markets and rapidly growing trade in food items where traditional dairy products are used as ingredients will increasingly undermine trade barriers for these dairy products. It can also be expected that where milk markets are governed by quotas and price support, rather than subject to competitive forces, it is less likely that producers will adapt to quickly evolving markets.

© OECD 2003

109

Figure 41. Mode rate incre ase s in world dairy price s 250

250 USD/100 kg

250 USD/100 kg

a

Cheese

USD/100 kg

210

210

170

170

150

130

130

100

90 1984

1988 1992

1996 2000

2004

2008

90 1984

200

Butterb

1988

1992 1996 2000

Whole milk powderc

2004 2008

50 1984

Skim milk powderd

1988

1992

1996 2000

2004 2008

a) Fob export price, cheddar cheese, 40 lb blocks, Northern Europe. b) Fob export price, butter 82% butterfat, Northern Europe. c) Fob export price, WMP 26%, Northern Europe. d) Fob export price, not fat dry milk, extra grade, Northern Europe. Source: OECD Secretariat.

World market trends and prospects World dairy prices hit rock bottom level in 2002…

Following the sharp rise in 2000 and 2001, world dairy prices started to fall rapidly as a consequence of high supply and reduced consumption, especially in Asia. By mid-2002 prices had plunged to their rock-bottom levels of the last decade. As demand started to react to very low prices, these started to firm up towards the end of 2002.

… prices to rebound in 2003, then grow slowly in subsequent years

Prices on international dairy markets are expected to recover considerably in 2003, partly as a result of adverse weather in New Zealand and Australia and continued economic uncertainties in South America. Assuming that weather conditions will return to normal, it is expected that the rise in world prices will slow-down towards the end of the Outlook period due to the supply response to higher prices and gains in milk productivity. By the end of the Outlook, whole milk powder (WMP) and skim milk powder (SMP) prices are expected to rebound from low 2002 levels, rising by 30%, with butter and cheese prices increasing by 20% and 16%, respectively. Nevertheless, dairy prices are not expected to reach the high levels of 2001 (see Figure 41). In real terms, prices peak in the middle of the projection period, then taper off during following years.

World milk production to increase by more than 10%

World milk production is expected to increase by 58 million tonnes or 10.3% between 2002 and 2008. Although the average annual growth rate for milk production is projected at 1.6% over the Outlook period, there are significant differences across countries. The highest increases are to be expected in the non-OECD area and in that part of the OECD area not subject to production quotas. The largest increases are expected in the Asia region, in particular in China where the annual growth is likely to exceed 6%.

110

© OECD 2003

Figure 42. Oce ania milk production to e xpand furthe r 20 Million tonnes 15 New Zealand 10

5 Australia 0 1972 Source:

1978

1984

1990

1996

2002

2008

OECD Secretariat.

Rate of increase in Oceania milk production to slow…

The pace of expansion in New Zealand milk production is expected to decrease in 2003, due largely to cold weather impacting on pasture growth, low rainfall and a reduction in producer prices. Nevertheless, production is expected to increase by 26% (more than 4% p.a.) over the entire Outlook period, mainly due to advances in technology, genetics, re-allocation of land to dairy farming and improved farm management. (see Figure 42).

… especially in the case of Australia.

Milk production in Australia has been recently affected by severe droughts. Farmers in southern Victoria, where the rainfall was above normal, tried to cushion the impact of drought elsewhere by aid schemes in which cows were brought from the northern irrigated areas to be milked temporarily and returned after the season. Despite these efforts, milk production is expected to fall below the previous years’ level, although it should rebound afterwards to reach a level 11% higher than in 2002 by the end of Outlook period.

Argentina’s dairy sector to recover slowly from the ongoing financial crisis

Seen in the 1990s as a potentially major player on world dairy markets, Argentina’s dairy sector was hard hit by the devaluation of Brazilian and Argentine currencies in 1999 and 2002, respectively. While milk production declined by 8% between 1999-2001, it plummeted by an additional 15% in 2002. Many dairy farmers have ceased dairying and switched to more profitable crop production. The Outlook broadly assumes a slow pick-up in milk production, although the dairy sector in Argentina remains volatile and the exact path and pace of recovery is uncertain.

Growth in US milk production to strengthen over time

In the United States, milk production grew by more than 1.5% in 2002 despite a sharp drop in producer prices and rising feed costs. One of the reasons for this is a strong herd expansion that occurred in 2001 under a favourable milk-feed cost price ratio. Droughts in 2002 could likely increase feed costs, reduce pasture and slacken the growth in milk production in 2003. Nevertheless, stronger growth in milk production is expected for the second half of the Outlook as a result of yield increases and higher producer prices.

© OECD 2003

111

Larger milk production, but less use on farms in the CEECs…

Milk production has increased in 2002 in most Central and Eastern European countries (CEECs) and it is expected to continue its growth over the Outlook period. In the preparation for future accession to the EU, milk quality standards will need to rise to meet EU requirements. This is expected to cause those producers (typically small-scale) that cannot comply with the new standards to leave dairies. It is also expected that over the Outlook the milk quantity delivered for processing will increase rapidly as the use of milk on farms steadily declines.

… with growth in dairy product trade restrained by rising demand in local markets

Most of the additional milk production is expected to be processed into dairy products, as fluid milk consumption should rise only modestly over the Outlook. However, the trade in dairy products is not expected to increase proportionally as most of the production increases will be used to satisfy rising local demand. The world trade in dairy products will continue to represent only 5-7% of world milk production (intra-EU trade excluded) and be largely regional. (In fact, intra-EU trade is currently almost as large as world trade for some of the dairy products.) This is a result, partly of the perishable nature of milk products but also of the prevalence of high market price support and trade barriers in the dairy sector, which prevent foreign competition from lowering dairy prices in many protected OECD markets. The impact of different market price support mechanisms on dairy markets is analysed in Box 7.

Increase of WMP trade to the detriment of SMP

WMP should see the highest increase in trade, especially in the nonOECD area where it is used for milk reconstitution, displacing SMP and condensed milk. SMP exports are projected higher in the short-term as the United States disposes of its large stocks. The reduction of stocks reflects the possibility of increased food aid and higher domestic consumption. However, the USDA has recently also adjusted the butter/SMP support price ratio (“tilt”) and the considerable reduction in the US support price of SMP is likely to reduce SMP production and this is another element in dealing with the problem of stock accumulation in the longer-term. As a result, SMP exports of the United States are expected to drop significantly towards the end of the projection period.

Oceania is to increase its dominance on world dairy markets…

With a very little support, survival of the dairy industry in Oceania rests on its competitiveness. Oceania has gained a large presence on world dairy markets during the last decade and the trend of rapidly growing exports is set to continue. For example, the share of world butter and cheese exports sourced from Australia or New Zealand are expected to increase from 61% to 69% and 39% to 44% respectively over the Outlook period (see Figure 43).

… while EU dairy exports fall…

In the European Union, steady growth in domestic consumption is expected to absorb most of the increase in cheese production, leaving less to be exported. Reduction in EU exports is also expected for other dairy products, with the exception of casein. SMP, followed by butter should see the highest fall in exports.

… and Argentina’s exports pick-up slowly towards the end of the Outlook

The exports of dairy products from Argentina have recently seen a decline despite enhanced export competitiveness resulting from devaluation. This decline in exports was largely caused by production reductions following the financial turmoil, but was further aggravated by a 5% export tax on all dairy

112

© OECD 2003

Figure 43. EU to lose marke t share to Oce ania 100 % 80

60

40

20

0 2002 2008 Butter

2002 2008 Cheese

Australia Source:

EU

2002 2008 Skim milk powder

2002 2008 Whole milk powder

New Zealand

Rest of world

Source: OECD Secretariat.

products, imposed by the government. With greater milk production in the second half of the Outlook, exports are expected to start recovering. Strongest growth in dairy product consumption in China

The strong growth in demand for dairy products that is expected in nonmember Economies is being driven by growing per capita income, changes in lifestyles, high population growth, increased urbanisation and also increasing presence of western retail chains influencing consumers’ preferences. The fastest growth in consumption (more than 40% over the Outlook) is expected in China, which will rapidly overtake Japan in terms of total (not per capita) cheese consumption (see Figure 44). The consumption of dairy products in OECD countries should increase only modestly with the main drivers being nutrition and health concerns. In these countries, consumption increases are expected for WMP and cheese, but to remain flat for butter, and even decline for SMP.

Figure 44. Che e se consumption to incre ase particularly in non-me mbe r Economie s 600 Kt

Brazil

Russia

China

Japan

500 400 300 200 100 0 1997 Source:

© OECD 2003

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

OECD Secretariat.

113

Imports of dairy products to Russia and Brazil to rise

Russia will remain one of the most important importers of dairy products. Cheese imports are projected to grow by 40% over the Outlook period. Butter imports, are expected to grow by 35%, and to increasingly be satisfied by packet size quantities as opposed to bulk butter. The evolution of trade policies remain an uncertainty in this respect. If, following a recent intervention in meat trade, tariff rate quotas would be introduced for trade in dairy products, future import growth would likely be less. Imports of dairy products to Brazil have dropped significantly but can be expected to increase in the medium term partly due to planned policies aimed at eliminating hunger. Nevertheless, developments in macroeconomic variables will continue to have a major influence on Brazil’s future dairy products trade patterns.

Key issues and uncertainties Dairy markets remain affected by many market and policy uncertainties

Trade in dairy products can be expected to remain only a small share of world total milk production and dairy markets will continue to be relatively “thin”. The markets will be influenced by a number of uncertainties ranging from weather conditions to broad global factors such as economic growth. More specifically, given the production and consumption potential, the economic situation in Latin America and opening of South Asia markets are among the important issues surrounding the outlook for dairy. In addition, developments in domestic policies can be expected to have an important influence on future dairy markets.

Important changes to US dairy legislation with the adoption of the FSRI Act

In 2002, the passage of the FSRI Act extended the US Milk Price Support Program. The Act also introduced a new payment called the Dairy Market Loss Payment (DMLP), which is capped at 1.09 million kg per farm. The stringency of the payment limit, controlled by the USDA, will bear an influence on the market impact of the payments. Another uncertainty lies in the stated temporary nature of the dairy payments which may be questioned, particularly in light of the routine continuation of market price support. An analysis of possible impacts of the FSRI Act is given in Box 3.

Whither the future of EU dairy policy?

The Outlook assumes adoption of the Berlin Agreement on the Agenda 2000 reforms. Beginning in 2005, milk quotas are to increase by 1.5%, dairy support prices are cut (by 15% for butter and SMP) and direct payments are introduced. However, recently, the EU Commission unveiled a radical plan which calls for further significant cuts in EU dairy support prices and recommends milk quota increases beyond those agreed in the context of Agenda 2000. If these plans are implemented, it could be expected that an increase in milk production, with rapidly falling EU internal prices, might create opportunities for unsubsidised EU exports of some dairy products by the end of the Outlook period, depending critically on the response of domestic consumption to falling prices.

Production quota limits likely to become binding in CEECs, following EU accession

The “Double Zero” agreement on exports is already in force between the CEECs and the European Union so that the major issue for dairy related to CEEC accession stems from the adoption of the quota system. Total agreed quota limits for 10 CEEC amounts to 18.3 million tonnes. In addition, a quota reserve of 671 kt.

114

© OECD 2003

Box 7.

Trade impacts of alte rnative milk marke t price support me asure s

Milk remains one of the most supported agricultural products. Measured by the PSE, the overwhelming majority of the support (about 86%) comes through Market Price Support. In most OECD countries, milk price support is the consequence of trade measures: tariffs, tariff rate quotas, and/or export subsidies applied to tradable dairy products. In some countries producer prices may be further enhanced through a combination of such measures and discriminatory pricing. As governments are faced with growing limitations controlling the application of traditional policies, alternative schemes, such as price discrimination receive increasing attention and could be used to partly substitute for more traditional trade measures. Analytical model The key concept that may be used to quantitatively assess the trade distortion of traditional support measures and discriminatory pricing can be illustrated in the following Figure 45. The standard theoretical framework presented here follows the work of Ippolito and Masson (1978),1 Sumner (1999)2 and BouamraMechemache et al. (2002).3 In this framework, there are only two end-use milk classes: fluid milk (non-traded) and manufacturing milk (traded in the form of dairy products). The line S in the diagram represents the total supply of raw milk. The line Df represents the demand for fluid milk and DdA represents the combined demand for fluid and manufacturing milk. Demand for manufacturing milk is given by the difference between DDA and Df. The slopes of the demand curves differ, reflecting a demand for fluid milk that is more inelastic than that for manufacturing milk. Consider, that there are two policy options for achieving a given producer price for milk – the price labelled PD in Figure 45. Under the first policy option (i.e. price support is the consequence of trade measures) the government simply sets a flat support price (PD) that all purchasers of raw milk must pay.4 The intersection of P D and S determines the level of total milk production, Qs AB. This price implies fluid milk consumption and production of QfA. Manufacturing milk processors buy the rest of milk produced (QsAB – QfA) also at the price PD. Part of the manufacturing milk production will be consumed domestically (QdA – QfA) and part will be exported (QsAB – QdA). Assuming that the quantity purchased will have to be exported at the prevailing world price Pw, then the per unit export subsidy will equal (PD – Pw). Figure 45. Trade impacts of alte rnative milk marke t price support me asure s Df PfB PD =

S

[PfB * QfB + PmB *(QsAB – QfB)] AB

Qs

PD PmB Pw DdA

DdB QfB Source:

QfA

QdA QdB

QsAB

OECD.

Under the second policy option the government achieves the same targeted producer price PD by using a combination of a flat support price, PmB and an administratively determined fluid milk premium (the difference between PfB and PmB). Producers receive the weighted average price of PfB and PmB where the weights are the quantities of milk going to each of the two end uses. Note that under the combined regime the same desired target price PD can be achieved with manufacturing milk prices set at the lower level PmB as compared to the policy relying only on flat support price. Figure 45 illustrates that in response to the introduction of the fluid milk premium the fluid milk consumption falls to QfB. As a result of the higher fluid milk price and the shift in the

© OECD 2003

115

Box 7.

Trade impacts of alte rnative milk marke t price support me asure s (cont.)

starting point the combined demand curve DdA moves leftward to DdB. By lowering fluid milk consumption, more milk is left for manufacturing purposes (QsAB – QfB). At the same time, domestic consumers of manufacturing products face lower price PmB and increase their consumption of dairy products to (QdB – QfB). The difference (QsAB – QdB) will be exported, attracting a per-unit export subsidy equal to (PmB – Pw). The shaded area in the diagram reflects exports that are effectively “cross-subsidised” by domestic fluid milk consumers. Figure 45 is drawn in such a way that less quantity has to be exported under the combined regime. The reduction in exports (QdB – QdA) is due to the fact that, in the diagram, the increase in fluid milk price reduces the fluid consumption by less than the decrease in manufacturing milk price boosts the manufacturing milk consumption. However, in general terms, the consequence for world markets of price discrimination relative to flat price support is ambiguous. The algebraic version of the model in Figure 45 indicates that the results depends critically on the numerical values of economic parameters such as: the relative magnitudes of the elasticity of demand for fluid versus manufacturing milk, the initial trading status of the country, the share of exports in manufacturing milk production and the initial relative supported prices of fluid and manufacturing milk. An example In order to evaluate the trade impacts of both measures under specific economic parameters, the empirical analysis is carried out for a representative OECD country. The analysis comprises the development of two policy scenarios in which the producer price is reduced, and then compares the results to the baseline. In the first policy scenario a 5% decrease in the producer price is achieved by lowering the fluid milk premium while maintaining the manufacturing milk price at the baseline level (LFP scenario). In the second scenario the 5% decrease in the producer price is achieved by lowering the supported manufacturing milk price while maintaining the full baseline fluid milk premium (LSP scenario). The relative changes in prices from the baseline levels under both scenarios are presented in the Table 7. The decrease of individual prices differs reflecting a different share of fluid and manufacturing milk in the country. Roughly two-thirds of total raw milk production there is used to manufacture dairy products. Table 7. Ave rage pe rce ntage change s in individual milk price s

LFP scenario LSP scenario

Producer price (PD)

Fluid milk price (Pf)

Fluid milk premium (Pf – Pm)

Manufacturing milk price (Pm)

–5.0% –5.0%

–12.5% –4.2%

–49.6% 0.0%

0.0% –5.6%

The scenario results indicate that a 5% decrease in average producer price achieved by reducing the price of supported manufactured products (LSP scenario) increases overall consumption (in milk equivalent) by a greater amount than is seen in the scenario which reduces the average producer price by means of reducing the fluid milk premium (LFP scenario). This outcome is driven mainly by the relative change in the fluid milk and dairy product prices and the relative demand price elasticities. With a larger price drop, fluid milk consumption rises more in the LFP than in the LSP scenario. At the same time, the decline in the manufacturing milk price in the LSP scenario is such that, given a more elastic demand for manufacturing milk, total milk consumption increases by more in this scenario. Given the fact that milk production is identical in both scenarios the differences in the fluid and manufacturing milk consumption translate directly into differences in net exports that have immediate consequences for world dairy market prices. With a stronger increase in consumption, less milk is available for exports in the LSP scenario, resulting in a somewhat larger impact on world prices. The impacts of two simulated scenarios on the world market dairy prices are shown in Figure 46. Comparing the impact across dairy products, Figure 46 indicates that the highest percentage change in a world price resulting from a decrease in market price support measures is in the cheese market. The higher impact on cheese markets stems from the fact that the majority of manufacturing milk in this particular example is used for the production of cheese. Figure 46 also shows that world market price effects are greater for the LSP scenario, although the differences are not large especially for milk powders.

116

© OECD 2003

was allocated from 2006 onwards to reflect the reduction in on-farm consumption. Nevertheless, the rapid restructuring of the dairy industry in CEECs is expected to increase direct sales of milk in the medium term and the milk quota will likely become binding despite the increase in 2006. Outcome of the Doha negotiations will affect future dairy markets

In October 2002, a group of “non-subsidising” dairy producing countries has united into a coalition known as the Global Dairy Alliance. The alliance members, Argentina, Australia, Brazil, Chile, New Zealand and Uruguay, account for about 55% of world trade in dairy products. This group aims to negotiate substantial reduction in trade distorting policies in the current Doha Development Round of trade negotiations. Although the final WTO agreement remains uncertain, any significant reduction in trade and production distorting support would likely have a decisive influence on the structure of the world dairy market at the end of the Outlook period.

The WTO delivers an important ruling on export practices

The United States and New Zealand claimed in the WTO that Canadian dairy export pricing arrangements amount to an export subsidy. After an initial loss before a WTO panel in 1999, the Canadian government and the dairy industry implemented changes to the pricing system. Following a series of panel decisions and appeals, on 20 December 2002, the Appellate Body of the WTO confirmed the original panel decision that Canada’s approach to the export of dairy products made from milk destined for exports constitutes an export subsidy. The decision sets an important precedent restraining the scope for any WTO member to violate the spirit of the URAA limits on export subsidies by exploiting pricing arrangements.

Innovation in milk protein markets to play an important role for the dairy sector

The trade in milk components based products has been rapidly developing. This development is primarily driven by technological advances, such as micro and ultrafiltration of milk, but partly by the prevalence of low or even no trade barriers for these products. The importance of these markets will continue to grow as more products are expected to use milk components. For example, whey proteins concentrates (WPC) are seen as multi-purpose food ingredient ideal for infant and sport nutrition. Milk protein concentrates (MPC), depending on the protein content, are used in frozen deserts, bakery and confection. The MPC are also attractive in cheese-making for its high protein-to-lactose ratio, although their use is currently allowed only in generic types of cheeses. Alpha-Lactalbumin is used in infant formulas and dietetic foods, Milk calcium in calcium fortification of foods, Colostrum in the veterinary sector and human nutrition. It is gaining popularity as a cosmeceutical where prices can reach USD 200 per kg. The uses of casein and caseinates are immense, ranging from infant formulas and pharmaceuticals to textile fabrics, paint, glue or buttons.1

Importance of trade in foodstuffs where traditional dairy products are used as ingredients

Recent years have seen rapid growth of demand for cheese as an ingredient in other food products, particularly in pizzas, hamburgers and sandwiches. Trade in these foodstuffs is likely to continue to undermine the trade barriers set for the traditional dairy products. A similar situation holds for blended dairy products, which have managed to slip under traditional dairy tariffs, such as butter oil/sugar blends (typically used in ice cream production). It could be expected that faced with the rapidly evolving trade in new dairy products and dairy ingredient markets, it would become increasingly difficult

© OECD 2003

117

for governments to continue domestic support based on trade barriers for the traditional dairy products. Nevertheless, governments have thus far resisted attempts from dairy lobby groups to push through legislation establishing tariffs for these new products.

Milk production and marketing will have to be innovative to stay competitive

New developments can not be limited only to dairy products but also to liquid milk at the input and product level. Sleep-inducing milk (with higher level of melatonin), milk low in cholesterol and high in protein, milk claimed to be better for the heart (milk containing beta-casein A2 instead of A1), vitamin enriched milk or flavoured carbonated soda made of milk are a few examples of recent developments to cite. Milk will have to continue to fight for its place in a consumer diet especially with soft drinks and other drinks such as those based on soya and rice, which are gaining popularity and could be seen as a direct milk substitute. Where milk markets are governed by quotas and price supports, rather than subject to competitive forces, it is less likely that producers will be able to adapt to the quickly evolving market.

Codex Alimentarius has the potential to influence the evolution of dairy markets

Current Codex Alimentarius standards dictate that cheeses with standards of identity (emmental, etc.) must be made from milk (including SMP, WMP, condensed milk and cream). Relaxation of this rule would likely boost use of fractionated milk ingredients in cheese-making. In addition, many countries, especially in South East Asia are actively seeking Codex Alimentarius approval to use the term “dairy products” for food that contains vegetable fats. Given the size and importance of South East Asia dairy markets this issue bears high importance. A narrowing taste gap between “fresh” milk and reconstituted milk and prospective evolution of milk pasteurisation could have a wide reaching impact on dairy trade. At the moment, there are different perceptions among countries regarding what qualifies as “fresh” milk (For example, in some countries Ultra Heated Milk (UHT) is labelled as fresh milk.) and there are no specific standards for liquid milk in the Codex Alimentarius as is the case for dairy products.

Product labelling a potential non tariff trade barrier?

The dairy supply chain will have to continuously adapt to growing consumers concerns over factors such as products nutrient definition, organic status, health concerns, animal welfare, environmental consideration, management practice etc. There is a danger that such concerns could result in an increase in more specific product labelling, which effectively may function as non tariff barriers to trade.

Note 1. For more information on new trends in dairy product developments and consumption see proceeding of the CONGRILAIT 2002, the 26th IDF World Dairy Congress, Paris. 118

© OECD 2003

Box 7.

Trade impacts of alte rnative milk marke t price support me asure s (cont.) Figure 46. Simulate d impacts of alte rnative price support me asure s on world marke t price s 5 %

LSP

LFP

4

3

2

1

0 Butter Source:

SMP

Cheese

WMP

OECD.

The result obtained here using specific parameters of a representative country suggests a high degree of similarity in trade effects between the two, with price support due to trade measures only slightly more trade distorting than price support due to discriminatory pricing. Moreover, even if discriminatory pricing has slightly smaller trade distorting effects than trade measures, this comes at the expense of higher costs for fluid milk consumers. This is because producers under a policy of price discrimination get a part of their market price support from higher prices charged to consumers of fluid milk. Conclusion In general, the findings of the theoretical analysis (supported by the quantitative example) suggest that for a net importing country (such as in the above example), market price support resulting from discriminatory pricing is less trade distorting than the same amount of support resulting from intervention via trade measures. For a net exporting country, the trade impact is conditional on the market specific parameters such as the relative demand elasticity for fluid versus manufacturing milk, the share of exports in manufacturing milk production and the initial relative supported prices of fluid and manufacturing milk. Despite the fact that price discrimination creates smaller trade distortion as compared to intervention via trade measures, the difference is relatively moderate. In addition, when the necessary administrative costs of a price discrimination system are also considered, there may be little or no difference in terms of overall welfare. Overall, market price support whether the consequence of trade interventions in dairy product markets or the consequence of discriminatory pricing arrangements, leads to increased production and reductions in consumption which translates into higher exports and lower imports. Moreover, market price support, in whichever form, belongs to the most trade distorting forms of support. Thus, any substantial welfare gains are to be expected by means of further market and trade policy reform away from market price support, rather than by nuancing various forms of this type of support.

1. Ippolito, R.A. and R.T. Masson (1978), “The social cost of government regulation of milk”, Journal of Law and Economics 19 (1):33-65. 2. Sumner D.A. (1999), “Domestic price regulations and trade policy: milk marketing orders in the United States”, Canadian Journal of Agricultural Economics – Revue canadienne d'Agroéconomie, 47 (5):5-16. 3. Bouamra-Mechemache, Z., J.P. Chavas, T. Cox and V. Réquillart (2002), Price discrimination and EU dairy policy: An economic evaluation of policy options, Paper presented at the European Association of Agricultural Economists conference in Zaragoza, Spain, 28-31 August 2002. 4. Note that applying trade measures [import tariffs, tariff rate quotas (TRQ’s) and export subsidies] is analytically equivalent to supporting price by flat support price.

© OECD 2003

119

DEVELOPMENT OF AGRICULTURAL MARKETS IN THE EU AFTER ENLARGEMENT*

1.

Introduction

On 13 December 2002, Heads of State and Government from the EU and ten candidate countries reached agreement on a formula for enlarging the EU to encompass ten new member States as from 2004. Following the decision of the Copenhagen Summit, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia will join the EU on 1 May 2004. Regarding agriculture the following was agreed: The new member States will receive a rural development package which is specifically adapted to their requirements and has more favourable conditions than those applied to the present EU member States. The amount available for the ten candidate countries is fixed at € 5.1 billion for 2004-2006. Direct aids for the new member States will be phased in over 10 years. They will thus receive 25% of the full EU rate in 2004, rising to 30% in 2005 and 35% in 2006. This level can be topped up by 30% up to 55% in 2004, 60% in 2005 and 65% in 2006. Until 2006 the top-up payments can be co-financed up to 40% of the EU-level from the new member States’ rural development funds. However, the share of EU rural development funds used for the top-up cannot exceed 20% (or 25% in 2004, 20% in 2005 and 15% in 2006). From 2007, the new member States may continue top-up EU direct payments by up to 30% above the applicable phasing-in level in the relevant year, but financed entirely by national funds. The Copenhagen Agreement also gives the possibility to introduce a simplified direct payment instead of the normal system of direct payments for the first five years after accession. This payment is essentially of decoupled nature and is easier to administer than the normal system. A number of countries, including Poland, currently consider the introduction of these payments. The farmers in the new member States will have full and immediate access to Common Agricultural Policy (CAP) market measures. From a sectoral perspective, the CAP would improve the situation of agriculture in the new member States compared to the situation without membership and under domestic policies. The CAP in combination with the size of the Single Market provides more stable prices than domestic policies of the Accession Countries can sustain and secure in terms of WTO and budget for the years to come. The agricultural prospects of the new member States develop, therefore, more positively after accession than without accession. Agricultural production slightly expands after accession as a response to high and stable prices, good perspectives on the single market and increasing competitiveness of agriculture.

* Chapter drafted by the EU Commission.

© OECD 2003

121

Despite the positive development of conditions for the agricultural sector, the production potential in the new member States would only gradually improve through more intensive production and restructuring. The ongoing successful restructuring process of agriculture and the food industries of recent years would continue. The CAP’s rural development programmes and the structural funds will facilitate this process after accession. The new member States add about 38 million ha of Utilised Agricultural Area to the 130 million ha of the old member States representing an increase of 30%. Despite this large potential, the realised production would remain lower than the area increase would indicate. Therefore, agricultural production of the EU-25 would be only moderately larger as in the EU-15 because of lower intensities of production in the new member States. The EU-25 would produce under Agenda 2000 policies in 2009 about 27% more cereals with 42% more cereal area, 25% more oilseeds with 37% more oilseed area (without non-food production), 16% more milk, 20% more butter and 10% more cheese, 10% more beef, 18% more pork, and 27% more poultry than the present EU-15. At the same time domestic use of cereals increases by 23%, of oilseeds by 6%, of beef by 10%, of pork by 22%, of poultry by 27%. With accession of 10 new member States (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia) in 2004, relatively dynamic market economies with 75 million consumers with rapidly growing incomes will become part of the European Union. Opportunities on the single market will open up for the agriculture and food industries in the new as well as in the old member States. Accession will, therefore, change the dynamics of agricultural markets in the EU. The paper analyses the development of key agricultural markets in the EU-25 under Agenda 2000 policies with a view on enlargement effects.

2.

The development of agricultural markets in the EU-25

The Agenda 2000 scenario takes into account the entry of the new member States in May 2004 as well as the specific conditions of entry agreed in the Copenhagen summit. In particular these conditions concern the phasing in of direct payments, the top-up possibility, and the agreed production quotas in the new member States. The baseline simulates the EU-25 under Agenda 2000 policies from 2004 to 2009. The cereal sector In the new member States, production of cereals would increase from 56 million tonnes in 2002 to 63 million tonnes in 2009. This demonstrates the positive but moderate effects of the CAP on cereal production in the new member States. The EU-25 would produce 290 million tonnes under Agenda 2000 policies. Domestic use would expand in the current as well as in the new member States from 247 million tonnes in 2004 to 254 million tonnes in 2009. The EU-25 would expand its marketable surplus from 28 million tonnes in 2004 to 36 million tonnes in 2009. The marketable surplus in the new member States (AC-10) would be relatively stable at 6 million tonnes, which would be about 750 000 tonnes less than without enlargement. However, under 122

© OECD 2003

current policies marketable surplus of rye would increase due to enlargement and contribute to the already existing structural surplus in the EU-15.

Table 8.

De ve lopme nt of ce re al marke ts in the EU-25 unde r Age nda 2000 policie s (million tonne s) 2002

2004

2005

2006

2007

2008

2009

Production EU-15 AC-10 EU-25

213.73 57.60 271.34

215.55 59.72 275.27

217.81 60.12 277.93

220.08 59.97 280.04

222.31 60.97 283.28

224.60 61.97 286.58

226.86 62.87 289.73

Domestic use EU-15 AC-10 EU-25

191.06 50.85 241.92

193.68 53.88 247.56

194.84 54.26 249.10

195.50 54.77 250.27

194.44 55.37 249.82

195.59 55.86 251.45

197.26 56.45 253.71

22.67 6.75 29.42

21.87 5.84 27.71

22.97 5.86 28.83

24.58 5.19 29.77

27.86 5.60 33.47

29.01 6.11 35.12

29.60 6.42 36.02

Marketable surplus EU-15 AC-10 EU-25

The milk and dairy sector In 2002 in the 10 acceding countries subsistence production still had a significant share in total milk production, accounting for about 16% of total production. In the projection period, subsistence production would gradually decline due to the expected positive development of rural economies and social security systems after enlargement. This development would offset the foreseen quota increases in the new member States. For the 10 acceding countries total milk production, i.e. subsistence and market production, would remain relatively stable at approximately 22 million tonnes. Market production in the new member States would increase according to the quota increases.

Table 9. De ve lopme nt of milk production in the EU-25, 2002-2009 (million tonne s) 2002

2004

2005

2006

2007

2008

2009

Production EU-15 AC-10 EU-25

121.20 21.67 142.87

121.20 22.31 143.51

121.68 22.28 143.96

122.17 22.17 144.34

122.65 22.05 144.70

122.65 22.10 144.75

122.65 21.99 144.65

EU av. producer price

292.87

296.02

279.48

263.59

246.64

245.78

247.35

Under Agenda 2000 conditions butter and, to a lesser extent, skimmed milk powder production would expand in the new member States owing to the increase in their prices after accession. Already the structure of dairy production in the new member States emphasises more the production of bulk dairy products as opposed to high value added products such as cheese. About 60% of all milk produced under quota would be used in the production of bulk products (butter and skimmed milk powder) compared to 40% in the current member States. Investments triggered by the positive market situation for high value added products could however contribute to a change of the dairy structure in the new member States. These developments

© OECD 2003

123

have not been taken into account. After enlargement, production of butter and skimmed milk powder would decline in the current member States and cheese production would expand. Nevertheless, markets for butter and, to a lesser extent, SMP would remain under pressure in the EU-25. Milk prices on average would therefore be lower in the EU-25 than those foreseen for the EU-15 without enlargement. The beef sector The building up of beef herds in the new member States would remain relatively stable despite the introduction of the coupled direct payments. The effects of the simplified scheme which essentially is of decoupled nature have not been analysed because at the time of the finalisation of the analyses it was unclear how many countries would actually decide to implement this alternative system. Market prospects indicate that beef production in the current EU member States would remain slightly expanding due to the coupled direct payments and technical progress such that the EU-25 would produce 8.6 million tonnes in 2009. The new member States would add 10% more production and equally 10% more consumption to the EU-15. The CAP and especially the direct payments would stabilise beef production in the new member States, which faces a small and declining market as compared to other meats. Without accession beef production would decline further to 0.56 million tonnes in 2009. Accession would lead to a decline of average EU prices of about 70 to 100 €/t, compared to the situation without enlargement adding to the downward trend of beef prices foreseen for the medium term. Agenda 2000 policies give the beef market enough price flexibility such that structural surpluses would be avoided.

Table 10.

De ve lopme nt of be e f marke ts in the EU-25 unde r Age nda 2000 policie s (million tonne s) 2002

2004

2005

2006

2007

2008

2009

Production EU-15 AC-10 EU-25

7.57 0.75 8.32

7.60 0.77 8.37

7.65 0.77 8.43

7.71 0.76 8.47

7.77 0.75 8.52

7.79 0.75 8.54

7.85 0.74 8.59

Domestic use EU-15 AC-10 EU-25

7.39 0.74 8.12

7.25 0.65 7.90

7.31 0.66 7.97

7.37 0.67 8.04

7.44 0.68 8.12

7.46 0.69 8.14

7.52 0.70 8.22

Marketable surplus EU-15 AC-10 EU-25

0.19 0.01 0.20

0.35 0.13 0.47

0.35 0.11 0.46

0.34 0.09 0.43

0.33 0.07 0.40

0.33 0.06 0.39

0.33 0.04 0.37

The pork and poultry sectors Accession and the effects of the single market would lead to a redirection of trade according to the relative competitiveness of the member States. One of the prime shifts of trade is concerning cereals, pork, and poultry. New data seems to suggest that the new member States have gained increasing 124

© OECD 2003

competitiveness in the area of poultry production mainly due to foreign direct investments into production and processing. It seems that upon enlargement an increasing part of poultry production (up to 900 000 tonnes) would be directed to the old member States benefiting from a comparative advantage. On the other hand, a part of the pork production in the new member States would have a comparative disadvantage in respect to quality, i.e. lean meat content, and feed costs. Here the simulations suggest that the old member States might trade 600 000 tonnes to 700 000 tonnes of pork to the new member States. Without accession the 10 countries would be net exporters of about 170 000 tonnes, however, with significantly higher prices for pork meat than in the present EU.

Table 11. De ve lopme nt of pork marke ts in the EU-25 unde r Age nda 2000 policie s (million tonne s) 2002

2004

2005

2006

2007

2008

2009

Production EU-15 AC-10 EU-25

17.71 3.50 21.21

19.16 3.47 22.64

19.32 3.51 22.83

19.45 3.55 23.00

19.64 3.60 23.24

19.85 3.63 23.48

20.07 3.68 23.75

Domestic use EU-15 AC-10 EU-25

16.50 3.49 19.99

17.51 4.08 21.58

17.93 4.14 22.07

18.15 4.21 22.36

18.15 4.28 22.43

18.36 4.34 22.71

18.58 4.41 22.99

1.21 0.01 1.22

1.66 (0.60) 1.05

1.39 (0.64) 0.76

1.30 (0.66) 0.64

1.49 (0.68) 0.81

1.49 (0.71) 0.78

1.49 (0.74) 0.76

Marketable surplus EU-15 AC-10 EU-25

3.

The development of agricultural income in the EU-25

The income measures take into account the revenues from markets, direct payments, and the effects of the additional rural development measures in the new member States for the agricultural sector as a whole. The agricultural prospects of the new member States develop more positively after accession than without accession. Agricultural income would increase between up to 48% after enlargement due to a modest expansion of agricultural production, slightly higher and more stable prices, a positive market perspective on the single market, and the phasing-in of direct payments. Some factor might put pressure on agricultural income such as the necessary adjustment to meet the EU standards of production and the increasing trend of real appreciation of currencies against the EUR after enlargement. The current member States would benefit from relatively strong increase in consumer incomes in the new member States mostly benefiting high value added production and slightly lower feed costs. Accession for the current member States would not lead to significant changes of income compared to non-accession. The development of income per person working in agriculture depends on the pace of restructuring in the current and new member States.

© OECD 2003

125

Table 12.

De ve lopme nt of se ctor income (re al) in the EU-25, 2002-2009

2002

2004

2005

2006

2007

2008

2009

GAO at marke t price s GAO crops GAO animals

95.0 100.3 89.3

100 100 100

98.0 100.0 95.8

96.0 100.0 91.8

94.2 100.1 87.9

95.1 100.1 89.5

95.4 100.5 88.9

GVA GVA crops GVA animals

94.6 100.7 85.9

100 100 100

97.9 100.4 94.7

95.8 100.4 89.4

94.0 100.5 84.6

95.5 100.5 88.1

95.1 101.0 86.5

98.0

100

99.0

97.9

96.8

98.4

98.5

GVA at market prices including direct payments

4.

Conclusions

Agricultural production in the new member States would expand modestly after enlargement and agricultural income would significantly increase. The development of the agricultural potential is foreseen to be gradually depending on the pace of structural change. This structural change will primarily depend on the economic development in the new member States. Rural development and regional policies will facilitate this change. The current member States would benefit for some products from relatively strong increase in consumer incomes in the new member States. Accession, therefore, would add to the dynamics of agricultural markets in the EU, which would alter market outlooks, in particular for some cereals, for dairy products, and meat, compared to the situation in the EU-15.

126

© OECD 2003

METHODOLOGY

The projections presented and analysed in this document are the result of a process that brings together information from member countries and a number of other sources. Consistency in this process is ensured by the use of the OECD’s Aglink model. A large amount of expert judgement, however, is applied at various stages of the Outlook process. The OECD Agricultural Outlook presents a single assessment, judged by the Secretariat to be plausible given the underlying assumptions, the procedure of information exchange outlined below and the information to which it had access as of 25 April 2003. The starting point of the outlook process is the reply by member countries (and some non-member Economies) to an annual questionnaire circulated by the Secretariat at mid-year. Through these questionnaires, the Secretariat obtains information from member countries on future market developments and on the evolution of agricultural policies in OECD countries. This information is supplemented by that obtained from other sources, such as the FAO, the World Bank or the IMF, to establish a view of the main forces determining market developments in the non-member Economies. This part of the process is aimed at creating a first insight into possible market developments and at establishing the key assumptions which condition the Outlook. The main economic and policy assumptions are indicated in the chapter on Economic and Policy Assumptions, and in specific tables of the present report. In a change to the previous procedure, the assumed medium term developments in main macroeconomic variables are based on December 2002 projections of the OECD’s Economic Department. While sometimes different from macroeconomic assumptions provided through the questionnaire replies, it was judged preferable to use one consistent source for these variables. As a next step, the OECD’s Aglink model is used to facilitate a consistent integration of this information and to derive an initial set of global market projections (baseline). Aglink is a dynamic economic and policy specifc model of major temperate-zone agricultural commodity markets. It currently consists of modules for ten main agricultural producing and trading countries, or groups of countries, within the OECD, a complete agricultural sector module for Argentina, Russia, China and Brazil (added this year) and a beef sector module for other MERCOSUR countries. A standalone sugar model has also been developed (and separate from the Aglink model at this stage), to produce a set of medium baseline projections for world and OECD sugar markets, covering raw and white or refine sugar. The modules are all developed by the Secretariat in conjunction with experts in member

© OECD 2003

127

countries and non-member Economies and, in some cases, with assistance from other national administrations. The initial baseline results are compared with those obtained from the questionnaire replies and any emerging issues are discussed in bilateral exchanges with country experts. On the basis of these discussions and of updated information, a second baseline is produced. In addition to quantities produced, consumed and traded, the baseline also includes projections for nominal prices for the commodities concerned. Unless otherwise stated, prices referred to in the text are also in nominal terms. The information generated is used to prepare reports presenting outlook assessments for cereals, oilseeds, meats, dairy products and sugar. These reports are discussed at the annual meetings of the Working Group on Meat and Dairy Products and the Working Group on Cereals, Animal Feeds and Sugar of the OECD Committee for Agriculture. The outlook discussions in the Working Groups focus on key issues emerging from the replies to the questionnaires and any adjustments which have to be made to member country projections in order to derive a coherent global baseline. Subsequent to the meetings of the commodity Working Groups and final data revisions, a revised baseline is produced and its sensitivity to major uncertainties evaluated. The revised projections form the basis of a draft of the present OECD Agricultural Outlook publication, which is normally discussed by the Working Party on Agricultural Policies and Markets of the Committee for Agriculture, prior to publication. The above procedure implies that the baseline projections presented in this report are heavily conditioned by those developed by member countries and participating non-member Economies. It also reconciles inconsistencies between individual country projections through the use of a formal modelling framework and highlights the sensitivity of the outcomes to key assumptions. The review process ensures that the judgement of country experts is applied to the projections and related analyses. However, the final responsibility for the projections and their interpretation rests with the OECD Secretariat.

128

© OECD 2003

ANNEX I.

© OECD 2003

STATISTICAL TABLES

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

ECONOMIC ASSUMPTIONS ................................................................................... WORLD PRICES ....................................................................................................... MAIN POLICY ASSUMPTIONS FOR CEREAL MARKETS...................................... WORLD CEREAL PROJECTIONS ............................................................................ MAIN POLICY ASSUMPTIONS FOR OILSEED MARKETS .................................... WORLD OILSEED PROJECTIONS........................................................................... MAIN POLICY ASSUMPTIONS FOR MEAT MARKETS ......................................... OECD MEAT PROJECTIONS ................................................................................... MAIN POLICY ASSUMPTIONS FOR DAIRY MARKETS......................................... WORLD DAIRY PROJECTIONS (BUTTER AND CHEESE) ..................................... WORLD DAIRY PROJECTIONS (POWDERS AND CASEIN) ................................... OECD TRADE PROJECTIONS ................................................................................. WHEAT PROJECTIONS............................................................................................ COARSE GRAINS PROJECTIONS ...........................................................................

130 132 133 135 136 138 139 141 142 144 145 146 147 149

15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41.

RICE PROJECTIONS ................................................................................................ OILSEED PROJECTIONS ......................................................................................... OILSEED MEALS PROJECTIONS ........................................................................... VEGETABLE OILS PROJECTIONS .......................................................................... BEEF AND VEAL PROJECTIONS............................................................................. PIG MEAT PROJECTIONS ....................................................................................... POULTRY MEAT PROJECTIONS ............................................................................ SHEEP MEAT PROJECTIONS ................................................................................. MEAT PER CAPITA CONSUMPTION PROJECTIONS ............................................ MILK PROJECTIONS ............................................................................................... BUTTER PROJECTIONS .......................................................................................... CHEESE PROJECTIONS .......................................................................................... SKIM MILK POWDER PROJECTIONS .................................................................... WHEY POWDER AND CASEIN PROJECTIONS....................................................... WHOLE MILK POWDER PROJECTIONS................................................................. DAIRY PER CAPITA CONSUMPTION PROJECTIONS ........................................... OTHER SELECTED COUNTRIES’ PROJECTIONS: BUTTER AND SMP ............... OTHER SELECTED COUNTRIES’ PROJECTIONS: WHEAT................................... OTHER SELECTED COUNTRIES’ PROJECTIONS: COARSE GRAINS .................. OTHER SELECTED COUNTRIES’ PROJECTIONS: RICE ....................................... OTHER SELECTED COUNTRIES’ PROJECTIONS: OILSEEDS.............................. OTHER SELECTED COUNTRIES’ PROJECTIONS: OILSEED MEALS................... OTHER SELECTED COUNTRIES’ PROJECTIONS: VEGETABLE OILS ................. MAIN POLICY ASSUMPTIONS FOR SUGAR MARKETS ....................................... WORLD SUGAR PROJECTIONS (in raw sugar e quivale nt) ................................... SUGAR PROJECTIONS (in raw sugar e quivale nt) ................................................. SUGAR PER CAPITA CONSUMPTION PROJECTIONS (in raw sugar e quivale nt)

151 153 155 157 159 161 163 165 166 168 170 172 174 176 177 178 180 181 182 183 184 185 186 187 188 189 192

129

Annex Table 1 – ECONOMIC ASSUMPTIONS Average 1997-01

Calendar yeara

REAL GDPb Australia Canada EU 15 Hungary Japan Korea Mexico New Zealand Poland United States OECDc, e Argentina Brazil China Russia Rest of worldd CPIb Australia Canada EU 15 Hungary Japan Korea Mexico New Zealand Poland United States OECD Argentina Brazil China Russia POPULATION Australia Canada EU 15 Japan Korea Mexico Poland United States OECD Argentina Brazil China Russia Rest of worldd

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

% % % % % % % % % % % % % % % %

3.9 4.0 2.6 4.5 0.7 4.3 4.4 2.5 4.1 3.4 2.8 0.7 2.0 7.7 3.1 2.9

3.2 5.0 3.3 5.2 2.6 9.3 6.5 3.9 4.1 3.8 3.8 –0.8 4.4 8.0 9.0 4.9

2.8 1.5 1.7 3.8 –0.3 3.0 –0.3 1.4 0.9 0.3 0.8 –4.4 1.6 7.3 5.0 1.8

3.5 3.3 0.8 3.1 –0.7 6.1 1.5 3.8 1.2 2.3 1.5 –11.9 0.7 7.8 4.3 3.0

3.7 3.1 1.8 4.1 0.8 5.8 3.3 3.0 2.5 2.6 2.6 0.8 1.3 7.4 3.5 4.6

3.8 3.5 2.7 4.0 0.9 5.7 4.0 3.4 2.9 3.6 3.2 4.3 3.4 7.5 2.9 4.7

3.9 3.1 2.4 4.2 1.3 5.5 4.8 2.8 4.4 3.5 3.0 5.5 3.6 6.5 3.6 5.0

3.5 3.1 2.3 4.1 1.3 5.4 4.6 2.9 5.0 3.4 2.9 4.9 4.5 7.0 4.1 4.1

3.4 3.1 2.3 4.0 1.3 5.4 4.5 2.8 5.2 3.4 2.9 3.9 4.4 8.4 3.2 3.9

3.3 3.1 2.3 4.0 1.4 5.3 4.5 2.8 5.3 3.4 2.9 4.0 4.3 8.4 3.3 4.7

% % % % % % % % % % % % % % %

2.3 4.0 2.0 12.3 0.1 3.8 13.8 1.5 9.9 2.5 3.6 –0.9 4.9 0.9 3.1

4.5 2.7 2.5 9.8 –0.7 2.3 9.5 2.6 10.1 3.4 3.6 0.5 0.8 0.7 14.0

4.4 2.5 2.1 9.2 –0.7 4.1 6.4 2.6 5.5 2.8 3.2 –1.1 6.8 0.7 25.7

3.0 2.2 2.2 5.4 –1.1 2.7 4.4 1.6 2.1 1.6 2.3 32.8 7.9 –0.6 15.6

2.9 2.7 2.0 5.2 –1.1 3.5 3.9 2.3 2.5 1.9 2.2 54.3 7.8 1.4 13.0

2.7 2.3 1.8 4.2 –1.1 3.3 3.5 2.1 2.7 1.8 1.8 14.9 4.5 3.2 10.4

2.4 2.3 1.6 3.6 –1.0 3.0 3.2 2.2 2.6 1.8 1.7 7.1 3.9 3.3 7.6

2.4 2.2 1.6 3.3 –1.0 3.0 3.0 2.2 2.6 1.8 1.6 5.5 3.5 5.4 8.0

2.4 2.2 1.5 3.0 –1.0 3.0 3.0 2.2 2.5 1.8 1.6 5.3 3.2 5.5 7.3

2.4 2.2 1.5 3.0 –1.0 3.0 3.0 2.2 2.5 1.8 1.6 5.1 3.1 4.3 4.8

19.0 30.7 374.8 126.7 46.7 96.8 38.7 273.2 1 113.8 36.6 168.0 1 249.2 146.5 3 114.9

19.2 30.8 375.4 126.9 47.0 97.4 38.6 275.2 1 119.4 37.0 170.3 1 260.4 146.1 3 177.5

19.5 31.1 375.7 127.2 47.3 99.2 38.6 279.8 1 128.5 37.5 172.3 1 269.9 145.7 3 237.3

19.7 31.4 375.8 127.3 47.7 101.0 38.7 282.8 1 135.4 38.0 174.3 1 279.2 145.3 3 299.6

19.9 31.6 375.8 127.4 48.0 102.6 38.7 284.8 1 141.0 38.4 176.4 1 288.2 144.8 3 357.3

20.0 31.9 375.8 127.4 48.3 104.1 38.7 286.8 1 146.1 38.8 178.4 1 297.0 144.3 3 414.6

20.2 32.1 375.6 127.4 48.6 105.6 38.7 288.8 1 151.0 39.2 180.4 1 305.6 143.8 3 471.3

20.4 32.3 375.4 127.4 48.9 106.8 38.8 290.8 1 155.6 39.5 182.5 1 313.8 143.2 3 527.3

20.5 32.5 375.1 127.3 49.2 108.1 38.8 292.7 1 160.0 39.9 184.5 1 322.0 142.6 3 583.4

20.7 32.6 374.7 127.1 49.5 109.4 38.8 294.7 1 164.2 40.2 186.5 1 330.4 142.1 3 639.3

million million million million million million million million million million million million million million

For notes, see end of the table.

130

© OECD 2003

Annex Table 1 – ECONOMIC ASSUMPTIONS (cont.) Average 1997-01

Calendar yeara

EXCHANGE RATE Australia Canada EU 15 Hungary Japan Korea Mexico New Zealand Poland Argentina Brazil Russia China

AUD/USD CAD/USD EUR/USD HUF/USD JPY/USD ’000 KRW/USD MXN/USD NZD/USD PLN/USD ARS/USD BRL/USD RUR/USD CNY/USD

1.63 1.48 0.98 241.3 119.0 1.19 9.09 1.97 3.84 1.00 1.65 19.5 1.37

2000

1.73 1.49 1.09 282.3 107.8 1.13 9.45 2.20 4.35 1.00 1.83 28.1 8.28

2001p

2002e

1.94 1.55 1.12 286.5 121.5 1.29 9.34 2.38 4.10 1.00 2.36 29.2 8.28

1.84 1.57 1.06 258.6 125.4 1.25 9.66 2.17 4.09 3.19 2.96 31.6 8.28

2003

2004

2005

2006

2007

2008

1.78 1.55 1.00 241.9 122.5 1.22 10.17 2.02 3.98 4.46 3.40 33.0 8.28

1.78 1.55 1.00 241.9 122.5 1.22 10.17 2.02 3.98 4.98 3.16 35.2 8.28

1.85 1.57 1.00 242.3 119.4 1.23 10.43 2.05 4.04 5.32 3.33 36.5 8.28

1.88 1.59 1.00 242.8 116.3 1.24 10.69 2.07 4.11 5.54 3.45 38.6 8.28

1.91 1.60 1.01 243.2 113.3 1.25 10.93 2.10 4.19 5.73 3.57 41.3 8.28

1.94 1.62 1.01 243.7 110.4 1.26 11.15 2.13 4.26 5.90 3.69 43.3 8.28

Notes: a) Historical information for real GDP, population and exchange rates were obtained from OECD Economic Outlook No. 72, December 2002 and CPI from OECD Main Economic indicators, December 2002. Assumptions for the projection period draw on the recent medium term macroeconomic projections of the OECD Economic Department, World Bank projections December 2002 and responses to a questionnaire sent to member country agricultural experts. b) Annual per cent change. c) Excludes Iceland. d) Excludes OIS, Argentina, China, Brazil and Russia. Source: World Bank, December 2002. e) Annual weighted average real GDP growth rates in OECD countries are based on GDP weights using 1995 purchasing power parities. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

131

Annex Table 2 – WORLD PRICES a Average 97/98-01/02

WHEAT Priceb COARSE GRAINS Pricec RICE Priced OILSEEDS Pricee OILSEED MEALS Pricef VEGETABLE OILS Priceg SUGAR Price, raw sugarh Price, refined sugari BEEF AND VEAL Price, EUj Price, USAk Price, Argentinal PIG MEAT Price, EUm Price, USAn Price, Brazilo POULTRY MEAT Price, EUp Price, USAq SHEEP MEAT Price, New Zealandr BUTTER Prices CHEESE Pricet SKIM MILK POWDER Priceu WHOLE MILK POWDER Pricev WHEY POWDER Wholesale price, USAw CASEIN Pricex

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

USD/t

124.3

126.6

125.2

167.7

138.7

139.8

141.9

143.2

141.9

144.7

–13.7

USD/t

93.9

90.2

89.8

113.7

100.2

102.6

105.8

106.9

106.9

109.6

–3.6

USD/t

238.6

184.0

192.0

191.5

204.6

220.6

234.1

238.9

244.6

256.3

33.8

USD/t

221.6

203.0

211.2

253.7

229.2

230.9

225.4

236.3

239.9

243.5

–4.0

USD/t

164.9

176.5

164.0

164.4

143.3

148.0

150.7

157.4

158.8

164.1

–0.2

USD/t

454.0

335.7

422.3

545.8

572.6

560.5

526.6

536.5

554.1

558.5

2.3

USD/t USD/t

190.0 236.4

219.3 252.3

167.2 235.3

165.3 238.1

172.0 242.5

191.8 260.1

183.0 249.1

174.2 238.1

169.8 231.5

165.3 224.9

0.0 –5.6

EUR/100 kg dw USD/100 kg dw ARS/100 kg dw

248.5 238.8 156.3

260.2 247.7 148.0

223.1 258.5 133.5

236.3 236.4 343.1

243.6 261.0 574.8

253.4 273.5 713.0

259.7 277.0 761.2

255.8 278.8 753.5

258.5 266.0 685.7

264.1 257.7 667.0

11.8 9.0 94.4

EUR/100 kg dw USD/100 kg dw BRL/100 kg dw

144.0 130.8 119.7

158.3 136.9 128.3

166.6 140.3 145.3

139.6 102.2 161.1

148.0 107.1 191.6

153.0 126.7 193.4

156.0 128.6 196.5

156.3 113.1 205.7

156.1 114.9 213.0

155.8 128.7 221.9

11.6 26.0 37.8

EUR/100 kg rtc USD/100 kg rtc

101.0 130.2

98.4 123.9

107.6 130.3

97.6 122.4

100.4 128.0

98.7 134.1

99.3 136.7

100.3 139.2

101.0 140.4

101.7 139.5

4.1 13.9

NZD/100 kg dw

296.1

299.5

383.0

417.0

366.2

345.2

334.8

342.4

350.3

357.5

–14.3

USD/100 kg

159.6

136.7

133.6

113.4

124.0

127.9

132.1

135.4

136.9

137.4

21.1

USD/100 kg

195.0

186.1

217.2

171.8

183.0

186.6

191.0

195.7

197.6

199.1

15.9

USD/100 kg

167.6

189.6

197.5

132.9

155.8

160.8

166.6

168.7

170.1

170.5

28.3

USD/100 kg

177.0

182.2

197.3

139.0

162.3

169.2

173.9

177.3

178.9

178.9

28.7

USD/100 kg

45.7

44.4

42.4

48.4

52.7

55.6

57.1

59.0

62.1

64.6

33.5

USD/100 kg

442.0

403.8

498.7

464.3

359.3

402.9

420.1

429.5

438.6

439.1

–5.4

Notes: a) This table is a compilation of price information presented in the detailed commodity tables further in this annex. Prices for crops are on marketing year basis and those for meat and dairy products on calendar year basis (e.g. 00/01 is calendar year 2000). b) No. 2 hard red winter wheat, ordinary protein, USA f.o.b. Gulf Ports (June/May). c) No. 2 yellow corn, US f.o.b. Gulf Ports (September/August). d) Milled, 100%, grade b, Nominal Price Quote, NPQ, f.o.b. Bangkok (August/July). e) Weighted average oilseed price, European port. f) Weighted average meal price, European port. g) Weighted average price of oilseed oils and palm oil, European port. h) Raw sugar world price, New York No. 11, Fob stowed Caribbean port (including Brazil), bulk spot price. i) Refined sugar price, London No. 5 , FOB Europe, spot. j) Producer price. k) Choice steers, 1 100-1 300 lb lw, Nebraska – lw to dw conversion factor 0.63. l) Buenos Aires wholesale price linier, young bulls. m) Pig reference price – EU 15 starting in 1995. n) Barrows and gilts, No. 1-3, 230250 lb lw, Iowa/South Minnesota – lw to dw conversion factor 0.74. o) Producer price. p) Weighted average farmgate live fowls, top quality, (lw to rtc conversion of 0.75), EU 15 starting in 1995. q) Wholesale weighted average broiler price 12 cities. r) Lamb schedule price, all grade average. s) F.o.b. export price, butter, 82% butterfat, northern Europe. t) F.o.b. export price, cheddar cheese, 40 lb blocks, Northern Europe. u) F.o.b. export price, nonfat dry milk, extra grade, Northern Europe. v) F.o.b. export price, WMP 26% butterfat, Northern Europe. w) Edible dry whey, Wisconsin, plant. x) World price, New Zealand. p: provisional; e : estimate. Source: OECD Secretariat

132

© OECD 2003

Annex Table 3 – MAIN POLICY ASSUMPTIONS FOR CEREAL MARKETS Average 97/98-01/02

Crop yeara

ARGENTINA Crops export tax Rice export tax CANADA Tariff-quotasb wheat in-quota tariff out-of-quota tariff barley in-quota tariff out-of-quota tariff EU 15 c Cereal support priced Cereal compensatione, f Compulsory set-aside rate Set-aside paymentf Wheat tariff-quotab Coarse grain tariff-quotab Subsidised export limitsb, g wheat coarse grainsh JAPAN Rice land diversion program Wheat support pricei Barley support pricej Wheat tariff-quota in-quota tariff out-of-quota tariff Barley tariff-quota In-quota tariff out-of-quota tariff Rice tariff-quotak in-quota tariff out-of-quota tariff KOREA Wheat tariff Maize tariff-quota in-quota tariff out-of-quota tariff Barley tariff-quota in-quota tariff out-of-quota tariff Rice quotak in-quota tariff

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

% %

0 0

0 0

0 0

23 10

23 10

23 10

23 10

23 10

23 10

23 10

kt % % kt % %

328 1.5 71 361 0.9 60

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

350 1.3 70 399 0.8 58

114 57 .. 66 350 2 522

110 59 10 59 350 2 822

101 63 10 63 350 2 822

101 63 10 63 350 2 822

101 63 10 63 3 332 3 122

101 63 10 63 3 332 3 122

101 63 10 63 3 332 3 122

101 63 10 63 3 332 3 122

101 63 10 63 3 332 3 122

101 63 10 63 3 332 3 122

16.8 11.3

14.4 10.4

14.4 10.4

14.4 10.4

14.4 10.4

14.4 10.4

14.4 10.4

14.4 10.4

14.4 10.4

14.4 10.4

’000 ha ’000 JPY/t ’000 JPY/t kt % % kt % % kt % %

937 148 127 5 698 10 504 1 359 0 371 629 5 1 182

963 147 127 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

1 010 145 125 5 740 10 547 1 369 0 400 682 5 1 291

% kt % % kt % % kt %

9.8 6 102 2.0 426 48 23 385 115 5

8.9 6 102 1.9 422 49 23 382 137 5

8.0 6 102 1.8 417 50 23 372 154 5

7.2 6 102 1.8 413 51 23 367 171 5

6.3 6 102 1.7 408 53 23 363 188 5

5.4 6 102 1.7 404 54 23 359 205 5

5.4 6 102 1.7 404 54 23 359 205 5

5.4 6 102 1.7 404 54 23 359 205 5

5.4 6 102 1.7 404 54 23 359 205 5

5.4 6 102 1.7 404 54 23 359 205 5

EUR/t EUR/t % EUR/t kt kt mt mt

For notes, see end of the table.

© OECD 2003

133

Annex Table 3 – MAIN POLICY ASSUMPTIONS FOR CEREAL MARKETS (cont.) Average 97/98-01/02

Crop yeara

MERCOSUR Wheat tariff Coarse grain tariff Rice tariff MEXICO Cereal income paymentl Wheat NAFTA tariff Fidelist social program Tortilla consumption subsidy Maize tariff-quota in-quota tariff out-of-quota tariff Barley tariff-quota in-quota tariff out-of-quota tariff POLAND Wheat tariff Barley tariff UNITED STATES Wheat loan rate Maize loan rate Prod. flex. contract payment wheat maize CRP areasm wheat coarse grains Subsidised export limitsb wheat coarse grains Wheat EEP paymentn CHINA Wheat support price Coarse grains support price Rice support price Wheat tariff-quota in-quota tariff out-of-quota tariff Coarse grains tariff Maize tariff-quota in-quota tariff out-of-quota tariff Rice tariff-quota in-quota tariff out-of-quota tariff

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

12 8 12

13 8 13

13 8 13

12 8 12

12 8 12

12 8 12

10 8 10

10 8 10

10 8 10

10 8 10

699 6.0 1 521 1 685 2 501 50 205 5 50 122

778 4.5 1 638 0 2 501 50 202 5 50 120

829 3.0 1 912 0 2 501 50 200 5 50 119

865 1.5 2 083 0 2 501 50 198 5 50 118

899 0.0 2 232 0 2 501 50 196 5 50 116

931 0.0 2 369 0 2 501 50 194 5 50 115

960 0.0 2 501 0 2 501 50 194 5 50 115

989 0.0 2 635 0 2 501 50 194 5 50 115

1 019 0.0 2 776 0 2 501 50 194 5 50 115

1 049 0.0 2 926 0 2 501 50 194 5 50 115

23 20

25 20

25 20

25 20

25 20

25 20

25 20

25 20

25 20

25 20

USD/t USD/t

94.8 74.4

94.8 74.4

94.8 74.4

102.9 77.9

102.9 77.9

101.0 76.8

101.0 76.8

101.0 76.8

101.0 76.8

101.0 76.8

USD/t USD/t mha mha mha

21.9 14.3 6.2 3.3 2.9

21.6 13.2 6.1 3.2 2.9

16.9 10.2 6.4 3.5 2.9

16.9 10.2 6.6 3.6 3.0

16.9 10.2 6.7 3.6 3.1

16.9 10.2 6.7 3.6 3.1

16.9 10.2 6.7 3.6 3.1

16.9 10.2 6.7 3.6 3.1

16.9 10.2 6.7 3.6 3.1

16.9 10.2 6.7 3.6 3.1

mt mt USD/t

15.9 1.7 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

14.5 1.6 0.0

CNY/t CNY/t CNY/t kt % % % kt % % % % %

661 565 1 885 1 577 .. 78.0 15 1 035 .. 59.9 665 .. 70.1

666 573 2 199 0 0.0 55.1 11 0 0.0 42.5 0 0.0 50.0

670 579 1 080 7 884 0.0 62.9 14 5 175 0.0 51.0 3 325 0.0 54.6

689 598 1 121 8 468 2.3 71.0 3 5 850 3.7 51.7 3 990 2.3 68.0

718 626 1 180 9 052 2.3 68.0 3 6 525 3.7 46.7 4 655 2.3 68.0

749 657 1 243 9 636 2.3 65.0 3 7 200 3.7 41.7 5 320 2.3 68.0

795 701 1 312 9 636 2.3 65.0 3 7 200 3.7 41.7 5 320 2.3 68.0

840 748 1 339 9 636 2.3 65.0 3 7 200 3.7 41.7 5 320 2.3 68.0

884 791 1 353 9 636 2.3 65.0 3 7 200 3.7 41.7 5 320 2.3 68.0

930 837 1 367 9 636 2.3 65.0 3 7 200 3.7 41.7 5 320 2.3 68.0

% % % MXN/ha % MXN mn MXN mn kt % % kt % % % %

Notes: a) Beginning crop marketing year – see Glossary of Terms for definitions. b) Year beginning 1 July. c) Prices and payments in market Euro – see Glossary of Terms. d) Common intervention price for soft wheat, barley, maize, rye and sorghum. e) Compensatory area payments. f) Actual payments made per hectare based on program yields. g) The export volume for coarse grain excludes 0.4mio t of exported potato starch. h) The original limit on subsidised exports is 10.8 mt; the figure given here is used to take into account subsidised exports for potatoes. i) Government purchase price, domestic wheat. j) Government purchase price, barley, 2nd grade, 1st class. k) Husked rice basis. l) Applies to producers of wheat, maize and sorghum. m) Includes wheat, barley, maize, oats and sorghum. n) Average per tonne of total exports. The source for tariffs and Tariff Rate Quotas is AMAD (Agricultural market access database). The tariff and TRQ data are based on Most Favoured Nation rates scheduled with the WTO and exclude those under preferential or regional agreements, which may be substantially different. Tariffs are averages of several product lines. Specific rates are converted to ad valorem rates using world prices in the Outlook. Import quotas are based on global commitments scheduled in the WTO rather than those allocated to preferential partners under regional or other agreements. For Mexico, the NAFTA in-quota tariff on maize and barley is zero, while the tariff-rate quota becomes unlimited in 2003 for barley and 2008 for maize. Source: OECD Secretariat.

134

© OECD 2003

Annex Table 4 – WORLD CEREAL PROJECTIONS

WHEAT OECDb Production Consumption feed use Closing stocks NON-OECD Production Consumption feed use Net traded Closing stocks WORLDc Production Consumption feed use Closing stocks Pricee COARSE GRAINS OECDb Production Consumption feed use Closing stocks NON-OECD Production Consumption feed use Net traded Closing stocks WORLDc Production Consumption feed use Closing stocks Pricef RICE OECDb Production Consumption Closing stocks NON-OECD Production Consumption Net traded Closing stocks WORLDc Production Consumption Closing stocks Priceg

2002-2008 % growth

Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

mt mt mt mt

247.5 186.7 66.9 56.9

253.9 191.0 70.0 59.6

231.4 189.7 66.0 57.3

214.6 189.1 63.4 39.7

253.0 195.3 65.9 46.9

255.7 198.0 68.2 50.0

258.2 199.5 68.8 51.3

262.1 201.0 69.4 53.0

265.1 202.5 70.3 53.9

268.6 203.7 70.9 53.9

25.2 7.7 11.8 35.9

mt mt mt mt mt

340.7 389.8 33.3 –57.9 162.3

326.7 364.7 32.3 –59.7 173.9

348.6 388.6 35.1 –43.9 177.8

354.3 399.1 39.1 –43.1 176.1

356.2 406.9 38.4 –50.6 175.9

362.6 417.0 40.2 –54.5 175.9

367.6 424.5 41.1 –57.4 176.4

373.4 432.5 42.2 –59.4 176.8

379.3 441.0 43.1 –61.8 176.9

385.0 449.7 44.5 –64.8 177.1

8.7 12.7 13.8 50.5 0.5

mt mt mt mt USD/t

588.1 576.6 100.1 219.2 124.3

580.7 555.7 102.3 233.5 126.6

580.0 578.4 101.1 235.1 125.2

568.9 588.2 102.5 215.8 167.7

609.2 602.2 104.3 222.7 138.7

618.3 615.0 108.4 225.9 139.8

625.8 624.0 109.9 227.7 141.9

635.6 633.5 111.6 229.8 143.2

644.5 643.4 113.3 230.8 141.9

653.6 653.4 115.4 231.0 144.7

14.9 11.1 12.5 7.0 –13.7

mt mt mt mt

475.9 441.7 329.0 95.4

477.3 445.0 332.0 96.3

476.3 454.0 335.2 96.3

446.4 449.7 325.3 72.1

498.4 459.0 328.4 83.6

498.7 464.4 332.5 86.0

499.7 467.8 334.6 85.3

509.8 471.6 336.8 86.4

515.3 474.8 338.2 87.0

521.7 479.6 341.5 87.0

16.9 6.7 5.0 20.6

mt mt mt mt mt

375.4 414.1 245.7 –28.9 98.7

361.3 396.1 235.0 –29.0 91.7

394.4 431.5 263.3 –22.3 76.9

402.8 432.1 259.2 –20.9 68.6

413.2 442.2 265.9 –27.9 67.4

420.0 452.9 274.9 –31.8 66.4

428.9 462.2 283.1 –32.6 65.7

438.2 475.2 294.7 –37.0 65.7

444.9 484.8 302.9 –40.0 65.8

452.4 494.2 311.0 –42.1 66.1

12.3 14.4 20.0 101.6 –3.6

mt mt mt mt USD/t

851.3 855.8 574.7 194.1 93.9

838.6 841.1 567.0 188.0 90.2

870.6 885.5 598.5 173.2 89.8

849.2 881.8 584.4 140.7 113.7

911.6 901.3 594.3 151.0 100.2

918.7 917.3 607.4 152.4 102.6

928.6 930.0 617.6 151.0 105.8

947.9 946.8 631.5 152.1 106.9

960.2 959.6 641.1 152.8 106.9

974.1 973.8 652.5 153.1 109.6

14.7 10.4 11.6 8.8 –3.6

mt mt mt

23.8 21.8 8.1

23.9 22.1 8.0

24.0 22.3 8.5

23.3 22.1 8.3

23.6 22.0 8.5

23.7 22.0 8.9

23.9 22.1 9.3

24.0 22.1 9.6

24.0 22.3 10.0

24.1 22.5 10.9

3.4 1.7 31.1

mt mt mt mt

373.5 372.8 –1.7 130.7

374.6 374.7 –1.6 139.9

374.4 388.6 –1.2 127.0

363.0 385.7 –1.4 105.7

379.3 390.0 –1.4 96.4

388.6 395.9 –1.4 90.5

394.2 400.0 –1.4 86.2

401.0 404.1 –1.4 84.5

406.9 408.8 –1.4 84.0

412.7 413.3 –0.7 84.1

13.7 7.2 –47.1 –20.4

mt mt mt USD/t

397.2 394.6 138.7 238.6

398.5 396.7 148.0 184.0

398.4 410.9 135.5 192.0

386.3 407.8 114.0 191.5

402.9 412.0 104.9 204.6

412.4 417.9 99.4 220.6

418.1 422.0 95.4 234.1

425.0 426.3 94.1 238.9

431.0 431.0 94.1 244.6

436.7 435.8 95.0 256.3

13.1 6.9 –16.6 33.8

Crop yeara

Notes: a) Beginning crop marketing year – see Glossary of Terms for definitions. b) Excludes Iceland. c) Source of historic data is USDA. d) Non-OECD net exports (imports) equal OECD net imports (exports). e) No. 2 hard red winter wheat, ordinary protein, USA f.o.b. Gulf Ports (June/May). f) No. 2 yellow corn, US f.o.b. Gulf Ports (September/August). g) Milled, 100%, grade b, Nominal Price Quote, NPQ, f.o.b. Bangkok (August/July). p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

135

Annex Table 5 – MAIN POLICY ASSUMPTIONS FOR OILSEED MARKETS Average 97/98-01/02

Crop yeara

ARGENTINA Oilseed export tax Oilseed meal export tax Oilseed oil export tax AUSTRALIA Tariffs soyabean oil rapeseed oil CANADA Tariffs rapeseed oil EU 15 c Oilseed compensationd, e Compulsory set-aside rate Set-aside paymente Tariffs soyabean oil rapeseed oil JAPAN Deficiency payments soyabeans Tariffs soyabean oil rapeseed oil KOREA Soybean tariff-quota in-quota tariff out-of-quota tariff Soyabean (for food) mark up MEXICO Soyabeans income paymentf Tariffs soyabeans soyabean meal soyabean oil POLAND Tariffs rapeseed soyabean meal soyabean oil soyabean oil tariff-quota in-quota tariff out-of-quota tariff UNITED STATES Soyabeans loan rate CRP area soyabeans Tariffs rapeseed soyabean meal rapeseed meal soyabean oil rapeseed oil Subsidised export limitsb oilseed oils

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

% % %

3.5 0.0 0.0

3.5 0.0 0.0

3.5 0.0 0.0

23.0 20.0 20.0

23.0 20.0 20.0

23.0 20.0 20.0

23.0 20.0 20.0

23.0 20.0 20.0

23.0 20.0 20.0

23.0 20.0 20.0

% %

8.4 8.4

8.0 8.0

8.0 8.0

8.0 8.0

8.0 8.0

8.0 8.0

8.0 8.0

8.0 8.0

8.0 8.0

8.0 8.0

%

7.1

6.4

6.4

6.4

6.4

6.4

6.4

6.4

6.4

6.4

87.3 10.0 65.6

82 10.0 58.7

72 10.0 63.0

63 10.0 63.0

63 10.0 63.0

63 10.0 63.0

63 10.0 63.0

63 10.0 63.0

63 10.0 63.0

63 10.0 63.0

6.7 6.7

6.0 6.0

6.0 6.0

6.0 6.0

6.0 6.0

6.0 6.0

6.0 6.0

6.0 6.0

6.0 6.0

6.0 6.0

bn. JPY

10.9

12.9

12.9

12.9

12.9

12.9

12.9

12.9

12.9

12.9

% %

12.1 26.0

10.9 28.4

10.9 28.4

10.9 28.4

10.9 28.4

10.9 28.4

10.9 28.4

10.9 28.4

10.9 28.4

10.9 28.4

1 032 5 514 146

1 032 5 509 252

1 032 5 503 168

1 032 5 498 155

1 032 5 492 141

1 032 5 487 136

1 032 5 487 130

1 032 5 487 128

1 032 5 487 125

1 032 5 487 122

MXN/ha

699

778

829

865

899

931

960

989

1 019

1 049

% % %

34.8 30.6 47.5

34.5 29.3 47.0

34.1 27.9 46.5

33.7 26.5 46.0

33.4 25.1 45.5

33.0 23.8 45.0

33.0 23.8 45.0

33.0 23.8 45.0

33.0 23.8 45.0

33.0 23.8 45.0

% % % kt % %

15 6 10 50 40 57

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

15 5 10 50 40 51

193.3

193.3

193.3

183.7

183.7

183.7

183.7

183.7

183.7

183.7

1.8

1.9

2.1

2.1

2.2

2.2

2.2

2.2

2.2

2.2

% % % % %

3.0 2.4 1.2 13.2 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

3.0 2.2 1.2 12.7 3.2

kt

248.4

141.0

141.0

141.0

141.0

141.0

141.0

141.0

141.0

141.0

EUR/t % EUR/t % %

kt % % ’000 KRW/t

USD/t mha

For notes, see end of the table.

136

© OECD 2003

Annex Table 5 – MAIN POLICY ASSUMPTIONS FOR OILSEED MARKETS (cont.) Crop yeara

CHINA Soyabeans support price Tariffsb soyabeans soyabean meal soyabean oil in-quota tariff Vegetable oil tariff-quota

CNY/t % % % kt

Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

1 005.0

1 222.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

81.7 15.1 .. 991.4

58.2 14.8 0.0 0.0

64.7 14.8 0.0 4 957.2

3.0 6.3 9.0 5 796.9

3.0 6.3 9.0 6 436.6

3.0 6.3 9.0 6 944.6

3.0 6.3 9.0 7 998.1

3.0 6.3 9.0 7 998.1

3.0 6.3 9.0 7 998.1

3.0 6.3 9.0 7 998.1

Notes: a) Beginning crop marketing year – see Glossary of Terms for definitions. b) calendar year, except for China and subsidised export limit in USA, beginning 1 July. c) Prices and payments in market Euro – see Glossary of Terms. d) Compensatory area payments, before penalties. e) Payments made per hectare based on regional yields. f) Weighted average of autumn/winter and spring/summer. The source for tariffs and Tariff Rate Quotas is AMAD (Agricultural market access database). The tariff and TRQ data are based on Most Favoured Nation rates scheduled with the WTO and exclude those under preferential or regional agreements, which may be substantially different. Tariffs are averages of several product lines. Specific rates are converted to ad valorem rates using world prices in the Outlook. Import quotas are based on global commitments scheduled in the WTO rather than those allocated to preferential partners under regional or other agreements. For Mexico, the NAFTA tariffs on soybeans, oilmeals and soybean oil are zero after 2003. Source: OECD Secretariat.

© OECD 2003

137

Annex Table 6 – WORLD OILSEED PROJECTIONS

OILSEEDS OECDb Production Consumption crush Closing stocks NON-OECD Production Consumption crush Net traded Closing stocks WORLDc Production Consumption crush Closing stocks Pricee OILSEED MEALS OECDb Production Consumption Closing stocks NON-OECD Production Consumption Net traded Closing stocks WORLDc Production Consumption Closing stocks Pricef VEGETABLE OILS OECDb Production Consumption Closing stocks NON-OECD Production Consumption Net traded Closing stocks WORLDc Production of which palm oil Consumption Closing stocks Oil priceg

2002-2008 % growth

Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

mt mt mt mt

107.5 108.7 96.7 12.5

107.2 109.8 97.3 12.2

107.6 110.6 99.0 11.1

100.7 110.6 98.1 9.3

110.5 114.6 101.4 11.2

111.7 117.4 103.8 11.7

113.8 120.3 106.2 12.3

115.4 121.6 107.6 11.8

118.0 123.3 109.2 11.7

120.0 125.5 111.2 11.9

19.1 13.4 13.3 28.4

mt mt mt mt mt

116.6 114.8 99.0 1.8 7.1

121.4 119.7 103.9 0.5 9.1

127.8 129.0 112.3 1.9 6.0

142.6 134.3 120.0 8.1 6.3

147.7 140.6 125.2 6.0 7.4

151.4 144.4 128.4 6.3 8.2

156.4 148.8 132.2 7.0 8.8

158.1 152.2 135.5 5.7 9.0

162.4 156.9 140.0 5.3 9.3

168.2 162.2 145.0 5.7 9.5

17.9 20.8 20.8 –29.2 51.0

mt mt mt mt USD/t

224.1 223.5 195.7 19.6 221.6

228.6 229.6 201.3 21.3 203.0

235.4 239.6 211.3 17.1 211.2

243.4 244.9 218.1 15.6 253.7

258.1 255.1 226.5 18.6 229.2

263.2 261.9 232.2 19.9 230.9

270.2 269.0 238.5 21.1 225.4

273.6 273.8 243.2 20.8 236.3

280.4 280.2 249.2 21.0 239.9

288.1 287.7 256.1 21.4 243.5

18.4 17.5 17.5 37.5 –4.0

mt mt mt

70.9 86.8 2.4

71.5 87.9 2.5

73.0 91.2 2.4

72.4 92.9 2.5

74.6 94.6 2.6

76.3 96.7 2.6

78.0 98.8 2.6

78.9 100.0 2.6

80.1 101.9 2.7

81.4 103.9 2.7

12.4 11.9 8.5

mt mt mt mt

70.0 53.8 16.0 3.3

73.6 57.1 16.5 3.5

80.8 62.6 18.1 3.6

86.0 65.3 20.5 3.8

89.4 69.0 20.1 4.2

91.7 71.2 20.4 4.3

94.4 73.3 20.8 4.5

96.6 75.4 21.1 4.7

99.7 77.7 21.8 4.9

103.2 80.5 22.6 5.0

20.0 23.2 10.1 32.0

140.9 140.6 5.7 164.9

145.2 144.9 6.0 176.5

153.8 153.7 6.1 164.0

158.4 158.2 6.3 164.4

164.0 163.5 6.8 143.3

168.0 167.9 6.9 148.0

172.4 172.1 7.1 150.7

175.6 175.4 7.3 157.4

179.8 179.6 7.5 158.8

184.6 184.4 7.7 164.1

16.5 16.6 22.8 –0.2

mt mt mt

23.5 24.8 2.2

23.6 25.9 2.5

23.3 26.3 2.2

23.3 26.5 1.9

24.3 26.9 1.9

25.0 27.6 1.9

25.7 28.7 2.0

26.1 29.2 2.0

26.5 29.6 2.0

27.1 30.1 2.0

16.4 13.4 7.7

mt mt mt mt

42.4 40.8 1.4 5.4

44.0 42.0 2.5 5.8

47.5 45.5 2.7 5.1

49.2 46.9 2.9 4.5

50.8 47.6 2.6 5.0

52.5 49.5 2.7 5.3

55.4 52.0 3.1 5.6

56.8 53.7 3.1 5.6

58.4 55.3 3.0 5.7

60.8 57.6 3.0 5.9

23.7 22.8 5.6 32.1

65.8 19.0 65.6 7.5 454.0

67.6 19.7 67.9 8.3 335.7

70.8 21.2 71.8 7.3 422.3

72.4 21.8 73.4 6.3 545.8

75.1 22.5 74.5 6.9 572.6

77.5 23.5 77.1 7.2 560.5

81.0 25.6 80.7 7.6 526.6

82.8 26.3 82.9 7.5 536.5

85.0 27.1 84.9 7.7 554.1

87.9 28.5 87.7 7.9 558.5

21.4 30.5 19.4 25.0 2.3

Marketing yeara

mt mt mt USD/t

mt mt mt mt USD/t

Notes: a) Beginning crop marketing year – see Glossary of Terms for definitions. b) Excludes Iceland. c) Source of historic data is USDA. d) Non-OECD net exports (imports) equal OECD net imports (exports). e) Weighted average oilseed price, European port. f) Weighted average meal price, European port. g) Weighted average price of oilseed oils and palm oil, European port. p: provisional; e : estimate. Source: OECD Secretariat.

138

© OECD 2003

Annex Table 7 – MAIN POLICY ASSUMPTIONS FOR MEAT MARKETS Average 1997-01

ARGENTINA Beef export tax CANADA Beef tariff-quota in-quota tariff out-of-quota tariff Poultry meat tariff-quota in-quota tariff out-of-quota tariff EU 15 a Beef support priceb, c, d Beef buy-in priceb, e Pig meat basic pricec Sheep meat basic price Sheep basic ratef Male bovine premiumg Adult bovine slaughter premiumh Calf slaughter premium Suckler cow premium Tariff-quotas beef in-quota tariff out-of-quota tariff pig meat in-quota tariff out-of-quota tariff poultry meat in-quota tariff out-of-quota tariff sheep meat in-quota tariff out-of-quota tariff Subsidised export limitsc beefi pig meati poultry meat HUNGARY Beef tariff-quota in-quota tariff out-of-quota tariff Pig meat tariff-quota in-quota tariff out-of-quota tariff Poultry meat tariff-quota in-quota tariff out-of-quota tariff Sheep meat tariff-quota in-quota tariff out-of-quota tariff

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

0

0

5

5

5

5

5

5

5

kt pw % % kt pw % %

76 0 29 45 4 215

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

76 0 27 45 3 208

EUR/kg dw EUR/kg dw EUR/kg dw EUR/kg dw EUR/head EUR/head EUR/head EUR/head EUR/head

3.34 .. 1.51 5.04 .. 167 25 10 156

3.24 .. 1.51 5.04 .. 178 49 17 163

3.01 .. 1.51 5.04 .. 203 75 33 182

2.22 1.56 1.51 .. 21.00 229 102 50 200

2.22 1.56 1.51 .. 21.00 229 102 50 200

2.22 1.56 1.51 .. 21.00 229 102 50 200

2.22 1.56 1.51 .. 21.00 229 102 50 200

2.22 1.56 1.51 .. 21.00 229 102 50 200

2.22 1.56 1.51 .. 21.00 229 102 50 200

2.22 1.56 1.51 .. 21.00 229 102 50 200

kt pw % % kt pw % % kt pw % % kt cwe % %

164 31 190 47 29 77 26 13 37 285 5 80

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

164 29 143 67 28 67 30 12 31 285 5 69

kt cwe kt cwe kt cwe

897 467 322

822 444 286

822 444 286

822 444 286

822 444 286

822 444 286

822 444 286

822 444 286

822 444 286

823 444 286

kt pw % % kt pw % % kt pw % % kt pw % %

14 15 80 18 15 54 10 35 43 0.08 20 28

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

14 15 72 20 15 52 11 35 39 0.09 20 26

%

For notes, see end of the table.

© OECD 2003

139

Annex Table 7 – MAIN POLICY ASSUMPTIONS FOR MEAT MARKETS (cont.)

JAPANj Beef stabilisation prices upper price lower price Beef tariff Pig meat stabilisation prices upper price lower price Pig meat import system tariff standard import pricek Poultry meat tariff KOREA Beef tariff Beef mark-up Pig meat tariff MEXICO Pig meat tariff Pig meat NAFTA tariff Poultry meat tariff-quota in-quota tariff out-of-quota tariff POLAND Beef tariff-quota in-quota tariff out-of-quota tariff Pig meat tariff-quota in-quota tariff out-of-quota tariff Poultry meat tariff-quota in-quota tariff out-of-quota tariff RUSSIA Beef tariff-quota in-quota tariff out-of-quota tariff Pigmeat tariff-quota in-quota tariff out-of-quota tariff Poultry meat tariff-quota in-quota tariff UNITED STATES Beef tariff-quota in-quota tariff out-of-quota tariff CHINA Beef tariff Pig meat tariff Sheep meat tariff Poultry meat tariff

Average 1997-01

2000

2001

2002

2003

2004

2005

2006

2007

2008

JPY/kg dw JPY/kg dw %

1 032 795 59

1 020 785 50

1 010 780 50

1 010 780 50

1 010 780 50

1 010 780 50

1 010 780 50

1 010 780 50

1 010 780 50

1 010 780 50

JPY/kg dw JPY/kg dw

495 373

485 365

480 365

480 365

480 365

480 365

480 365

480 365

480 365

480 365

% JPY/kg dw %

4 422 8

4 410 7

4 410 7

4 410 7

4 410 7

4 410 7

4 410 7

4 410 7

4 410 7

4 410 7

42 14 26

42 0 25

41 0 24

41 0 24

40 0 23

40 0 22

40 0 22

40 0 22

40 0 22

40 0 22

% % kt pw % %

48 8 41 50 240

47 6 41 50 238

47 4 41 50 235

46 2 41 50 233

46 0 41 50 230

45 0 41 50 228

45 0 41 50 228

45 0 41 50 228

45 0 41 50 228

45 0 41 50 228

kt pw % % kt pw % % kt pw % %

23 30 118 42 30 51 30 30 85

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

29 30 103 46 30 48 20 30 76

kt pw % % kt pw % % kt pw %

.. 15 .. .. 15 .. .. 29

.. 15 .. .. 15 .. .. 30

.. 15 .. .. 15 .. .. 25

.. 15 .. .. 15 .. .. 25

420 15 60 450 15 80 1 050 25

420 15 60 450 15 80 1 050 25

420 15 60 450 15 80 1 050 25

420 15 60 450 15 80 1 050 25

420 15 60 450 15 80 1 050 25

420 15 60 450 15 80 1 050 25

kt pw % %

677 5 27

657 5 26

657 5 26

697 5 26

697 5 26

697 5 26

697 5 26

697 5 26

697 5 26

697 5 26

44 20 23 20

45 20 23 20

40 20 22 20

27 15 18 14

21 14 17 12

16 12 15 10

16 12 15 10

16 12 15 10

16 12 15 10

16 12 15 10

% % %

% % % %

Notes: a) Prices and payments in market Euro’s – see Glossary of Terms. b) Price for R3 grade male cattle. c) Year beginning 1 July. d) Ending 1 July 2002, replaced by basic price for storage. e) Starting 1 July 2002. f) A supplementary payment of 7 euro per head is provided for Less Favoured Areas. g) Weighted average of all bull and steers payments. h) Includes national envelopes for beef. i) Includes live trade. j) Year beginning 1 April. k) Pig carcass imports. Emergency import procedures triggered from November 1995 to March 1996, from July 1996 to June 1997, from August 2001 to March 2002 and from August 2002 to March 2003. The source for tariffs and Tariff Rate Quotas (excluding Russia) is AMAD (Agricultural market access database). The tariff and TRQ data are based on Most Favoured Nation rates scheduled with the WTO and exclude those under preferential or regional agreements, which may be substantially different. Tariffs are averages of several product lines. Specific rates are converted to ad valorem rates using world prices in the Outlook. Import quotas are based on global commitments scheduled in the WTO rather than those allocated to preferential partners under regional or other agreements. For Mexico, the NAFTA in-quota tariff on poultry meat is zero and the tariff-rate quota is unlimited from 2003. Source: OECD Secretariat.

140

© OECD 2003

Annex Table 8 – OECD MEAT PROJECTIONS a 2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt cwe 26 816 kt cwe 695 kt cwe 26 086 kt cwe 889 kg rwt 16.4 AUD/100 kg dw 218 EUR/100 kg dw 248 USD/100 kg dw 239 ARS/100 kg dw 156

26 861 354 26 460 624 16.5 237 260 248 148

26 409 422 25 562 930 15.9 307 223 259 133

27 064 580 26 588 812 16.4 233 236 236 343

26 607 615 26 257 538 16.1 250 244 261 575

26 907 622 26 284 528 16.1 263 253 274 713

26 732 506 26 258 485 16.0 277 260 277 761

26 721 494 26 272 429 15.9 284 256 279 753

26 848 411 26 423 427 15.9 275 259 266 686

27 146 454 26 669 426 16.0 271 264 258 667

0.3 –21.6 0.3 –47.5 –2.2 16.1 11.8 9.0 94.4

kt cwe 34 535 kt cwe 982 kt cwe 33 394 kt cwe 871 kg rwt 23.4 EUR/100 kg dw 144 USD/100 kg dw 131

34 953 937 33 905 816 23.6 158 137

35 100 858 34 018 866 23.5 167 140

36 089 940 34 959 870 24.0 140 102

35 954 1 077 34 656 905 23.7 148 107

36 489 1 037 35 302 864 24.0 153 127

36 895 1 056 35 633 873 24.1 156 129

37 261 996 36 064 885 24.3 156 113

37 537 990 36 405 841 24.5 156 115

37 847 1 014 36 681 801 24.6 156 129

4.9 7.9 4.9 –7.9 2.3 11.6 26.0

kt rtc kt rtc kt rtc kt rtc kg rwt EUR/100 kg rtc USD/100 kg rtc

31 804 2 330 29 478 –4 23.3 101 130

32 701 2 106 30 633 –37 24.1 98 124

33 620 2 168 31 453 0 24.5 108 130

34 420 1 880 32 429 111 25.1 98 122

34 319 1 791 32 549 –22 25.1 100 128

34 942 1 845 33 095 2 25.4 99 134

35 734 1 886 33 847 1 25.9 99 137

35 750 1 914 33 835 1 25.8 100 139

36 084 1 902 34 181 1 25.9 101 140

36 862 1 869 34 993 1 26.5 102 139

7.1 –0.6 7.9 –99.3 5.2 4.1 13.9

kt cwe kt cwe kt cwe kt cwe kg rwt AUD/100 kg dw AUD/100 kg dw NZD/100 kg dw

2 730 344 2 364 21 1.9 205 87 296

2 835 370 2 455 10 1.9 174 72 300

2 671 366 2 280 23 1.8 266 146 383

2 613 272 2 320 21 1.8 217 72 417

2 636 222 2 391 23 1.8 216 74 366

2 648 195 2 427 26 1.9 216 74 345

2 620 152 2 442 26 1.9 218 69 335

2 597 140 2 432 24 1.9 232 68 342

2 576 126 2 426 24 1.8 234 65 350

2 580 126 2 429 26 1.8 240 62 357

–1.2 –53.7 4.7 22.1 2.1 10.7 –13.2 –14.3

64.9

66.2

65.7

67.3

66.7

67.4

67.9

67.9

68.2

68.9

2.3

Average 1997-01

Calendar year

BEEF AND VEALb Production Net trade Consumption Ending stocks Per capita consumption Price, Australiac Price, EUd Price, USAe Price, Argentinaf PIG MEATg Production Net trade Consumption Ending stocks Per capita consumption Price, EUh Price, USAi POULTRY MEAT Production Net trade Consumption Stock changes Per capita consumption Price, EUj Price, USAk SHEEP MEAT Production Net trade Consumption Stock changes Per capita consumption Price, Australial Price, Australiam Price, New Zealandn TOTAL MEAT Per capita consumption

kg rwt

Notes: a) Excludes Iceland. Carcass weight to retail weight conversion factors of 0.7 for beef and veal, 0.78 for pig meat and 0.88 for sheep meat. Rtc to retail weight conversion factor 0.88 for poultry meat. b) Do not balance due to statistical differences in New Zealand. c) Weighted average price of cows 201-260 kg, steers 301-400 kg, yearling < 200 kg dw. d) Producer price. e) Choice steers, 1 100-1 300 lb lw, Nebraska – lw to dw conversion factor 0.63. f) Buenos Aires wholesale price linier, young bulls. g) Do not balance due to consumption in Canada which excludes nonfood parts. h) Pig reference price – EU 15 starting in 1995. i) Barrows and gilts, No. 1-3, 230-250 lb lw, Iowa/South Minnesota – lw to dw conversion factor 0.74. j) Weighted average farmgate live fowls, top quality, (lw to rtc conversion of 0.75), EU 15 starting in 1995. k) Wholesale weighted average broiler price 12 cities. l) Saleyard price, lamb, 16-20 kg dw. m) Saleyard price, wethers, < 22kg dw. n) Lamb schedule price, all grade average. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

141

Annex Table 9 – MAIN POLICY ASSUMPTIONS FOR DAIRY MARKETS Average 1997-01

ARGENTINA Dairy export tax AUSTRALIAa Domestic support paymentb CANADA Milk target priceb Butter support price SMP support price Dairy subsidy Cheese tariff-quota in-quota tariff out-of-quota tariff Subsidised export limits cheese SMP EU 15 c, d Milk quotae Milk target price Butter intervention price SMP intervention price Tariff-quotas butter in-quota tariff out-of-quota tariff cheesef in-quota tariff out-of-quota tariff SMP in-quota tariff out-of-quota tariff Subsidised export limitsa butter cheese SMP other milk products JAPANc Direct paymentsm Deficiency/direct payment ceilingg Milk guaranteed priceb standard transaction priceh deficiency paymenti Butter stab. indicative price SMP stab. indicative price Cheese tariffj Tariff-quotas Butter in-quota tariff out-of-quota tariff SMP in-quota tariff out-of-quota tariff WMP in-quota tariff out-of-quota tariff

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

0

0

5

5

5

5

5

5

5

1.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

56 5 491 4 533 2.46 20 2 254

57 5 558 4 670 1.58 20 1 246

58 5 711 4 826 1.50 20 1 246

59 5 870 4 945 0.33 20 1 246

61 6 080 5 145 0.00 20 1 246

62 6 200 5 187 0.00 20 1 246

63 6 328 5 260 0.00 20 1 246

64 6 454 5 334 0.00 20 1 246

65 6 582 5 408 0.00 20 1 246

66 6 712 5 465 0.00 20 1 246

10 47

9 45

9 45

9 45

9 45

9 45

9 45

9 45

9 45

9 45

118 0.319 3 282 2 055

119 0.319 3 282 2 055

120 0.319 3 282 2 055

120 0.319 3 282 2 055

120 0.319 3 282 2 055

120 0.319 3 282 2 055

121 0.310 3 200 2 004

122 0.292 3 036 1 901

122 0.274 2 872 1 798

122 0.265 2 790 1 747

kt pw % % kt pw % % kt pw % %

85 63 153 77 43 108 59 36 95

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

87 66 144 102 42 96 68 35 88

kt pw kt pw kt pw kt pw

420 346 288 1 013

399 321 273 958

399 321 273 958

399 321 273 958

399 321 273 958

399 321 273 958

399 321 273 958

399 321 273 958

399 321 273 958

399 321 273 959

JPY/kg kt pw JPY/litre JPY/litre JPY/litre ’000 JPY/t ’000 JPY/t %

.. 2 374 .. .. .. .. .. 34

.. 2 400 74 64 11 910 524 31

10 2 270 .. .. .. .. .. 31

11 2 200 .. .. .. .. .. 30

11 2 100 .. .. .. .. .. 30

11 2 100 .. .. .. .. .. 30

11 2 100 .. .. .. .. .. 30

11 2 100 .. .. .. .. .. 30

11 2 100 .. .. .. .. .. 30

11 2 100 .. .. .. .. .. 30

2 35 605 116 17 260 0 24 345

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

2 35 679 116 16 275 0 24 377

% AUDc/kg CADc/litre CAD/t CAD/t CADc/hltr kt pw % % kt pw kt pw mt pw EUR/litre EUR/t EUR/t

kt pw % % kt pw % % kt pw % %

For notes, see end of the table.

142

© OECD 2003

Annex Table 9 – MAIN POLICY ASSUMPTIONS FOR DAIRY MARKETS (cont.) Average 1997-01

KOREA Tariff-quotas Butter in-quota tariff out-of-quota tariff SMP in-quota tariff out-of-quota tariff WMP in-quota tariff out-of-quota tariff MEXICO Butter tariff Tariff-quotas cheese in-quota tariff out-of-quota tariff SMP in-quota tariff out-of-quota tariff Liconsa social program RUSSIA Butter tariff Cheese tariff UNITED STATES k Milk support priceb Target pricel Butter support price SMP support price Butter tariff-quota in-quota tariff out-of-quota tariff Cheese tariff-quota in-quota tariff out-of-quota tariff Subsidised export limitsa butter SMP

kt pw % % kt pw % % kt pw % % % kt pw % % kt pw % % MXN mn % % USDc/litre USDc/litre USD/t USD/t kt pw % % kt pw % % kt pw kt pw

2000

2001

2002

2003

2004

2005

2006

2007

2008

0.3 40 89 0.8 20 176 0.4 40 176

0.3 40 89 0.9 20 176 0.5 40 176

0.4 40 89 0.9 20 176 0.5 40 176

0.4 40 89 0.9 20 176 0.5 40 176

0.4 40 89 1.0 20 176 0.5 40 176

0.4 40 89 1.0 20 176 0.6 40 176

0.4 40 89 1.0 20 176 0.6 40 176

0.4 40 89 1.0 20 176 0.6 40 176

0.4 40 89 1.0 20 176 0.6 40 176

0.4 40 89 1.0 20 176 0.6 40 176

8

6

4

2

0

0

0

0

0

0

9 50 132 90 0 132 3 195

9 50 131 90 0 131 3 334

9 50 129 90 0 129 3 425

9 50 128 90 0 128 3 410

9 50 126 90 0 126 3 395

9 50 125 90 0 125 3 380

9 50 125 90 0 125 3 364

9 50 125 90 0 125 3 349

9 50 125 90 0 125 3 334

9 50 125 90 0 125 3 319

20 15

20 15

20 15

20 15

20 15

20 15

20 15

20 15

20 15

20 15

23 0.0 1 492 2 228 12 9 112 132 12 84

22 0.0 1 454 2 227 13 9 117 135 12 84

22 0.0 1 701 2 079 13 9 117 135 12 84

22 38.5 1 957 1 947 13 9 117 135 12 84

22 38.5 1 885 1 984 13 9 117 135 12 84

22 38.5 1 885 1 984 13 9 117 135 12 84

22 38.5 1 885 1 984 13 9 117 135 12 84

22 0.0 1 885 1 984 13 9 117 135 12 84

22 0.0 1 885 1 984 13 9 117 135 12 84

22 0.0 1 885 1 984 13 9 117 135 12 84

26 78

21 68

21 68

21 68

21 68

21 68

21 68

21 68

21 68

21 68

Notes: a) Year ending 30 June. b) For manufacturing milk. c) Year beginning 1 April. d) Prices and payments in market Euro’s -see Glossary of Terms. e) Total quota, EU 15 starting in 1995. f) Calendar year minimum access for Australia, New Zealand and Canada before 1995. g) Manufacturing milk eligible for deficiency/direct payments. h) Paid to producers. i) Difference between transaction price and guaranteed price. j) Excludes processed cheese. k) Year beginning 1 January. l) The counter-cyclical payment is determined as a 45% difference between the target price and the Boston class I price. m) In addition to direct payments, a compensation payment is paid – equal to 80% difference between the market price and the base price (the average price of the past three years). The source for tariffs and Tariff Rate Quotas (except Russia) is AMAD (Agricultural market access database). The tariff and TRQ data are based on Most Favoured Nation rates scheduled with the WTO and exclude those under preferential or regional agreements, which may be substantially different. Tariffs are averages of several product lines. Specific rates are converted to ad valorem rates using world prices in the Outlook. Import quotas are based on global commitments scheduled in the WTO rather than those allocated to preferential partners under regional or other agreements. Source: OECD Secretariat.

© OECD 2003

143

Annex Table 10 – WORLD DAIRY PROJECTIONS (BUTTER AND CHEESE) Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw kt pw kt pw

3 567 183 637 3 074 420

3 602 197 654 3 124 460

3 611 216 640 3 130 535

3 739 219 681 3 111 654

3 650 236 724 3 110 668

3 581 242 760 3 099 624

3 563 246 773 3 085 569

3 591 251 776 3 085 541

3 608 254 780 3 099 504

3 640 257 801 3 110 471

–2.6 17.6 17.6 0.0 –28.0

kt pw kt pw kt pw kt pw

3 486 3 906 –454 276

3 611 4 082 –457 293

3 892 4 320 –424 288

3 825 4 253 –463 323

4 006 4 493 –488 323

4 180 4 698 –518 323

4 362 4 889 –527 323

4 529 5 054 –525 323

4 684 5 209 –526 323

4 865 5 409 –544 323

27.2 27.2 17.6 0.0

kt pw kt pw kt pw USD/100 kg

7 053 6 980 696 160

7 213 7 206 753 137

7 503 7 450 823 134

7 564 7 363 977 113

7 656 7 603 991 124

7 762 7 797 947 128

7 925 7 974 893 132

8 120 8 139 864 135

8 292 8 309 828 137

8 505 8 519 794 137

12.4 15.7 –18.7 21.1

kt pw kt pw kt pw kt pw kt pw

12 660 691 1 107 12 250 635

12 988 760 1 144 12 577 639

13 207 793 1 190 12 820 628

13 427 811 1 210 13 025 631

13 652 830 1 173 13 341 598

13 936 833 1 193 13 588 586

14 211 845 1 251 13 827 565

14 490 858 1 272 14 087 554

14 764 863 1 284 14 348 550

15 008 875 1 308 14 578 547

11.8 7.9 8.1 11.9 –13.3

kt pw kt pw kt pw kt pw

3 195 3 577 –416 1 274

3 306 3 713 –384 1 220

3 300 3 658 –398 1 260

3 314 3 742 –399 1 231

3 470 3 811 –343 1 233

3 584 3 944 –360 1 233

3 699 4 105 –406 1 233

3 821 4 235 –414 1 233

3 934 4 355 –421 1 233

4 063 4 497 –433 1 233

22.6 20.2 8.5 0.2

15 855 15 827 1 909 195

16 294 16 290 1 859 186

16 507 16 478 1 888 217

16 741 16 767 1 862 172

17 123 17 153 1 832 183

17 520 17 532 1 819 187

17 911 17 932 1 798 191

18 310 18 322 1 787 196

18 699 18 703 1 783 198

19 072 19 075 1 780 199

13.9 13.8 –4.4 15.9

Calendar yeara

BUTTER OECDb, f Production Imports Exports Consumption Closing stocks NON-OECD Production Consumption Net traded Closing stocks WORLDf Productionc Consumption Closing stocks Pricee CHEESE OECDb Production Imports Exports Consumption Closing stocks NON-OECD Production Consumption Net traded Closing stocks WORLD Productionc Consumption Closing stocks Priceg

kt pw kt pw kt pw USD/100 kg

Notes: a) Year ending 30 June for Australia and 31 May for New Zealand in OECD aggregate. b) Excludes Iceland. c) Source of data is FAO. d) Non-OECD net exports (imports) equals OECD net imports (exports). e) F.o.b. export price, butter, 82% butterfat, northern Europe. f) Do not balance due to statistical differences in New Zealand. g) F.o.b. export price, cheddar cheese, 40 lb blocks, Northern Europe. p: provisional; e : estimate. Source: OECD Secretariat.

144

© OECD 2003

Annex Table 11 – WORLD DAIRY PROJECTIONS (POWDERS AND CASEIN) Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw kt pw kt pw

2 709 262 998 1 908 618

2 776 277 1 101 1 923 592

2 739 257 935 1 852 808

2 949 229 984 1 951 1 056

2 772 285 1 088 2 099 926

2 596 293 1 115 2 048 654

2 570 299 1 041 1 966 521

2 572 306 1 031 1 891 477

2 578 315 977 1 924 469

2 561 326 1 007 1 888 461

–13.2 42.2 2.3 –3.2 –56.3

kt pw kt pw kt pw kt pw

701 1 394 –736 323

643 1 571 –824 258

605 1 255 –678 286

602 1 336 –755 307

663 1 465 –803 307

711 1 534 –822 307

772 1 514 –742 307

812 1 536 –725 307

862 1 523 –662 307

907 1 588 –681 307

50.6 18.9 –9.8 0.0

kt pw kt pw kt pw USD/100 kg

3 410 3 302 942 168

3 419 3 494 849 190

3 344 3 107 1 093 198

3 552 3 286 1 363 133

3 435 3 564 1 233 156

3 307 3 582 961 161

3 341 3 479 828 167

3 383 3 428 784 169

3 439 3 447 776 170

3 468 3 476 768 171

–2.3 5.8 –43.7 28.3

kt pw kt pw kt pw kt pw

1 781 73 1 116 737

1 750 84 1 130 706

1 840 80 1 232 688

1 858 78 1 153 783

1 926 79 1 177 827

1 998 77 1 231 844

2 047 75 1 262 860

2 098 73 1 278 892

2 158 70 1 309 919

2 217 68 1 341 945

19.3 –12.0 16.3 20.7

kt pw kt pw kt pw

1 429 2 470 –1 043

1 513 2 585 –1 045

1 559 2 710 –1 151

1 544 2 619 –1 075

1 570 2 669 –1 098

1 626 2 780 –1 154

1 681 2 869 –1 187

1 729 2 934 –1 206

1 781 3 021 –1 239

1 827 3 099 –1 273

18.3 18.3 18.3

kt pw kt pw USD/100 kg

3 210 3 207 177

3 264 3 291 182

3 399 3 398 197

3 402 3 402 139

3 496 3 496 162

3 624 3 624 169

3 729 3 729 174

3 827 3 827 177

3 940 3 940 179

4 044 4 044 179

18.9 18.9 28.7

kt pw USD/100 kg

–290 46

–364 44

–365 42

–396 48

–393

–392 56

–396 57

–389 59

–390 62

–383 65

–3.2 33.5

USD/100 kg

442

404

499

464

359

403

420

430

439

439

–5.4

Calendar yeara

SKIM MILK POWDER OECDb, f Production Imports Exports Consumption Closing stocks NON-OECD Production Consumption Net traded Closing stocks WORLDf Productionc Consumption Closing stocks Pricee WHOLE MILK POWDER OECDb Production Imports Exports Consumption NON-OECD Production Consumption Net traded WORLD Productionc Consumption Priceg WHEY POWDER NON-OECD Net trade Wholesale price, USAh CASEIN Pricei

Notes: a) Year ending 30 June for Australia and 31 May for New Zealand in OECD aggregate. b) Excludes Iceland. c) Source of data is FAO. d) Non-OECD net exports (imports) equal OECD net imports (exports). e) F.o.b. export price, nonfat dry milk, extra grade, Northern Europe. f) Do not balance due to stastitical differences in New Zealand. g) F.o.b. export price, WMP 26% butterfat, Northern Europe. h) Edible dry whey, Wisconsin, plant. i) World price, New Zealand. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

145

Annex Table 12 – OECD TRADE PROJECTIONS a

EXPORTS Wheat Coarse grains Rice Oilseeds Oilseed meals Vegetable oils Beefb Pig meatb Poultry meat Sheep meatb Butter Cheese Skim milk powder Whole milk powder Whey powderc IMPORTS Wheat Coarse grains Rice Oilseeds Oilseed meals Vegetable oils Beefb Pig meatb Poultry meat Sheep meatb Butter Cheese Skim milk powder Whole milk powder

2002-2008 % growth

Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

kt kt kt kt kt kt kt kt kt kt kt kt kt kt kt

80 809 78 545 4 854 33 492 10 626 4 340 5 018 2 985 3 866 886 637 1 107 998 1 116 290

80 851 82 174 4 960 35 897 10 801 3 580 5 042 3 166 3 833 923 654 1 144 1 101 1 130 364

73 835 75 701 4 738 35 374 10 450 3 955 5 038 3 159 4 134 954 640 1 190 935 1 232 365

68 774 74 851 4 959 30 087 8 236 3 873 5 254 3 375 3 951 868 681 1 210 984 1 153 361

76 488 80 484 4 871 31 616 9 382 4 159 5 317 3 512 3 897 829 724 1 173 1 088 1 177 358

80 542 86 848 4 927 32 238 9 975 4 516 5 517 3 516 3 973 821 760 1 193 1 115 1 231 358

83 667 87 752 5 000 31 723 10 113 4 370 5 498 3 583 4 079 800 773 1 251 1 041 1 262 362

86 059 93 055 5 027 32 862 10 312 4 448 5 585 3 672 4 148 789 776 1 272 1 031 1 278 355

88 477 96 796 5 108 33 620 10 189 4 586 5 457 3 716 4 203 785 780 1 284 977 1 309 355

91 620 99 194 5 177 33 873 9 680 4 650 5 399 3 791 4 258 796 801 1 308 1 007 1 341 349

33.2 32.5 4.4 12.6 17.5 20.1 2.8 12.3 7.8 –8.2 17.6 8.1 2.3 16.3 –3.5

kt kt kt kt kt kt kt kt kt kt kt kt kt kt

22 860 49 624 3 111 35 328 26 613 5 784 4 010 1 989 1 536 448 183 691 262 73

21 151 53 138 3 382 36 352 27 269 6 108 4 334 2 200 1 727 464 197 760 277 84

29 922 53 384 3 500 37 309 28 502 6 672 4 311 2 266 1 966 477 216 793 257 80

25 678 53 982 3 563 38 169 28 734 6 753 4 287 2 435 2 071 490 219 811 229 78

25 862 52 619 3 493 37 591 29 477 6 743 4 280 2 446 2 106 499 236 830 285 79

26 029 55 017 3 546 38 492 30 334 7 174 4 498 2 494 2 128 515 242 833 293 77

26 298 55 138 3 558 38 741 30 946 7 450 4 578 2 552 2 194 535 246 845 299 75

26 609 56 066 3 580 38 569 31 374 7 553 4 673 2 711 2 233 533 251 858 306 73

26 669 56 831 3 754 38 872 31 997 7 604 4 616 2 774 2 301 542 254 863 315 70

26 780 57 116 4 439 39 598 32 239 7 693 4 506 2 844 2 390 550 257 875 326 68

4.3 5.8 24.6 3.7 12.2 13.9 5.1 16.8 15.4 12.3 17.6 7.9 42.2 –12.0

Notes: a) For meats, year are calendar year; for grains, meals and oils products, year are crop or marketing year; for dairy products, year are calendar year but year ends 30 June for Australia and 31 May for New Zealand in the OECD aggregate. b) Includes trade of live animals. c) Net exports. p: provisional; e : estimate. Source: OECD Secretariat.

146

© OECD 2003

Annex Table 13 – WHEAT PROJECTIONS Average 97/98-01/02

Crop yeara

AUSTRALIA Production Consumption Exports Priceb CANADA Production Consumption Exports Closing stocks Pricec EU 15 Production Consumption Exportsd Closing stocks Pricee HUNGARY Production Consumption Exports Pricef JAPAN Production Consumption Imports Closing stocks Priceg KOREA Consumption Imports Priceh MEXICO Production Consumption Imports Pricei NEW ZEALAND Production Consumption Imports Pricej

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt AUD/t

22.5 5.2 16.4 213

22.1 5.6 16.1 234

24.9 5.8 16.3 256

10.0 5.8 8.0 340

21.0 5.9 15.1 281

20.1 6.1 13.8 291

20.4 6.1 14.6 301

21.0 6.1 14.9 309

21.8 6.1 15.7 311

22.7 6.1 16.6 323

127.4 4.8 108.4 –5.1

mt mt mt mt CAD/t

24.5 7.8 17.3 7.5 187

26.5 7.5 17.1 9.7 190

20.6 7.6 16.2 6.5 204

15.6 8.2 9.6 4.3 286

24.7 8.2 14.8 6.0 222

27.0 8.4 16.9 7.7 216

27.7 8.3 19.0 8.0 222

28.1 8.1 19.8 8.3 226

28.4 8.1 20.1 8.5 226

27.8 8.0 19.8 8.5 233

78.4 –2.2 107.5 96.2 –18.7

mt mt mt mt EUR/t

97.6 87.2 14.1 14.9 124

104.4 90.7 14.3 16.0 120

91.1 91.7 10.2 14.7 123

103.0 92.4 17.5 14.4 115

104.7 94.6 14.7 14.9 111

108.1 96.9 16.4 14.9 111

109.1 97.6 16.5 15.1 111

111.1 98.3 17.9 15.1 112

111.8 99.4 17.4 15.3 111

113.5 100.0 18.5 15.5 112

10.2 8.3 5.7 7.6 –2.1

mt mt mt ’000HUF/t

4.3 2.7 1.5 21

3.7 2.4 1.0 28

5.2 2.7 2.0 23

4.2 2.3 2.4 30

4.2 2.7 1.8 28

4.1 2.5 1.7 28

4.3 2.6 1.8 29

4.4 2.6 1.9 29

4.6 2.4 2.2 29

4.8 2.4 2.5 30

14.8 1.1 4.4 –1.8

mt mt mt mt ’000JPY/t

0.6 6.3 5.7 2.0 23

0.7 6.3 5.7 2.0 19

0.7 6.3 5.6 2.1 23

0.7 6.3 5.6 2.1 30

0.7 6.3 5.6 2.1 30

0.8 6.3 5.6 2.1 28

0.8 6.3 5.5 2.1 28

0.8 6.2 5.5 2.1 27

0.8 6.2 5.5 2.1 27

0.8 6.2 5.4 2.1 27

6.0 –2.5 –3.6 3.3 –11.1

mt mt ’000KRW/t

3.7 3.8 166

3.4 3.4 160

3.3 4.0 188

4.2 3.8 191

4.3 4.4 165

4.4 4.4 168

4.5 4.5 173

4.5 4.5 176

4.6 4.6 176

4.6 4.6 182

10.7 20.6 –4.8

mt mt mt MXN/t

3.3 5.6 2.6 1 414

3.5 5.7 2.8 1 436

3.3 6.2 3.4 1 609

3.2 6.1 3.5 2 228

3.2 6.6 3.9 1 969

3.2 6.8 4.1 1 962

3.3 6.9 4.2 2 034

3.3 7.1 4.4 2 065

3.3 7.1 4.4 2 154

3.3 7.3 4.5 2 185

4.2 19.4 30.3 –1.9

mt mt mt NZD/t

0.3 0.5 0.1 257

0.4 0.5 0.1 244

0.4 0.5 0.1 289

0.4 0.5 0.1 356

0.4 0.5 0.1 285

0.4 0.5 0.1 289

0.4 0.5 0.1 297

0.4 0.5 0.1 312

0.4 0.5 0.1 316

0.4 0.5 0.1 329

8.8 3.1 –22.3 –7.5

For notes, see end of the table.

© OECD 2003

147

Annex Table 13 – WHEAT PROJECTIONS (cont.) Average 97/98-01/02

Crop yeara

POLAND Production Consumption Imports Pricek UNITED STATES Production Consumption Imports Exports Closing stocks Pricel OTHER OECDm Production Consumption Net trade ARGENTINA Production Consumption Exports Pricen BRAZIL Production Consumption Net trade Price CHINA Production Consumption Imports Closing stocks Priceo RUSSIA Production Consumption Net trade Price OIS Production Consumption Net trade Closing stocks REST OF WORLD Production Consumption Net trade Closing stocks

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt PLN/t

8.9 9.5 0.5 481

8.5 9.4 0.9 511

9.3 9.5 0.3 488

9.3 9.0 0.0 654

9.6 9.1 0.0 500

9.4 9.2 0.0 510

9.6 9.2 0.0 530

9.7 9.2 0.0 549

10.0 9.3 0.0 553

10.2 9.3 0.0 580

10.0 3.8 .. –11.3

mt mt mt mt mt USD/t

62.7 35.3 2.7 28.3 23.3 102

60.7 36.3 2.4 28.9 23.8 96

53.3 32.7 2.9 26.2 21.1 102

44.0 30.7 2.1 25.0 11.5 138

59.6 33.6 2.6 23.6 16.5 116

57.3 33.1 2.7 25.5 17.9 117

56.8 33.5 2.8 25.1 18.9 119

57.2 34.0 3.0 24.7 20.4 120

57.5 34.1 3.0 25.9 20.8 118

58.2 34.3 3.0 26.8 20.8 121

32.3 11.7 43.8 7.2 81.5 –12.8

mt mt mt

22.7 23.0 –0.3

23.4 23.1 0.2

22.7 23.5 –1.5

24.4 23.6 1.7

24.9 23.5 1.6

25.4 23.8 1.6

25.8 24.1 1.8

26.3 24.4 2.0

26.6 24.6 2.0

26.9 24.9 2.1

10.5 5.5 28.3

mt mt mt ARS/t

14.8 5.4 9.6 118

16.0 5.8 10.1 130

15.3 5.4 10.3 127

18.4 6.2 11.9 410

18.3 6.5 11.8 460

18.6 6.6 12.1 517

19.2 6.5 12.7 604

20.1 6.4 13.7 686

20.7 6.4 14.4 753

21.1 6.3 14.8 841

14.2 1.1 24.0 105.2

mt mt mt BRL/t

2.4 9.1 –6.5 186

1.7 9.2 –7.5 216

3.3 11.1 –7.0 211

3.9 9.5 –6.3 314

4.0 10.3 –6.4 387

4.1 10.5 –6.4 322

4.2 10.7 –6.5 343

4.2 10.9 –6.7 362

4.3 11.0 –6.8 372

4.4 11.2 –6.8 387

13.0 18.0 7.6 23.3

mt mt mt mt CNY/t

108.3 105.8 1.0 94.8 755

99.6 84.1 0.2 106.5 655

94.9 107.0 1.1 94.0 913

91.9 101.5 1.0 83.9 1 232

98.1 101.4 1.6 80.8 1 029

102.9 103.8 2.1 80.7 1 043

103.4 105.7 2.9 80.1 1 016

104.2 107.3 3.9 79.7 1 008

105.0 109.4 4.8 78.9 952

105.8 111.3 5.8 78.1 979

15.2 9.6 465.0 –6.9 –20.6

mt mt mt RUR/t

37.5 37.3 –0.9 1 281

41.8 35.2 –0.9 1 926

43.3 41.6 3.8 1 889

46.6 38.4 6.4 2 249

45.9 39.3 6.1 2 033

45.8 40.7 5.1 2 000

46.0 41.2 4.7 2 117

46.1 42.3 4.0 2 257

46.6 43.0 3.7 2 422

47.2 44.2 2.9 2 569

1.3 15.1 –53.7 14.3

mt mt mt mt

35.2 30.9 3.2 20.6

23.0 30.2 0.6 11.9

49.5 28.7 5.6 27.1

48.2 37.8 6.4 31.1

42.2 38.4 4.6 30.3

43.2 38.8 4.2 30.5

44.2 39.3 4.7 30.6

45.2 39.8 5.2 30.8

46.2 40.2 5.8 30.9

47.2 40.7 6.3 31.1

–2.1 7.7 –1.8 0.0

mt mt mt mt

142.4 201.3 –63.2 40.4

144.6 200.2 –62.4 45.3

142.3 194.9 –57.0 49.7

145.3 205.7 –61.9 51.3

147.8 210.9 –66.3 54.4

147.9 216.6 –68.7 54.5

150.6 221.1 –71.2 55.2

153.6 225.8 –73.0 56.1

156.6 230.9 –75.3 57.1

159.4 236.0 –77.4 57.8

9.7 14.8 24.9 12.6

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) AWB net pool return, ASW 10. c) CWB final producer price, No. 1 CWRS, in store Thunder Bay or Vancouver. From 1995 in store St Lawrence or Vancouver. d) Excludes intra-EU 15 trade. e) Weighted average producer price, common and durum wheat, year ended 31 December. f) Average price at farm level g) Average import price c.i.f., all wheat, year ended 31 December. h) Import price. i) Average producer price. j) Indicative wheat price. k) Average procurement price. l) Average price received by farmers. m) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. n) Export price f.o.b., Argentinean ports. o) Free market price. p: provisional; e : estimate. Source: OECD Secretariat.

148

© OECD 2003

Annex Table 14 – COARSE GRAINS PROJECTIONS Average 97/98-01/02

Crop yeara

AUSTRALIA Production Consumption Exports Priceb CANADA Production Consumption Exports Closing stocks Pricec EU 15 Production Consumption Exportsd Closing stocks Pricee HUNGARY Production Consumption Exports Closing stocks Pricef JAPAN Production Consumption Imports Closing stocks Priceg KOREA Production Consumption Imports Closing stocks Priceh MEXICO Production Consumption Imports Pricei NEW ZEALAND Production Consumption Imports Pricej

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt AUD/t

10.9 5.8 4.9 166

11.0 5.9 5.2 174

13.1 6.1 5.7 203

6.4 4.3 3.1 240

9.9 5.1 4.7 202

9.8 5.0 4.6 211

10.1 4.9 4.9 221

10.5 5.1 5.2 223

10.7 5.1 5.5 229

11.1 5.2 5.8 238

74.5 22.0 88.0 –0.8

mt mt mt mt CAD/t

25.0 23.2 4.1 4.5 137

24.0 23.7 4.6 4.3 143

22.6 24.1 3.4 3.5 137

19.6 22.7 2.9 2.7 199

29.5 23.3 5.6 4.3 158

26.8 24.1 4.6 4.2 148

26.5 24.0 4.4 4.2 157

27.6 24.4 5.4 4.4 157

27.3 24.1 5.6 4.5 162

28.0 23.8 6.5 4.5 167

42.7 4.8 126.7 68.2 –16.1

mt mt mt mt EUR/t

107.2 95.5 13.3 23.2 112

108.9 95.0 14.4 20.5 111

107.3 96.8 9.8 25.0 110

105.9 97.3 14.2 22.8 105

104.8 96.6 12.2 22.4 105

105.6 96.9 12.4 22.3 104

105.5 97.3 12.5 21.6 105

106.7 97.9 12.6 21.5 105

107.3 98.1 12.8 21.4 105

108.6 99.2 12.8 21.6 105

2.5 2.0 –9.5 –5.2 –0.2

mt mt mt mt ’000 HUF/t

8.0 6.5 1.4 1.6 18.2

6.1 6.0 1.1 0.9 25.4

9.4 6.5 1.7 2.1 19.6

8.0 6.1 2.2 2.0 25.5

9.2 6.1 3.1 2.0 24.2

9.6 6.2 3.4 2.0 24.7

10.0 6.6 3.4 2.0 25.2

10.4 7.0 3.4 2.1 25.5

10.6 7.3 3.3 2.1 25.5

11.0 7.7 3.4 2.1 26.1

37.1 26.3 57.6 7.6 2.4

mt mt mt mt ’000 JPY/t

0.2 21.5 21.6 9.0 15.2

0.2 21.1 21.2 9.5 12.6

0.2 21.3 21.1 9.5 14.6

0.3 20.5 20.0 9.3 14.8

0.3 21.2 21.1 9.4 15.1

0.3 21.3 21.2 9.6 14.5

0.2 21.2 20.8 9.4 14.8

0.2 21.1 20.8 9.3 14.9

0.2 21.1 20.9 9.3 14.8

0.2 21.1 20.8 9.2 14.8

–10.0 3.0 4.1 –1.1 –0.1

mt mt mt mt ’000 KRW/t

0.3 8.9 8.6 1.1 159.4

0.3 10.1 9.6 1.0 145.0

0.5 8.9 8.8 1.4 155.0

0.4 9.3 8.9 1.4 173.6

0.4 9.4 9.1 1.6 158.6

0.4 9.5 9.1 1.6 162.0

0.4 9.7 9.3 1.6 166.5

0.4 9.8 9.4 1.6 168.7

0.4 9.9 9.5 1.6 169.8

0.4 10.0 9.6 1.6 173.9

–9.8 7.9 8.9 14.7 0.2

mt mt mt MXN/t

25.0 34.4 9.3 1 482

24.1 35.2 10.9 1 511

27.4 39.4 11.5 1 645

27.2 40.4 12.7 2 139

27.5 41.2 13.7 2 059

27.7 42.0 14.4 2 045

27.9 42.7 14.9 2 149

28.0 43.4 15.4 2 254

28.0 44.0 16.0 2 320

28.2 44.7 16.5 2 394

3.8 10.8 30.0 11.9

kt kt kt NZD/t

532.1 602.5 74.1 220

509.1 618.0 114.0 240

531.7 652.6 121.0 270

526.1 623.6 90.8 314

502.4 622.0 121.2 261

479.9 603.2 124.1 259

460.1 593.1 134.5 263

461.5 618.5 155.8 269

463.6 647.4 184.0 274

463.9 675.6 211.7 283

–11.8 8.3 133.1 –9.9

For notes, see end of the table.

© OECD 2003

149

Annex Table 14 – COARSE GRAINS PROJECTIONS (cont.) Average 97/98-01/02

Crop yeara

POLAND Production Consumption Imports Pricek UNITED STATES Production Consumption Exports Closing stocks Pricel OTHER OECDm Production Consumption Net trade ARGENTINA Production Consumption Exports Closing stocks Pricen BRAZIL Production Consumption Net trade Closing stocks CHINA Production Consumption Imports Closing stocks Priceo RUSSIA Production Consumption Net trade Pricep OIS Production Consumption Net trade Closing stocks REST OF WORLD Production Consumption Net trade Closing stocks

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt PLN/t

16.6 17.4 1.0 439

13.8 15.9 1.5 484

17.7 17.2 0.5 475

17.1 18.0 0.2 564

17.6 17.9 0.3 460

17.4 18.4 1.1 474

17.5 18.3 0.8 499

17.6 18.1 0.6 505

17.6 18.0 0.4 522

17.7 17.8 0.2 549

3.5 –1.5 –30.3 –2.8

mt mt mt mt USD/t

266.0 211.2 53.8 47.2 79

273.1 215.1 56.6 52.7 73

261.9 217.1 54.7 45.0 78

245.1 213.8 52.2 26.5 94

282.3 221.2 54.0 36.2 84

284.0 223.5 60.9 38.4 86

284.2 225.5 61.4 38.2 89

290.7 227.2 65.3 39.1 89

295.4 229.2 68.5 39.4 89

298.5 232.0 69.6 38.9 91

21.8 8.5 33.4 47.0 –3.2

mt mt mt

16.1 16.6 –0.6

15.1 16.5 –1.4

15.6 16.0 –0.8

15.9 16.7 –0.7

16.3 16.5 –0.1

16.7 16.8 –0.1

17.0 17.0 0.0

17.1 17.1 0.1

17.3 17.3 0.0

17.4 17.4 0.0

9.5 4.2 –102.6

mt mt mt mt ARS/t

20.5 9.3 11.2 0.5 92

19.8 9.1 10.5 0.7 91

18.8 9.0 10.0 0.5 96

25.0 11.2 13.8 0.5 293

24.2 11.6 12.7 0.6 322

24.8 12.1 12.7 0.6 387

25.9 12.8 13.1 0.6 449

27.1 13.5 13.6 0.6 502

27.7 14.0 13.7 0.6 549

28.7 14.6 14.1 0.6 610

15.0 30.5 2.5 21.5 108.2

mt mt mt mt

35.0 35.4 0.0 5.7

33.7 36.8 –1.9 3.5

43.0 37.6 4.8 4.2

38.0 37.9 1.3 3.1

42.0 40.5 1.5 3.2

44.0 41.9 2.0 3.3

46.0 42.8 3.0 3.4

47.7 45.5 2.1 3.5

49.9 47.0 2.7 3.6

52.2 49.5 2.6 3.7

37.2 30.7 96.5 18.2

mt mt mt mt CNY/t

121.6 130.3 3.0 75.6 1 044

125.7 133.7 4.0 73.3 1 099

123.6 138.7 2.0 51.6 1 062

134.7 132.7 2.3 45.9 1 346

137.4 133.6 2.6 44.4 1 207

138.9 137.6 3.2 43.0 1 243

141.4 141.3 4.1 42.2 1 241

144.2 145.6 5.2 41.9 1 258

146.0 148.1 5.8 41.7 1 209

147.8 150.2 6.5 41.9 1 243

9.8 13.2 178.9 –8.7 –7.7

mt mt mt RUR/t

28.9 28.7 0.0 1 053

30.5 26.6 0.0 1 671

31.7 32.0 1.8 1 566

31.3 28.9 2.1 1 755

30.7 30.1 0.5 1 585

31.1 30.0 1.0 1 613

31.4 30.5 0.8 1 720

31.2 30.7 0.4 1 841

31.4 31.2 0.0 1 980

31.2 31.2 –0.1 2 152

–0.4 8.0 –104.0 22.6

mt mt mt mt

24.9 21.9 1.7 8.6

21.2 21.5 1.3 5.6

32.5 21.8 3.3 13.1

27.9 25.3 3.4 12.2

28.2 25.8 2.4 12.2

28.6 26.0 2.6 12.2

29.0 26.3 2.7 12.2

29.5 26.7 2.8 12.2

29.5 27.2 2.4 12.2

29.9 27.6 2.3 12.2

7.2 8.9 –32.9 0.0

mt mt mt mt

144.5 188.6 –43.5 4.7

130.4 168.5 –37.6 3.7

144.7 192.4 –48.7 4.7

145.9 196.2 –49.2 3.7

150.6 200.7 –50.2 3.8

152.6 205.4 –52.9 4.0

155.2 208.5 –53.1 3.8

158.5 213.2 –54.7 3.9

160.4 217.3 –57.0 4.0

162.6 221.1 –58.5 3.9

11.4 12.7 19.0 7.0

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Cash price, bulk feed barley, Sydney. c) CWB final price, No. 1 CW barley, St Lawrence since 1995, Thunder Bay before. d) Excludes intra-EU 15 trade. e) Weighted average producer price, barley, year ended 31 December. f) Maize farm gate price. g) Farm gate price. h) Average import price c.i.f., maize, year ended 31 December. i) Average producer price, maize. j) Indicative price, feed barley. k) Average procurement price, barley. l) Maize average producer price. m) Includes the Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. n) Export price, f.o.b., Argentinean Ports. o) Maize free market price. p) Barley average producer price. p: provisional; e : estimate. Source: OECD Secretariat.

150

© OECD 2003

Annex Table 15 – RICE PROJECTIONS Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt AUD/t

1.0 0.3 0.6 215

1.3 0.4 0.6 190

0.9 0.4 0.5 215

0.8 0.4 0.5 218

0.8 0.4 0.5 215

0.8 0.4 0.5 222

0.8 0.4 0.5 234

0.8 0.4 0.5 246

0.8 0.4 0.5 259

0.9 0.4 0.5 274

13.6 0.7 1.4 25.4

mt mt mt mt EUR/t

1.5 1.8 0.5 0.6 290

1.4 1.8 0.5 0.6 278

1.5 1.8 0.6 0.5 283

1.5 1.9 0.6 0.6 283

1.6 1.9 0.6 0.6 283

1.6 1.9 0.6 0.6 283

1.6 1.9 0.6 0.7 283

1.7 2.0 0.6 0.8 283

1.7 2.0 0.7 1.0 283

1.7 2.1 1.4 1.8 283

12.8 11.6 127.5 201.2 0.0

mt mt mt mt ’000JPY/t

9.3 10.0 0.8 5.2 269

9.5 10.0 0.9 4.9 274

9.1 10.0 0.9 4.7 259

9.0 10.0 0.9 4.5 262

9.1 9.8 0.9 4.5 262

9.2 9.7 0.8 4.7 254

9.2 9.7 0.8 4.9 246

9.3 9.7 0.8 5.1 236

9.3 9.8 0.8 5.3 225

9.3 9.8 0.7 5.4 214

3.1 –2.3 –18.7 20.2 –18.4

mt mt mt mt ’000KRW/t

5.3 5.3 0.1 1.0 1 900

5.3 5.5 0.2 1.0 1 991

5.5 5.3 0.1 1.3 2 070

5.2 5.2 0.1 1.4 2 124

5.2 5.2 0.2 1.6 2 161

5.1 5.1 0.2 1.8 2 208

5.0 5.1 0.2 1.9 2 261

5.0 5.1 0.2 1.9 2 320

4.9 5.1 0.2 2.0 2 384

4.8 5.0 0.2 2.0 2 451

–7.0 –3.6 43.8 37.3 15.4

mt mt mt MXN/t

0.2 0.6 0.4 1 674

0.2 0.7 0.4 1 684

0.1 0.7 0.5 1 755

0.2 0.7 0.5 1 751

0.2 0.7 0.5 1 787

0.2 0.7 0.6 1 843

0.2 0.7 0.6 1 926

0.2 0.7 0.6 1 992

0.2 0.7 0.6 2 034

0.2 0.7 0.6 2 088

0.3 7.2 16.3 19.2

mt mt mt mt USD/t

6.1 2.8 3.6 0.9 152

5.9 2.6 3.7 0.9 123

6.7 3.0 3.8 1.2 94

6.5 2.8 4.1 1.2 90

6.6 2.9 4.0 1.3 97

6.7 3.0 4.0 1.3 105

6.8 3.1 4.1 1.3 112

6.9 3.1 4.1 1.4 114

7.0 3.2 4.2 1.4 117

7.0 3.3 4.3 1.3 123

8.8 15.6 5.3 9.7 36.1

mt mt mt

0.2 1.1 –0.9

0.2 1.1 –0.9

0.2 1.1 –0.9

0.2 1.1 –0.9

0.2 1.1 –0.9

0.2 1.1 –0.9

0.2 1.2 –0.9

0.2 1.2 –1.0

0.2 1.2 –1.0

0.2 1.2 –1.0

0.3 7.1 8.5

Crop yeara

OECD AUSTRALIA Production Consumption Exports Priceb EU 15 Production Consumption Importsc Closing stocks Priced JAPAN Production Consumption Imports Closing stocks Pricee KOREA Production Consumption Imports Closing stocks Pricef MEXICO Production Consumption Imports Priceb UNITED STATES Production Consumption Exports Closing stocks Priceb OTHER OECDg Production Consumption Net trade

For notes, see end of the table.

© OECD 2003

151

Annex Table 15 – RICE PROJECTIONS (cont.) Crop yeara

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

0.7 0.3 0.5 0.1 303

0.5 0.2 0.3 0.1 240

0.7 0.3 0.4 0.1 215

0.5 0.2 0.3 0.1 806

0.6 0.3 0.3 0.1 1 146

0.6 0.3 0.4 0.1 1 369

0.7 0.3 0.5 0.1 1 536

0.8 0.3 0.6 0.1 1 649

0.9 0.3 0.6 0.1 1 763

1.0 0.3 0.7 0.1 1 909

119.3 72.1 144.2 0.0 137

6.5 7.3 –0.6 1

7.4 7.3 –0.6 2

6.8 7.7 –0.6 2

7.0 7.7 –0.3 1

7.2 7.7 –0.2 1

7.3 7.9 –0.2 1

7.5 7.6 –0.1 1

7.6 7.7 –0.1 1

7.7 7.9 –0.2 1

7.8 8.0 –0.3 1

11.2 4.3 –14.9 –57

135.2 133.7 39.0 0.2 93.2 1 818

131.5 134.4 39.8 0.3 94.1 2 069

126.0 134.3 39.1 0.2 84.3 1 166

128.3 134.8 39.7 0.3 75.8 1 163

130.6 134.3 39.2 0.3 70.3 1 240

132.2 135.1 40.0 0.3 65.8 1 341

132.6 135.0 40.2 0.4 61.8 1 378

134.0 134.5 40.6 0.4 60.1 1 470

134.7 134.0 40.7 0.4 59.6 1 441

135.1 133.5 41.2 0.5 59.7 1 511

5.3 –1.0 3.6 50.6 –21.2 30

86.9 81.1 17.7 4 770

84.9 75.9 25.1 5 100

91.6 88.4 23.0 5 300

78.0 83.3 13.9 5 294

89.6 86.9 11.1 5 488

93.6 88.8 10.2 5 802

95.9 90.2 10.0 6 166

97.7 91.6 9.9 6 427

99.3 93.4 9.9 6 692

101.0 95.2 9.9 7 067

29.4 14.3 –28.4 33

32.3 35.4 3.1 5.6 1 014

32.5 35.9 1.5 4.5 1 077

32.4 36.1 3.3 4.1 1 114

32.5 36.8 3.3 3.1 1 237

33.7 37.2 3.2 2.8 1 334

34.2 38.0 3.8 2.8 1 458

34.8 38.6 3.9 2.8 1 630

35.5 39.1 3.7 2.8 1 843

36.3 39.7 3.4 2.8 2 040

37.0 40.2 3.2 2.8 2 304

13.9 9.3 –0.9 –7.5 86

0.4 0.6 –0.2

0.4 0.6 –0.2

0.3 0.6 –0.3

0.4 0.7 –0.3

0.4 0.7 –0.3

0.4 0.7 –0.3

0.4 0.7 –0.3

0.4 0.7 –0.3

0.4 0.7 –0.3

0.4 0.7 –0.3

2.4 0.0 8.5

0.3 0.6 –0.3

0.4 0.7 –0.2

0.3 0.7 –0.3

0.3 0.7 –0.3

0.3 0.7 –0.3

0.3 0.7 –0.3

0.3 0.7 –0.3

0.3 0.6 –0.3

0.3 0.6 –0.3

0.4 0.6 –0.3

6.5 –6.1 –14.6

16.2 9.2 6.7 1.5 6 111

16.9 9.4 7.5 1.7 6 241

16.5 9.5 6.5 2.2 6 632

16.5 9.6 7.5 1.6 7 048

16.7 9.7 7.5 1.2 7 319

17.0 9.7 7.4 1.1 7 584

17.4 9.8 7.6 1.0 7 753

17.6 9.9 7.8 1.0 7 792

17.9 9.9 8.0 1.0 7 907

18.1 10.0 8.1 1.0 8 086

9.9 4.1 8.4 –35.1 15

93.5 103.3 –10.2 10.9

98.8 109.2 –10.2 12.1

98.5 109.8 –10.6 11.4

98.4 110.7 –10.8 9.7

99.1 111.4 –12.3 9.7

101.8 113.6 –11.7 9.7

103.6 116.0 –12.4 9.7

106.0 118.5 –12.5 9.7

108.4 121.1 –12.6 9.7

110.9 123.6 –12.6 9.7

12.8 11.6 17.5 –0.1

Average 97/98-01/02

OECD NON-MEMBER COUNTRIES ARGENTINA Production mt Consumption mt Exports mt Closing stocks mt h ARS/t Price BRAZIL Production mt Consumption mt Net trade mt Closing stocks mt CHINA Production mt Consumption mt of which feed mt Imports mt Closing stocks mt CNY/t Pricei INDIA Production mt Consumption mt Closing stocks mt INR/t Pricej INDONESIA Production mt Consumption mt Imports mt Closing stocks mt k ’000IDR/t Price OIS Production mt Consumption mt Net trade mt RUSSIA Production mt Consumption mt Net trade mt THAILAND Production mt Consumption mt Exports mt Closing stocks mt k THB/t Price REST OF WORLD Production mt Consumption mt Net trade mt Closing stocks mt

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Producer price. c) Includes intra-EU 15 trade. d) Producer price, paddy rice. e) Market price, husked rice. f) Producer price, native king, polished grade b. g) Includes the Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. h) Export price. i) Free market price, weighted average of japonica and indica. j) Farm harvest price, rough basis. k) Paddy, farm harvest price. p: provisional; e : estimate. Source: OECD Secretariat.

152

© OECD 2003

Annex Table 16 – OILSEED PROJECTIONS Average 97/98-01/02

Crop yeara

AUSTRALIA Production Consumption crush Exports Priceb CANADA Production Consumption crush Exports Pricec EU 15 Production Consumption crush Importsd Closing stocks Pricee HUNGARY Production Consumption crush Exports Pricef JAPANg Production Consumption crush Imports Closing stocks Priceh KOREA Production Consumption crush Imports Pricei MEXICO Production Consumption crush Imports Pricej

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt mt AUD/t

1.9 0.6 0.6 1.3 353

1.9 0.5 0.4 1.5 333

1.9 0.6 0.6 1.3 410

0.9 0.6 0.5 0.3 487

2.1 0.7 0.7 1.3 463

2.3 0.8 0.8 1.5 470

2.4 0.8 0.8 1.7 462

2.4 0.8 0.8 1.6 483

2.4 0.9 0.9 1.6 498

2.5 0.9 0.9 1.6 508

188.1 63.8 65.4 394.3 4.2

mt mt mt mt CAD/t

9.6 5.7 4.6 4.5 346

10.0 6.2 4.9 5.7 290

6.7 4.7 4.0 3.1 357

5.8 4.4 3.7 2.6 434

9.0 5.4 4.5 3.6 408

9.8 6.1 4.9 3.6 409

10.4 6.3 5.1 4.2 395

10.2 6.3 5.2 4.2 416

10.7 6.3 5.2 4.8 429

10.9 6.3 5.2 4.7 437

87.9 45.4 39.8 83.4 0.7

mt mt mt mt mt EUR/t

14.3 32.7 29.7 19.4 1.7 227

13.4 33.1 29.7 20.3 1.5 224

13.2 32.8 29.9 20.3 1.6 236

12.8 33.8 30.2 21.4 1.6 248

14.4 34.6 31.0 20.6 1.7 226

14.5 35.2 31.5 21.0 1.7 227

15.3 35.9 32.1 20.9 1.8 220

15.9 36.2 32.4 20.4 1.8 230

16.4 36.8 32.9 20.6 1.9 235

16.7 37.5 33.6 21.0 1.9 238

30.1 10.9 11.3 –1.9 19.2 –4.2

mt mt mt mt ’000 HUF/t

0.9 0.6 0.6 0.3 49

0.7 0.4 0.3 0.4 49

0.9 0.6 0.5 0.3 52

1.0 0.6 0.6 0.3 59

1.0 0.7 0.6 0.3 50

1.0 0.7 0.6 0.3 50

1.0 0.7 0.6 0.3 49

1.0 0.7 0.6 0.3 52

1.0 0.7 0.6 0.3 53

1.0 0.7 0.6 0.3 54

7.7 14.3 12.2 –0.5 –10.0

mt mt mt mt mt ’000 JPY/t

0.2 7.2 6.3 7.1 1.8 33

0.2 7.2 6.4 7.1 1.9 27

0.3 7.4 6.5 7.2 2.0 27

0.3 7.6 6.6 7.3 2.0 29

0.3 7.6 6.6 7.4 2.0 32

0.3 7.7 6.7 7.5 2.1 30

0.3 7.8 6.8 7.5 2.1 29

0.3 7.9 6.9 7.6 2.1 28

0.3 7.9 6.9 7.6 2.1 29

0.3 7.9 6.9 7.6 2.1 28

5.2 4.7 5.4 3.8 2.8 –4.0

mt 0.1 mt 1.6 mt 1.2 mt 1.5 ’000 KRW/t 2 699

0.1 1.5 1.1 1.4 2 996

0.1 1.7 1.3 1.7 2 277

0.1 1.7 1.3 1.7 2 528

0.1 1.8 1.3 1.8 2 599

0.1 1.8 1.3 1.7 2 667

0.1 1.8 1.4 1.7 2 743

0.1 1.8 1.4 1.7 2 825

0.1 1.9 1.4 1.8 2 916

0.1 1.9 1.4 1.8 3 015

–17.2 10.4 10.1 6.6 19.3

mt mt mt mt MXN/t

0.1 5.1 4.2 5.0 1 803

0.1 5.7 4.8 5.6 1 847

0.1 5.7 4.7 5.5 2 360

0.1 5.8 4.9 5.7 2 639

0.1 6.2 5.2 6.0 2 492

0.1 6.4 5.3 6.2 2 532

0.1 6.6 5.6 6.5 2 578

0.1 6.8 5.7 6.6 2 705

0.1 7.0 5.9 6.8 2 784

–4.9 23.0 26.2 23.5 18.0

0.1 5.0 4.2 4.8 2 126

For notes, see end of the table.

© OECD 2003

153

Annex Table 16 – OILSEED PROJECTIONS (cont.) Average 97/98-01/02

Crop yeara

POLAND Production Consumption crush Imports Pricek UNITED STATES Production Consumption crush Exports Closing stocks Pricel OTHER OECDm Production Consumption crush Net trade ARGENTINA Production Consumption crush Exports Closing stocks Price, (soyabeans)n Price, (sunflower)n BRAZIL Production Consumption crush Net trade Closing stocks CHINA Production Consumption crush Exports Imports Priceo RUSSIA Production Consumption crush Net trade Priceb OIS Production Consumption crush Net trade Closing stocks REST OF WORLD Production Consumption crush Net trade Closing stocks

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt mt PLN/t

1.0 0.9 0.8 0.1 809

1.0 0.9 0.9 0.0 806

1.1 0.9 0.8 0.0 830

0.9 1.0 0.9 0.1 947

1.2 1.1 1.0 0.0 865

1.4 1.2 1.0 0.0 880

1.5 1.2 1.1 0.0 871

1.6 1.3 1.1 0.0 942

1.7 1.4 1.2 0.0 979

1.9 1.4 1.3 0.0 1 016

110.5 48.7 40.1 –100.0 7.3

mt mt mt mt mt USD/t

77.3 51.3 45.8 26.0 7.3 183

77.6 51.7 46.3 27.5 6.9 167

81.2 53.2 47.8 29.4 5.8 160

76.7 52.1 46.9 26.0 4.6 200

80.0 53.4 47.9 25.6 6.1 177

79.9 54.5 48.9 25.9 6.2 179

80.5 56.0 50.2 24.6 6.5 174

81.5 56.6 50.9 26.0 6.0 184

83.0 57.4 51.6 26.1 6.0 187

84.2 58.4 52.5 26.3 6.0 190

9.8 12.0 12.0 1.1 32.3 –4.8

mt mt mt mt

2.1 3.1 2.9 –1.0

2.1 3.2 3.0 –1.0

2.2 2.8 2.7 –0.5

2.2 3.2 2.8 –1.1

2.2 3.3 2.8 –1.1

2.2 3.3 2.8 –1.1

2.2 3.4 2.8 –1.1

2.2 3.4 2.8 –1.1

2.2 3.4 2.8 –1.1

2.3 3.4 2.8 –1.1

4.0 4.4 1.8 5.2

mt mt mt mt mt ARS/t ARS/t

27.8 22.7 21.9 5.4 0.3 194 219

29.4 21.7 21.0 7.9 0.3 190 180

32.1 25.7 24.9 6.7 0.4 200 230

37.2 28.9 28.1 8.6 0.3 632 611

37.5 30.7 29.9 7.0 0.4 694 678

38.4 31.1 30.3 7.4 0.4 817 806

39.0 31.7 30.8 7.5 0.5 887 881

39.6 31.9 31.0 7.9 0.5 1 024 1 023

40.7 32.5 31.6 8.3 0.5 1 126 1 130

41.4 33.1 32.1 8.3 0.6 1 231 1 240

11.1 14.7 14.5 –3.9 65.3 94.7 102.9

mt Mt Mt Mt Mt

32.0 22.2 21.7 10.0 2.2

33.0 22.1 21.5 10.7 2.6

37.9 23.7 23.2 14.8 1.9

44.7 26.4 25.9 17.9 2.2

48.9 27.6 27.0 20.8 2.7

51.3 28.9 28.3 22.0 3.2

55.0 30.3 29.6 24.3 3.6

55.9 31.6 31.0 24.1 3.7

58.2 33.0 32.3 25.2 3.8

62.5 34.3 33.6 28.0 3.9

39.9 29.8 30.0 57.0 77.6

Mt Mt Mt mt mt CNY/t

26.9 36.6 27.3 0.3 10.3 2 776

28.7 42.4 32.4 0.2 15.6 2 920

29.2 44.0 34.2 0.4 12.7 2 961

29.9 45.3 35.5 0.4 15.8 3 550

30.1 46.7 36.8 0.4 17.2 3 324

30.5 47.8 37.9 0.4 17.8 3 331

30.9 49.3 39.2 0.4 18.8 3 272

31.4 50.7 40.5 0.3 19.7 3 362

32.0 52.6 42.3 0.4 21.0 3 384

32.7 54.8 44.4 0.4 22.5 3 406

9.3 21.0 25.0 4.2 42.1 –4.0

mt mt mt mt RUR/t

3.7 3.2 2.9 0.6 2 198

4.4 3.7 3.5 0.8 2 609

3.1 3.7 3.6 –0.6 3 546

4.1 4.3 4.1 –0.3 3 774

4.4 4.3 4.1 0.1 3 826

4.3 4.4 4.2 –0.2 4 228

4.4 4.5 4.3 –0.1 4 296

4.4 4.6 4.4 –0.2 4 525

4.3 4.7 4.5 –0.3 4 985

4.3 4.7 4.5 –0.4 5 311

6.4 9.1 9.3 53.4 40.7

mt mt mt mt mt

3.3 2.5 2.0 0.8 0.1

4.2 3.1 2.5 1.2 0.1

3.1 2.3 1.8 0.8 0.1

3.9 3.5 2.8 0.4 0.1

3.8 3.5 2.7 0.3 0.1

3.7 3.4 2.7 0.3 0.1

3.5 3.3 2.6 0.3 0.1

3.4 3.2 2.5 0.2 0.1

3.2 3.0 2.4 0.2 0.1

3.1 2.9 2.3 0.2 0.1

–20.1 –17.2 –16.1 –48.7 0.0

mt mt mt mt mt

22.9 27.6 23.2 –4.6 1.3

21.6 26.8 23.1 –4.5 1.2

22.5 29.6 24.8 –7.0 1.1

22.8 25.8 23.5 –2.8 0.9

23.1 27.9 24.6 –5.1 1.2

23.3 28.8 25.1 –5.6 1.3

23.5 29.7 25.8 –6.3 1.4

23.4 30.3 26.2 –6.9 1.4

23.9 31.2 27.0 –7.4 1.4

24.2 32.4 27.9 –8.2 1.5

6.0 25.4 18.5 194.1 62.8

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Producer price, rapeseed. c) Canola price, stored in Vancouver. d) Excludes intra-EU 15 trade. e) Import price, rapeseed c.i.f. Hamburg. f) Sunflower seed farmgate price. g) Excludes sunflower seed. h) Import price c.i.f., soyabeans, year ended 31 December. i) Producer price, soyabeans. j) Average producer price, soyabeans. k) Rapeseed average procurement price. l) Average price received by farmers, soyabeans. m) Includes Czech Republic, Norway, New Zealand, Slovak Republic, Switzerland and Turkey. n) Export price, f.o.b., Argentinean Ports. o) Soyabeans free market price. p: provisional; e : estimate. Source: OECD Secretariat.

154

© OECD 2003

Annex Table 17 – OILSEED MEALS PROJECTIONS Average 97/98-01/02

Marketing yeara

AUSTRALIA Production Consumption Imports Priceb CANADA Production Consumption Imports Exports Pricec EU 15 Production Consumption Importsd Exportsd Closing stocks Pricee HUNGARY Production Consumption Imports Pricef JAPANg Production Consumption Imports Priceh KOREA Production Consumption Imports MEXICO Production Consumption Imports Pricei

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt AUD/t

0.4 0.6 0.2 290

0.3 0.5 0.2 259

0.4 0.6 0.3 261

0.3 0.6 0.3 269

0.4 0.6 0.2 257

0.4 0.6 0.2 258

0.4 0.7 0.2 263

0.5 0.7 0.2 269

0.5 0.7 0.2 273

0.5 0.7 0.2 277

63.9 17.4 –27.7 3.0

mt mt mt mt CAD/t

3.2 2.8 0.9 1.2 183

3.4 3.1 0.9 1.2 205

2.7 2.9 1.1 0.9 233

2.5 2.9 0.8 0.4 227

3.0 3.0 0.7 0.6 198

3.2 3.2 0.9 1.0 205

3.3 3.3 0.9 1.0 211

3.4 3.5 1.0 0.9 222

3.4 3.5 1.1 0.9 226

3.3 3.5 1.1 0.9 235

33.0 20.3 36.0 140.1 3.9

mt mt mt mt mt EUR/t

20.3 37.2 18.5 1.7 1.1 195

20.4 37.2 18.8 2.0 1.1 226

20.8 38.6 19.9 2.1 1.1 204

21.2 39.2 19.7 1.7 1.1 210

21.6 40.2 20.4 1.8 1.2 184

21.9 40.8 20.6 1.8 1.2 189

22.3 41.3 20.8 1.9 1.2 193

22.5 41.8 21.3 1.9 1.2 201

22.8 42.4 21.6 2.0 1.2 203

23.1 42.8 21.7 2.0 1.2 209

9.3 9.2 9.8 17.1 13.4 –0.7

mt mt mt ’000 HUF/t

0.3 1.0 0.7 29

0.2 1.0 0.9 32

0.3 1.0 0.8 33

0.3 1.1 0.8 33

0.3 1.0 0.7 26

0.3 1.0 0.7 27

0.3 1.1 0.8 28

0.3 1.2 0.8 29

0.3 1.2 0.9 29

0.3 1.3 0.9 30

11.7 18.1 20.5 –6.5

mt mt mt ’000 JPY/t

4.5 5.3 0.9 29

4.5 5.3 0.8 24

4.6 5.5 0.9 29

4.7 5.9 1.3 27

4.7 6.2 1.5 27

4.8 6.3 1.5 27

4.8 6.3 1.5 27

4.9 6.3 1.4 26

4.9 6.3 1.4 26

4.9 6.4 1.5 26

5.4 7.4 14.4 –6.1

mt mt mt

0.9 2.6 1.7

0.9 2.5 1.6

1.0 2.7 1.7

1.0 2.7 1.7

1.0 2.8 1.8

1.1 2.9 1.9

1.1 3.0 1.9

1.1 3.1 2.0

1.1 3.1 2.0

1.1 3.2 2.1

10.2 16.7 21.4

3.2 3.3 0.2 1 664

3.2 3.3 0.1 1 808

3.6 3.9 0.2 1 728

3.6 3.9 0.3 1 787

3.7 4.1 0.4 1 664

3.9 4.3 0.4 1 712

4.0 4.5 0.5 1 785

4.2 4.7 0.5 1 903

4.3 4.8 0.5 1 960

4.4 5.0 0.6 2 060

23.6 28.7 88.2 15.3

mt mt mt MXN/t

For notes, see end of the table.

© OECD 2003

155

Annex Table 17 – OILSEED MEALS PROJECTIONS (cont.) Average 97/98-01/02

Marketing yeara

POLAND Production Consumption Imports Pricej UNITED STATES Production Consumption Imports Exports Pricek OTHER OECDl Production Consumption Net trade ARGENTINA Production Consumption Exports Closing stocks Price, (soya meal)m Price, (sun meal)m BRAZIL Production Consumption Net trade CHINA Production Consumption Imports Pricen RUSSIA Production Consumption Net trade Price OIS Production Consumption Net trade REST OF WORLD Production Consumption Net trade Closing stocks

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

mt mt mt PLN/t

0.5 1.3 1.1 484

0.5 1.5 1.3 450

0.5 1.7 1.3 470

0.5 1.8 1.5 458

0.6 1.8 1.5 401

0.6 1.9 1.5 424

0.6 2.0 1.6 446

0.7 1.9 1.5 488

0.7 2.0 1.6 506

0.7 2.1 1.6 542

41.3 14.1 9.5 18.4

mt mt mt mt USD/t

36.0 30.0 1.1 7.1 184

36.7 30.7 1.1 7.0 191

37.4 31.6 1.0 6.8 185

36.6 32.0 1.0 5.5 185

37.4 32.1 1.1 6.4 164

38.2 32.9 1.3 6.6 168

39.2 33.8 1.3 6.6 171

39.8 34.2 1.2 6.8 178

40.4 35.0 1.2 6.6 179

41.1 36.2 1.2 6.0 185

12.3 13.2 23.5 9.5 –0.2

mt mt mt

1.7 2.6 –0.9

1.7 2.7 –1.1

1.8 2.7 –1.0

1.8 2.7 –1.0

1.8 2.8 –1.0

1.8 2.8 –1.0

1.8 2.8 –1.0

1.8 2.8 –1.0

1.8 2.8 –1.0

1.8 2.8 –1.0

1.7 2.2 3.0

mt mt mt mt ARS/t ARS/t

15.7 0.7 15.0 0.6 141 73

15.5 0.9 14.4 0.6 160 90

18.4 0.6 17.8 0.6 150 85

20.7 0.7 20.1 0.6 508 279

21.9 0.7 21.2 0.6 527 268

22.0 0.7 21.3 0.6 621 332

22.2 0.8 21.4 0.6 694 375

22.2 0.8 21.3 0.6 783 434

22.4 0.9 21.5 0.6 846 467

22.7 1.0 21.7 0.6 929 520

9.4 46.2 8.2 3.1 83.0 86.5

mt mt mt

16.3 6.3 10.1

15.9 6.9 9.2

17.8 6.9 11.0

19.8 7.3 12.3

20.4 7.5 12.8

21.4 7.7 13.6

22.5 8.0 14.4

23.5 8.3 15.2

24.5 8.6 15.8

25.5 9.0 16.5

29.2 23.7 34.1

mt mt mt CNY/t

19.5 20.0 1.3 1 570

23.4 22.7 0.1 1 677

24.7 23.1 0.0 1 558

25.8 24.9 0.8 1 447

26.8 27.2 2.2 1 261

27.6 28.1 2.4 1 302

28.6 29.0 2.5 1 326

29.6 29.6 2.2 1 386

31.0 30.4 1.8 1 398

32.6 31.6 1.5 1 444

26.3 27.0 103.0 –0.2

mt mt mt RUR/t

1.2 1.4 –0.2 3 051

1.5 1.5 0.0 4 248

1.3 1.6 –0.3 4 188

1.6 1.8 –0.3 4 325

1.5 1.9 –0.4 3 964

1.5 1.9 –0.3 4 316

1.6 2.0 –0.4 4 612

1.6 2.0 –0.4 5 140

1.6 2.1 –0.5 5 506

1.6 2.2 –0.5 6 008

3.7 16.6 94.3 38.9

mt mt mt

1.1 1.0 0.0

1.3 1.0 0.2

1.2 1.1 0.1

1.6 1.4 0.2

1.5 1.3 0.2

1.5 1.2 0.2

1.4 1.2 0.3

1.3 1.1 0.3

1.3 1.0 0.3

1.2 0.9 0.3

–25.5 –34.6 29.4

mt mt mt mt

16.2 24.4 –8.4 2.2

16.1 23.9 –8.1 2.5

17.4 29.3 –12.2 2.7

16.5 29.3 –12.8 2.7

17.2 30.4 –13.4 2.9

17.6 31.5 –14.0 2.9

18.0 32.4 –14.5 3.1

18.3 33.5 –15.3 3.2

18.9 34.7 –16.0 3.3

19.5 35.9 –16.5 3.4

18.5 22.5 28.8 28.0

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Average import price c.i.f., soyabean and other oilseed meals, year beginning 1 July. c) Canola meal price, f.o.b. Vancouver (prior 2002, f.o.b. plant). d) Excludes intra-EU 15 trade. e) Soyabean meal price, 44/45%, f.o.b. ex-mill Hamburg. f) Calculated domestic price. g) Excludes sunflower seed. h) Average import price c.i.f., soyabean cake, year ended 31 December. i) Calculated import price of soyabean meal. j) Calculated import price. k) Wholesale price, soyabean meal, 48% solvent, Decatur. l) Includes Czech Republic, Norway, New Zealand, Slovak Republic, Switzerland and Turkey. Excludes Iceland. m) Export price, f.o.b., Argentinean Ports. n) Calculated import price. p: provisional; e : estimate. Source: OECD Secretariat.

156

© OECD 2003

Annex Table 18 – VEGETABLE OILS PROJECTIONS Average 97/98-01/02

Marketing yeara

AUSTRALIA Production Consumption Imports Priceb CANADA Production Consumption Imports Exports Pricec EU 15 Production Consumption Importsd Exportsd Closing stocks Pricee HUNGARY Production Consumption Exports Pricef JAPANg Production Consumption Imports Closing stocks Priceh KOREA Production Consumption Imports Priceh MEXICO Production Consumption Imports

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt kt kt AUD/t

221 312 128 323

164 266 130 314

233 333 120 339

209 321 134 397

283 335 104 424

297 349 103 431

304 364 112 423

313 377 116 430

332 385 104 449

350 391 93 463

67.4 22.0 –30.5 16.5

kt kt kt kt CAD/t

1 516 906 122 728 638

1 591 994 151 749 481

1 255 861 149 533 617

1 209 754 129 586 688

1 511 789 74 799 727

1 662 827 244 1 069 714

1 740 865 244 1 115 670

1 762 891 244 1 120 694

1 779 913 244 1 111 730

1 782 936 244 1 089 745

47.4 24.3 88.9 85.8 8.3

kt kt kt kt kt EUR/t

8 589 9 436 2 765 1 907 704 457

8 587 10 101 3 007 1 584 681 415

8 399 10 220 3 514 1 706 668 486

8 375 10 205 3 568 1 729 677 567

8 688 10 340 3 599 1 922 702 585

8 885 10 525 3 659 2 006 715 574

9 115 10 865 3 748 1 983 729 542

9 235 10 992 3 815 2 070 718 553

9 431 11 088 3 864 2 207 717 571

9 671 11 229 3 916 2 351 724 576

15.5 10.0 9.8 36.0 7.0 1.6

236 180 106 153

138 149 86 157

236 220 55 164

222 175 87 209

251 195 96 204

250 206 84 200

249 227 62 187

249 233 56 191

249 235 55 198

249 241 48 200

12.3 37.4 –44.3 –3.9

1 582 1 925 346 200 68

1 607 1 958 358 204 50

1 619 1 984 366 205 57

1 655 2 052 401 209 71

1 671 2 045 369 204 79

1 692 2 060 373 210 80

1 714 2 093 388 219 75

1 729 2 119 394 224 72

1 737 2 137 400 223 72

1 744 2 157 414 223 72

5.4 5.1 3.3 6.9 0.9

224 437 219 585

212 442 222 437

235 436 226 548

238 442 204 688

249 442 195 719

252 451 202 709

256 468 220 672

256 472 225 691

259 473 224 720

263 479 227 732

10.2 8.3 11.2 6.3

818 1 326 528

862 1 352 508

950 1 491 553

889 1 498 620

940 1 516 587

1 017 1 616 611

1 066 1 731 676

1 136 1 771 647

1 185 1 801 627

1 247 1 859 624

40.2 24.1 0.7

kt kt kt ’000 HUF/t kt kt kt kt ’000 JPY/t kt kt kt ’000 KRW/t kt kt kt

For notes, see end of the table.

© OECD 2003

157

Annex Table 18 – VEGETABLE OILS PROJECTIONS (cont.) Average 97/98-01/02

Marketing yeara

POLAND Production Consumption Imports UNITED STATES Production Consumption Imports Exports Closing stocks Pricei OTHER OECDj Production Consumption Net trade ARGENTINA Production Consumption Exports Closing stocks Price, (soya oil)k Price, (sunflower oil)k BRAZIL Production Consumption Net trade CHINA Production Consumption Imports Closing stocks Pricel RUSSIA Production Consumption Net trade OIS Production Consumption Net trade Closing stocks REST OF WORLD Production Consumption Net trade Closing stocks

2002-2008 % growth

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

320 523 217

333 558 234

317 531 224

350 517 179

383 540 179

403 573 203

422 618 236

444 652 258

470 683 263

494 722 280

40.8 39.8 56.0

kt kt kt kt kt USD/t

8 986 8 188 689 1 409 1 035 406

9 045 8 427 727 999 1 418 312

9 191 8 655 703 1 504 1 153 364

9 216 8 995 696 1 318 753 449

9 408 9 060 798 1 145 754 468

9 614 9 370 925 1 148 774 459

9 875 9 816 955 990 799 436

10 017 10 009 967 970 804 443

10 177 10 161 973 979 815 455

10 367 10 397 974 927 832 458

12.5 15.6 39.9 –29.7 10.5 2.0

kt kt kt

977 1 593 –608

1 019 1 657 –616

893 1 559 –667

909 1 586 –676

926 1 616 –690

925 1 630 –705

926 1 647 –721

927 1 664 –737

928 1 681 –752

930 1 699 –769

2.2 7.1 13.7

kt kt kt kt ARS/t ARS/t

5 152 637 4 521 270 414 469

4 700 650 4 050 275 280 350

5 700 600 5 135 240 410 500

5 783 610 5 183 231 1 052 1 249

6 159 632 5 531 227 1 514 1 751

6 255 646 5 618 219 1 752 2 029

6 369 702 5 675 210 1 828 2 145

6 411 715 5 706 200 2 085 2 442

6 543 731 5 820 193 2 372 2 769

6 674 760 5 923 184 2 602 3 039

15.4 24.7 14.3 –20.5 147.2 143.2

kt kt kt

4 063 3 036 1 062

3 957 3 054 789

4 541 3 379 1 323

4 914 3 568 1 472

5 081 3 347 1 676

5 357 3 605 1 707

5 630 3 758 1 837

5 899 3 942 1 930

6 161 4 025 2 116

6 437 4 100 2 320

31.0 14.9 57.6

kt kt kt kt CNY/t

6 497 8 738 2 354 276 ..

7 630 9 249 1 744 280 2 779

7 993 10 329 2 476 279 3 496

8 217 10 989 2 969 279 5 565

8 444 10 895 2 630 290 5 838

8 666 11 325 2 824 301 5 715

8 928 12 045 3 266 315 5 369

9 204 12 424 3 353 328 5 470

9 558 12 921 3 495 346 5 650

9 981 13 761 3 909 367 5 695

21.5 25.2 31.7 31.6 2.3

kt kt kt

1 104 1 746 –636

1 331 1 923 –600

1 360 2 264 –904

1 601 2 307 –706

1 600 2 341 –742

1 646 2 384 –738

1 664 2 494 –830

1 714 2 601 –887

1 730 2 729 –1 000

1 763 2 897 –1 134

10.1 25.6 60.6

kt kt kt kt

902 753 156 31

1 194 850 338 46

835 615 253 13

1 311 759 418 146

1 275 776 521 124

1 237 793 467 101

1 197 810 410 79

1 155 828 350 56

1 111 845 288 34

1 072 864 219 23

–18.2 13.8 –47.6 –84.0

kt kt kt kt

24 652 25 910 –1 433 4 354

25 225 26 230 –431 4 683

27 063 28 325 –755 4 177

27 346 28 670 –714 3 567

28 219 29 658 –1 940 4 069

29 346 30 786 –1 726 4 354

31 564 32 181 –881 4 618

32 383 33 170 –761 4 592

33 336 34 067 –826 4 686

34 922 35 212 –484 4 881

27.7 22.8 –32.2 36.8

kt kt kt

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Average import price c.i.f., soyabean, sunflower and other oilseed oils, year beginning 1 July. c) Canola oil price, f.o.b Vancouver (prior 2002, f.o.b. plant). d) Excludes intra-EU 15 trade. e) Rapeseed oil price, f.o.b. ex-mill Hamburg. f) Calculated domestic price. g) Excludes sunflower seeds. h) Calculated import price. i) Wholesale price, crude soyabean oil, Decatur. j) Includes Czech Republic, Norway, New Zealand, Slovak Republic, Switzerland and Turkey. Excludes Iceland. k) Export price, f.o.b., Argentinean Ports. l) Calculated import price. p: provisional; e : estimate. Source: OECD Secretariat.

158

© OECD 2003

Annex Table 19 – BEEF AND VEAL PROJECTIONS a

PACIFIC MARKET AUSTRALIA Production Consumption Exports Pricec CANADA Production Consumption Imports Exports Priced JAPAN Production Consumption Imports Pricee KOREA Production Consumption Imports Pricef MEXICO Production Consumption Imports Priceg NEW ZEALAND Production Consumption Exports Priceh UNITED STATES Production Consumption Imports Exports Pricei OTHERS Chinese Taipei: imports Singapore: imports Hong Kong (China): imports

2002-2008 % growth

Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

kt cwe kt cwe kt cwe AUD/100 kg dw

2 003 711 1 295 218

2 025 698 1 329 237

2 072 666 1 407 307

2 157 719 1 446 233

2 128 666 1 469 250

2 141 649 1 499 263

2 117 634 1 491 277

2 125 673 1 460 284

2 122 679 1 451 275

2 145 691 1 461 271

–0.6 –3.8 1.1 16.1

kt cwe kt cwe kt cwe kt cwe CAD/100 kg dw

1 210 1 006 267 469 344

1 264 1 024 270 517 378

1 250 991 310 562 353

1 306 1 016 297 592 322

1 326 982 275 614 357

1 347 962 273 658 365

1 311 999 273 585 360

1 290 982 270 578 358

1 292 1 026 266 532 337

1 288 1 079 261 470 322

–1.4 6.2 –12.3 –20.7 –0.1

kt cwe kt cwe kt cwe ’000 JPY/100 kg dw

518 1 473 967 107

530 1 546 1 028 111

458 1 380 964 100

541 1 300 703 74

525 1 430 891 83

521 1 551 1 030 91

517 1 568 1 051 99

513 1 581 1 068 110

508 1 615 1 107 105

503 1 650 1 147 103

–7.0 26.9 63.1 39.1

316 539 228 517

306 575 318 550

232 549 237 649

202 556 361 473

205 585 379 489

212 595 382 500

227 606 379 506

238 641 402 511

250 649 398 501

257 672 414 495

27.4 20.9 14.9 4.7

kt cwe kt cwe kt cwe MXN/100 kg dw

1 278 1 524 247 2 021

1 236 1 535 300 2 112

1 276 1 585 310 2 210

1 293 1 608 316 2 092

1 358 1 640 284 2 418

1 421 1 672 253 2 540

1 490 1 700 211 2 643

1 510 1 725 216 2 727

1 520 1 747 228 2 620

1 548 1 756 208 2 563

19.8 9.2 –34.1 22.5

kt cwe kt cwe kt cwe NZD/100 kg dw

601 123 479 219

572 119 455 261

591 104 483 324

576 106 471 303

615 111 501 266

630 107 519 279

602 105 493 288

580 105 471 295

587 107 470 288

602 109 476 281

4.5 2.8 1.0 –7.1

kt cwe kt cwe kt cwe kt cwe USD/100 kg dw

11 984 12 201 1 277 1 039 239

12 298 12 502 1 375 1 119 248

11 983 12 359 1 443 1 029 259

12 420 12 833 1 492 1 094 236

11 791 12 274 1 491 1 110 261

11 758 12 140 1 581 1 182 274

11 622 11 999 1 600 1 223 277

11 626 11 900 1 543 1 269 279

11 689 11 915 1 394 1 168 266

11 938 12 039 1 243 1 142 258

–3.9 –6.2 –16.7 4.4 9.0

85 24 64

83 26 72

80 26 72

87 26 73

94 28 72

100 29 73

104 29 73

108 29 74

113 30 75

118 30 75

36.0 15.3 3.5

Calendar yearb

kt cwe kt cwe kt cwe ’000 KRW/100 kg dw

kt cwe kt cwe kt cwe

For notes, see end of the table.

© OECD 2003

159

Annex Table 19 – BEEF AND VEAL PROJECTIONS a (cont.) Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

kt cwe kt cwe kt cwe ARS/100 kg dw

2 830 2 477 314 156

2 880 2 529 360 148

2 854 2 486 128 133

2 762 2 515 250 343

2 821 2 558 269 575

2 806 2 493 315 713

2 876 2 496 383 761

2 924 2 561 366 753

3 000 2 651 351 686

3 059 2 755 310 667

10.7 9.5 24.2 94.4

kt cwe kt cwe kt cwe BRL/100kg dw

5 772 5 330 556 210

6 228 5 628 700 244

6 913 6 135 858 271

7 136 6 218 951 367

7 359 6 413 959 405

7 630 6 680 964 393

7 797 6 860 950 365

8 049 7 088 974 412

8 331 7 335 1 009 438

8 615 7 608 1 020 464

20.7 22.4 7.2 26.3

kt cwe kt cwe kt cwe

238 341 –103

226 338 –111

218 329 –111

216 320 –104

220 330 –110

224 320 –97

234 325 –91

239 340 –101

245 371 –127

253 386 –133

16.9 20.4 27.9

kt cwe kt cwe kt cwe

238 198 40

244 188 56

244 188 56

241 197 44

243 207 35

244 206 37

250 212 37

264 225 39

277 239 39

290 252 38

20.5 27.9 –12.6

kt cwe kt cwe kt cwe

469 189 279

465 164 301

465 233 232

479 254 225

491 256 235

489 247 242

491 249 243

498 249 249

506 250 256

512 252 261

6.9 –1.0 15.8

kt cwe kt cwe kt cwe kt cwe kt cwe EUR/100 kg dw

7 554 7 226 370 723 304 248

7 404 7 269 379 577 2 260

7 166 6 709 350 499 309 223

7 292 7 241 410 520 270 236

7 436 7 396 400 600 110 244

7 644 7 425 410 650 89 253

7 586 7 442 418 600 50 260

7 555 7 439 422 588 0 256

7 567 7 434 425 558 0 259

7 532 7 405 425 552 0 264

3.3 2.3 3.7 6.2 –99.9 11.8

kt cwe kt cwe ’000 HUF/100 kg dw

62 43 2 032

67 38 2 093

63 41 2 270

61 43 2 354

64 44 2 472

66 47 2 705

68 48 2 825

70 50 2 942

76 50 2 876

77 51 2 897

26.2 17.3 23.1

kt cwe kt cwe PLN/100 kg dw

410 371 469

375 353 508

341 309 490

319 291 525

287 257 552

286 256 559

301 269 533

312 280 571

333 300 560

345 311 596

8.3 6.9 13.4

kt cwe kt cwe kt cwe

862 870 –6

783 801 –16

878 869 8

877 876 2

872 871 3

882 880 3

891 887 4

901 897 4

906 902 4

911 907 4

3.8 3.5 103.6

kt cwe kt cwe CNY/100 kg

5 016 4 957 1 185

5 328 5 291 1 212

5 488 5 446 1 305

5 600 5 581 1 376

5 851 5 841 1 445

6 212 6 160 1 544

6 496 6 447 1 626

6 672 6 632 1 737

6 752 6 721 1 891

6 876 6 845 2 047

22.8 22.6 48.8

kt cwe kt cwe kt cwe RUR/100 kg

2 065 2 643 586 210

1 897 2 224 336 263

1 916 2 309 400 346

2 113 2 521 415 315

2 144 2 557 420 344

2 164 2 577 420 396

2 139 2 552 420 439

2 153 2 566 420 504

2 222 2 635 420 564

2 280 2 693 420 634

7.9 6.8 1.3 101.4

Calendar yearb

MERCOSUR MARKET ARGENTINA Production Consumption Exports Pricej BRAZIL Production Consumption Exports Price CHILE Productionk Consumption Net trade PARAGUAY Productionk Consumption Net trade URUGUAY Productionk Consumption Net trade OTHER MARKETS EU 15 Production Consumption Importsl Exportsl Closing stocks Pricem HUNGARY Production Consumption Pricen POLAND Production Consumption Priceo OTHER OECDp Production Consumption Net trade CHINA Production Consumption Priceq RUSSIA Production Consumption Importsr Priceq

2002-2008 % growth

Notes: a) Excludes trade of live animals. b) Year ended 30 September for New Zealand. c) Weighted average price of cows 201-260 kg, steers 301-400 kg, yearling < 200 kg dw. d) Grade A slaughter steers > 1 251 lb lw, Ontario – lw to dw conversion factor 0.6. e) Wholesale carcass price B2-B3 steers, Tokyo. f) Farm price of native cattle male 500 kg. g) Huasteco steers grade 1A, 400 kg lw. h) Schedule price M grade cow, 145.5 – 170 kg dw. i) Choice steers, 1 100-1 300 lb lw, Nebraska – lw to dw conversion factor 0.63. j) Buenos Aires wholesale liner, young bull, lw to dw conversion factor 0.55. k) Indigenous basis, including live exports but excluding live imports. l) Excludes intra-EU 15 trade. m) Producer price. n) Producer price, bull, class 1. o) Average procurement price. p) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Island. q) Producer price. r) Includes trade of live animals. p: provisional; e : estimate. Source: OECD Secretariat.

160

© OECD 2003

Annex Table 20 – PIG MEAT PROJECTIONS a

PACIFIC MARKET CANADA Production Consumptionc Exports Priced JAPAN Production Consumption Imports Pricee KOREA Production Consumption Imports Exports Pricef MEXICO Production Consumption Imports Priceg UNITED STATES Production Consumption Imports Exports Priceh CHINESE TAIPEI Production Consumption Imports OCEANIA AUSTRALIA Production Consumption Exports Pricei NEW ZEALAND Production Consumption Imports Pricej

2002-2008 % growth

Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

kt cwe kt cwe kt cwe CAD/100 kg dw

1 517 869 559 153

1 641 886 656 162

1 729 903 731 173

1 857 924 863 138

1 854 913 863 141

1 905 930 883 156

1 967 942 932 161

1 903 950 879 139

1 863 944 850 143

1 908 948 903 158

2.8 2.6 4.5 14.6

kt cwe kt cwe kt cwe ’000 JPY/100kg dw

1 272 2 139 850 46

1 271 2 165 930 44

1 243 2 211 1 012 48

1 207 2 283 1 078 53

1 248 2 273 1 022 52

1 265 2 296 1 031 52

1 247 2 314 1 068 52

1 226 2 358 1 133 49

1 223 2 361 1 139 49

1 231 2 363 1 133 48

1.9 3.5 5.1 –8.9

918 962 118 70 178

916 1 000 123 21 166

940 1 047 131 48 174

968 1 077 137 22 176

993 1 063 107 25 182

1 010 1 081 111 33 184

1 022 1 120 126 40 183

1 034 1 152 149 45 182

1 045 1 189 181 47 183

1 053 1 241 234 48 184

8.8 15.2 70.2 121.2 5.1

kt cwe kt cwe kt cwe MXN/100 kg dw

1 013 1 100 115 1 873

1 030 1 164 166 2 019

1 144 1 261 154 2 203

1 165 1 298 169 1 706

1 160 1 311 189 1 916

1 217 1 368 189 2 235

1 275 1 410 173 2 374

1 324 1 458 174 2 185

1 335 1 485 188 2 201

1 346 1 515 208 2 365

15.5 16.8 22.8 38.7

kt cwe kt cwe kt cwe kt cwe USD/100 kg dw

8 501 8 275 370 580 131

8 596 8 456 439 584 137

8 691 8 388 431 708 140

8 996 8 675 388 697 102

8 920 8 459 486 925 107

9 098 8 787 466 836 127

9 184 8 812 481 840 129

9 375 8 905 423 866 113

9 470 9 044 450 909 115

9 489 8 997 541 1 054 129

5.5 3.7 39.5 51.2 26.0

kt cwe kt cwe kt cwe

915 936 35

921 975 54

910 925 15

900 986 87

927 1 009 100

938 1 023 111

956 1 049 111

969 1 058 105

978 1 077 108

1 004 1 083 110

11.5 9.8 26.5

kt cwe kt cwe kt cwe AUD/100 kg dw

364 359 44 228

364 381 56 249

378 334 77 276

370 336 52 244

364 351 52 245

356 351 56 254

360 360 62 277

366 368 60 284

375 378 59 270

380 385 57 269

2.6 14.5 9.9 9.9

kt cwe kt cwe kt cwe NZD/100 kg dw

48 63 16 285

47 67 21 290

44 62 18 333

44 65 21 337

45 66 20 311

46 67 20 314

47 67 20 329

49 68 18 333

51 69 18 319

53 71 18 305

19.5 8.7 –13.8 –9.6

Calendar yearb

kt cwe kt cwe kt cwe kt cwe ’000 KRW/100kg dw

For notes, see end of the table.

© OECD 2003

161

Annex Table 20 – PIG MEAT PROJECTIONS a (cont.)

OTHER MARKETS EU 15 Production Consumption Importsk Exports to Pacific markets Exports to other marketsk Pricel HUNGARY Production Consumption Exports Pricem POLAND Production Consumption Exports Pricen OTHER OECDo Production Consumption Net trade ARGENTINA Production Consumption Net trade BRAZIL Production Consumption Net trade CHINA Production Consumption Exports Pricep RUSSIA Production Consumption Imports Pricem

2002-2008 % growth

Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

17 384 16 269 51 442 722 144

17 577 16 386 49 511 830 158

17 532 16 486 52 457 622 167

17 900 16 819 55 507 631 140

17 950 16 858 64 509 650 148

18 172 17 062 69 521 660 153

18 321 17 196 72 530 670 156

18 493 17 374 77 538 660 156

18 605 17 456 81 576 655 156

18 777 17 628 84 584 650 156

4.9 4.8 50.9 15.3 2.9 11.6

615 550 92 31

654 562 105 30

606 556 90 41

661 575 118 28

514 475 67 33

486 459 51 40

529 492 70 40

578 535 75 39

620 571 81 37

654 606 81 36

–1.1 5.4 –31.9 28.1

1 952 1 827 168 454

1 950 1 892 106 453

1 884 1 834 69 554

2 005 1 965 82 539

1 971 1 930 87 571

1 994 1 939 111 550

2 000 1 959 88 533

1 964 1 930 84 594

1 993 1 933 114 612

1 997 1 948 102 631

–0.4 –0.9 24.5 17.2

kt cwe kt cwe kt cwe

952 980 –27

908 946 –36

909 936 –29

915 941 –27

935 957 –22

941 964 –23

941 960 –19

948 966 –18

957 975 –18

961 980 –18

5.0 4.1 –32.9

kt cwe kt cwe kt cwe

172 230 –58

190 250 –60

196 258 –61

200 257 –57

191 267 –76

175 265 –90

181 263 –81

184 261 –77

187 253 –67

186 251 –64

–6.8 –2.3 13.8

kt cwe kt cwe kt cwe

1 792 1 648 145

1 810 1 687 135

2 234 1 971 264

2 310 2 039 270

2 389 2 114 275

2 417 2 127 290

2 547 2 231 317

2 659 2 372 288

2 784 2 489 295

2 903 2 605 299

25.7 27.7 10.8

kt cwe kt cwe kt cwe CNY/100 kg

39 607 39 533 118 888

40 807 40 784 73 918

42 400 42 325 139 973

43 258 43 101 222 1 000

44 771 44 657 194 1 043

45 061 45 025 124 1 152

46 121 46 104 120 1 206

46 605 46 598 121 1 298

47 909 47 895 124 1 394

49 312 49 275 134 1 483

14.0 14.3 –39.5 48.3

kt cwe kt cwe kt cwe RUR/100 kg

1 558 2 078 533 244

1 569 1 946 252 296

1 687 2 002 328 437

1 723 2 209 491 497

1 746 2 191 450 494

1 759 2 204 450 612

1 830 2 276 450 608

1 882 2 328 450 675

1 904 2 349 450 730

1 918 2 363 450 802

11.3 7.0 –8.4 61.3

Calendar yearb

kt cwe kt cwe kt cwe kt cwe kt cwe EUR/100 kg dw kt cwe kt cwe kt cwe ’000 HUF/100 kg dw kt cwe kt cwe kt cwe PLN/100 kg dw

Notes: a) Excludes trade of live animals. b) Year ended 30 September for New Zealand. c) Excluding non-food parts. d) Carcass price, index 100, Ontario. e) Wholesale carcass price, excellent grade, Tokyo. f) Farm price of pigs 100 kg. g) Supreme grade. h) Barrows and gilts, No. 1-3, 230-250 lb lw, Iowa/South Minnesota – lw to dw conversion factor 0.72. i) Weighted average price, pigs 60-73 kg dw. j) Schedule price, pigs > 50 kg dw, Canterbury. k) Excludes intra-EU 15 trade. l) Pig reference price – EU 15 starting in 1995. m) Producer price. n) Procurement price. o) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. p) Pig meat reference price. p: provisional; e : estimate. Source: OECD Secretariat.

162

© OECD 2003

Annex Table 21 – POULTRY MEAT PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Production Consumption Exports Priceb CANADA Production Consumption Imports Pricec EU 15 Production Consumption Importsd Exportsd Pricee HUNGARY Production Consumption Exports Pricef JAPAN Production Consumption Imports Priceg KOREA Production Consumption Imports Priceh MEXICO Production Consumption Imports Pricei

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt rtc kt rtc kt rtc AUD/100 kg rtc

618 594 24 357

658 634 24 356

661 630 31 364

710 688 22 369

695 671 23 395

731 706 24 369

723 699 24 381

714 690 24 389

729 705 24 389

751 726 24 378

5.7 5.6 10.0 2.7

kt rtc kt rtc kt rtc CAD/100 kg rtc

1 008 1 033 142 158

1 054 1 077 153 151

1 099 1 126 159 157

1 119 1 167 169 185

1 161 1 206 175 189

1 223 1 274 184 173

1 248 1 305 193 174

1 258 1 320 200 178

1 279 1 344 206 180

1 306 1 375 213 182

16.8 17.8 25.7 –1.5

kt rtc kt rtc kt rtc kt rtc EUR/100 kg rtc

8 837 8 314 455 975 101

8 814 8 446 558 978 98

9 136 8 861 741 971 108

9 057 8 670 711 1 098 98

8 984 8 702 722 1 005 100

9 116 8 841 729 1 005 99

9 264 8 995 736 1 005 99

9 411 9 148 741 1 005 100

9 541 9 281 745 1 005 101

9 622 9 366 748 1 005 102

6.2 8.0 5.3 –8.5 4.1

431 334 116 18

476 388 109 16

426 335 119 24

429 332 122 23

456 357 124 15

484 387 122 14

487 395 124 14

487 398 121 14

483 394 122 14

480 391 124 14

11.9 17.7 1.7 –38.0

1 210 1 750 541 116

1 196 1 756 584 116

1 194 1 744 538 118

1 210 1 821 644 125

1 201 1 840 643 124

1 210 1 845 638 124

1 200 1 860 664 122

1 183 1 867 687 120

1 159 1 890 734 118

1 127 1 920 797 114

–6.9 5.5 23.8 –8.6

461 526 66 179

488 582 96 170

500 619 121 200

504 635 133 198

517 647 132 188

537 665 131 190

549 677 129 193

561 687 128 195

570 694 126 196

580 703 125 199

15.0 10.7 –6.4 0.3

1 699 1 913 216 1 334

1 825 2 055 230 1 474

1 898 2 171 275 1 507

1 997 2 280 284 1 517

2 098 2 396 300 1 520

2 138 2 446 310 1 540

2 197 2 519 325 1 576

2 231 2 558 330 1 600

2 273 2 609 340 1 621

2 375 2 725 355 1 648

18.9 19.5 24.9 8.6

kt rtc kt rtc kt rtc ’000HUF/100 kg lw kt rtc kt rtc kt rtc ’000JPY/100kg rwt kt rtc kt rtc kt rtc ’000KRW/100 kg rtc kt rtc kt rtc kt rtc MXN/100 kg rtc

For notes, see end of the table.

© OECD 2003

163

Annex Table 21 – POULTRY MEAT PROJECTIONS (cont.) Average 1997-01

Calendar yeara

NEW ZEALAND Production Consumption POLAND Production Consumption Imports Pricej UNITED STATES Production Consumption Exports Pricek OTHER OECDl Production Consumption Net trade ARGENTINA Production Consumption Imports Pricem BRAZIL Production Consumption Net trade CHINA Production Consumption Imports Exports Pricen RUSSIA Production Consumption Imports Pricen

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt rtc kt rtc

104 104

110 110

119 119

127 127

125 125

141 141

149 149

161 161

170 170

179 179

40.8 40.8

kt rtc kt rtc kt rtc PLN/100 kg rtc

569 563 35 518

584 560 17 550

695 676 26 575

724 703 26 643

724 703 27 659

721 700 28 648

714 693 29 668

734 714 30 692

747 723 31 709

778 750 32 723

7.5 6.7 23.1 12.4

kt rtc kt rtc kt rtc USD/100 kg rtc

15 838 13 270 2 573 130

16 362 13 838 2 533 124

16 757 13 980 2 824 130

17 351 14 759 2 509 122

17 227 14 716 2 541 128

17 486 14 879 2 614 134

18 027 15 319 2 715 137

17 808 15 031 2 783 139

17 904 15 085 2 826 140

18 411 15 546 2 872 139

6.1 5.3 14.5 13.9

1 029 1 077 –49

1 134 1 187 –52

1 137 1 191 –56

1 191 1 246 –54

1 131 1 185 –54

1 154 1 210 –57

1 175 1 236 –60

1 202 1 261 –59

1 228 1 285 –56

1 254 1 311 –57

5.3 5.2 5.7

868 890 47 126

919 938 46 97

913 906 28 144

687 651 9 460

738 696 9 642

806 755 9 716

885 823 9 766

986 909 9 797

1 099 1 005 9 825

1 222 1 108 9 850

77.8 70.1 0.0 84.8

5 477 4 636 841

5 981 5 065 916

6 564 5 315 1 249

6 802 5 510 1 292

7 005 5 650 1 355

7 201 5 892 1 309

7 460 6 105 1 355

7 684 6 392 1 292

7 921 6 639 1 282

8 173 6 853 1 320

20.2 24.4 2.2

kt rtc kt rtc kt rtc kt rtc CNY/100 kg rtc

11 299 11 366 499 432 975

11 960 12 064 608 504 998

12 285 12 226 473 532 1 051

13 365 13 346 380 400 1 173

13 787 13 735 350 402 1 218

14 484 14 448 364 400 1 268

15 205 15 197 377 385 1 309

15 928 15 957 393 363 1 353

16 587 16 669 411 329 1 437

17 187 17 267 410 331 1 529

28.6 29.4 8.0 –17.3 30.4

kt rtc kt rtc kt rtc RUR/100 kg rtc

654 1 875 1 229 256

660 1 804 1 149 307

700 2 136 1 443 432

765 2 278 1 515 489

830 1 878 1 050 497

914 1 957 1 050 521

1 014 2 057 1 050 522

1 089 2 132 1 050 538

1 126 2 170 1 050 543

1 175 2 218 1 050 548

53.5 –2.6 –30.7 11.9

kt rtc kt rtc kt rtc kt rtc kt rtc kt rtc ARS/100 kg rtc kt rtc kt rtc kt rtc

Notes: a) Year ended 30 September for New Zealand. b) Average retail price of chicken. c) Weighted average producer price of broilers < 2kg, Ontario – lw to rtc conversion factor 0.75. d) Excludes intra-EU 15 trade. e) Weighted average farmgate live fowls, top quality, lw to rtc conversion of 0.75, EU 15 starting in 1995. f) Procurement price. g) Consumer price. Young boneless broilers. h) Farm price of hi-broiler 1 kg. i) Average producer price, chicken. j) Average procurement price. k) Wholesale weighted average broiler price 12 cities. l) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. m) Brazil export price. n) Producer price. p: provisional; e : estimate. Source: OECD Secretariat.

164

© OECD 2003

Annex Table 22 – SHEEP MEAT PROJECTIONS a Average 1997-01

Calendar yearb

AUSTRALIA Production Consumption Exports Pricec (lamb) Priced (mutton) CANADA Production Consumption Imports Pricee (lamb) EU 15 Production Consumption Importsf Priceg JAPAN Consumption Imports MEXICO Production Consumption Imports Priceh NEW ZEALAND Production Consumption Exports Pricei (lamb) Pricei (mutton) UNITED STATES Production Consumption Imports Pricej (lamb) OTHER OECDk Production Consumption Net trade

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt cwe kt cwe kt cwe AUD/100 kg dw AUD/100 kg dw

648 325 322 205 87

714 353 361 174 72

679 328 351 266 146

624 340 287 217 72

612 351 261 216 74

613 344 268 216 74

619 361 256 218 69

603 350 253 232 68

597 350 248 234 65

606 351 253 240 62

–3.0 3.2 –12.0 10.7 –13.2

kt cwe kt cwe kt cwe CAD/100 kg dw

11 26 15 576

11 28 17 586

13 31 18 543

13 32 19 473

14 33 20 502

14 34 21 535

14 36 22 546

15 38 24 545

15 42 27 537

15 45 30 542

16.4 41.0 57.7 14.4

kt cwe kt cwe kt cwe EUR/100 kg dw

1 095 1 338 246 360

1 123 1 370 251 357

1 017 1 266 252 412

1 029 1 279 254 412

1 076 1 329 256 363

1 104 1 370 269 331

1 090 1 362 275 336

1 086 1 362 280 336

1 078 1 359 285 338

1 076 1 362 289 340

4.5 6.4 13.6 –17.3

54 54

47 47

46 46

43 43

41 41

40 40

41 41

41 41

40 40

41 41

–4.8 –4.8

kt cwe kt cwe kt cwe MXN/100 kg dw

44 79 35 3 078

47 91 44 3 599

50 96 46 3 771

51 99 48 3 354

52 101 49 3 778

54 104 50 4 032

55 106 51 4 175

57 109 52 4 224

58 111 53 4 212

60 113 53 4 298

17.4 14.9 12.2 28.1

kt cwe kt cwe kt cwe NZD/100 kg dw NZD/100 kg dw

541 95 429 296 132

539 101 434 300 107

562 94 447 383 170

539 95 422 417 206

524 95 408 366 192

513 100 391 345 177

506 105 379 335 170

498 107 369 342 172

496 106 368 350 175

499 106 371 357 178

–7.6 11.0 –12.2 –14.3 –13.7

kt cwe kt cwe kt cwe USD/100 kg dw

111 161 53 344

106 161 59 350

103 167 66 318

99 177 81 273

96 181 87 292

98 185 89 312

91 188 99 315

102 190 90 311

103 191 90 303

104 192 90 303

4.6 8.5 11.5 10.9

kt cwe kt cwe kt cwe

270 274 –3

285 292 –7

236 241 –6

238 243 –5

242 247 –5

234 239 –5

226 231 –5

218 223 –5

210 215 –5

202 207 –5

–14.9 –14.7 –3.4

kt cwe kt cwe

Notes: a) Excludes trade of live animal. b) Year ended 30 September for New Zealand. c) Saleyard price, lamb, 16-20 kg dw. d) Saleyard price, wethers, < 22kg dw. e) A/B grade slaughter lambs, 80-94 lb lw, Toronto – lw to dw conversion factor 0.5. f) Excludes intra-EU 15 trade. g) Market price for sheep meat, EU 15 starting in 1995. h) Average producer price, sheep. i) Schedule price, all grade average. j) Choice grade slaughter lamb, 95-115 lb. lw, San Angelo – lw to dw conversion factor 0.5. k) Includes Czech Republic, Hungary, Korea, Norway, Poland, Slovak Republic, Switzerland and Turkey. Excludes Iceland. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

165

Annex Table 23 – MEAT PER CAPITA CONSUMPTION PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Total meat Beef and veal Pig meat Poultry meat Sheep meat CANADA Total meatb Beef and veal Pig meat Poultry meat EU 15 Total meat Beef and veal Pig meat Poultry meat Sheep meatc HUNGARY Total meatb Beef and veal Pig meat Poultry meat JAPAN Total meatb Beef and veal Pig meat Poultry meat KOREA Total meatb Beef and veal Pig meat Poultry meat MEXICO Total meatb Beef and veal Pig meat Poultry meat

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kg/person kg/person kg/person kg/person kg/person

83.5 26.2 14.7 27.5 15.1

86.1 25.4 15.5 29.0 16.2

80.6 23.9 13.4 28.5 14.8

84.8 25.6 13.3 30.8 15.2

82.5 23.5 13.8 29.7 15.5

82.4 22.7 13.7 31.0 15.1

82.0 22.0 13.9 30.4 15.7

82.1 23.1 14.1 29.8 15.1

82.7 23.1 14.3 30.2 15.0

83.7 23.4 14.5 30.9 14.9

–1.3 –8.5 8.9 0.4 –1.8

kg/person kg/person kg/person kg/person

75.4 23.0 22.1 29.6

77.4 23.3 22.5 30.8

77.7 22.3 22.7 31.9

79.3 22.7 23.0 32.7

78.7 21.7 22.5 33.6

80.0 21.1 22.8 35.2

81.5 21.8 22.9 35.8

81.2 21.3 23.0 36.0

82.3 22.1 22.7 36.4

84.1 23.1 22.7 37.1

6.0 2.0 –1.4 13.2

kg/person kg/person kg/person kg/person kg/person

70.0 13.5 33.9 19.5 3.1

70.6 13.6 34.0 19.8 3.2

70.4 12.5 34.2 20.8 3.0

71.7 13.5 34.9 20.3 3.0

72.2 13.8 35.0 20.4 3.1

73.2 13.8 35.4 20.7 3.2

73.8 13.9 35.7 21.1 3.2

74.6 13.9 36.1 21.4 3.2

75.1 13.9 36.3 21.8 3.2

75.7 13.8 36.7 22.0 3.2

5.6 2.6 5.1 8.3 6.7

kg/person kg/person kg/person kg/person

74.2 3.0 41.9 28.7

79.6 2.6 42.9 33.4

75.0 2.8 42.5 28.9

76.5 3.0 44.1 28.8

71.4 3.0 36.6 31.1

73.3 3.3 35.5 33.8

76.9 3.4 38.2 34.6

80.9 3.5 41.7 35.0

83.7 3.5 44.6 34.8

86.5 3.6 47.6 34.6

13.0 20.0 7.9 20.5

kg/person kg/person kg/person kg/person

33.8 8.1 13.2 12.2

34.3 8.5 13.3 12.2

33.5 7.6 13.6 12.1

34.0 7.1 14.0 12.6

34.8 7.9 13.9 12.7

35.6 8.5 14.1 12.7

35.9 8.6 14.2 12.8

36.3 8.7 14.4 12.9

36.7 8.9 14.5 13.1

37.1 9.1 14.5 13.3

9.2 27.0 3.6 5.6

kg/person kg/person kg/person kg/person

34.1 8.1 16.1 9.9

36.1 8.6 16.6 10.9

36.9 8.1 17.3 11.5

37.5 8.2 17.6 11.7

37.7 8.5 17.3 11.9

38.2 8.6 17.4 12.1

39.0 8.7 18.0 12.2

39.9 9.2 18.4 12.3

40.5 9.2 18.8 12.4

41.6 9.5 19.6 12.5

10.8 16.5 11.0 6.7

kg/person kg/person kg/person kg/person

38.0 11.0 8.9 17.4

39.7 11.0 9.3 18.6

41.2 11.2 9.9 19.2

41.9 11.1 10.0 19.9

42.6 11.2 10.0 20.6

43.0 11.2 10.2 20.7

43.6 11.3 10.4 21.0

43.9 11.3 10.6 21.1

44.2 11.3 10.7 21.2

44.9 11.2 10.8 21.9

7.1 0.8 7.8 10.3

For notes, see end of the table.

166

© OECD 2003

Annex Table 23 – MEAT PER CAPITA CONSUMPTION PROJECTIONS (cont.) Average 1997-01

Calendar yeara

NEW ZEALAND Total meat Beef and veal Pig meat Poultry meat Sheep meat POLAND Total meatb Beef and veal Pig meat Poultry meat UNITED STATES Total meatb Beef and veal Pig meat Poultry meat OTHER OECDd Total meatb Beef and veal Pig meat Poultry meat ARGENTINA Total meatb Beef and veal Pig meat Poultry meat BRAZIL Total meatb Beef and veal Pig meat Poultry meat CHINA Total meatb Beef and veal Pig meat Poultry meat RUSSIA Total meatb Beef and veal Pig meat Poultry meat

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kg/person kg/person kg/person kg/person kg/person

81.4 22.5 12.9 24.0 21.9

83.9 21.8 13.7 25.2 23.2

80.1 18.9 12.5 27.3 21.4

81.6 18.9 12.9 28.5 21.3

81.6 19.7 12.9 27.9 21.1

85.5 18.9 13.1 31.4 22.1

87.8 18.4 13.2 33.0 23.2

90.6 18.3 13.2 35.6 23.5

92.8 18.6 13.4 37.4 23.3

95.0 19.0 13.7 39.2 23.1

16.5 0.5 6.3 37.6 8.5

kg/person kg/person kg/person kg/person

56.4 6.7 36.9 12.8

57.4 6.4 38.2 12.8

58.1 5.6 37.0 15.4

61.0 5.3 39.7 16.0

59.6 4.7 38.9 16.0

59.7 4.6 39.1 15.9

60.1 4.9 39.5 15.7

60.2 5.1 38.8 16.2

60.7 5.4 38.9 16.4

61.8 5.6 39.2 17.0

1.4 6.5 –1.2 6.3

kg/person kg/person kg/person kg/person

98.1 31.3 23.6 42.7

100.5 31.8 24.0 44.3

98.8 30.9 23.4 44.0

102.2 31.8 23.9 45.9

99.4 30.2 23.2 45.5

99.7 29.6 23.9 45.6

100.1 29.1 23.8 46.7

98.6 28.6 23.9 45.5

98.5 28.5 24.1 45.4

99.4 28.6 23.8 46.4

–2.7 –10.0 –0.5 1.1

kg/person kg/person kg/person kg/person

27.4 6.5 8.2 10.1

27.4 5.9 7.8 11.0

27.1 6.3 7.6 10.9

27.4 6.3 7.6 11.3

26.7 6.2 7.6 10.6

26.7 6.2 7.6 10.8

26.6 6.2 7.5 10.9

26.6 6.2 7.5 11.0

26.6 6.2 7.5 11.1

26.6 6.2 7.4 11.2

–2.8 –2.2 –1.7 –0.6

kg/person kg/person kg/person kg/person

73.7 47.4 4.9 21.4

75.4 47.8 5.3 22.3

73.0 46.4 5.4 21.2

66.7 46.3 5.3 15.1

68.0 46.6 5.4 16.0

67.4 45.0 5.3 17.1

68.2 44.6 5.2 18.5

70.7 45.3 5.1 20.2

73.7 46.5 5.0 22.2

77.0 47.9 4.9 24.2

15.5 3.4 –7.7 60.6

kg/person kg/person kg/person kg/person

54.0 22.2 7.6 24.2

57.0 23.1 7.7 26.2

61.0 24.9 8.9 27.1

61.9 25.0 9.1 27.8

63.0 25.5 9.4 28.2

64.6 26.2 9.3 29.1

66.0 26.6 9.6 29.8

68.2 27.2 10.1 30.8

70.0 27.8 10.5 31.7

71.8 28.6 10.9 32.3

16.0 14.4 19.4 16.3

kg/person kg/person kg/person kg/person

37.2 2.8 24.7 8.0

38.5 2.9 25.2 8.4

39.3 3.0 26.0 8.5

40.5 3.1 26.3 9.2

41.6 3.2 27.0 9.4

42.3 3.3 27.1 9.8

43.4 3.5 27.5 10.2

44.1 3.5 27.7 10.7

45.2 3.6 28.3 11.1

46.3 3.6 28.9 11.4

14.5 17.9 9.9 24.4

kg/person kg/person kg/person kg/person

35.9 12.6 11.1 11.3

32.7 10.7 10.4 10.9

35.5 11.1 10.7 12.9

38.6 12.1 11.9 13.8

36.4 12.4 11.8 11.4

37.1 12.5 11.9 11.9

38.1 12.4 12.3 12.6

39.1 12.5 12.7 13.1

39.9 12.9 12.8 13.4

40.8 13.3 13.0 13.7

5.6 9.2 9.4 –0.4

Notes: a) Year ended 30 September for New Zealand. Consumption expressed in retail weight. Carcass weight to retail weight conversion factors of 0.7 for beef and veal, 0.78 for pig meat and 0.88 for sheep meat. Rtc to retail weight conversion factor 0.88 for poultry meat. b) Includes sheep meat. c) Includes goat meat. d) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

167

Annex Table 24 – MILK PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Production Liquid sales Industrial use Priceb Pricec CANADA Production Liquid sales Industrial use Priced Pricee EU 15 Production Liquid sales Industrial use Pricef HUNGARY Production Liquid sales Industrial use Priceg JAPAN Production Liquid sales Industrial use Priceh KOREA Production Liquid sales Industrial use Pricei MEXICO Production On farm use Liquid sales Industrial use Pricej NEW ZEALAND Production Liquid sales Industrial use Pricek

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

mt pw mt pw mt pw AUDc/litre AUDc/litre

10.3 2.0 8.4 28.5 23.5

11.2 2.0 9.2 26.3 22.0

10.9 2.0 8.9 29.0 25.1

11.6 2.0 9.7 29.3 28.2

11.4 2.0 9.4 27.2 25.6

11.6 2.1 9.5 28.5 26.9

11.7 2.2 9.5 30.6 29.2

12.0 2.2 9.8 32.9 31.6

12.5 2.2 10.3 35.0 33.6

12.9 2.2 10.7 36.6 35.4

11.0 13.9 10.4 25.1 25.5

mt pw mt pw mt pw CADc/litre CADc/litre

8.2 2.9 4.9 62.9 56.2

8.2 2.9 4.8 63.8 56.7

8.2 2.9 4.9 65.4 58.4

8.0 2.9 4.7 66.5 59.3

7.9 2.9 4.6 68.0 61.2

8.0 2.9 4.7 68.9 62.0

8.1 2.9 4.8 71.2 63.0

8.1 2.9 4.8 72.9 64.0

8.2 2.9 4.9 74.6 65.1

8.2 2.9 4.9 76.2 66.0

2.6 2.1 3.6 14.6 11.2

mt pw mt pw mt pw EUR/litre

121.3 29.0 85.2 0.317

121.0 29.1 85.1 0.319

121.8 29.3 85.6 0.329

121.6 29.0 85.7 0.290

121.1 29.0 85.3 0.292

121.0 29.0 85.3 0.299

121.3 29.4 85.4 0.294

121.7 29.8 85.3 0.285

122.1 29.9 85.7 0.273

122.0 30.2 85.3 0.263

0.4 4.3 –0.5 –9.2

mt pw mt pw mt pw HUF/litre

2.1 0.6 1.1 61.6

2.1 0.6 1.1 66.8

2.1 0.6 1.1 72.7

2.1 0.6 1.2 77.2

2.2 0.7 1.2 91.8

2.3 0.7 1.2 93.9

2.4 0.7 1.3 97.7

2.4 0.7 1.3 100.5

2.4 0.7 1.3 102.0

2.4 0.7 1.4 103.1

13.1 11.5 20.0 33.6

mt pw mt pw mt pw JPY/litre

8.5 5.0 3.4 85.0

8.5 5.0 3.4 84.6

8.3 4.9 3.3 85.0

8.4 5.0 3.3 84.8

8.4 5.0 3.3 85.1

8.4 5.1 3.3 83.9

8.4 5.1 3.2 83.3

8.4 5.1 3.2 83.6

8.4 5.2 3.1 83.5

8.4 5.2 3.1 82.9

0.5 4.6 –6.3 –2.2

mt pw mt pw mt pw KRW/litre

2.2 1.3 0.9 575.7

2.3 1.1 1.1 621.7

2.3 1.5 0.9 629.9

2.6 1.4 1.2 650.7

2.8 1.4 1.4 653.6

3.0 1.4 1.6 627.0

3.1 1.4 1.8 640.1

3.2 1.3 1.9 657.3

3.3 1.3 2.0 672.1

3.4 1.3 2.1 684.8

31.2 –8.4 78.6 5.2

mt pw mt pw mt pw mt pw MXN/litre

8.8 2.4 3.0 3.3 3.0

9.3 2.5 3.1 3.6 3.2

9.5 2.4 3.3 3.9 3.4

9.8 2.4 3.4 4.0 3.1

9.8 2.3 3.5 4.0 3.1

9.9 2.2 3.7 4.1 3.1

10.0 2.1 3.8 4.1 3.2

10.1 1.9 3.9 4.2 3.4

10.2 1.8 4.1 4.3 3.5

10.3 1.6 4.3 4.4 3.6

5.3 –31.8 25.2 10.6 19.0

mt pw mt pw mt pw NZDc/litre

11.7 0.3 11.4 32.8

12.2 0.3 11.8 31.9

13.2 0.3 12.8 42.5

13.8 0.3 13.4 45.2

14.1 0.3 13.7 31.3

14.8 0.3 14.4 35.6

15.3 0.3 15.0 43.0

15.9 0.3 15.6 45.1

16.6 0.3 16.2 48.8

17.4 0.3 17.0 53.5

26.3 –0.6 27.1 18.5

For notes, see end of the table. p: provisional e : estimate. Source: OECD Secretariat.

168

© OECD 2003

Annex Table 24 – MILK PROJECTIONS (cont.) Average 1997-01

Calendar yeara

POLAND Production On farm use Liquid sales Industrial use Pricel UNITED STATES Production Liquid sales Industrial use Pricem Pricen OTHER OECDo Production On farm use Liquid sales Industrial use ARGENTINA Production Liquid sales Industrial use Pricep BRAZIL Production CHINA Production Industrial use Other uses Priceq RUSSIA Production Price REST OF WORLDr Production Industrial use Other uses WORLD Production

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

mt pw mt pw mt pw mt pw PLN/litre

12.1 3.4 3.0 5.8 0.66

11.8 3.4 2.9 5.6 0.76

11.8 3.1 2.6 6.2 0.76

12.1 3.0 2.8 6.3 0.78

12.0 2.9 2.6 6.5 0.79

12.1 2.8 2.6 6.7 0.77

12.1 2.5 2.6 6.9 0.77

12.2 2.4 2.6 7.2 0.77

12.5 2.4 2.6 7.5 0.80

12.4 2.1 2.6 7.8 0.80

3.3 –30.5 –6.4 23.6 2.5

mt pw mt pw mt pw USDc/litre USDc/litre

73.4 24.9 47.9 28.8 32.1

76.0 24.9 50.6 23.9 28.2

75.0 24.8 49.7 30.5 34.2

76.1 25.9 49.6 24.6 27.0

76.7 26.0 50.2 26.3 29.1

77.3 25.9 51.0 26.9 30.2

78.1 25.9 51.8 27.3 30.5

79.0 25.9 52.6 27.9 31.1

80.2 26.0 53.9 28.8 32.1

81.3 26.0 55.0 29.6 33.0

6.9 0.2 10.7 20.2 22.1

mt pw mt pw mt pw mt pw

15.0 3.1 2.9 9.0

15.7 3.2 3.2 9.3

14.4 2.8 2.4 9.3

14.5 2.8 2.3 9.3

16.7 3.4 3.0 10.3

17.0 3.4 3.1 10.4

17.3 3.5 3.2 10.6

17.6 3.5 3.3 10.8

17.8 3.5 3.4 10.9

18.0 3.6 3.4 11.0

24.3 27.5 46.2 17.8

mt pw mt pw mt pw ARSc/litre

9.7 2.3 7.4 16.5

9.8 2.3 7.5 15.2

9.6 2.2 7.3 15.7

8.1 2.2 5.9 25.5

8.5 2.3 6.3 36.6

8.8 2.4 6.4 46.4

9.1 2.5 6.6 53.7

9.3 2.5 6.8 56.1

9.6 2.6 7.0 58.0

9.8 2.7 7.2 59.2

20.9 21.9 20.6 132.1

mt pw

19.4

19.8

20.8

21.4

22.1

22.6

23.1

23.7

24.3

25.0

16.9

10.3 3.4 5.4 2 765.7

11.3 3.5 5.7 2 808.9

11.8 3.7 5.9 2 982.8

11.5 3.6 7.9 1 649.1

13.0 4.0 9.0 1 623.3

13.5 4.2 9.3 1 739.6

14.3 4.4 9.8 1 815.7

15.1 4.7 10.4 1 888.6

15.9 4.9 10.9 2 012.2

16.8 5.2 11.6 2 125.2

46.3 46.1 46.4 28.9

mt pw RUR/100kg

32.5 288.4

31.6 401.8

32.0 433.1

31.6 388.3

32.3 447.4

32.7 485.3

33.2 517.7

33.4 550.8

33.8 588.0

34.0 616.2

7.8 58.7

mt pw mt pw mt pw

168.8 75.9 93.0

172.4 78.9 93.6

177.0 83.2 93.8

181.4 82.5 98.8

187.0 86.1 100.9

193.1 89.9 103.2

199.5 93.9 105.6

205.9 97.9 108.0

212.3 101.4 110.9

219.2 105.5 113.7

20.8 27.8 15.0

mt pw

548.5

556.4

563.1

566.4

576.3

584.9

594.2

603.7

614.3

624.7

10.3

mt pw mt pw mt pw CNY/litre

Notes: a) Year ended 30 June for Australia and 31 May for New Zealand. b) Weighted average farm price, market and manufacturing milk. c) Average price, manufacturing milk. d) Fluid milk price, class 1, Ontario. e) Industrial milk target return. f) Weighted average farm price, raw cow’s milk. g) Producer price. h) Average producer price, all milk. i) Producer price, 4th grade raw milk. j) Average producer price. k) Average farm price, all milk, milk to milkfat conversion factor 0.043. l) Average procurement price. m) Average farm price, manufacturing milk, 3.5% fat, Minnesota-Wisconsin. n) Average received by farmers for all milk. o) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. p) Price of milk to producers. q) Producer price. r) Excluding OIS. p: provisional e : estimate. Source: OECD Secretariat.

© OECD 2003

169

Annex Table 25 – BUTTER PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Production Consumption Exports Priceb CANADA Production Consumption Exports Pricec EU 15 Production Consumption Importsd Exportsd Closing stocks Intervention stocks Pricee HUNGARY Production Consumption Exports JAPAN Production Consumption Imports Pricef KOREA Production Consumption Imports MEXICO Production Consumption Imports Priceg NEW ZEALAND Productionh Consumption Exportsi, j Priceb, j

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw AUD/100 kg

160 65 106 252

172 61 124 235

151 56 108 271

165 66 107 276

160 61 106 231

157 59 105 242

151 58 104 251

155 57 105 259

160 57 110 265

163 56 113 268

–0.9 –15.3 6.2 –2.8

kt pw kt pw kt pw CAD/100 kg

85 83 5 549

77 81 1 556

82 83 1 571

82 87 8 587

80 88 10 608

77 90 3 620

80 91 3 633

82 91 3 645

84 92 3 658

85 93 3 671

3.1 6.7 –64.6 14.3

kt pw kt pw kt pw kt pw kt pw kt pw EUR/100 kg

1 862 1 770 101 184 258 96 337

1 881 1 799 104 176 293 119 337

1 860 1 797 114 172 298 130 337

1 912 1 743 120 208 378 211 323

1 823 1 746 143 201 397 229 328

1 773 1 735 146 197 383 216 330

1 746 1 723 149 195 360 193 323

1 742 1 726 151 187 341 173 311

1 726 1 730 153 179 311 143 299

1 718 1 730 154 177 275 108 292

–10.2 –0.8 28.4 –15.0 –27.2 –48.9 –9.6

kt pw kt pw kt pw

15 13 2

12 12 1

15 14 2

17 13 4

18 14 5

18 14 5

17 14 4

17 14 4

17 14 4

17 14 4

1.7 5.8 5.9

kt pw kt pw kt pw ’000 JPY/100 kg

86 86 0 97

88 83 0 95

80 91 0 94

91 92 4 95

89 91 2 94

88 91 2 94

88 90 1 94

87 89 1 95

87 89 0 96

87 88 0 95

–4.7 –4.3 –100.0 0.1

4 4 1

4 5 1

5 6 1

5 6 1

5 6 1

5 6 1

4 5 1

4 5 1

4 5 1

4 5 1

–8.6 –14.2 –18.5

kt pw kt pw kt pw MXN/100 kg

14 45 31 2 643

16 50 34 2 848

15 49 35 3 336

18 57 40 2 230

18 57 39 2 673

19 63 44 2 870

19 65 46 2 969

19 68 49 3 035

19 71 51 3 183

20 74 54 3 380

11.2 28.5 36.3 51.5

kt pw kt pw kt pw NZD/100 kg

358 31 299 307

350 31 318 289

391 31 309 329

391 31 313 318

426 31 357 269

433 31 394 285

446 30 411 308

461 30 420 329

477 30 427 352

497 30 447 372

27.2 –4.2 42.7 17.0

kt pw kt pw kt pw

For notes, see end of the table. p: provisional e : estimate. Source: OECD Secretariat.

170

© OECD 2003

Annex Table 25 – BUTTER PROJECTIONS (cont.) Average 1997-01

Calendar year

POLAND Production Consumption Exports Imports Pricek UNITED STATES Production Consumption Exports Imports Closing stocks Pricel OTHER OECDm Production Consumption Net trade ARGENTINA Production Consumption Exports Pricen BRAZIL Production Consumption Net trade CHINA Production Consumption Imports RUSSIA Production Consumption Imports OIS Production Consumption Net trade REST OF WORLD Production Consumption Net trade

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw kt pw PLN/100 kg

169 166 6 6 949

165 163 3 12 1 207

179 168 19 3 907

168 167 11 3 999

180 172 7 3 1 028

181 173 10 3 1 013

186 181 11 3 997

192 184 11 3 1 006

196 188 12 3 999

200 190 12 3 1 009

18.7 13.4 9.1 0.0 1.0

kt pw kt pw kt pw kt pw kt pw USD/100 kg

552 564 5 21 14 311

570 586 4 19 11 261

561 581 0 34 25 370

613 587 0 20 71 236

589 596 10 16 70 269

567 589 20 16 44 290

559 574 20 16 25 292

560 562 20 16 19 292

563 563 20 16 15 299

573 567 20 16 17 312

–6.6 –3.4 .. –20.0 –76.1 32.1

kt pw kt pw kt pw

263 246 17

267 253 14

274 254 20

278 260 17

262 247 15

264 250 14

268 254 14

271 257 14

274 261 13

277 264 13

–0.2 1.3 –22.1

kt pw kt pw kt pw ARS/100 kg

49 45 5 395

47 44 6 396

46 43 3 402

39 36 3 531

41 37 4 920

42 38 3 1 165

43 39 5 1 339

44 39 5 1 398

45 41 5 1 448

47 41 6 1 480

19.5 13.1 106.2 178.7

kt pw kt pw kt pw

77 83 –7

79 89 –10

81 80 1

83 83 0

86 78 8

88 89 –2

89 90 –1

91 93 –2

93 95 –3

95 98 –2

14.9 18.2 ..

kt pw kt pw kt pw

80 97 17

82 100 18

84 102 18

82 101 19

93 112 19

96 116 19

101 121 20

108 128 20

113 133 20

120 140 21

46.1 39.6 11.0

kt pw kt pw kt pw

269 392 125

265 332 60

270 380 110

281 396 115

305 413 114

319 429 116

331 446 119

332 465 138

341 480 144

348 496 152

24.2 25.3 32.4

kt pw kt pw kt pw

125 92 31

135 105 30

160 99 53

136 99 37

132 99 33

132 100 33

131 100 31

129 100 29

125 100 25

123 101 22

–9.7 1.3 –39.4

kt pw kt pw kt pw

2 886 3 197 –345

3 004 3 412 –408

3 251 3 616 –355

3 205 3 538 –374

3 349 3 754 –404

3 504 3 926 –422

3 666 4 093 –427

3 825 4 229 –404

3 966 4 360 –393

4 132 4 534 –401

28.9 28.1 7.4

Notes: a) Year ending 30 June for Australia and 31 May for New Zealand. b) Average export price, f.o.b. c) Wholesale support price. d) Excludes intra-EU 15. e) Average wholesale price, branded butter, Cologne. f) Average wholesale price for major users. g) Value of production divided by volume of production. h) Includes AMF measured in butter equivalent. i) Includes AMF measured in product weight. j) Year ended 30 June. k) Wholesale price, exit plant. l) Average wholesale price, grade A butter, Chicago. m) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. n) Wholesale price (precios mayoristas). p: provisional e : estimate. Source: OECD Secretariat.

© OECD 2003

171

Annex Table 26 – CHEESE PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Production Consumption Exports Priceb CANADA Production Consumption Imports Exports Pricec EU 15 Production Consumption Importsd Exportsd Pricee HUNGARY Production Consumption Exports JAPAN Productionf of which : domestic Consumption Importsg Priceh KOREA Production Consumption Imports MEXICO Production Consumption Imports Pricei NEW ZEALAND Production Consumption Exportsj Priceb, j

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw AUD/100 kg

347 217 179 393

385 224 220 367

387 204 219 434

386 207 216 473

379 210 208 387

375 213 197 393

379 214 200 404

392 216 211 414

405 217 223 427

423 222 236 432

9.7 7.2 9.1 –8.6

kt pw kt pw kt pw kt pw CAD/100 kg

329 327 22 22 709

328 332 25 18 730

322 323 23 18 748

318 329 21 15 758

321 332 21 11 773

325 338 21 9 783

332 344 21 9 791

337 349 21 9 823

340 352 21 10 852

344 355 21 10 883

8.0 7.9 0.0 –33.8 16.5

kt pw kt pw kt pw kt pw EUR/100 kg

6 820 6 500 141 457 407

6 900 6 600 149 458 404

7 159 6 844 174 470 428

7 197 6 852 150 490 377

7 254 6 979 171 458 380

7 318 7 031 174 470 389

7 440 7 134 177 489 382

7 548 7 252 180 479 371

7 638 7 362 183 459 355

7 665 7 407 186 443 342

6.5 8.1 24.0 –9.5 –9.2

65 56 16

66 58 19

71 61 21

72 73 13

77 78 9

82 83 10

85 88 11

89 93 11

97 98 12

101 103 12

39.7 41.7 –8.7

122 35 227 192 34

123 34 243 209 28

123 34 241 206 33

125 35 244 210 31

125 35 244 209 32

126 36 246 210 32

129 36 252 216 32

132 36 257 221 32

133 37 259 223 33

136 37 264 227 33

8.4 5.3 7.9 8.4 7.6

13 35 23

15 44 31

20 53 35

21 65 44

21 65 44

20 66 45

20 66 46

19 66 47

19 66 47

18 67 48

–13.5 2.9 10.6

kt pw kt pw kt pw MXN/100 kg

126 170 44 3 745

134 187 54 4 292

140 205 66 4 776

145 210 65 3 650

147 212 65 4 262

148 213 65 4 509

150 215 64 4 678

158 222 64 4 761

166 230 64 4 791

175 238 63 4 834

20.7 13.5 –2.5 32.4

kt pw kt pw kt pw NZD/100 kg

267 37 241 407

297 38 240 409

281 38 256 478

304 38 265 502

285 38 268 364

314 38 282 381

332 38 310 405

350 37 323 425

372 37 339 443

394 37 361 456

29.5 –3.7 36.1 –9.2

kt pw kt pw kt pw kt pw kt pw kt pw kt pw ’000 JPY/100 kg kt pw kt pw kt pw

For notes, see end of the table. p: provisional e : estimate. Source: OECD Secretariat.

172

© OECD 2003

Annex Table 26 – CHEESE PROJECTIONS (cont.)

POLAND Production Consumption Exports Pricek UNITED STATES Production Consumption Imports Exports Pricel OTHER OECDm Production Consumption Net trade ARGENTINA Production Consumption Exports Pricen BRAZIL Production Consumption Net trade CHINA Production Consumption Imports RUSSIA Production Consumption Imports OIS Production Consumption Net trade REST OF WORLD Production Consumption Net trade

2002-2008 % growth

Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

kt pw kt pw kt pw PLN/100 kg

477 450 34 1 067

470 445 34 1 160

494 453 45 1 212

503 461 46 1 248

502 459 48 1 236

508 463 50 1 207

510 464 51 1 202

517 471 52 1 219

533 487 52 1 222

537 489 54 1 231

6.8 6.1 17.4 –1.3

kt pw kt pw kt pw kt pw USD/100 kg

3 547 3 660 175 46 306

3 746 3 845 186 47 256

3 687 3 854 198 52 319

3 829 3 990 215 55 265

3 998 4 153 215 60 263

4 164 4 315 215 60 286

4 271 4 423 215 62 296

4 377 4 527 217 65 300

4 483 4 635 220 67 306

4 635 4 786 222 70 314

21.0 19.9 3.3 27.3 18.7

kt pw kt pw kt pw

634 570 65

614 561 55

612 544 70

617 557 60

633 572 62

645 582 64

655 590 66

665 597 69

673 604 70

681 611 70

10.3 9.7 16.9

kt pw kt pw kt pw ARS/100 kg

439 423 20 281

453 440 25 283

441 429 12 284

375 368 7 374

396 391 5 634

406 393 13 799

417 400 17 920

430 410 20 972

442 420 22 1 001

454 430 24 1 022

21.2 17.0 243.0 173.3

kt pw kt pw kt pw

433 451 –18

445 458 –13

460 466 –6

466 480 –14

484 489 –6

496 508 –12

503 523 –21

516 535 –20

528 553 –25

540 570 –30

16.1 18.9 110.4

kt pw kt pw kt pw

195 204 10

206 218 12

217 229 12

212 224 12

240 253 13

249 262 13

262 275 13

279 292 13

292 306 14

310 323 14

46.1 44.1 11.0

kt pw kt pw kt pw

200 330 134

220 275 60

260 394 140

305 436 136

326 455 142

337 473 146

350 494 154

354 516 171

367 534 177

379 558 190

24.2 28.2 39.9

kt pw kt pw kt pw

63 53 10

67 56 11

100 65 34

97 65 32

92 65 27

90 65 25

86 66 21

82 66 16

76 66 10

73 66 7

–24.7 1.3 –77.6

kt pw kt pw kt pw

1 865 2 115 –283

1 916 2 265 –331

1 822 2 075 –291

1 859 2 169 –281

1 933 2 158 –225

2 004 2 242 –237

2 080 2 347 –267

2 159 2 416 –256

2 229 2 476 –247

2 308 2 549 –241

24.1 17.5 –14.2

Calendar yeara

Notes: a) Year ended 30 June for Australia and 31 May for New Zealand. b) Average export price, f.o.b. c) Industry price of cheddar cheese. d) Excludes intra-EU 15 trade. e) Average ex-store wholesale price, Emmental Kempten, Cologne. f) Includes cheese produced from natural cheese imports. g) Includes natural cheese imports. h) Average import price, natural cheese, c.i.f. i) Value of production divided by volume of production. j) Year ended 30 June. k) Wholesale price exit plant. l) Average wholesale price, American cheese, 40 lb blocks, f.o.b., Winconsin. m) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. n) Wholesale price (precios mayoristas). p: provisional e : estimate. Source: OECD Secretariat.

© OECD 2003

173

Annex Table 27 – SKIM MILK POWDER PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Production Consumption Exports Priceb CANADA Production Consumption Exports Pricec EU 15 Production Consumption Importsd Exportsd Closing stocks Intervention stocks Pricee HUNGARY Production Consumption JAPAN Production Consumption Imports Pricef KOREA Production Consumption Imports MEXICO Production Consumption Imports Priceg NEW ZEALAND Production Consumption Exportsh Priceb, h

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw AUD/100 kg

237 43 202 257

246 48 218 219

244 33 203 343

261 54 211 333

258 51 209 245

251 50 202 250

255 50 211 264

259 50 209 277

264 50 216 289

272 50 225 295

4.1 –7.6 6.3 –11.5

kt pw kt pw kt pw CAD/100 kg

76 38 36 453

75 34 32 467

90 45 46 483

98 53 45 495

92 61 32 514

97 81 14 519

100 87 14 526

102 84 14 533

105 90 15 541

104 90 15 547

5.7 70.4 –66.7 10.5

kt pw kt pw kt pw kt pw kt pw kt pw EUR/100 kg

1 106 932 69 246 224 105 212

1 092 973 78 358 130 7 229

1 005 879 57 143 170 0 227

1 112 844 50 192 295 125 194

979 894 99 193 285 116 193

866 830 101 179 243 73 199

844 827 103 170 193 23 198

842 819 104 150 170 0 195

837 804 105 138 170 0 188

803 769 106 140 170 0 182

–27.7 –8.9 114.5 –26.9 –42.4 –100.0 –6.1

5 5

5 4

5 4

6 5

6 5

6 5

6 5

5 4

5 4

5 4

–11.3 –4.8

192 242 53 19

194 231 49 15

175 212 51 21

178 207 44 17

174 219 44 18

174 219 45 19

175 222 47 19

175 224 49 19

175 226 52 19

175 231 56 18

–2.0 11.4 27.9 6.3

20 24 3

24 20 3

22 31 5

22 28 5

24 28 5

25 29 5

26 29 4

27 30 4

29 32 4

30 32 4

33.2 14.4 –29.4

kt pw kt pw kt pw MXN/100 kg

26 139 113 1 887

27 143 116 1 805

29 147 118 2 373

30 149 113 1 650

31 148 118 2 037

31 151 121 2 102

32 154 124 2 234

33 158 127 2 320

33 164 131 2 390

34 168 135 2 445

12.4 12.6 19.7 48.2

kt pw kt pw kt pw NZD/100 kg

246 25 225 331

256 35 220 328

304 35 240 452

340 35 301 412

369 35 341 321

379 35 356 350

404 34 379 381

415 34 390 407

427 34 393 430

441 34 407 449

29.7 –3.5 35.0 8.9

kt pw kt pw kt pw kt pw kt pw ’000 JPY/100 kg kt pw kt pw kt pw

For notes, see end of the table. p: provisional e : estimate. Source: OECD Secretariat.

174

© OECD 2003

Annex Table 27 – SKIM MILK POWDER PROJECTIONS (cont.) Average 1997-01

Calendar year

POLAND Production Consumption Exports Pricei UNITED STATES Production Consumptionj Exports Closing stocks Pricek OTHER OECDl Production Consumption Net trade ARGENTINA Production Consumption Exports Pricem BRAZIL Production Consumption Net trade CHINA Consumption Imports RUSSIA Production Consumption Imports Exports OIS Production Consumption Net trade REST OF WORLD Production Consumption Net trade

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw PLN/100 kg

128 39 98 628

128 58 86 690

151 53 108 814

144 62 88 675

146 56 96 652

141 50 97 637

135 39 102 641

136 38 104 652

140 35 111 659

142 32 116 663

–1.6 –48.3 31.5 –1.8

kt pw kt pw kt pw kt pw USD/100 kg

597 380 146 187 231

659 345 142 288 224

641 376 150 406 222

683 477 100 515 206

623 566 175 400 184

557 560 225 175 191

524 477 125 100 195

510 408 125 80 200

496 441 68 70 205

489 434 68 60 209

–28.5 –9.1 –32.1 –88.3 1.4

76 41 35

69 32 36

73 37 36

73 36 38

71 38 33

70 38 31

69 40 29

67 41 26

66 43 23

66 44 22

–10.1 22.4 –41.1

kt pw kt pw kt pw ARS/100 kg

43 23 20 269

45 23 22 246

44 22 22 271

38 19 19 370

39 20 19 597

40 21 19 757

42 21 20 879

43 22 21 919

44 23 21 948

45 24 22 968

19.8 26.9 13.0 161.8

kt pw kt pw kt pw

58 97 –37

62 99 –31

65 76 –11

66 77 –11

68 85 –17

67 84 –17

67 84 –17

68 87 –19

68 89 –21

69 91 –22

4.1 18.9 111.2

kt pw kt pw

68 17

80 22

92 22

105 24

108 24

112 26

116 26

121 27

127 28

133 31

26.7 25.1

kt pw kt pw kt pw kt pw

145 161 44 29

125 128 51 48

130 165 50 15

142 170 48 20

147 171 44 20

150 176 46 20

153 183 50 20

152 192 61 20

153 201 68 20

154 210 76 20

8.8 24.1 59.3 0.0

kt pw kt pw kt pw

47 19 27

61 13 49

82 36 45

65 36 29

69 36 33

76 36 40

83 36 47

92 36 56

100 36 63

111 37 74

69.1 1.3 152.3

kt pw kt pw kt pw

357 1 026 –713

292 1 229 –839

214 863 –677

212 931 –740

256 1 046 –790

291 1 104 –813

337 1 073 –736

363 1 078 –715

399 1 047 –649

427 1 094 –667

101.9 17.6 –9.8

kt pw kt pw kt pw

Notes: a) Year ended 30 June for Australia and 31 May for New Zealand. b) Average export price, f.o.b. c) Average wholesale price. d) Excludes intra EU 15 trade. e) Average wholesale price, SMP, Cologne. f) Unit import price for feed use. g) Average import price c.i.f., SMP and WMP. h) Year ended 31 June. i) Wholesale price, exit plant. j) Excludes domestic feed use. k) Average wholesale price, non-fat dry milk, f.o.b., Central States. l) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. m) Wholesale price (precios mayoristas). p: provisional e : estimate. Source: OECD Secretariat.

© OECD 2003

175

Annex Table 28 – WHEY POWDER AND CASEIN PROJECTIONS Average 1997-01

Calendar year

AUSTRALIA Net trade, whey Exports, casein CANADA Net trade, whey EU 15 Net trade, whey Casein production consumption net trade HUNGARY Net trade, whey JAPAN Net trade, whey Imports, casein Import price, casein KOREA Net trade, whey MEXICO Net trade, whey NEW ZEALAND Net trade, whey Exports, casein Export price, casein POLAND Net trade, whey Exports, casein UNITED STATES Whey production consumption exports pricea Imports, casein ARGENTINA Net trade, whey BRAZIL Net trade, whey CHINA Net trade, whey RUSSIA Net trade, whey OIS Net trade, whey REST OF WORLDb Net trade, whey

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw

34.4 8.6

37.4 10.6

36.1 7.8

39.9 6.7

39.6 7.2

40.6 9.7

37.7 8.8

37.1 7.9

37.9 8.1

38.2 8.2

–4.3 23.5

kt pw

–3.1

–8.8

–7.0

–7.3

–7.7

–8.1

–8.5

–8.9

–9.4

–9.8

34.0

kt pw

231.3

312.9

315.0

304.7

302.0

300.8

309.7

303.5

303.3

298.6

–2.0

kt pw kt pw kt pw

148.2 144.2 5.2

149.9 135.6 14.4

158.3 148.7 9.6

164.5 152.9 11.6

171.5 157.7 13.8

177.3 163.5 13.8

183.3 168.3 15.0

189.3 173.7 15.6

195.4 179.3 16.1

201.2 185.5 15.8

22.3 21.3 35.5

kt pw

2.5

2.6

3.2

3.2

3.2

3.2

3.2

3.2

3.2

3.2

0.0

kt pw kt pw ’000 JPY/100kg

–35.0 9.9 55.2

–32.1 10.4 48.0

–36.7 8.5 64.9

–40.0 6.8 58.2

–43.6 7.5 49.9

–47.6 8.2 50.6

–51.8 8.9 51.2

–56.5 9.6 51.0

–61.6 9.8 50.6

–67.1 10.0 48.3

67.7 47.1 –17.0

kt pw

–31.1

–38.9

–38.6

–38.6

–38.6

–38.6

–38.6

–38.6

–38.6

–38.6

0.0

kt pw

–60.9

–68.0

–74.2

–71.3

–68.9

–66.8

–64.1

–59.7

–54.5

–50.6

–28.9

kt pw kt pw USD/100kg

4.9 102.1 442.0

3.8 102.4 403.8

3.8 111.5 498.7

3.8 110.8 464.3

3.8 130.0 359.3

3.8 138.4 402.9

3.8 138.9 420.1

3.8 139.2 429.5

3.8 140.9 438.6

3.8 146.5 439.1

0.0 32.2 –5.4

11.7 10.0

12.8 10.0

12.8 10.0

12.1 10.0

11.3 10.0

10.6 10.0

9.8 10.0

9.0 10.0

9.0 10.0

8.6 10.0

–29.2 0.0

531.1 413.6 123.8 45.7 70.2

539.0 418.0 127.0 44.4 70.0

539.0 415.0 130.0 42.4 70.0

552.7 425.7 133.0 48.4 69.7

563.2 433.9 135.4 52.7 69.2

574.8 444.1 136.8 55.6 69.6

587.8 456.1 137.7 57.1 69.6

602.5 469.7 138.8 59.0 69.7

616.8 484.1 138.8 62.1 69.8

632.1 498.8 139.3 64.6 70.4

14.4 17.2 4.7 33.5 1.0

kt pw

6.2

28.1

28.1

28.0

27.9

27.9

27.8

27.7

27.7

27.6

–1.5

kt pw

–31.1

–43.1

–37.4

–37.4

–37.4

–37.4

–37.4

–37.4

–37.4

–37.4

0.0

kt pw

–95.7

–122.8

–129.9

–137.9

–148.4

–152.3

–164.0

–173.3

–183.1

–194.7

41.2

kt pw

–1.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

..

kt pw

1.9

1.6

1.6

1.6

1.6

1.6

1.6

1.6

1.6

1.6

0.0

kt pw

–170.1

–227.6

–227.3

–250.0

–236.4

–232.0

–224.4

–207.9

–198.3

–180.1

–28.0

kt pw kt pw kt pw kt pw kt pw USD/100kg kt pw

Notes: a) Wholesale price, edible dry whey, Wisconsin, plant. b) Excluding OIS. p: provisional e : estimate. Source: OECD Secretariat.

176

© OECD 2003

Annex Table 29 – WHOLE MILK POWDER PROJECTIONS Average 1997-01

Calendar yeara

AUSTRALIA Production Consumption Exports EU 15 Production Consumption Exportsb JAPAN Production Consumption MEXICO Production Consumption Imports Pricec NEW ZEALAND Production Consumption Exportsd Pricee POLAND Production Consumption Exports UNITED STATES Production Consumption Exports Closing stocks OTHER OECDf Production Consumption Net trade ARGENTINA Production Consumption Exports Priceg BRAZIL Production Consumption Net trade CHINA Consumption Exports Imports RUSSIA Production Consumption Imports OIS Production Consumption Net trade REST OF WORLD Production Consumption Net trade

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt pw kt pw kt pw

160 35 128

187 39 153

205 44 167

189 26 166

219 32 193

240 49 197

246 50 202

255 60 201

268 61 213

281 65 221

49.0 149.2 33.3

kt pw kt pw kt pw

885 333 559

841 275 571

809 243 571

828 335 498

837 373 469

846 367 484

863 378 490

880 401 484

897 428 474

915 450 470

10.5 34.3 –5.7

kt pw kt pw

53 53

52 52

51 51

51 51

50 50

49 49

48 48

47 47

46 46

45 45

–11.5 –11.5

143 185 44 4 321

160 206 47 4 730

181 222 43 5 441

179 219 42 4 670

184 222 40 5 452

188 224 37 5 767

192 225 35 5 984

193 224 32 6 090

193 222 30 6 129

195 222 28 6 183

8.9 1.1 –32.7 32.4

387 2 386 346

373 4 373 347

444 4 444 440

455 4 451 410

478 4 474 331

511 4 508 363

531 4 527 389

553 4 549 411

582 4 578 436

610 4 606 455

34.0 0.0 34.2 10.8

kt pw kt pw kt pw

36 31 7

30 32 1

34 20 16

40 39 4

38 37 4

40 39 4

42 40 5

43 41 5

45 43 5

45 43 5

12.5 10.4 25.0

kt pw kt pw kt pw kt pw

55 49 8 2

51 49 5 2

51 47 5 2

51 47 5 2

51 47 5 2

51 47 5 2

51 47 5 2

51 47 5 2

51 47 5 2

51 47 5 2

0.0 0.0 0.0 0.0

kt pw kt pw kt pw

40 26 14

41 24 16

39 27 12

40 27 14

44 29 16

47 30 17

49 32 17

51 32 19

51 32 19

51 31 19

26.4 17.6 43.7

203 105 102 340

202 85 118 327

197 115 82 333

169 97 71 408

177 103 74 682

181 107 74 862

186 110 76 991

191 113 78 1 043

197 117 80 1 078

202 121 81 1 096

19.6 24.1 13.5 168.4

kt pw kt pw kt pw

263 367 –104

271 377 –106

279 320 –41

285 322 –37

289 336 –47

302 345 –43

307 352 –45

314 360 –46

321 371 –50

329 385 –56

15.3 19.4 51.0

kt pw kt pw kt pw

488 9 52

563 10 51

570 20 50

580 20 54

600 10 57

627 10 58

659 10 59

689 10 64

718 10 66

740 10 69

27.6 –49.3 26.9

kt pw kt pw kt pw

82 103 24

75 81 9

85 91 9

87 93 9

84 94 13

87 96 13

90 101 15

88 104 19

89 108 21

90 111 24

3.0 19.6 177.7

kt pw kt pw kt pw

45 36 9

44 33 11

50 39 11

44 32 13

40 25 14

36 20 16

33 16 17

32 13 18

30 11 20

30 9 21

–33.1 –72.9 66.8

kt pw kt pw kt pw

389 1 371 –982

400 1 446 –1 020

407 1 574 –1 167

413 1 495 –1 082

427 1 509 –1 082

441 1 584 –1 143

455 1 629 –1 175

469 1 655 –1 186

482 1 697 –1 215

496 1 734 –1 238

20.0 16.0 14.4

kt pw kt pw kt pw MXN/100 kg kt pw kt pw kt pw NZD/100kg

kt pw kt pw kt pw ARS/100 kg

Notes: a) Year ended 30 June for Australia and 31 May for New Zealand. b) Excludes intra-EU 15 trade. c) Value of production divided by volume of production. d) Including exports of other dairy products made from WMP. e) Export price. f) Includes Czech Republic, Korea, Norway, Slovak Republic, Switzerland and Turkey. Excludes Iceland. g) Wholesale price (precios mayoristas). p: provisional e : estimate. Source: OECD Secretariat.

© OECD 2003

177

Annex Table 30 – DAIRY PER CAPITA CONSUMPTION PROJECTIONS a

AUSTRALIA Milk Butter Cheese SMP WMP CANADA Milk Butter Cheese SMP EU 15 Milk Butter Cheese SMP WMP HUNGARY Milk Butter Cheese SMP JAPAN Milk Butter Cheese SMP WMP KOREA Milk Butter Cheese SMP MEXICO Milkc Butter Cheese SMP WMP NEW ZEALAND Milk Butter Cheese SMP WMP

2002-2008 % growth

Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

L/person kg/person kg/person kg/person kg/person

99.9 3.4 11.4 2.2 1.9

100.7 3.2 11.7 2.5 2.0

98.6 2.9 10.5 1.7 2.3

97.0 3.4 10.5 2.7 1.3

98.3 3.1 10.5 2.6 1.6

102.0 2.9 10.6 2.5 2.4

104.5 2.9 10.6 2.5 2.5

104.6 2.8 10.6 2.4 2.9

104.0 2.8 10.6 2.4 3.0

105.1 2.7 10.7 2.4 3.1

8.4 –19.4 2.0 –12.1 137.0

L/person kg/person kg/person kg/person

91.0 2.7 10.7 1.3

92.1 2.6 10.8 1.1

91.0 2.7 10.4 1.4

89.4 2.8 10.5 1.7

88.5 2.8 10.5 1.9

88.0 2.8 10.6 2.5

87.6 2.8 10.7 2.7

87.5 2.8 10.8 2.6

87.6 2.8 10.8 2.8

87.7 2.8 10.9 2.8

–1.9 2.5 3.7 63.7

L/person kg/person kg/person kg/person kg/person

75.3 4.7 17.3 2.5 0.9

75.2 4.8 17.6 2.6 0.7

75.6 4.8 18.2 2.3 0.6

74.8 4.6 18.2 2.2 0.9

74.9 4.6 18.6 2.4 1.0

74.9 4.6 18.7 2.2 1.0

75.9 4.6 19.0 2.2 1.0

77.2 4.6 19.3 2.2 1.1

77.3 4.6 19.6 2.1 1.1

78.3 4.6 19.8 2.1 1.2

4.6 –0.5 8.4 –8.6 34.7

L/person kg/person kg/person kg/person

55.2 1.2 5.5 0.4

57.1 1.2 5.7 0.4

57.7 1.4 5.9 0.4

61.9 1.3 7.2 0.5

66.2 1.4 7.7 0.5

70.0 1.4 8.3 0.5

72.0 1.4 8.8 0.5

70.2 1.4 9.3 0.4

70.2 1.4 9.8 0.4

70.6 1.4 10.4 0.4

14.1 8.2 45.0 –2.6

L/person kg/person kg/person kg/person kg/person

38.4 0.7 1.8 1.9 0.4

38.0 0.7 1.9 1.8 0.4

37.7 0.7 1.9 1.7 0.4

37.9 0.7 1.9 1.6 0.4

38.2 0.7 1.9 1.7 0.4

38.5 0.7 1.9 1.7 0.4

38.8 0.7 2.0 1.7 0.4

39.1 0.7 2.0 1.8 0.4

39.4 0.7 2.0 1.8 0.4

39.7 0.7 2.1 1.8 0.4

4.7 –4.2 8.1 11.6 –11.4

L/person kg/person kg/person kg/person

26.8 0.1 0.8 0.5

23.7 0.1 0.9 0.4

30.1 0.1 1.1 0.7

29.0 0.1 1.4 0.6

28.5 0.1 1.4 0.6

28.3 0.1 1.4 0.6

27.1 0.1 1.4 0.6

26.6 0.1 1.4 0.6

26.2 0.1 1.3 0.6

25.6 0.1 1.3 0.7

–11.7 –17.3 –0.8 10.3

L/person kg/person kg/person kg/person kg/person

30.4 0.5 1.8 1.4 1.9

31.4 0.5 1.9 1.5 2.1

32.0 0.5 2.1 1.5 2.2

32.7 0.6 2.1 1.5 2.2

33.4 0.6 2.1 1.4 2.2

34.1 0.6 2.0 1.4 2.2

35.0 0.6 2.0 1.5 2.1

35.9 0.6 2.1 1.5 2.1

36.8 0.7 2.1 1.5 2.1

37.7 0.7 2.2 1.5 2.0

15.5 18.6 4.7 3.9 –6.6

L/person kg/person kg/person kg/person kg/person

86.7 8.2 9.8 6.6 0.5

86.2 8.2 10.0 9.1 0.9

85.7 8.2 10.0 9.1 0.9

83.9 8.0 9.8 8.9 0.9

83.0 7.8 9.7 8.8 0.9

82.6 7.7 9.6 8.7 0.9

82.0 7.6 9.4 8.6 0.9

81.8 7.6 9.3 8.5 0.9

81.7 7.5 9.3 8.5 0.9

81.5 7.5 9.2 8.4 0.9

–2.8 –6.4 –5.9 –5.7 –2.2

Calendar yearb

For notes, see end of the table. p: provisional e : estimate. Source: OECD Secretariat.

178

© OECD 2003

Annex Table 30 – DAIRY PER CAPITA CONSUMPTION PROJECTIONS a (cont.) Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

L/person kg/person kg/person kg/person kg/person

74.2 4.3 11.6 1.0 0.8

71.8 4.2 11.5 1.5 0.8

64.1 4.3 11.7 1.4 0.5

69.8 4.3 11.9 1.6 1.0

64.9 4.4 11.9 1.4 0.9

65.2 4.5 12.0 1.3 1.0

65.2 4.7 12.0 1.0 1.0

65.0 4.8 12.1 1.0 1.1

65.8 4.9 12.6 0.9 1.1

65.1 4.9 12.6 0.8 1.1

–6.7 13.0 5.7 –48.4 10.0

L/person kg/person kg/person kg/person kg/person

88.6 2.1 13.4 1.4 0.2

87.7 2.1 14.0 1.3 0.2

85.9 2.1 13.8 1.3 0.2

89.0 2.1 14.1 1.7 0.2

88.5 2.1 14.6 2.0 0.2

87.7 2.1 15.0 2.0 0.2

87.1 2.0 15.3 1.7 0.2

86.6 1.9 15.6 1.4 0.2

86.1 1.9 15.8 1.5 0.2

85.6 1.9 16.2 1.5 0.2

–3.8 –7.3 15.1 –12.8 –4.0

L/person kg/person kg/person kg/person kg/person

30.3 2.6 6.1 0.4 0.2

32.8 2.7 5.9 0.3 0.2

23.9 2.6 5.7 0.4 0.2

23.4 2.7 5.7 0.4 0.2

30.0 2.5 5.8 0.4 0.2

30.7 2.5 5.9 0.4 0.2

31.2 2.5 5.9 0.4 0.2

31.8 2.5 5.9 0.4 0.2

32.4 2.6 5.9 0.4 0.2

32.3 2.6 6.0 0.4 0.2

38.2 –4.3 3.7 15.7 11.9

L/person kg/person kg/person kg/person kg/person

60.3 1.2 11.6 0.6 2.9

60.9 1.2 11.9 0.6 2.3

58.2 1.1 11.4 0.6 3.1

56.3 1.0 9.7 0.5 2.6

58.1 1.0 10.2 0.5 2.7

59.7 1.0 10.1 0.5 2.8

60.9 1.0 10.2 0.5 2.8

62.1 1.0 10.4 0.6 2.9

63.4 1.0 10.5 0.6 2.9

64.7 1.0 10.7 0.6 3.0

15.1 6.8 10.5 19.8 17.1

kg/person kg/person kg/person kg/person

0.5 2.7 0.6 2.2

0.5 2.7 0.6 2.2

0.5 2.7 0.4 1.9

0.5 2.8 0.4 1.8

0.4 2.8 0.5 1.9

0.5 2.8 0.5 1.9

0.5 2.9 0.5 1.9

0.5 2.9 0.5 2.0

0.5 3.0 0.5 2.0

0.5 3.1 0.5 2.1

10.5 11.1 11.2 11.6

L/person kg/person kg/person kg/person kg/person

4.2 0.1 0.2 0.1 0.4

4.4 0.1 0.2 0.1 0.4

4.5 0.1 0.2 0.1 0.4

6.0 0.1 0.2 0.1 0.5

6.8 0.1 0.2 0.1 0.5

7.0 0.1 0.2 0.1 0.5

7.3 0.1 0.2 0.1 0.5

7.7 0.1 0.2 0.1 0.5

8.0 0.1 0.2 0.1 0.5

8.5 0.1 0.2 0.1 0.6

40.8 34.2 38.6 21.8 22.7

kg/person kg/person kg/person kg/person

2.7 2.3 1.1 0.7

2.3 1.9 0.9 0.6

2.6 2.7 1.1 0.6

2.7 3.0 1.2 0.6

2.9 3.1 1.2 0.7

3.0 3.3 1.2 0.7

3.1 3.4 1.3 0.7

3.2 3.6 1.3 0.7

3.4 3.7 1.4 0.8

3.5 3.9 1.5 0.8

28.1 31.1 26.9 22.3

kg/person kg/person kg/person kg/person

0.6 0.4 0.1 0.3

0.7 0.4 0.1 0.2

0.7 0.5 0.3 0.3

0.7 0.5 0.3 0.2

0.7 0.5 0.3 0.2

0.7 0.5 0.3 0.1

0.7 0.5 0.3 0.1

0.7 0.5 0.3 0.1

0.7 0.5 0.3 0.1

0.7 0.5 0.3 0.1

0.0 0.0 0.0 –73.3

L/person kg/person kg/person kg/person kg/person

29.0 1.0 0.7 0.3 0.4

28.6 1.1 0.7 0.4 0.5

28.1 1.1 0.6 0.3 0.5

29.1 1.1 0.7 0.3 0.5

29.2 1.1 0.6 0.3 0.4

29.3 1.1 0.7 0.3 0.5

29.5 1.2 0.7 0.3 0.5

29.7 1.2 0.7 0.3 0.5

30.1 1.2 0.7 0.3 0.5

30.3 1.2 0.7 0.3 0.5

4.3 16.2 6.5 6.6 5.2

Calendar year

POLANDc Milk Butter Cheese SMP WMP UNITED STATES Milk Butter Cheese SMPd WMP OTHER OECDe Milkc Butter Cheese SMP WMP ARGENTINA Milk Butter Cheese SMP WMP BRAZIL Butter Cheese SMP WMP CHINA Milkf Butter Cheese SMP WMP RUSSIA Butter Cheese SMP WMP OIS Butter Cheese SMP WMP REST OF WORLDg Milkf Butter Cheese SMP WMP

Notes: a) Milk excludes on farm use. b) Year ended 30 June for Australia and 31 May for New Zealand. c) In Mexico, Switzerland, Turkey and Poland, on farm use is large. d) Excludes feed use. e) Includes Czech Republic, Norway, Slovak Republic, Switzerland and Turkey (and Korea for WMP). Excludes Iceland. f) Fluid milk and other dairy products not specified. g) Excludes OIS. p: provisional e : estimate. Source: OECD Secretariat.

© OECD 2003

179

Annex Table 31 – OTHER SELECTED COUNTRIES’ PROJECTIONS: BUTTER AND SMP Average 1997-01

2000

2001p

2002e

2003

2004

2005

2006

2007

2008

2002-2008 % growth

kt kt kt kt

64 41 24 1

64 42 22 1

65 42 24 1

65 44 25 4

67 44 25 2

66 44 23 1

66 45 22 1

66 45 22 1

66 46 21 1

66 46 21 1

1.5 4.5 –16.0 –75.0

kt kt kt kt

18 16 2 0

18 16 2 0

18 16 2 0

18 16 2 0

19 17 2 0

19 17 2 0

20 18 2 0

20 18 2 0

21 19 2 0

21 19 2 0

15.4 17.2 0.0 0.0

kt kt kt kt

16 14 2 0

16 14 2 1

17 16 2 1

15 14 2 1

15 13 2 1

15 13 2 1

15 13 2 1

15 13 2 1

15 13 2 1

14 13 2 1

–4.5 –8.4 33.3 0.0

kt kt kt kt

39 44 0 5

37 44 0 7

42 47 0 6

43 48 2 7

42 48 0 6

43 49 0 6

43 49 0 6

44 50 0 6

45 50 0 5

46 51 0 5

6.0 6.0 –100.0 –25.4

kt kt kt kt

127 131 0 4

133 137 0 4

132 133 0 1

136 138 0 2

120 125 0 5

122 127 0 5

124 129 0 5

126 131 0 5

128 133 0 5

130 135 0 5

–4.5 –2.3 .. 150.0

kt kt kt kt

35 8 27 0

35 5 29 0

40 5 35 0

36 5 31 0

36 7 30 1

36 8 30 2

37 10 30 3

37 11 30 4

38 13 30 5

38 14 30 6

5.6 180.0 –3.2 ..

kt kt kt kt

4 4 0 0

4 4 0 0

4 4 0 0

4 4 0 0

4 4 0 0

3 3 0 0

3 3 0 0

3 3 0 0

3 3 0 0

3 3 0 0

–28.9 –29.1 0.0 ..

kt kt kt kt

9 4 5 1

8 4 5 2

9 5 6 2

8 4 5 2

8 4 4 2

7 4 5 3

7 4 4 2

7 4 4 2

7 4 4 2

7 4 5 2

–3.9 2.8 –8.6 0.0

kt kt kt kt

27 19 8 0

22 14 9 0

20 18 2 0

26 18 8 0

24 18 6 0

23 18 6 0

22 18 4 0

20 18 2 0

18 18 0 0

18 18 0 0

–30.9 –0.2 –100.0 ..

kt kt kt kt

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

0 5 0 5

.. 0.0 .. 0.0

Calendar year

BUTTER CZECH REPUBLICa Production Consumption Exports Imports NORWAYb Production Consumption Exports Imports SLOVAK REPUBLICa Production Consumption Exports Imports SWITZERLANDb Production Consumption Exports Imports TURKEYa Production Consumption Exports Imports SMP CZECH REPUBLICa Production Consumption Exports Imports NORWAYb Production Consumption Exports Imports SLOVAK REPUBLICa Production Consumption Exports Imports SWITZERLANDb Production Consumption Exports Imports TURKEYa Production Consumption Exports Imports

Notes: a) Questionnaire response, summer 2002. b) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

180

© OECD 2003

Annex Table 32 – OTHER SELECTED COUNTRIES’ PROJECTIONS: WHEAT

CZECH REPUBLICb Production Consumption Feed use Food Exports Imports Ending stocks NORWAYc Production Consumption Feed use Food Exports Imports Ending stocks SLOVAK REPUBLICb Production Consumption Feed use Food Exports Imports Ending stocks SWITZERLANDc Production Consumption Feed use Food Exports Imports Ending stocks TURKEYb Production Consumption Feed use Food Exports Imports Ending stocks

2002-2008 % growth

Average 1997-01

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

kt kt kt kt kt kt kt

4 015 3 557 2 130 1 427 357 36 903

4 084 3 694 2 240 1 454 326 10 772

4 476 3 810 2 370 1 440 75 11 1 374

3 953 3 821 2 380 1 441 800 10 716

4 440 3 750 2 250 1 500 800 10 800

4 557 3 767 2 300 1 467 800 10 800

4 650 3 810 2 300 1 510 850 10 800

4 743 3 853 2 300 1 553 900 10 800

4 743 3 853 2 300 1 553 900 10 800

4 743 3 853 2 300 1 553 900 10 800

20.0 0.8 –3.4 7.8 12.5 0.0 11.7

kt kt kt kt kt kt kt

287 527 80 447 0 239 250

280 444 80 364 0 164 250

280 505 80 425 0 225 250

294 507 82 425 12 225 250

298 509 84 425 14 225 250

301 511 86 425 15 225 250

305 513 88 425 17 225 250

309 514 89 425 19 225 250

312 516 91 425 22 225 250

316 517 92 425 24 225 250

7.2 1.9 11.6 0.0 96.3 0.0 0.0

kt kt kt kt kt kt kt

1 602 1 525 706 819 69 58 260

1 254 1 385 622 764 10 206 177

1 894 1 552 600 952 70 2 451

1 754 1 513 600 913 467 0 225

1 829 1 482 606 876 426 0 145

1 879 1 495 608 886 383 0 146

1 935 1 505 609 896 432 0 144

1 958 1 515 609 906 442 0 145

1 981 1 527 611 916 453 0 146

2 001 1 538 611 926 464 0 146

14.1 1.6 1.9 1.4 –0.7 .. –35.0

kt kt kt kt kt kt kt

557 830 215 615 38 292 737

579 839 265 574 38 299 750

515 810 150 660 38 266 683

575 765 140 625 38 228 683

581 769 137 631 38 226 683

587 772 134 638 38 223 683

593 776 132 644 38 221 683

598 779 129 650 38 219 683

604 783 127 657 38 217 683

605 784 125 659 38 217 683

5.2 2.4 –10.7 5.4 0.0 –5.0 0.0

kt kt kt kt kt kt kt

16 249 16 591 1 260 15 331 2 110 2 226 1 033

17 220 16 750 1 400 15 350 2 438 1 968 500

15 580 16 800 1 400 15 400 2 200 3 420 500

17 775 16 973 1 086 15 887 4 222 3 420 500

17 775 16 973 1 086 15 887 4 222 3 420 500

18 060 17 211 1 086 16 125 4 289 3 420 480

18 349 17 452 1 086 16 366 4 357 3 420 440

18 642 17 696 1 086 16 610 4 427 3 420 380

18 941 17 944 1 086 16 858 4 498 3 420 299

19 244 18 195 1 086 17 109 4 571 3 420 197

8.3 7.2 0.0 7.7 8.3 0.0 –60.6

Crop yeara

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Questionnaire response, summer 2002. c) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

181

Annex Table 33 – OTHER SELECTED COUNTRIES’ PROJECTIONS: COARSE GRAINS Average 1997-01

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt kt kt kt kt kt kt

2 861 2 905 2 145 760 103 122 632

2 379 2 667 1 878 789 53 164 356

2 861 2 799 2 009 790 20 97 495

2 855 2 886 2 071 815 86 72 450

3 285 2 864 2 052 812 371 42 542

3 450 2 933 2 081 852 530 23 552

3 590 2 973 2 091 882 640 23 552

3 640 2 973 2 091 882 690 23 552

3 640 2 973 2 091 882 690 23 552

3 640 2 973 2 091 882 690 23 552

27.5 3.0 1.0 8.2 702.3 –68.1 22.7

kt kt kt kt kt kt kt

1 039 1 224 1 102 122 0 160 365

1 040 1 170 1 054 116 0 121 335

1 040 1 186 1 069 117 0 140 329

1 025 1 191 1 074 117 0 166 329

1 019 1 196 1 078 118 0 177 329

1 013 1 200 1 082 118 0 188 329

1 007 1 204 1 086 118 0 197 329

1 000 1 208 1 089 119 0 207 329

994 1 211 1 092 119 0 217 329

988 1 214 1 094 119 0 226 329

–3.6 1.9 1.9 1.9 .. 36.0 0.0

kt kt kt kt kt kt kt

1 518 1 424 1 001 423 186 94 280

927 1 165 734 431 30 365 252

1 565 1 446 912 534 66 52 357

1 766 1 783 1 184 599 41 27 326

1 777 1 599 986 614 307 15 211

1 834 1 714 1 034 681 134 17 213

1 879 1 728 1 041 688 179 30 214

1 874 1 712 1 020 692 192 28 212

1 893 1 763 1 051 713 156 26 212

1 892 1 770 1 037 733 147 24 212

7.2 –0.8 –12.4 22.2 257.9 –12.4 –35.0

kt kt kt kt kt kt kt

602 901 595 306 8 293 284

609 950 606 344 10 327 286

548 847 467 379 10 275 252

541 754 521 233 10 223 252

545 774 526 249 10 239 252

550 777 531 246 10 237 252

555 780 536 244 10 235 252

560 783 541 242 10 233 252

564 785 546 240 10 231 252

565 786 549 238 10 231 252

4.6 4.3 5.4 2.0 0.0 3.6 0.0

kt kt kt kt kt kt kt

10 067 10 196 8 754 1 442 550 812 2 047

10 142 10 543 9 060 1 484 196 741 2 093

9 588 9 744 8 336 1 408 219 588 2 306

9 707 10 068 8 424 1 644 219 581 2 306

9 707 10 068 8 424 1 644 219 581 2 306

9 826 10 181 8 513 1 668 219 574 2 306

9 948 10 296 8 604 1 692 219 567 2 306

10 071 10 411 8 694 1 717 219 559 2 306

10 195 10 528 8 786 1 742 219 552 2 306

10 321 10 647 8 879 1 767 219 544 2 306

6.3 5.7 5.4 7.5 0.0 –6.3 0.0

Crop yeara

CZECH REPUBLICb Production Consumption Feed use Food Exports Imports Ending stocks NORWAYc Production Consumption Feed use Food Exports Imports Ending stocks SLOVAK REPUBLICb Production Consumption Feed use Food Exports Imports Ending stocks SWITZERLANDc Production Consumption Feed use Food Exports Imports Ending stocks TURKEYb Production Consumption Feed use Food Exports Imports Ending stocks

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Questionnaire response, summer 2002. c) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

182

© OECD 2003

Annex Table 34 – OTHER SELECTED COUNTRIES’ PROJECTIONS: RICE Average 1997-01

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt kt kt kt kt

0 45 14 59 0

0 46 12 58 0

0 47 13 60 0

0 47 15 62 0

0 50 12 62 0

0 52 10 62 0

0 53 10 63 0

0 54 10 64 0

0 55 10 65 0

0 55 10 65 0

.. 17.0 –33.3 4.8 ..

kt kt kt kt kt

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

.. .. .. .. ..

kt kt kt kt kt

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

0 15 0 15 0

.. 0.0 .. 0.0 ..

kt kt kt kt kt

0 52 0 52 11

0 55 0 50 8

0 53 0 55 10

0 55 0 55 10

0 55 0 55 10

0 55 0 55 10

0 55 0 55 10

0 55 0 55 10

0 55 0 55 10

0 55 0 55 10

.. 0.0 .. 0.0 0.0

kt kt kt kt kt

195 491 2 298 45

210 513 2 305 45

208 509 4 305 45

208 509 0 301 45

208 509 0 301 45

208 509 0 301 45

208 509 0 301 45

208 509 0 301 45

208 509 0 301 45

208 509 0 301 45

0.0 0.0 .. 0.0 0.0

Crop yeara

CZECH REPUBLICb Production Consumption Exports Imports Ending stocks NORWAYc Production Consumption Exports Imports Ending stocks SLOVAK REPUBLICb Production Consumption Exports Imports Ending stocks SWITZERLANDc Production Consumption Exports Imports Ending stocks TURKEYb Production Consumption Exports Imports Ending stocks

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Questionnaire response, summer 2002. c) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

183

Annex Table 35 – OTHER SELECTED COUNTRIES’ PROJECTIONS: OILSEEDS Average 1997-01

Crop yeara

CZECH REPUBLICb Production Consumption Crush Feed Exports Imports Ending stocks NORWAYc Production Consumption Crush Feed Exports Imports Ending stocks SLOVAK REPUBLICb Production Consumption Crush Feed Exports Imports Ending stocks SWITZERLANDc Production Consumption Crush Feed Exports Imports Ending stocks TURKEYc Production Consumption Crush Feed Exports Imports Ending stocks

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt kt kt kt kt kt kt

851 620 542 78 260 26 11

913 632 540 92 299 19 0

1 049 692 643 49 381 23 0

1 053 710 660 50 361 18 0

1 053 750 700 50 321 18 0

1 053 790 700 90 281 18 0

1 053 835 700 135 236 18 0

1 053 835 700 135 236 18 0

1 053 835 700 135 236 18 0

1 053 835 700 135 236 18 0

0.0 17.6 6.1 170.0 –34.6 0.0 ..

kt kt kt kt kt kt kt

12 395 386 9 0 383 5

11 412 406 6 0 401 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

11 422 417 5 0 411 5

0.0 0.0 0.0 0.0 0.0 0.0 0.0

kt kt kt kt kt kt kt

297 200 176 24 110 13 0

256 176 154 21 84 4 0

369 214 179 35 162 7 0

349 257 200 57 97 5 0

403 257 203 54 149 3 0

406 255 199 56 154 3 0

412 259 202 57 156 3 0

419 262 204 58 159 3 0

418 267 207 60 154 3 0

434 270 210 60 167 3 0

24.2 5.0 4.9 5.1 72.0 –32.0 ..

kt kt kt kt kt kt kt

48 154 141 13 0 106 0

43 113 102 11 0 70 0

38 108 100 8 0 70 0

55 121 97 24 0 66 0

56 121 97 25 0 66 0

56 122 97 25 0 66 0

57 122 97 26 0 66 0

57 123 97 26 0 66 0

58 124 97 27 0 66 0

58 124 97 27 0 66 0

5.2 2.4 0.0 11.9 .. 0.0 ..

kt kt kt kt kt kt kt

885 1 684 1 674 10 3 814 272

845 1 850 1 826 24 2 935 359

701 1 400 1 397 3 2 506 164

701 1 727 1 397 330 2 1 028 164

701 1 727 1 397 330 2 1 028 164

701 1 727 1 397 330 2 1 028 164

701 1 727 1 397 330 2 1 028 164

701 1 727 1 397 330 2 1 028 164

701 1 728 1 397 331 2 1 029 164

701 1 729 1 397 332 2 1 030 164

0.0 0.1 0.0 0.6 0.0 0.2 0.0

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Questionnaire response, summer 2002. c) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

184

© OECD 2003

Annex Table 36 – OTHER SELECTED COUNTRIES’ PROJECTIONS: OILSEED MEALS Average 1997-01

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt kt kt kt kt

315 578 184 446 0

314 578 206 469 0

375 631 204 460 0

384 643 206 465 0

408 667 206 465 0

408 667 206 465 0

408 672 206 470 0

408 672 206 470 0

408 672 206 470 0

408 672 206 470 0

6.0 4.4 0.0 1.1 ..

kt kt kt kt kt

301 195 136 27 30

316 273 101 49 16

326 251 130 60 21

326 251 135 60 21

326 251 135 60 21

326 251 135 60 21

326 251 135 60 21

326 251 135 60 21

326 251 135 60 21

326 251 135 60 21

0.0 0.0 0.0 0.0 0.0

kt kt kt kt kt

101 179 54 132 0

89 123 56 91 0

103 160 29 85 0

115 194 51 130 0

117 198 50 132 0

114 202 46 133 0

116 199 49 132 0

117 202 48 133 0

119 212 48 141 0

120 215 48 143 0

4.9 10.6 –5.3 9.4 ..

kt kt kt kt kt

99 230 0 130 0

70 249 0 179 0

69 278 0 209 0

60 237 0 177 0

60 239 0 179 0

60 241 0 181 0

61 243 0 182 0

61 245 0 184 0

61 247 0 186 0

61 247 0 186 0

2.4 4.4 .. 5.1 ..

kt kt kt kt kt

894 1 462 7 574 0

874 1 524 7 657 0

880 1 400 10 530 0

880 1 400 10 530 0

880 1 400 10 530 0

880 1 400 10 530 0

880 1 400 10 530 0

880 1 400 10 530 0

880 1 400 10 530 0

880 1 400 10 530 0

0.0 0.0 0.0 0.0 ..

Marketing yeara

CZECH REPUBLICb Production Consumption Exports Imports Ending stocks NORWAYc Production Consumption Exports Imports Ending stocks SLOVAK REPUBLICb Production Consumption Exports Imports Ending stocks SWITZERLANDc Production Consumption Exports Imports Ending stocks TURKEYc Production Consumption Exports Imports Ending stocks

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Questionnaire response, summer 2002. c) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

185

Annex Table 37 – OTHER SELECTED COUNTRIES’ PROJECTIONS: VEGETABLE OILS Average 1997-01

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt kt kt kt kt

205 249 32 76 0

204 244 43 82 0

242 288 40 85 0

249 290 40 80 0

264 304 40 80 0

264 304 40 80 0

264 304 40 80 0

264 304 40 80 0

264 304 40 80 0

264 304 40 80 0

6.1 5.1 1.3 0.0 ..

kt kt kt kt kt

74 85 27 36 12

78 82 33 36 10

79 85 39 44 10

79 85 39 44 10

79 85 39 44 10

79 85 39 44 10

79 85 39 44 10

79 85 39 44 10

79 85 39 44 10

79 85 39 44 10

0.0 0.0 0.0 0.0 0.0

kt kt kt kt

68 78 11 22

60 82 7 29

69 77 15 23

77 88 10 20

78 88 11 20

77 85 12 21

78 86 13 21

79 85 14 21

80 85 16 20

81 86 15 20

5.0 –2.2 61.0 0.0

kt kt kt kt kt

39 77 10 49 2

31 85 2 56 2

29 89 2 62 2

30 86 2 58 2

31 87 2 58 2

31 87 2 58 2

31 87 2 58 2

31 87 2 58 2

31 87 2 58 2

31 87 2 58 2

3.2 1.1 0.0 0.0 0.0

kt kt kt kt kt

591 1 093 36 533 54

647 1 154 24 511 40

474 1 011 15 552 40

474 1 026 15 568 40

474 1 042 15 584 40

474 1 058 15 600 40

474 1 075 15 616 40

474 1 092 15 633 40

474 1 108 15 650 40

474 1 126 15 667 40

0.0 9.7 0.0 17.5 0.0

Marketing yeara

CZECH REPUBLICb Production Consumption Exports Imports Ending stocks NORWAYc Production Consumption Exports Imports Ending stocks SLOVAK REPUBLICb Production Consumption Exports Imports SWITZERLANDc Production Consumption Exports Imports Ending stocks TURKEYc Production Consumption Exports Imports Ending stocks

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Questionnaire response, summer 2002. c) OECD estimates. p: provisional; e : estimate. Source: OECD Secretariat.

186

© OECD 2003

Annex Table 38 – MAIN POLICY ASSUMPTIONS FOR SUGAR MARKETS Crop yeara

Average 97/98-01/02

MAIN ASSUMPTIONS FOR SUGAR MARKETS ARGENTINA Tariff, sugar ARS/t 35.0 BRAZIL Tariff, raw sugar % 46.1 Tariff, white sugar % 61.0 CANADA Tariff, raw sugar CAD/t 25.0 Tariff, white sugar CAD/t 36.7 CHINA TRQ sugar kt .. Tariff, in-quota, raw sugar % 20.0 Tariff, in-quota, white sugar % 30.0 Tariff, over-quota % .. EUb Intervention price, white sugar Euro/t 632 A quota, white sugar kt rse 12 837 B quota, white sugar kt rse 2 896 Tariff, raw sugar Euro/t 356 Tariff, white sugar Euro/t 440 INDIA Intervention price, raw sugar INR/t 558 INDONESIA Tariff % 103 JAPAN Minimum stabilisation price, raw sugar JPY/kg 142 Tariff, raw sugar JPY/kg 74.3 Tariff, white sugar JPY/kg 106.7 KOREA Tariff % 20.9 MEXICO Tariff % 165 NAFTA, common external tariff, raw sugar MXN/t .. NAFTA, common external tariff, white sugar MXN/t .. RUSSIA Tariff, raw sugar % 2.6 Tariff, white sugar % 27.0 TRQ, raw sugar kt rse .. UNITED STATESb Loan rate, cane sugar USD/t 397 Loan rate, white sugar USD/t 505 TRQ, raw sugar kt rse 1 227 TRQ, refined sugar kt rse 22 Raw sugar second tier tariff – over quota USD/t 351 White sugar second tier tariff – over quota USD/t 370

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

35.0

35.0

35.0

35.0

35.0

35.0

35.0

35.0

35.0

43.9 55.0

41.7 55.0

39.4 45.0

37.2 40.0

35.0 35.0

35.0 35.0

35.0 35.0

35.0 35.0

35.0 35.0

24.1 35.4

24.1 35.4

24.1 35.4

24.1 35.4

24.1 35.4

24.1 35.4

24.1 35.4

24.1 35.4

24.1 35.4

1 680 20.0

1 680 20.0

1 764 20.0

1 852 20.0

1 945 15.0

1 945 15.0

1 945 15.0

1 945 15.0

1 945 15.0

30.0 75.0

30.0 75.0

30.0 75.0

30.0 75.0

15.0 50.0

15.0 50.0

15.0 50.0

15.0 50.0

15.0 50.0

632 12 517 2 824 339 419

632 12 846 2 896 339 419

632 12 846 1 997 339 419

632 12 846 1 997 339 419

632 12 846 1 997 339 419

632 12 846 1 997 339 419

632 12 846 1 997 339 419

632 12 846 1 997 339 419

632 12 846 1 997 339 419

595

620

620

620

620

620

620

620

620

101

100

98

97

95

95

95

95

95

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

142 71.8 103.1

20.3

19.7

19.1

18.6

18.0

18.0

18.0

18.0

18.0

163

161

159

158

156

156

156

156

156

3 209

3 172

3 278

3 452

3 452

3 542

3 631

3 709

3 787

3 376

3 337

3 448

3 632

3 632

3 726

3 819

3 902

3 983

5.0 30.0 3 650

5.0 30.0 3 650

5.0 30.0 3 650

5.0 30.0 3 950

5.0 30.0 3 950

5.0 30.0 3 950

5.0 30.0 3 950

5.0 30.0 3 950

5.0 30.0 3 950

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

397 505 1 223 22

339

339

339

339

339

339

339

339

339

357

357

357

357

357

357

357

357

357

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Price based special safeguard actions apply. The source for tariffs (except United States and Russia) is the International Sugar Organisation, MECAS(99)16, mainly bound tariffs. The source for Russia and United States tariffs is ERS, USDA. rse : raw sugar equivalent Source: OECD Secretariat.

© OECD 2003

187

Annex Table 39 – WORLD SUGAR PROJECTIONS (in raw sugar e quivale nt)

OECD Production Consumption Closing stocks NON-OECD Production Consumption Net tradeb Closing stocks WORLD Production Consumption Closing stocks Price, raw sugarc Price, white sugard

2002-2008 % growth

Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

kt rse kt rse kt rse

42 681 39 360 13 159

42 687 39 590 14 366

39 392 39 938 10 652

43 170 40 134 10 627

42 951 40 010 10 514

43 251 40 374 10 373

43 563 40 649 10 494

43 941 40 823 10 855

44 724 41 082 11 558

44 750 41 319 12 019

3.7 3.0 13.1

kt rse kt rse kt rse kt rse

90 675 90 754 –3 668 45 279

88 476 92 054 –1 891 46 430

98 825 95 914 –3 167 52 507

99 974 98 466 –3 061 57 076

95 101 101 256 –3 055 56 977

100 861 103 724 –3 017 56 030

106 187 106 240 –2 792 55 469

106 483 109 397 –2 757 56 211

106 977 111 689 –2 940 56 239

109 198 114 144 –2 969 56 263

9.2 15.9 –3.0 –1.4

kt rse kt rse kt rse USD/t USD/t

133 356 130 114 58 438 190.0 236.4

131 164 131 643 60 795 219.3 252.3

138 217 135 852 63 160 167.2 235.3

143 144 138 600 67 704 165.3 238.1

138 052 141 265 67 490 172.0 242.5

144 112 144 099 66 403 191.8 260.1

149 749 146 890 65 963 183.0 249.1

150 423 150 220 67 066 174.2 238.1

151 701 152 770 67 797 169.8 231.5

153 948 155 463 68 281 165.3 224.9

7.5 12.2 0.9 0.0 –5.6

Crop yeara

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Non-OECD net exports (imports) equal OECD net imports (exports). c) Raw sugar world price, New York No. 11, f.o.b. stowed Caribbean port (including Brazil), bulk spot price, sep/aug. d) Refined sugar price, London No. 5 , f.o.b. Europe, spot, sept/aug. p: provisional; e : estimate. Source: OECD Secretariat.

188

© OECD 2003

Annex Table 40 – SUGAR PROJECTIONS (in raw sugar e quivale nt) Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt rse kt rse kt rse kt rse kt rse AUD/t

5 042 1 087 3 801 104 1 657 306.5

4 563 1 084 3 013 100 1 757 378.6

4 987 1 135 3 606 137 1 870 323.6

5 374 1 151 4 223 116 1 757 304.6

4 924 1 156 3 722 87 1 720 306.7

5 049 1 166 3 794 95 1 717 342.1

5 249 1 175 3 846 107 1 842 338.5

5 557 1 182 4 036 142 2 042 327.8

5 835 1 188 4 297 222 2 174 324.7

6 033 1 200 4 463 284 2 265 321.5

12.3 4.2 5.7 143.7 28.9 5.6

kt rse kt rse kt rse kt rse kt rse

107 1 110 39 1 242 206

121 1 186 58 1 243 268

87 1 093 35 1 255 210

87 1 136 113 1 269 262

87 1 106 97 1 279 255

93 1 118 97 1 286 252

93 1 124 108 1 294 257

87 1 156 89 1 301 259

94 1 169 93 1 306 259

92 1 197 75 1 312 265

5.5 5.3 –33.1 3.4 1.3

kt rse kt rse kt rse kt rse kt rse

17 969 1 701 14 318 5 977 4 376

18 068 1 624 14 305 6 203 4 837

16 055 1 647 14 592 6 060 2 006

18 536 1 675 14 465 5 892 1 940

18 340 1 725 14 451 5 801 1 841

18 346 1 758 14 436 5 853 1 752

18 244 1 846 14 422 5 847 1 678

18 127 1 956 14 407 5 841 1 626

18 236 2 074 14 393 5 835 1 828

17 871 2 198 14 379 5 830 1 819

–3.6 31.2 –0.6 –1.1 –6.3

kt rse kt rse kt rse ’000JPY/t

868 1 549 2 432 132.0

781 1 537 2 428 122.0

903 1 524 2 431 120.0

848 1 628 2 474 119.3

846 1 619 2 471 123.7

843 1 630 2 469 124.7

855 1 624 2 437 122.7

857 1 548 2 406 121.9

849 1 558 2 404 123.4

845 1 549 2 401 125.7

–0.4 –4.8 –2.9 5.4

kt rse kt rse kt rse kt rse

1 445 1 115 336 369

1 483 1 239 310 366

1 541 1 290 320 298

1 745 1 320 351 371

1 680 1 351 337 364

1 678 1 371 323 347

1 730 1 397 339 343

1 772 1 430 349 335

1 822 1 463 361 333

1 851 1 496 374 315

6.1 13.3 6.5 –15.2

kt rse kt rse kt rse kt rse

5 174 4 517 143 1 779

5 236 4 533 73 2 150

5 168 4 758 441 2 100

5 200 4 849 351 2 080

5 165 4 671 407 2 139

5 323 4 869 456 2 106

5 500 5 016 545 2 016

5 596 5 132 450 2 011

5 867 5 236 503 2 114

6 083 5 294 538 2 342

17.0 9.2 53.4 12.6

kt rse kt rse kt rse

2 069 1 739 570

2 188 1 725 577

1 674 1 725 561

2 065 1 730 666

2 264 1 738 755

2 018 1 750 657

1 917 1 757 563

1 913 1 717 565

1 917 1 730 569

1 915 1 735 571

–7.2 0.3 –14.3

kt rse kt rse kt rse kt rse kt rse USD/t USD/t

7 628 1 565 9 100 129 1 940 460.0 538.8

7 934 1 271 9 223 101 2 142 461.0 480.3

7 285 1 305 8 982 80 1 707 453.7 559.1

7 412 1 500 9 043 109 1 506 444.7 540.1

7 650 1 318 8 976 109 1 427 502.8 610.8

7 849 1 405 9 083 103 1 533 479.6 582.5

7 938 1 517 9 174 100 1 754 463.4 562.9

8 041 1 561 9 245 144 2 007 463.4 562.9

8 104 1 581 9 336 122 2 273 463.7 563.1

8 064 1 675 9 436 150 2 464 463.9 563.4

8.8 11.6 4.3 37.1 63.7 4.3 4.3

Crop yeara

AUSTRALIA Production Consumption Exports, raw sugar Exports, white sugar Closing stocks Price, raw sugarb CANADA Production Imports, raw sugar Imports, white sugar Consumption Closing stocks EU 15 Production Imports, raw sugarc Consumption Exports, white sugarc Closing stocks JAPAN Production Imports, raw sugar Consumption Price, whited KOREA Imports, raw sugar Consumption Exports, white sugar Closing stocks MEXICO Production Consumption Exports, raw sugar Closing stocks POLAND Production Consumption Closing stocks UNITED STATES Production Imports, raw sugar Consumption Exports, white sugar Closing stocks Price, rawe Price, whitef

For notes, see end of the table. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

189

Annex Table 40 – SUGAR PROJECTIONS (in raw sugar e quivale nt) (cont.) Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt rse kt rse kt rse kt rse

3 825 3 810 –15 687

3 798 3 811 13 524

3 232 3 771 539 349

3 648 3 833 185 384

3 676 3 916 240 435

3 730 3 944 214 515

3 767 3 977 210 636

3 763 4 002 240 679

3 822 4 026 205 776

3 848 4 067 219 860

5.5 6.1 18.8 124.0

kt rse kt rse kt rse kt rse kt rse

1 691 1 495 93 88 1 191

1 608 1 529 78 91 1 143

1 585 1 493 61 91 1 085

1 608 1 449 62 115 1 067

1 592 1 491 84 104 981

1 678 1 512 77 104 967

1 796 1 539 83 110 1 032

1 761 1 595 86 104 1 009

1 805 1 621 92 111 992

1 882 1 645 95 117 1 020

17.1 13.5 52.6 1.4 –4.4

kt rse kt rse kt rse kt rse kt rse BRL/t BRL/t

19 610 9 303 5 913 4 041 4 882 306.7 385.2

18 133 9 317 5 881 3 099 4 965 401.4 461.7

22 286 9 491 6 803 5 857 5 100 394.2 554.8

22 563 9 668 4 667 7 865 5 463 489.5 704.9

19 947 9 903 5 369 4 079 6 059 583.8 823.4

23 338 10 097 7 423 5 749 6 127 606.4 822.5

28 241 10 249 9 949 7 178 6 993 608.5 828.4

27 698 10 490 10 670 7 452 6 078 601.7 822.5

28 700 10 801 10 582 7 590 5 804 605.8 826.1

29 751 11 110 10 596 7 859 5 990 610.4 830.2

31.9 14.9 127.1 –0.1 9.6 24.7 17.8

kt rse kt rse kt rse kt rse kt rse kt rse

8 370 649 103 8 694 361 2 170

6 739 705 184 8 697 177 1 109

9 236 1 153 124 9 120 416 2 077

10 326 751 169 9 670 565 3 083

9 500 948 206 9 914 314 3 505

9 310 971 286 10 166 305 3 596

9 124 1 009 326 10 355 261 3 433

9 215 1 116 398 10 550 426 3 181

9 307 1 188 457 10 826 366 2 936

9 463 1 300 550 11 020 553 2 672

–8.4 73.2 225.1 14.0 –2.3 –13.3

kt rse kt rse kt rse kt rse kt rse

3 724 699 2 936 36 565

3 592 679 2 923 8 470

3 775 657 2 636 168 869

3 300 684 2 784 178 648

3 277 686 2 476 178 585

3 245 688 2 422 178 541

3 180 691 2 379 178 474

3 450 693 2 564 178 489

3 726 695 2 853 178 489

3 875 698 2 981 178 508

17.4 2.0 7.1 0.0 –21.6

kt rse kt rse kt rse kt rse

18 166 16 910 516 11 361

20 107 17 403 1 168 13 823

20 140 18 084 1 002 14 872

19 551 18 740 815 14 874

18 786 19 484 1 056 13 080

21 847 20 070 1 080 13 737

23 037 20 672 862 15 201

23 822 21 167 997 16 819

22 867 21 661 1 003 16 982

22 351 22 264 998 16 031

14.3 18.8 22.5 7.8

kt rse kt rse kt rse kt rse kt rse

1 747 469 1 146 3 467 1 961

1 723 472 956 3 638 1 614

1 980 446 1 557 3 711 1 886

2 003 165 1 668 3 785 1 937

2 016 337 1 537 3 846 1 980

2 119 347 1 501 3 929 2 018

2 165 358 1 523 4 030 2 034

2 179 368 1 637 4 129 2 088

2 204 379 1 680 4 222 2 128

2 206 391 1 797 4 314 2 207

10.1 136.6 7.7 14.0 14.0

kt rse kt rse kt rse

1 917 2 129 45

1 687 2 195 75

1 793 2 145 2

1 740 2 095 76

1 757 2 119 126

1 791 2 144 137

1 843 2 164 107

1 890 2 180 73

1 932 2 205 83

1 952 2 222 97

12.2 6.1 28.5

kt rse kt rse kt rse kt rse kt rse

1 598 4 827 255 6 229 2 159

1 665 4 774 308 6 850 2 332

1 748 5 084 66 6 940 2 075

1 739 5 430 170 7 000 2 204

1 756 5 242 226 7 080 2 101

1 790 5 377 239 7 162 2 107

1 842 5 498 217 7 230 2 237

1 889 5 432 173 7 285 2 201

1 931 5 486 197 7 367 2 226

1 951 5 541 193 7 425 2 201

12.2 2.0 13.6 6.1 –0.1

Crop yeara

OTHER OECDg Production Consumption Net trade, raw sugar Net trade, white sugar ARGENTINA Production Consumption Exports, raw sugar Exports, white sugar Closing stocks BRAZIL Production Consumption Exports, raw sugar Exports, white sugar Closing stocks Price, raw sugarb Price, white sugarb CHINA Production Imports, raw sugar Imports, white sugar Consumption Exports, white sugar Closing stocks CUBA Production Consumption Exports, raw sugar Exports, white sugar Closing stocks INDIA Production Consumption Exports, white sugar Closing stocks INDONESIA Production Imports, raw sugar Imports, white sugar Consumption Closing stocks OIS Production Consumption Net trade RUSSIA Production Imports, raw sugar Imports, white sugar Consumption Closing stocks

For notes, see end of the table. p: provisional; e : estimate. Source: OECD Secretariat.

190

© OECD 2003

Annex Table 40 – SUGAR PROJECTIONS (in raw sugar e quivale nt) (cont.) Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

kt rse kt rse kt rse kt rse kt rse ZAR/t ZAR/t

2 644 1 527 939 286 1 061 1 179.1 1 479.4

2 557 1 642 1 012 194 1 098 1 543.9 1 776.2

2 568 1 599 1 082 184 1 065 1 346.0 1 894.2

2 714 1 614 1 016 321 1 092 1 340.0 1 929.6

2 739 1 638 1 098 353 1 007 1 406.6 1 983.7

2 770 1 664 1 105 259 1 014 1 579.1 2 141.8

2 796 1 712 1 104 146 1 113 1 580.4 2 151.7

2 812 1 736 1 081 288 1 085 1 574.6 2 152.7

2 833 1 770 1 152 156 1 104 1 576.4 2 149.6

2 879 1 802 1 208 231 1 007 1 576.2 2 143.7

6.1 11.6 18.9 –28.0 –7.8 17.6 11.1

kt rse kt rse kt rse kt rse kt rse THB/t THB/t

5 516 1 878 2 041 1 550 1 249 7 301 9 160

5 439 1 925 2 223 1 441 1 312 8 797 10 120

6 507 2 001 2 432 2 132 1 254 7 429 10 455

6 652 1 998 2 783 1 310 1 815 7 104 10 230

6 387 2 032 2 469 1 790 1 911 7 089 9 997

6 486 2 105 2 669 1 705 1 918 7 608 10 319

6 362 2 148 2 527 1 751 1 854 7 441 10 130

6 486 2 211 2 661 1 777 1 691 7 199 9 842

6 758 2 263 2 711 1 809 1 666 6 972 9 508

7 001 2 336 2 817 1 895 1 619 6 757 9 190

5.2 16.9 1.2 44.7 –10.8 –4.9 –10.2

kt rse kt rse kt rse kt rse kt rse

25 692 38 423 –2 227 –12 171 17 991

25 227 38 178 –1 728 –11 775 18 039

27 208 40 671 –2 840 –14 462 21 876

27 778 41 763 –1 313 –15 304 24 509

27 344 43 064 –1 208 –15 334 25 330

26 488 44 187 –3 226 –12 631 23 488

25 801 45 451 –5 252 –11 370 20 461

25 282 47 362 –6 179 –16 331 20 890

24 914 48 258 –6 475 –17 113 21 133

25 888 49 308 –6 532 –17 901 22 146

–6.8 18.1 397.4 17.0 –9.6

Crop yeara

SOUTH AFRICA Production Consumption Exports, raw sugar Exports, white sugar Closing stocks Price, raw sugarb Price, white sugarb THAILAND Production Consumption Exports, raw sugar Exports, white sugar Closing stocks Price, raw sugarb Price, white sugarb REST OF WORLD Production Consumption Net trade, raw sugar Net trade, white sugar Closing stocks

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. b) Export price, f.o.b. c) Excludes intra-EU 15 trade. d) White sugar, refined, lower price; Tokyo market. e) Raw sugar price, sept-aug New York No.14. f) Refined beet sugar price (Midwest), sept-aug. g) Includes Czech Republic, Hungary, New Zealand, Norway, Slovakia and Switzerland. p: provisional; e : estimate. Source: OECD Secretariat.

© OECD 2003

191

Annex Table 41 – SUGAR PER CAPITA CONSUMPTION PROJECTIONS (in raw sugar e quivale nt) Crop yeara

Australia Canada EU 15 Japan Kore a Me xico Poland Unite d State s Arge ntina Brazil China Cuba India Indone sia Russia South Africa Thailand Re st of World

kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person kg/person

Average 97/98-01/02

00/01

01/02p

02/03e

03/04

04/05

05/06

06/07

07/08

08/09

2002-2008 % growth

57.2 40.5 38.2 19.2 23.9 46.7 45.0 33.3 40.9 55.4 7.0 62.6 17.0 16.7 42.5 36.3 30.5 21.4

56.4 40.4 38.1 19.1 26.4 46.6 44.6 33.5 41.3 54.7 6.9 60.6 17.1 17.3 46.9 38.4 31.0 20.8

58.2 40.5 38.8 19.1 27.3 47.9 44.6 32.1 39.8 55.1 7.2 58.4 17.5 17.4 47.6 36.9 31.9 21.7

58.5 40.6 38.5 19.4 27.7 48.0 44.8 32.0 38.2 55.5 7.6 60.5 17.9 17.5 48.2 36.8 31.5 21.8

58.1 40.7 38.4 19.4 28.1 45.5 45.0 31.5 38.8 56.1 7.7 60.4 18.3 17.6 48.9 36.9 31.7 22.0

58.1 40.7 38.4 19.4 28.4 46.8 45.3 31.7 39.0 56.5 7.8 60.4 18.6 17.7 49.6 37.1 32.5 22.1

58.0 40.6 38.4 19.1 28.7 47.5 45.5 31.8 39.2 56.6 7.9 60.3 18.9 18.0 50.2 37.8 32.9 22.2

57.8 40.6 38.4 18.9 29.2 48.0 44.4 31.8 40.3 57.2 8.0 60.3 19.1 18.2 50.7 38.1 33.5 22.6

57.5 40.6 38.4 18.9 29.7 48.4 44.7 31.9 40.6 58.3 8.1 60.2 19.3 18.4 51.4 38.5 34.0 22.6

57.6 40.6 38.4 18.9 30.2 48.4 44.8 32.0 40.9 59.2 8.2 60.1 19.6 18.6 51.9 38.9 34.8 22.5

–1.5 –0.1 –0.3 –2.8 9.2 0.8 0.1 0.1 7.1 6.8 9.0 –0.6 9.7 6.1 7.7 5.7 10.4 3.4

Notes: a) Beginning crop marketing year – see the Glossary of Terms for definitions. p: provisional; e : estimate. Source: OECD Secretariat.

192

© OECD 2003

REFERENCES

Argentina Wheat production, export, price Coarse grains production, export, stocks and price Oilseed prices Oilseeds production, import export crush Vegetable oils production, import export Oilseed meals production, import export Rice production, exports, stocks and price

SAGPYA, Reply to OECD medium term questionnaire (Oct. 2002), Buenos Aires, Argentina. USDA (January 2003), PS&D Database, Washington DC.

Milk production, liquid sales, industrial use Milk, butter, cheese, SMP and WMP prices Butter production, export Cheese production, export SMP production, export WMP production, import export Whey powder, net trade

SAGPYA, Reply to OECD medium term questionnaire (Oct. 2002), Buenos Aires, Argentina. FAO, FAOSTAT PC database, Rome (2002).

Beef balance Poultry balance Pork balance Egg balance

SAGPYA, Reply to OECD medium term questionnaire (Oct. 2002), Buenos Aires, Argentina.

Pigmeat, poultry and beef meat price

EAP, Buenos Aires, Argentina.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

Australia Wheat production, feed use, trade, price Coarse grain production, feed use, trade, price Oilseed production, crush, trade, price Oilseed meal price Vegetable oils price Beef production, trade, price Pig meat production, trade, prices Poultry meat production, trade, prices Sheep meat production, trade, prices Milk production, liquid sales, industrial use, prices Butter production, trade, price Cheese production, trade, price SMP production, trade, price WMP production, trade

ABARE, Australian Commodity Statistics Bulletin 2002, Canberra.

Whey powder, net trade

ABARE, Reply to OECD medium term questionnaire, Canberra (August 2002).

Oilseed meals production, imports, feed use Vegetable oils production, imports Rice, production, exports Casein, net trade

USDA (November 2002), PS&D Database, Washington DC.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

© OECD 2003

193

Brazil Ministry of Agriculture, Reply to OECD medium term Wheat utilisation, supply, price questionnaire, Brasilia (November 2002). Coarse grains (except buckwheat, rye and other cereals) utilisation, supply, price Cotton, supply, price Soybean seed, meal and oil, utilisation, supply Sunflower, utilisation, consumption Beef utilisation, supply, price Pig meat utilisation, supply, prices Poultry meat utilisation, supply, prices Sheep meat utilisation, supply, prices Milk utilisation, liquid sales, industrial use, prices Butter utilisation, supply, price Cheese utilisation, supply, price SMP utilisation, supply, price WMP utilisation, supply, price Buckwheat utilisation, supply Other cereals utilisation, supply Oilseeds, meal and oil prices Rapeseed , production, supply Sunflower, trade Palm oil, utilisation, supply

FAO, FAOSTAT PC database, Rome (2002).

Rye, utilisation, supply

USDA (2002), PS&D Database, Washington DC.

Canada Wheat production, exports, stocks, price Coarse grain production, exports, stocks, price Oilseed production, crush, exports, feed use, price Oilseed meal production, imports, exports, price Vegetable oils production, imports, exports, price Beef production, imports, exports, price Pig meat production, exports, price Poultry meat production, imports, price Sheep meat production, imports, price Milk production, liquid sales, industrial use, prices, target return Dairy subsidy Butter production, exports, price, support price Cheese production, imports SMP production, exports, price

Agriculture and Agri-Food Canada (January 2003), CANSIM Database, Ottawa.

Whey powder net trade

FAO, FAOSTAT PC database, Rome (2002).

Consumption of all products

Calculated as production + imports – exports – change in stocks.

194

© OECD 2003

China Wheat balance, price Coarse grains price Rice balance, price Oilseed balance, price Beef balance, price Pig meat balance, price Poultry balance, price Milk price Coarse grains production, imports, exports, stocks Soybean oil balance Rapeseed meal balance Rapeseed oil balance

USDA China team, Washington DC.

Palm oil balance

USDA (January 2003), PS&D Database, Washington DC.

Milk production, industrial use, other use Whey powder net trade Butter production, imports, exports Cheese production, imports, exports SMP imports WMP imports, exports

FAO, FAOSTAT PC database, Rome (2002).

Consumption of all products

Calculated as production + imports – exports – change in stocks.

European Union Wheat price Coarse grain price Rice price Poultry meat price Sheep meat price Milk price

EUROSTAT (2002), OECD PSE database (2002), Meat and Livestock Commission, European Market survey, 2002.

Pig meat price

Meat and Livestock Commission, European Market survey, 2002.

Oilseed price Oilseed meal price Vegetable oil price

ISTA Mielke GmbH, Oil World Annual 2002, Hamburg.

EU Commission, Reply to OECD medium term questionnaire, Wheat production, exports, stocks Brussels (January 2003). Coarse grains production, exports, stocks Rice production, imports, stocks Oilseeds production Beef and veal production, exports, imports, stocks, male bovine premium Pig meat production, exports, imports, stocks Poultry meat production, exports, imports, stocks Sheep meat production, imports Butter production, imports, exports, stocks Cheese production, imports, exports, stocks SMP production, imports, exports, stocks Oilseed crush, imports, stocks Oilseed meals production, imports, exports, stocks Vegetable oils production, imports, exports, stocks

ISTA Mielke GmbH, Oil World Statistics 2002, Hamburg.

Butter price Cheese price SMP price

Agra Europe (2002), Milk Products, London.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

© OECD 2003

195

Hungary Wheat production, exports, price Coarse grains production, exports, stocks, price Oilseed production, crush, exports, price Oilseed meals production, imports, price Vegetable oils production, imports Beef and veal production and price Pig meat production, exports, price Poultry meat production, imports, price Butter production, exports, price Cheese production, exports, price SMP production

USDA (October/November 2002), PS&D Database, Washington DC. Reply to OECD medium term questionnaire (October 2002), Budapest.

Milk production, liquid sales, industrial use, price Whey Powder net trade

FAO, FAOSTAT PC database, Rome (2002).

Consumption of all products

Calculated as production + imports – exports – change in stocks.

Japan Wheat price Coarse grain price Oilseed price Oilseed meal price Oilseed meal imports

MAFF, Monthly Statistics of Agriculture Forestry and Fisheries (various issues) – Japan, Tokyo.

Wheat production, imports, stocks Coarse grain production, imports, stocks Rice production, imports, stocks Oilseed production, crush, imports, stocks Oilseed meal production Vegetable oil production, imports, stocks

MAFF, Food balance sheet, Japan, Tokyo.

Beef production, imports, price Pig meat production, imports, price Sheepmeat imports Poultry meat production, imports, price Milk production, fluid sales, industrial use, price, support price, transaction price, deficiency payment Butter production, imports, price, stabilisation price Cheese production, imports, price SMP production, imports, price, stabilisation price WMP production

MAFF, Monthly Statistics of Agriculture Forestry and Fisheries (various issues) – Japan, Tokyo. ALIC, Monthly Statistics (various issues), Japan, Tokyo. USDA PS&D Database, Washington DC.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

196

USDA PS&D Database, Washington DC.

© OECD 2003

Korea Wheat price Coarse grains price Rice price Oilseed price

Replies to OECD medium term questionnaire, Seoul, (September 2002).

Wheat imports Coarse grains production, imports, stocks Rice production, imports, stocks Oilseed production, crush, imports Oilseed meals production, imports Vegetable oils production, imports

MAFF, Statistical Yearbook (2002) and FAO, FAOSTAT PC database, Rome (2002).

Beef production, imports, price Pig meat production, net trade, price Poultry meat production, imports, price Milk production, liquid sales, industrial use Butter production, imports Cheese production, imports SMP production, imports

Replies to OECD medium term questionnaire, Seoul, (September 2002).

Whey Powder net trade

FAO, FAOSTAT PC database, Rome (2002).

Consumption of all products

Calculated as production + imports – exports – change in stocks.

Mexico Wheat production, price Coarse grains production, price Oilseed production, price Beef production, price Pig meat production, price Poultry meat production, price Sheep meat production, price Rice production, export, stocks and price

SAGAR, Reply to OECD medium term questionnaire (August 2002), Mexico City. CEA (Centro de Esta distica Agropecuaria), SAGAR, Mexico City. USDA (January 2003), PS&D Database, Washington DC and FAS reports.

Butter production SMP production

FAO, FAOSTAT PC database, Rome (2002).

Wheat support price Maize support price Cereal income payment Oilseed support price Soyabean income payment

SAGAR (2002), Reply to OECD medium term questionnaire (August 2002), Mexico City.

Milk production, price Milk liquid sales, industrial use Butter price Cheese price SMP price WMP price

SAGAR, Medium Term Questionnaire Reply (August 2002), Mexico City.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

© OECD 2003

197

New Zealand Wheat production, imports, price Coarse grain production, price Beef production, exports, price Pig meat production, imports, price Poultry meat production, price Sheep meat production, exports, prices Milk production, liquid sales, industrial use, prices Butter production, exports, price Cheese production, exports, price SMP production, exports, price WMP production, consumption, exports, price Casein price

MAF, Reply to OECD Questionnaire, Wellington, (September 2002).

Wheat feed use Coarse grain imports, feed use Butter consumption SMP consumption Whey powder net trade

FAO, FAOSTAT PC database, Rome (2002).

Casein, exports

USDA (January 2003), PS&D FAO.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

Poland Wheat production, imports Coarse grains production, imports Oilseed production, crush, imports Oilseed meals production, imports Vegetable oils production, imports Pig meat production, exports, price Poultry meat production, imports, price Cheese exports

IERIGZ(86-96). USDA (September/October 2002), PS&D Database,

Milk production, on farm use liquid sales, industrial use, price Butter production, exports, imports, price Cheese price SMP production, exports price

WTO (81-84), GUS (88-90), IERIGZ (91-96), Reply to OECD medium term questionnaire Warsaw, (September 2002).

Casein exports

USDA (September/October 2002), PS&D Database, Washington DC.

Cheese production Whey powder net trade

GUS (89-95), IERIGZ (96), FAO FAOSTAT PC Database, Rome (2002).

Wheat price Coarse grains price Oilseed price Oilseed meals price Vegetable oils price Beef production, price

GUS (86-96). Reply to OECD medium term questionnaire Warsaw, (September 2002).

Consumption of all products

Calculated as production + imports – exports – change in stocks.

198

Washington DC.

Reply to OECD medium term questionnaire Warsaw, (September 2002).

© OECD 2003

Russia Wheat production, imports, exports, ending stocks Coarse grains production, imports, exports, ending stocks Oilseed production, crush, imports, exports Oilseed meals production, imports, exports Vegetable oils production, imports, exports Rice production, imports, exports

USDA (January 2003), PS&D Database, Washington DC.

Beef production, imports Pig meat production, imports

FAO, FAOSTAT PC database (2002), Rome.

Poultry meat production, imports

USDA (January 2003), PS&D Database, Washington DC.

Milk production

FAO, FAOSTAT PC database (2002), Rome.

Butter production, imports Cheese production, imports SMP production, imports, exports WMP production, imports

USDA (January 2003), PS&D Database, Washington DC.

Consumption of wheat, coarse grain, rice, oilseeds, oilseed meals, vegetable oils, beef, pig meat, poultry meat, sheep meat, butter, cheese, SMP and WMP

Calculated as production – imports + exports – change in stocks.

Prices

OECD PSE database (2003).

United States Wheat production, imports, exports, stocks, price, EEP payment

USDA, Wheat Outlook (January 2003), Washington DC.

Coarse grains production, exports and price Rice production, imports, exports, stocks and price

USDA, Feed Outlook (January 2003), Washington DC. USDA, Rice Outlook (January 2003), Washington DC.

Beef production, imports, exports, price Pig meat production, imports, exports, price Poultry meat production, exports, price Sheep meat production, imports, price

USDA, Livestock, Dairy and Poultry (January 2003), Washington DC.

Milk production, liquid sales, industrial use, support price, prices Butter production, exports, stocks, price Cheese production, imports, exports, price SMP production, exports, stocks, price

USDA, Livestock, Dairy and Poultry (January 2003), Washington DC.

WMP production, exports, stocks Whey powder production, exports, price

USDA Dairy Yearbook (2002), Washington DC.

Casein imports

USDA (January 2003), PS&D Database, Washington DC.

Oilseed production, crush, exports, and price Oilseed meals production, imports, exports and price Vegetable oils production, imports, exports, stocks and price

USDA, Oil Crops Outlook (January 2003), Washington DC.

Wheat target price, loan rate, ARP area, CRP area, other land idled Coarse grains ARP area, CRP area, other land idled Maize target price, loan rate Soyabean loan rate, CRP area

USDA, Agricultural Outlook (2003), Washington DC.

Consumption of all products

Calculated as production + imports – exports – change in stocks.

© OECD 2003

199

Other OECD Wheat production, consumption Coarse grains production, consumption Oilseed production, crush, consumption Oilseed meals production, consumption Vegetable oils production, consumption Rice production, consumption

Replies to OECD Questionnaires (September 2002). USDA (January 2003), PS&D Database, Washington DC.

Beef production, consumption Pig meat production, consumption Poultry meat production, consumption Sheep meat production, consumption

Replies to OECD Questionnaires (September 2002). USDA (January 2003), PS&D Database, Washington DC.

Milk production, on farm use, liquid sales, industrial use Butter production, consumption Cheese production, consumption SMP production, consumption WMP production, consumption

Replies to OECD Questionnaires (September 2002).

Net trade in wheat, coarse grain, rice, oilseeds, oilseed Calculated as production – consumption – change in stocks. meals, vegetable oils, beef, pig meat, poultry meat, sheep meat, butter, cheese, SMP and WMP

OECD Production of wheat, coarse grains, rice, oilseeds, oilseed meals, vegetable oils, butter, cheese, SMP, WMP Consumption of wheat, coarse grains, rice, oilseeds, oilseed meals, vegetable oils, butter, cheese, SMP, whole milk powder Imports of butter, cheese, SMP, WMP Exports of butter, cheese, SMP, WMP Stocks of wheat, coarse grains, rice, oilseeds, oilseed meals, vegetable oils, butter, cheese, SMP Feed use of wheat, coarse grains Oilseed crush

Calculated as Australia + Canada + EU + Japan + New Zealand + United States + Mexico + Korea + Poland + Hungary + other OECD.

Rest of World Wheat production, stocks Coarse grains production, stocks Rice production, stocks Oilseed production, crush, stocks Oilseed meals production, stocks Vegetable oils production, stocks

USDA (December 2002), PS&D Database, Washington DC.

Net trade of wheat, coarse grains, rice, oilseeds, oilseed Calculated as – net trade of (OECD + RUS + Other Independent States + Brazil + China + Argentina) meals, vegetable oils, butter, cheese, SMP, WMP, whey powder Milk production, industrial use, other uses Butter production Cheese production SMP production WMP production

Calculated as World – (OECD + RUS + Other Independent States + Argentina + Brazil + China).

Consumption of all products

Calculated as production – net trade – change in stocks.

200

© OECD 2003

Chinese Tapei, India Rice production, stocks

USDA (December 2002) PS&D Database, Washington DC.

Indonesia Rice production, imports, stocks Thailand Rice production, exports, stocks Chinese Taipei, India, Indonesia, Thailand Rice price

University of Arkansas rice database (2002), Fayetteville, USA. USDA FAS reports (various issues), Washington DC. IRRI World Rice Statistics (various issues), Makati, Philippines.

Consumption of all products

Calculated as production – net trade – change in stocks.

OIS (Other Independent States) Wheat production, net trade, ending stocks Coarse grains production, net trade, ending stocks Rice production, net trade Oilseed production, crush, net trade, ending stocks Oilseed meals production, net trade Vegetable oils production, net trade

USDA (January 2003), PS&D Database, Washington DC for FSU. Calculated as FSU-RUS.

Butter production, net trade Cheese production, net trade SMP production, net trade WMP production, net trade

USDA (January 2003), PS&D Database, Washington DC for FSU. Calculated as FSU-RUS.

Consumption of wheat, coarse grain, rice, oilseeds, oilseed meals, vegetable oils, beef, pig meat, poultry meat, sheep meat, butter, cheese, SMP and WMP

Calculated as production – net trade – change in stocks.

World Wheat production, feed use, stocks Coarse grains production, feed use, stocks Rice production, stocks Oilseed production, crush, stocks Oilseed meals production, stocks Vegetable oils production, stocks Butter, cheese, skim milk powder, stocks

Calculated as Rest of world + OECD + Argentina + Brazil + China + OIS + Russia.

Production of butter, cheese, skim milk powder, whole milk powder

FAO, FAOSTAT PC database, Rome (2002).

Wheat price

USDA, Wheat Outlook , January 2003.

Coarse grains price

USDA, Feed Outlook, January 2003.

Rice price

USDA, Rice Outlook, January 2003.

Oilseed price Oilseed meals price Oilseed oils price Palm oil price

ISTA Mielke GmbH, Oil World Annual 2002, Hamburg.

Butter price SMP price

USDA, Dairy World Markets and Trade (December 2002), Washington DC.

© OECD 2003

201

Cheese price

USDA, Dairy World Markets and Trade (December 2002), Washington DC.

WMP price

USDA, Dairy World Markets and Trade (December 2002), Washington DC.

Whey powder price

USDA, Livestock, Dairy and Poultry (January 2002), Washington DC.

Casein price

New Zealand Dairy Board, International Market Update, Wellington.

Tariffs, tariff-quotas and subsidised export limits for OECD countries unless otherwise specified

GATT (1996), Uruguay Round GATT Schedules, Geneva.

Consumption of all products

Calculated as production – net trade – change in stocks.

Sugar Sugar production, raw and white exports, raw and white imports, consumption, stocks

FO Licht World Sugar Balances, 2002.

202

© OECD 2003

ANNEX II. GLOSSARY OF TERMS

Age nda 2000

A CAP reform package proposed by the European Commission in 1998. After a number of modifications, the European Union Heads of State agreed to a package of reforms in March 1999. Beginning in 2000, the package reduces price supports and increases direct payments for cereals and beef, while lowering oilseed direct payments (by harmonising them with cereals) and raising the milk quota. Dairy support price reductions and the introduction of new dairy direct payments are delayed until 2005, along with a second round of milk quota increase. The package is sometimes referred to as the “Berlin Agreement” to distinguish the agreement from the initial European Commission proposals.

AMAD

Agricultural Market Access database (www.amad.org). A co-operative effort between Agriculture and Agri-food Canada, EU Commission-Agriculture DirectorateGeneral, FAO, OECD, The World Bank, UNCTAD and the United States Department of Agriculture, Economic Research Service. Data in the database is obtained from countries’ schedules and notifications submitted to the WTO.

Atlantic be e f marke t

World beef market excluding the Pacific Rim beef trade.

Base line

The set of market projections used for the outlook analysis in this report and as a benchmark for the analysis of the impact of different economic and policy scenarios. A detailed description of the generation of the baseline is provided in the chapter on Methodology in this report.

Be rlin Agre e me nt

The CAP reform package to which European Union heads of state agreed in March 1999. Beginning in 2000, the package reduces price supports and increases direct payments for cereals and beef, while lowering oilseed direct payments (by harmonising them with cereal payments) and raising the milk quota. Dairy support price reductions and the introduction of new dairy direct payments are delayed until 2005, along with a second round of milk quota increase. Like the initial proposal by the European Commission which was not accepted, the agreement is often referred to as “Agenda 2000”.

Biofue l

See biomass fuel.

Biomass

Biomass is defined as any plant matter used directly as fuel or converted into other forms before combustion. Included are wood, vegetal waste (including wood waste and crops used for energy production), animal materials/wastes and other solid biomass.

Biomass fue l

Liquid, solid, or gaseous fuel produced by conversion of biomass. Examples include bioethanol from sugar cane or corn, charcoal or woodchips, and biogas from anaerobic decomposition of wastes.

Blair House Agre e me nt

An agreement on agriculture between the United States and the European Community in 1992 dealing mainly with limits on oilseed subsidies in the EU which paved the way for the Uruguay Round Agreement.

© OECD 2003

203

Bovine Spongiform Ence phalopathy (BSE)

A fatal disease of the central nervous system of cattle, first identified in the United Kingdom in 1986. On 20 March 1996 the UK Spongiform Encephalopathy Advisory Committee (SEAC) announced the discovery of a new variant of Creutzfeldt-Jacob Disease (vCJD), a fatal disease of the central nervous system in humans, which might be linked to consumption of beef affected by exposure to BSE.

Ce re als

Defined as wheat, coarse grains and rice.

Codex Alimentarius

The Codex Alimentarius Commission was created in 1963 by FAO and WHO to develop food standards, guidelines and related texts such as codes of practice under the Joint FAO/WHO Food Standards Programme. The main purposes of this Programme are protecting health of the consumers and ensuring fair trade practices in the food trade, and promoting coordination of all food standards work undertaken by international governmental and nongovernmental organizations.

Common Agricultural Policy (CAP)

The European Union’s agricultural policy, first defined in Article 39 of the Treaty of Rome signed in 1957.

Coarse grains

Defined as barley, maize, oats, sorghum and other coarse grains in all countries except Australia, where it includes triticale and in the European Union where it includes rye and other mixed grains.

Conse rvation Re se rve Program (CRP)

A major provision of the United States’ Food Security Act of 1985 and extended under the Food, Agriculture, Conservation and Trade Act of 1990, and the Food, Agriculture, Improvement and Reform Act of 1996, designed to reduce erosion on 40 to 45 million acres (16 to 18 million hectares) of farm land. Under the programme, producers who sign contracts agree to convert erodible crop land to approved conservation uses for ten years. Participating producers receive annual rental payments and cash or payment in kind to share up to 50% of the cost of establishing permanent vegetative cover. The CRP is part of the Environmental Conservation Acreage Reserve Program. The 1996 FAIR Act authorised a 36.4 million acre (14.7 million hectares) maximum under CRP, its 1995 level.

Commonwe alth of Inde pe nde nt State s (CIS)

The heads of eleven sovereign states (except the Baltic states) have signed the Treaty on establishment of the Economic Union, in which they stressed that the Azerbaijan Republic, Republic of Armenia, Republic of Belarus, Republic of Kazakstan, Kyrgyz Republic, Republic of Moldova, Russian Federation, Republic of Tajikistan, Republic of Uzbekistan and Ukraine on equality basis established the Commonwealth of Independent States.

Country-of-origin labe lling (CoOL)

Refers to the 2002 United States Farm Act which requires that by September 30, 2004, United States Department of Agriculture will implement a mandatory regulation for country-of-origin labelling.

Crop ye ar, coarse grains

Refers to the crop marketing year beginning 1 April for Japan, 1 July for the European Union and New Zealand, 1 August for Canada and 1 October for Australia. The US crop year begins 1 June for barley and oats and 1 September for maize and sorghum.

Crop ye ar, oilse e ds

Refers to the crop marketing year beginning 1 April for Japan, 1 July for the European Union and New Zealand, 1 August for Canada and 1 October for Australia. The US crop year begins 1 June for rapeseed, 1 September for soyabeans and for sunflower seed.

204

© OECD 2003

Crop ye ar, rice

Refers to the crop marketing year beginning 1 April for Japan, Australia, 1 August for the United States, 1 September for the European Union, 1 October for Mexico, 1 November for Korea and 1 January for other countries.

Crop ye ar, whe at

Refers to the crop marketing year beginning 1 April for Japan, 1 June for the United States, 1 July for the European Union and New Zealand, 1 August for Canada and 1 October for Australia.

Dairy Export Ince ntive Program (DEIP)

A US programme first authorised by the 1985 FSA Act under which the Commodity Credit Corporation subsidises exporters of US dairy products to help them compete with other subsidising nations. Eligible sales should be in addition to, and not displace, commercial export sales. The 1996 FAIR Act extended the programme to 2002.

De -couple d payme nts

Budgetary payments paid to eligible recipients which are not linked to current production of specific commodities or livestock numbers or the use of specific factors of production.

Dire ct payme nts

Payments made directly by governments to producers.

Doha De ve lopme nt Age nda

Mulitlateral trade negotiations in the World Trade Organisation that were initiated in November 2001, in Doha, Qatar.

Dome stic support

Refers to the annual level of support, expressed in monetary terms, provided to agricultural production. It is one of the three pillars of the Uruguay Round Agreement on Agriculture targeted for reduction.

Double -ze ro agre e me nt

In the double zero agreements, the EU and the CEEC typically agree to offer duty free quotas for a specific quantity of a given agricultural product, while anything above the quota is subject to duty. Further the EU and the CEEC agree not to use any export subsidies for the given agricultural product. Every agreement has been concluded bilaterally between the EU and each CEEC country and that, consequently, the contents of the agreements vary from one case to another.

Eve rything-But-Arms (EBA)

The Everything-But-Arms (EBA) Initiative eliminates EU import tariffs for numerous goods, including agricultural products, from the least developed countries. The tariff elimination is scheduled in four steps from 2006-07 to 2009-10.

Export cre dits (with official support)

Government financial support, direct financing, guarantees, insurance or interest rate support provided to foreign buyers to assist in the financing of the purchase of goods from national exporters.

Export Enhance me nt Program (EEP)

A US programme initiated in May 1985 under a Commodity Credit Corporation charter to subsidise the export of certain products to specified countries. The programme was formally authorised by the Food Security Act of 1985 and has been extended since under the Farm Act of 1990 and the FAIR Act of 1996. Under the EEP, exporters are awarded generic commodity certificates which are redeemable for commodities held in CCC stores, thus enabling them to sell commodities to designated countries at prices below those on the US market.

Export re stitutions (re funds)

EU export subsidies provided to cover the difference between internal prices and world market prices for particular commodities.

© OECD 2003

205

Export subsidie s

Subsidies given to traders to cover the difference between internal market prices and world market prices, such as for example the EU export restitutions and the US Export Enhancement Program (see above). Export subsidies are now subject to value and volume restrictions under the Uruguay Round Agreement on Agriculture.

FAIR Act, 1996

Officially known as the Federal Agriculture Improvement and Reform Act of 1996. This US legislation replaces the 1990 Farm Act and governs almost all aspects of food and agriculture policy during the period 1996-2002.

Foot and Mouth Dise ase (FMD)

Foot and mouth disease is a highly contagious disease, which chiefly affects cloven-hoofed animal species (cattle, sheep, goats and pigs). Its symptoms are the appearance of vesicles (aphthae) on the animals’ mouths (with a consequent reduction in appetite) and feet. It is caused by a virus which may be found in the animals’ blood, saliva and milk. The virus is transmitted in a number of ways, via humans, insects, most meat products, urine and faeces, feed, water or soil. Although the mortality rate in adult animals from this disease is generally low and the disease presents no risk for humans, because it is highly contagious, infected animals in a given country are generally put down and other countries place an embargo on imports of live animals and fresh, chilled or frozen meat from the country of infection; in that case, only smoked, salted or dried meat and meat preserves may be imported from the country concerned. In addition, given the possibility of contagion between different species of cloven-hoofed animals, when foot and mouth disease breaks out in one species in a given country, exports of meat from all four types of animal are suspended.

FSRI Act, 2002

Officially known as the Farm Security and Rural Investment Act of 2002. This US legislation replaces the FAIR Act of 1996, covering a wide range of policy aspects for the period 2002-2007.

Industrial oilse e ds

A category of oilseed production in the European Union for industrial use (i.e. bio-fuels) that is subject to subsidy limits.

Inte rve ntion purchase s

Purchases by the EC Commission of certain commodities to support internal market prices.

Inte rve ntion purchase price

Price at which the European Commission will purchase produce to support internal market prices. It usually is below 100% of the intervention price, which is an annually decided policy price.

Inte rve ntion stocks

Stocks held by national intervention agencies in the European Union as a result of intervention buying of commodities subject to market price support. Intervention stocks may be released onto the internal markets if internal prices exceed intervention prices; otherwise, they may be sold on the world market with the aid of export restitutions.

Loan de ficie ncy payme nts (Unite d State s)

Loan deficiency payments are a type of non-recourse loan whereby, for wheat, feed grain, upland cotton, rice and oilseeds, a producer may agree to forgo loan eligibility and receive an output subsidy, the rate of payment of which is the amount by which the applicable county’s loan rate exceeds the marketing loan repayment rate. Producers may elect to apply for this payment during the loan availability period on a quantity of the programme crop not exceeding their loan-eligible production.

206

© OECD 2003

Loan rate

The commodity price at which the Commodity Credit Corporation (CCC) offers non-recourse loans to participating farmers. The crops covered by the programme are used as collateral for these loans. The loan rate serves as a floor price for participating farmers in the sense that they can default on their loan and forfeit their crop to the CCC rather than sell it in the open market at a lower price.

Marke t acce ss

Governed by provisions of the Uruguay Round Agreement on Agriculture which refer to concessions contained in the country schedules with respect to b i n d i n g s a n d r e d u c t i o n s o f t a r i f fs a n d t o o t h e r m i n i m u m i m p o r t commitments.

Marke ting Assistance Loan Programme

US loan programme since 1986 designed to provide producers of certain crops with financial assistance when prices are low while avoiding a disadvantage of the traditional loan programme (see loan rate) – the accumulation of government stocks that depress prices when disposed of. The programme effectively guarantees farmers a minimum price. Farmers can obtain payments in two ways. They can sell the crop and repay the loan at the posted county price (a USDA estimate of the local market price) and keep the difference known as “marketing gain”. They can also obtain a payment without taking out a loan – see loan deficiency payments.

Marke ting ye ar, oil me al

Refers to the production year beginning 1 October for the United States.

Marke ting ye ar, oilse e d oil

Refers to the production year beginning 1 October for the United States.

MERCOSUR

A multilateral agreement on trade, including agricultural trade between Argentina, Brazil, Paraguay and Uruguay. The agreement was signed in 1991 and came into effect on 1 January 1995. Its main goal is to create a customs union between the four countries by 2006.

Marke t Price Support (MPS) Payme nt

Indicator of the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers arising from policy measures creating a gap between domestic market prices and border prices of a specific agricultural commodity, measured at the farm gate level. Conditional on the production of a specific commodity, MPS includes the transfer to producers associated with both production for domestic use and exports, and is measured by the price gap applied to current production. The MPS is net of financial contributions from individual producers through producer levies on sales of the specific commodity or penalties for not respecting regulations such as production quotas (Price levies), and in the case of livestock production is net of the market price support on domestically produced coarse grains and oilseeds used as animal feed (Excess feed cost).

Mid-Te rm Re vie w

The EU Commission has published a Communication on the Mid-Term Review on the Common Agricultural Policy in July 2002, in January 2003 the Commission adopted a formal proposal. While no decision has been made at the time this Outlook report is written, the proposal includes far-reaching amendments of current policies, including further reductions in support prices, partly offset by direct payments, and a further decoupling of most direct payments from current production.

Milk quota sche me

A supply control measure to limit the volume of milk produced or supplied. Quantities up to a specified quota amount benefit from full market price support.

© OECD 2003

207

Over-quota volumes may be penalised by a levy (as in the European Union, where the “super levy” is 115% of the target price) or may receive a lower price. Allocations are usually fixed at individual producer level. Other features, including arrangements for quota reallocation, differ according to scheme. Ne wly Inde pe nde nt State s (NIS)

Newly Independent States of the former Soviet Union.

Non-me mbe r Economie s

Countries outside of the OECD area or membership.

North Ame rican Fre e Trade Agre e me nt (NAFTA)

A trilateral agreement on trade, including agricultural trade, between Canada, Mexico and the United States, phasing out tariffs and revising other trade rules between the three countries over a 15-year period. The agreement was signed in December 1992 and came into effect on 1 January 1994.

Oilme al

Defined as rapeseed meal (canola), soyabean meal, and sunflower meal in all countries, except in Japan where it excludes sunflower meal.

Oilse e ds

Defined as rapeseed (canola), soyabeans, and sunflower seed in all countries, except in Japan where it excludes sunflower seed.

Pacific be e f marke t

Beef trade between countries in the Pacific Rim where foot and mouth disease is not endemic.

PROCAMPO

A programme of direct support to farmers in Mexico. It provides for direct payments per hectare on a historical basis.

Produce r Support Estimate (PSE)

Indicator of the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at farm gate level, arising from policy measure, regardless of their nature, objectives or impacts on farm production or income. The PSE measure support arising from policies targeted to agriculture relative to a situation without such policies, i.e. when producers are subject only to general policies (including economic, social, environmental and tax policies) of the country. The PSE is a gross notion implying that any costs associated with those policies and incurred by individual producers are not deducted. It is also a nominal assistance notion meaning that increased costs associated with import duties on inputs are not deducted. But it is an indicator net of producer contributions to help finance the policy measure (e.g. producer levies) providing a given transfer to producers. The PSE includes implicit and explicit payments. The percentage PSE is the ration of the PSE to the value of total gross farm receipts, measured by the value of total production (at farm gate prices), plus budgetary support. The nomenclature and definitions of this indicator replaced the former Producer Subsidy Equivalent in 1999.

Re course loan programme

Programme to be implemented under the US FAIR Act of 1996 for butter, nonfat dry milk and cheese after 1999 in which loans must be repaid with interest to processors to assist them in the management of dairy product inventories.

Sce nario

A model-generated set of market projections based on alternative assumptions than those used in the baseline. Used to provide quantitative information on the impact of changes in assumptions on the outlook.

Se t-aside programme

European Union programme for cereal, oilseed and protein crops that both requires and allows producers to set-aside a portion of their historical base

208

© OECD 2003

acreage from current production. Mandatory set-aside rates for commercial producers are set at 10% until 2006. SPS Agre e me nt

WTO Agreement on Sanitary and Phyto-sanitary measures, including standards used to protect human, animal or plant life and health.

Support price

Prices fixed by government policy makers in order to determine, directly or indirectly, domestic market or producer prices. All administered price schemes set a minimum guaranteed support price or a target price for the commodity, which is maintained by associated policy measures, such as quantitative restrictions on production and imports; taxes, levies and tariffs on imports; export subsidies; and public stockholding.

Tariff-rate quota (TRQ)

Resulted from the Uruguay Round Agreement on Agriculture. Certain countries agreed to provide minimum import opportunities for products previously protected by non-tariff barriers. This import system established a quota and a two-tier tariff regime for affected commodities. Imports within the quota enter at a lower (in-quota) tariff rate while a higher (out-of-quota) tariff rate is used for imports above the concessionary access level.

Uruguay Round Agre e me nt on Agriculture (URAA)

The terms of the URAA are contained in the section entitled the “Agreement on Agriculture” of the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations. This text contains commitments in the areas of market access, domestic support (see AMS), and export subsidies, and general provisions concerning monitoring and continuation. In addition, each country’s schedule is an integral part of its contractual commitment under the URAA. There is a separate agreement entitled the Agreement on the Application of Sanitary and Phyto-sanitary Measures. This agreement seeks establishing a multilateral framework of rules and disciplines to guide the adoption, development and the enforcement of sanitary and phyto-sanitary measures in order to minimise their negative effects on trade. See also Phytosanitary regulations and Sanitary regulations.

Ve ge table oil

Defined as rapeseed oil (canola), soyabean oil, sunflower seed oil and palm oil, except in Japan where it excludes sunflower seed oil.

WTO

World Trade Organisation created by the Uruguay Round agreement.

© OECD 2003

209

OECD PUBLICATIONS, 2, rue André-Pascal, 75775 PARIS CEDEX 16 PRINTED IN FRANCE (51 2003 09 1 P) ISBN 92-64-10302-3 – No. 53103 2003