Expert sees plunge in world grain stocks, prices up
By Gilbert Le Gras
OTTAWA, March 4 (Reuters) - Global production of wheat, corn and rice is poised to decline within two years because of environmental factors, and crop prices could double as a result, the head of a Washington-based environmental think tank said on Thursday.
"If the environmental trends of recent decades continue, we're going to be in trouble," Lester Brown, president of the Earth Policy Institute, which promotes sustainable agriculture, told Reuters.
Falling water tables in top grain producers such as China, India and the United States are threatening grain output and forced China last month to raise prices of wheat and rice, Brown said.
The drop in Chinese output over four of the past five years is equal to Canada's total annual grain production, he added.
"There's been a dramatic loss of momentum in the growth of production," Brown said, adding that rising world temperatures could further crimp output.
World corn inventories are near their lowest point in 25 years and Reuters' Commodity Research Bureau index of 17 commodities rose Monday to its highest point since May 1984.
A promising crop outlook in Europe this year should help pull world grain supplies back up from last year's heat-wave damaged levels, but there is only a 50-50 chance of restoring just half of last year's lost global inventories, he said.
The world grain deficit was 105 million tonnes in 2003, its highest level in at least 40 years, according to the U.S. Agriculture Department.
"If we can only fill half of this gap this year, if we end up with a 50 million tonne shortfall, then we're probably going to see something like a doubling of grain prices," Brown said, before briefing Canadian officials, lawmakers and advisers to Prime Minister Paul Martin.
"It's going to be dramatic. If we don't have the stocks to draw down, then rising prices will have to do the job."
Coarse grain stocks in the five top exporters -- Argentina, Australia, Canada, the European Union and the United States -- are forecast to fall to 48 million tonnes in 2003-04 from 57 million tonnes in 2002-03, London's International Grains Council said late in January.
"Ever since the (1964) Kennedy Round (of global trade talks), the overriding issue in international trade negotiations has been access to markets," Brown said.
"That could soon be reversed to access to supplies in exporting countries because when food prices start to rise, the instinct will be to restrict exports to keep (domestic) prices down."
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