Grain Harvest Sets Record, But Supplies Still Tight

Following several years of declining harvests, the world’s farmers reaped a record 2.316 billion tons of grain in 2007.¹ (See Figure 1.) Despite this jump of 95 million tons, or about 4 percent, over the previous year, commodity analysts estimate that voracious global demand will consume all of this increase and prevent governments from replenishing cereal stocks that are at their lowest level in 30 years.²

The global grain harvest has nearly tripled since 1961, during a time when world population doubled.³ As a result, the amount of grain produced per person grew from 285 kilograms in 1961 to a peak of 376 kilograms in 1986.⁴ (See Figure 2.) In recent decades, as the growth in grain production has matched population growth, per capita production has hovered around 350 kilograms.⁵

But output per person varies dramatically by region. For instance, it stands at roughly 1,230 kilograms per year in the United States, most of which is fed to livestock, compared with 325 kilograms in China and just 90 kilograms in Zimbabwe.⁶

Economists, hunger activists, and agricultural researchers track world grain production because people still primarily eat foods made from grain. On average, humans get about 48 percent of their calories from grains, a share that has declined just slightly, from 50 percent, over the last four decades.⁷ Grains, particularly corn, in conjunction with soybeans, also form the primary feedstock for industrial livestock production.

People consume a little less than half (48 percent) of the world’s grain directly—as steamed rice, bread, tortillas, or millet cakes, for instance.⁸ Roughly one third (35 percent) becomes livestock feed.⁹ And a growing share, 17 percent, is used to make ethanol and other fuels.¹⁰

Although high crop prices have been pushing farmers around the world to plant more land in grains in recent years, a more powerful engine for the record output was a boost in average yields, the amount of grain harvested per hectare. For the last decade, grain yields have surpassed 3 tons—nearly three times the level in 1960.¹¹ Near-perfect weather in major growing areas as well as an estimated 5 percent jump in world fertilizer use helped farmers increase yields.¹²

World grain production is concentrated in a number of ways—in terms of the species produced, where the crops are raised, and the major exporters. Corn, wheat, and rice account for about 85 percent of the global grain harvest (in terms of weight), with sorghum, millet, barley, oats, and other less common grains rounding out the total.¹³

China, India, and the United States alone account for 46 percent of global grain production; Europe, including the former Soviet states, grows another 21 percent.¹⁴ Argentina, Australia, Canada, the European Union (EU), and the United States account for 80 percent of wheat exports, while just three nations— Argentina, the EU, and the United States— account for 80 percent of corn exports.¹⁵

In 2007, a 200-million-ton jump in the global coarse grain harvest was responsible for nearly all of the increase in the total grain harvest. ¹⁶ Production of coarse grains—a group that includes corn, barley, sorghum, and other grains fed mainly to animals—increased 10 percent, from 985 million tons in 2006 to 1,080 million tons in 2007.¹⁷ At 784 million tons, the record harvest of corn was buoyed by the growing use of this grain to produce biofuels, which prompted farmers in the United States (responsible for over 40 percent of the global harvest and half of world exports), Brazil, and Argentina to plant more land to corn.¹⁸ Production in China, the world’s second largest corn producer, inched beyond the previous year’s record.¹⁹

Worldwide, the amount of coarse grains converted to energy jumped 15 percent to 255 million tons, although this is still small compared with the 627 million tons devoted to another relatively inefficient use—livestock feed.²⁰

Wheat harvests increased modestly, by 2 percent, to 605 million tons, with near perfect weather nurturing strong harvests in India, the EU, and the United States.²¹ Australia, however, normally the source of one third of world exports, faced lower crop prospects and depleted exportable supplies.²² And unfavorable weather meant a reduced harvest in China, the world’s second largest producer.²³

The global rice harvest was up slightly to 633 million tons, matching the record 2005 harvest, as conditions returned to normal in China, India, and across Asia, which accounts for 90 percent of world production.²⁴

The amount of grain stored by governments— a good measure of the global cushion against poor harvests and rising prices—continues to decline. Global cereal stocks were expected to stand at 318 million tons by the close of the 2007 season, equivalent to about 14 percent of annual consumption.²⁵ (See Figure 3.) These stocks, and the stock-to-use ratio, built up by bumper crops in the 1980s and the late 1990s, are now substantially below their all-time high.²⁶

Despite the record harvest, the low stocks and strong demand combined to push prices of all cereals to new highs.²⁷ At harvest time, the U.S. corn export price was up about 70 percent from the previous year, while the American hard wheat price averaged 65 percent more than a year earlier.²⁸ Wheat prices in Argentina, another major exporter, doubled since 2006.²⁹ Important wheat exporters like Ukraine and Russia have imposed export restrictions to ensure a sufficient domestic supply.³⁰ Major importers, like Egypt, the European Union, Yemen, and Iraq, have reacted to high prices by purchasing grain early, which has further tightened supplies and boosted prices.³¹

As such increases ripple through the food chain, people around the world have been greeted with higher prices for bread, beer, corn flour, and other basic foods. Developing countries are likely to spend a record $52 billion on imports of cereals in 2007, up 10 percent from 2006.³² This follows a 36-percent hike in the previous season.³³

Even international food aid programs, which also purchase their supplies on the world market, have been forced to scale back.³⁴ The volume of aid provided through the largest assistance program in the United States, Food for Peace, dropped by nearly half since 2005, to 2.4 million tons, in response to a 35-percent increase in the cost of agricultural commodities as well as the rising costs of fuel for shipping.³⁵ The combination of rising food costs and declining aid can be fatal for the estimated 854 million people worldwide who experience hunger on a regular basis.³⁶