Miller Magazine Issue: 139 July 2021

19 MILLER / july 2021 NEWS World supplies of wheat and rice are robust, while stocks of coarse grains are forecast to fall despite an expected record 2021 global production, reflecting large-scale utilization foreseen for livestock feed and industrial starches. Expected global year-end stock-to-use ratios are, re- spectively, 38.0 percent for wheat, above the five-year average, stable at 35.1 percent for rice, and declining to 20.8 percent for coarse grains. World meat output in 2021 is forecast to expand by 2.2 percent, to 346 million tonnes, reflecting an anticipated rebound in meat production in China, where expansions are expected across all meat types, especially pig meat, facilitated by high investments in the value chain and efforts to control the spread of African swine fever. AGRICULTURAL EXPORTS GROWS World fish output is expected to rebound and price rises are likely, due to recovering demand from restau- rants after a year of restrictions associated with the COVID-19 pandemic. The report notes that pandem- ic-related restrictions catalyzed a shift in sales trends benefiting small pelagics, such as sardines, anchovies and mackerel, as well as tuna. At the global level, food and agricultural exports grew by almost $52 billion in 2020 from the year before, a 3.2 percent annualized expansion, with developing countries accounting for around 40 percent of the in- crease. And in 2021, prospects are for the value of global agricultural trade, measured by exports, to increase by 8 percent, or $137 billion. Much of that growth reflects demand from East Asia, although the composition of the import basket there is expected to change significantly due in large part to the recovery of China's livestock sector. The ratio of agricultural trade to non-agricultural trade reached almost 11 percent in early 2020, only a third of its level in the 1960s but nearly double its historic low in 2007. Rising food imports as a share of all imports can be an early warning indicator for potential crises in some areas. For example, the import bills of Low-In- come Food-Deficit Countries (LIFDCs) appear set to in- crease by 20 percent, five times as fast as the group of Least-Developed Countries. Countries where export revenues, including from tourism, have been hit hard by the pandemic, may be particularly vulnerable. Lastly, the Food Outlook explores an innovative way of measuring food prices paid by importers that also takes into account the way demand trends change, of- ten as a result of income shifts, and covers a broader array of foodstuffs than the FAO Food Price Index (FFPI). The FFPI is built on benchmark export prices for key commodities, while the new measure uses Import Unit Values that capture what countries actually pay when they import food, which includes not only freight costs but also quality premia or discounts. The new index is based on flexible weights and hence captures the changing composition of imports. As a result, the IUV index offers insight into shifts that consumers who lost income during the COVID-19 pan- demic may have made, such as moving from meat to cereals, beef to chicken, or Basmati to ordinary rice. It reached its historical peak in March 2021, the last data point available. China will grant 20 billion yuan ($3.1 billion) in sub- sidies to grain farmers this year to offset soaring fer- tiliser and diesel costs, the country's cabinet said, in the government's latest attempt to manage the impact of rising commodity prices. The one-time subsidies will help stabilise incomes, the cabinet was cited as saying by state broadcaster CCTV after a regular meeting, as China looks to en- sure its farmers are incentivised to keep producing food for the world's most populous nation. "Subsidies should be paid out as soon as possible, so as not to miss the farming season," the cabinet added after the meeting led by Premier Li Keqiang, pledging to keep farmers keen on growing crops for the summer harvest by calling for increased supply of agricultural raw materials. The cost of diesel, a refined oil product used as a fuel in farm machinery, has jumped this year as benchmark crude oil prices LCOc1 have rallied some 40% on the back of a recovery in energy demand following the coronavirus outbreak. Fertiliser prices are also heavily influenced by energy costs and China's agriculture ministry had earlier urged regions to strengthen supply of fertilis- er during the summer amid record prices and tight stocks. China to grant $3.1 billion to grain farmers