November 23,
2001-3
Copyright © 2001 Earth Policy Institute
World Grain Harvest Falling Short by
54 Million Tons
Water Shortages Contributing to Shortfall
Lester R. Brown
As Americans prepare to celebrate Thanksgiving
and another bountiful harvest, there are signs that the world harvest
is falling short as water shortages translate into food shortages.
In its November world crop survey, the U.S. Department of Agriculture
reports that this year's estimated world grain harvest of 1,841
million tons will fall 54 million tons short of projected consumption
of 1,895 million tons. This comes on the heels of a poor crop last
year, when world output fell short of use by 34 million tons.
These two consecutive disappointing harvests have reduced next year's
projected world carryover stocks of grain, the amount in the bin
when the new harvest begins, to 22 percent of annual consumption,
the lowest level in 20 years. With stocks at such a low level, all
eyes will be on the harvest in 2002. Another short harvest could
lead to rising grain prices and higher prices for bread, meat, milk,
eggs, and other products derived directly or indirectly from grain.
The poor harvests of the last two years were largely due to weak
grain prices, drought, and spreading water shortages. The lowest
grain prices in two decades have discouraged farmers from investing
in production-boosting measures.
Prices that are too low to stimulate adequate production can be
quickly remedied as the market responds to tighter supplies. But
dealing with the water shortages that result from drought, aquifer
depletion, and the diversion of scarce water to cities is much more
difficult.
Water tables are now falling in key food-producing regions--the
North China Plain, the Punjab in India, and the southern Great Plains
of the United States. The North China Plain accounts for a third
of China's grain harvest. The Punjab, a highly productive piece
of agricultural real estate, is India's breadbasket. And the southern
Great Plains help make the United States the world's leading wheat
exporter.
In an increasingly integrated world economy, water shortages are
crossing national boundaries via the international grain trade.
Since it takes 1,000 tons of water to produce 1 ton of grain, the
most efficient way for water-deficit countries to import water is
to import grain.
The fastest-growing grain import market in the world today is North
Africa and the Middle East, the region with the most serious water
shortages. Virtually every country in this region--stretching from
Morocco across the northern tier of Africa and the Middle East through
Iran--is facing water shortages. With supplies limited, countries
satisfy the growing demand for water in cities and industry by taking
it from agriculture. Then they import grain to offset the loss of
production capacity.
It is often said that future wars in this region are more likely
to be fought over water than oil. This may be, but it is hard to
win a water war. The competition for water is more likely to take
place in world grain markets.
In recent years, grain imports into Iran, a water-short, grain-deficit
country, have eclipsed those of Japan, long the world's leading
wheat importer. Last year, Egypt also moved ahead of Japan. Both
Iran and Egypt now import over 40 percent of the grain they consume.
The populations of both countries are continuing to grow, but their
water supplies are not.
Grain exporters are, in effect, water exporters. Canada, where water
exports are a politically sensitive issue, is one of the world's
leading exporters of water in the form of grain. The 18 million
tons of grain, mostly wheat, that it ships abroad each year embody
18 billion tons of water. Similarly, U.S. annual grain exports of
90 million tons of grain represent 90 billion tons of water, an
amount that exceeds the 67-billion-ton annual flow of the Missouri
River.
The adequacy of food and water supplies are closely linked. Some
70 percent of all water that is pumped from underground or diverted
from rivers is used to produce food, while 20 percent is used by
industry and 10 percent goes to residential uses. With 40 percent
of the world's grain harvest produced on irrigated land, anything
that reduces the irrigation water supply reduces the food supply.
The wildcard in the world grain market is China. It accounted for
45 million tons of this year's grain harvest shortfall of 54 million
tons. Last year, China's harvest fell short of consumption by 33
million tons. In two years, it has reduced grain stocks by nearly
80 million tons.
Among the forces shrinking China's grain harvest are severe drought
in northern China during the last two years, spreading irrigation
water shortages as aquifers are depleted and as water is diverted
to cities, and a lowering of support prices. The drought will eventually
end, but water shortages will not. In a country dependent on irrigated
land for 70 percent of its grain, water shortages are fast becoming
a security issue. (See Eco-Economy Update "Worsening
Water Shortages Threaten China's Food Security".
In 1994, in an ambitious and successful effort to be self-sufficient,
China raised grain support prices by 40 percent. Unfortunately the
drain on the treasury was too great, so the support prices were
lowered, dropping close to world market levels. As grain prices
have fallen over the last three years, the area planted to grain
has shrunk by 10 percent.
China has absorbed the harvest shortfall of the last two years by
drawing down stocks, but there are signs that supplies are now tightening.
If this huge nation has another large harvest shortfall, it will
likely have to import substantial quantities of grain to maintain
food price stability. China, with a population equal to that of
India and the United States combined, has a strong economy and a
trade surplus with the United States of over $80 billion. It would
take only $35 billion of that trade surplus to buy the entire U.S.
grain harvest. China can compete not only with the 100 or so countries
that import U.S. grain but with U.S. consumers if it needs to.
If the 2002 world grain harvest falls short of consumption when
stocks are at a near-record low, prices will rise. Higher prices
will curb demand, particularly the feeding of grain to livestock,
and will encourage production. Supply and demand will again be in
balance, but at a higher price.
If world grain demand continues to grow during this coming year
at the 16-million-ton-per-year pace of the last decade, then the
harvest will have to jump by 70 million tons to avoid a further
drawdown in stocks. Whether this can occur, in the face of spreading
water shortages, remains to be seen.
As water deficits expand in water-scarce countries, so too will
grain deficits. The new reality is that if the world is facing water
shortages, it is also facing food shortages.
A review of the demographic map reveals another troubling reality.
Most of the 80 million people being added to world population each
year are being added in countries that are already experiencing
water shortages. Restoring a balance between water supply and needs
worldwide may now depend on stabilizing population in water-deficit
countries.
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Copyright
© 2001 Earth Policy Institute
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FOR ADDITIONAL INFORMATION
From Earth Policy Institute
Lester R. Brown, Eco-Economy:
Building an Economy for the Earth (New York: W.W. Norton
& Company, 2001).
Lester R. Brown, "Worsening Water Shortages
Threaten China's Food Security," Earth Policy Alert, 29
August 2001.
LINKS
International Water Management Institute http:/www.cgiar.org/iwmi
United Nations Food and
Agriculture Organization http:/www.fao.org
United States Department of Agriculture (USDA) http:/www.usda.gov
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