November 2000

FEATURE COMMODITY ARTICLE

2000/01 World Cotton Production Down from Last Year,

Despite High Cotton Prices

World cotton production for 2000/01 is forecast at 86.7 million 480-pound bales, down nearly 0.4 million from last year’s output, despite the highest world’s cotton A index price since 1997/98, averaging 61.12 cents per pound through October of 2000/01 season. This price is nearly 12 cents above the similar period last year but down from the recent peak of 91.4 cents in 1994/95. World area is forecast at 32.4 million hectares nearly unchanged from last season while the yield at 583 kilograms per hectare is slightly lower.

The world's largest cotton producers, United States and China, are projected to account for 41 percent of global production, up from 39 percent last year.

The seven major producers’ percent share of production were unchanged from last year. In the table below and in the following charts this report highlights the top seven cotton producing nations which include the United States, China, India, Pakistan, Uzbekistan, Turkey, and Australia. These countries are estimated to produce 67.5 million bales of cotton in 2000/01 and account for more than 88 percent of the 0.4 million bales decrease this season.

Ron Roberson, Cotton Chairperson
Telephone: (202) 720-0879
E-mail: roberson@fas.usda.gov

World Oilseeds Production Continues to Grow, but Grains Stall Recently

World grain and oilseed production has trended higher over the past twenty years, with oilseeds growing at an annual percentage rate of 3.2 percent and grains at 1.1 percent.

Over the past four years, expansion in grain production has stopped as harvested area declined. Lower grain prices, weather disruptions, and increasing demand for high protein animal feeds and vegetable oil have encourage producers to shift into oilseeds. Since 1996/97, oilseed area has expanded 16 million hectares, while grain area decreased by 36 million hectares. The former Soviet Union (FSU), China, Canada, Argentina, and the United States all showed decreases in grain area, but increases in oilseed area. Decreases in world wheat, corn, sorghum, barley and oats area more than offset increases in soybeans, sunflower and rapeseed. Also, there is a significant upward trend in yield due to improved plant genetics, cultural practices, and changes in crop mix. For example, minor, lower yielding grain crops such as barley, oats, and sorghum have declined steadily in favor of higher yielding food and feed grains such as rice and corn.

Large production the last couple of years has led to low international prices, while world harvested area of both grains and oilseeds declined in 2000/01. Higher average yield is forecast to boost world oilseed production to a new record. Total grain (wheat, coarse grains, and milled rice) production for 2000/01 is estimated at 1836.6 million tons, down 28.0 million or 2 percent from the previous year. Production of the seven major oilseeds (soybeans, rapeseed, cottonseed, peanuts, sunflowerseeds, copra, and palm kernel) is estimated at a record 302.5 million tons, up 2.4 million or 1 percent from 1999/2000. For the 2000/01 season, record levels of production are estimated for Argentina, Brazil, China, and U.S. oilseeds; and also for European Union (EU) and India grains. Brazil, U.S., and FSU grains; and India oilseeds are up year-to-year, but are not at record levels. FSU, EU and Canada oilseeds are lower; while Canada, and China grains are also down year-to-year.

Charts on the following pages show long term trends in global, as well as individual countries’ area and production for grains and oilseeds. (Area estimates for oilseeds exclude copra and palm kernel.)

Ron Roberson, Grains Chairperson
Telephone: (202)720-0879
E:mail: roberson@fas.usda.gov

Paul Provance, Oilseeds Chairperson
Telephone: (202)720-0882
E:mail: provance@fas.usda.gov

Central America Trip Report

Analysts from the United States Department of Agriculture, Foreign Agricultural Service, Production Estimates and Crop Assessment Division (PECAD) traveled to Honduras and Nicaragua during September 2000 to monitor crop conditions and to assess progress in areas heavily damaged by Hurricane Mitch. (click to view satellite imagery used and photographs acquired during this trip) This work is sponsored by the U.S. Agency for International Development (AID). The role of PECAD in the reconstruction project is to monitor the agricultural sector, provide crop analysis and forecasts, produce satellite-based and other remote sensing products, and recommend approaches to assist Central American and Caribbean nations in their recovery from the devastation of Hurricanes Mitch and Georges.

Nicaragua

The PECAD team visited the Managua offices of the Nicaraguan Institute of Territorial Studies (INETER) and the Ministry of Agriculture and Forestry (MAG-FOR) to solidify a data exchange agreement between FAS and those Nicaraguan agencies. It was learned that INETER had issued weather reports in March and May forecasting that Nicaragua would suffer drought conditions during the annual monsoon season (May-October), and the report advised producers to plant extremely drought-hardy varieties. For those who could afford to, INETER suggested that they wait for the start of the second-crop season in September/October to plant. Apparently, the INETER advisory was poorly distributed because during field travel, the PECAD team encountered few producers and local government officials who were aware of the advisory. Not many producers could afford to follow the INETER suggestion not to plant, and many were skeptical about the reliability of INETER. But most producers said they would probably have employed different tactics in 2000 had they know of the advisory, particularly after enduring even drier field conditions during the 1999 monsoon.

Discussions with MAG-FOR officials led to elaboration on how their technicians involved in the creation of a national crop insurance program. MAG-FOR technicians are studying possible scenarios to permit the purchase of disaster insurance from private enterprises composed of producers, trade associations and craft unions, or the government. A complicating factor is the high turnover rate at all levels of the government when a change in leadership occurs. Programs are occasionally on hold while the new government acclimates itself.

The PECAD team, accompanied by two experts from the Association of Producers and Exporters of Non-Traditional Products (APENN), visited the Pacific coast states of Chinandega and Leon, areas of below-normal precipitation during the 2000 monsoon season (May-October). Non-irrigated fields planted before July were moisture-stressed, many fields had been plowed and re-planted, or left fallow for the fall season. Failed corn fields were not difficult to find (about half of Nicaragua's first-season corn area is planted before August), and much of the corn that will be harvested along the route traveled indicated varying degrees of yield loss due to heat and lack of moisture. Many soybean fields were less than 60 days old, and stubble suggested that soybean plants had first emerged in the field in May or June but had succumbed to unfavorable conditions and been plowed under. Rice fields were irrigated and reasonably healthy, as were sugarcane fields. Peanut fields were common, some so recently planted that flowering had just begun. Better than half the Nicaraguan first-season peanut area is planted by the end of August and harvested in December/January, making it a common crop to switch to when a first season corn or soybean field fails.

Honduras

The PECAD team visited the Tegucigalpa headquarters of the Secretariat of Agriculture and Livestock (SAG), the Honduran government agency whose mission is similar to USDA, to brief the SAG Vice-Minister, and several of his department heads. Also present were representatives from the International Development Bank (IDB) and the International Center for Tropical Agriculture (CIAT). PECAD shared its data concerning the corridor of dryness that had developed in Honduras and Nicaragua during Central America's 2000 monsoon season, and discussed the area and production estimates that had been released from the August 2000 lockup (September estimates were not yet released at the time of the meeting at SAG). The Vice-Minister said the PECAD weather products (see Hurricane Mitch Reconstruction website) correlated with the findings of the Honduran agencies, and agreed that the precipitation deficit of 1999 for the corridor of dryness was even greater than this year. The Vice-Minister said the USDA estimates were slightly higher than his government was reporting; he responded to PECAD's suggestion that nationwide cultivated area is higher in 2000 than in 1999 by saying any such expansion of area would be statistically small.

The Vice-Minister was favorably impressed with PECAD's "convergence of evidence" approach to crop assessment, elaborating that PECAD input was helpful because SAG's two main data collection activities had been severely curtailed by funding restraints. The Vice-Minister expressed the desire for expanded information exchanges between FAS and the various Honduran agencies, hoping that the collaboration would continue beyond the Hurricane Mitch Reconstruction Project (planned expiration date is December 31, 2001).

The PECAD team also briefed several members of the permanent staff at the Tegucigalpa USAID mission about the purpose of the team's visit, and the dialogue that occurred with SAG. Mission staff persons confirmed that funding shortages had sharply curtailed Honduras' ability to conduct important statistical studies, and pointed out that Honduran elected officials are in the process of funding the creation of the National Statistics Institute (bolstered by a $2 million contribution from Sweden) to resume those data collection activities.

The PECAD team traveled for two days in Olancho, a major agricultural state in east-central Honduras that has experienced drought, accompanied by two SAG staffers who were knowledgeable of agricultural practices in the region. Random stops were made along the route through the Guayape and Lepaguare Valleys to permit assessment of crop condition. One of the SAG hosts said nearly 85 percent of Olancho's corn, and nearly 100 percent of its sorghum comes from those two valleys. During the night dividing the 2-day trip, heavy showers fell intermittently for about 6 hours across Olancho, perhaps salvaging the crop season for those many producers who had planted in June. Yet by noon of the following day, the Olancho soil had absorbed the rainfall so thoroughly that the surface of many fields had already begun to harden.

Approximately one third of the corn observed was mature fields where conditions indicated that the prospective yield had been reduced to some degree by insufficient rainfall. The rest were late-planted fields of a corn variety designed to return high yields in less than ideal moisture conditions, and those fields will reach maturity in October. Early planted sorghum fields were better off than their corn counterparts (most sorghum varieties are very drought-resistant). Later-planted sorghum was more robust than the earlier-planted mature fields. The rice fields observed were irrigated, reflecting the producer's access to necessary resources, and the crop will show little effect from heat and drought. No bean (frijoles) fields were visited.

Extra Points

1. Before the privatization of utilities in the 1990s, electricity was affordable for small Nicaraguan producers in the Pacific coast states. Today, irrigation is available only to wealthy producers who can buy electricity, and those who own wells. Poorer producers have been reduced from planting options that included cucumbers and ornamental plants to now being limited to corn and soybeans. A second consecutive monsoon season of below-normal rainfall prompted producers to plant more peanuts. The strategy worked for those who had irrigation and those who planted late in the season, as the PECAD team encountered a surprising number of peanut fields, many of them in excellent shape. A big buyer in Leon usually purchases all the region's peanut which is then routed to the export market.

2. In the face of high or rising imports, SAG representatives report that the Honduran Government has assisted grains and rice producers in orchestrating treaties with the poultry industry and millers. An agreement is being signed by various poultry producers to buy only Honduran corn and sorghum between September 2000 and March 2001 (the time frame during which crops from Honduras' main season are harvested and sold). Any participating poultry producer who imports corn or sorghum during this period is subject to a 45 percent tariff based on the purchase price of the imported items.

If it can be proven that the producers are not providing enough grain to the poultry producers, then a waiver can be requested that will drop the import tariff to 1 percent. The rice producers and millers have agreed to the same conditions. When the treaties were drafted, the poultry producers foresaw the need for at least 86,200 tons of corn and 27,200 tons of sorghum, while rice producers have promised to deliver at least 22,680 tons of rice to millers.

3. An area shift is evident in Olancho, where 25,000 hectares of cropland was converted to pasture in 1999, according to SAG officials. Weather issues, unreliable assistance programs, production costs, and low prices due to cheaper imports has forced some crop producers to switch to livestock, while others have sold their land and moved to the city. Concern is building about the loss of food production and the increased need to import more basic foodstuffs in the future to feed the citizens.

4. Smuggling of pine, redwood, cedar, mahogany, and other valuable woods is a serious problem in Honduras, where a permit is need to engage in logging. Smuggling means lost revenue for private businesses and the government, and also harms the long range goal of fighting pollution. European countries have begun paying countries in Central America to grow and maintain forests. The smugglers have a clever black market clientele that apparently pays well, and hikers and other woodsmen have been shot by smugglers who mistook them for law enforcement personnel.

Ron White, Mexico and Central America Analyst
Telephone: (202)690-0137
E:mail: whiter@fas.usda.gov

Return to the Table of Contents