WORLD WHEAT SUPPLY
TO HIT 40-YEAR LOW!
WASKATENEAU, Alta.--United States Department of Agriculture (USDA) figures released this morning project that wheat supplies for the current, 2000/2001, crop year will hit a 40 year low. (Please see backgrounder for a complete listing of supply and demand statistics.)
Stocks/use ratios are a fundamental and oft-quoted measure of supply and demand. The ratios compare the stocks on hand (in elevators, terminals, railcars, farm granaries) at the end of a given year ("ending stocks") to the amount used that year ("total use"). These ratios take into account that as the world's population increases and grain consumption increases, production and supplies have to increase as well.
The 2000/2001 stocks/use ratio for wheat is projected to be 19.04%, the lowest level in the last 40 years. Further, wheat ending stocks for the year are projected at 113.6 million tonnes: the second lowest level in the past 23 years and down 37% from the record ending stocks of fourteen years ago. Over the past fourteen years, consumption of wheat has far exceeded production.
"We have record low wheat supplies and record low prices. It is getting harder and harder to maintain the fiction that farmers' grain prices are determined by supply and demand. This is clearly market failure--or possibly manipulation. Economists will be studying this one for some time," said NFU President Cory Ollikka.
NFU Vice-President Fred Tait noted: "Some may continue to argue that the lowest wheat stocks/use ratios in the last 40 years do not constitute a shortage. That may be. But surely no reasonable person can continue to assert that there is a surplus--and certainly not a surplus that is so burdensome that farmers should expect the worst income crisis since the 1930s."
"It has become impossible for anyone to credibly argue that the farm income crisis is caused by oversupply," stated Tait. He continued: "Farmers in Canada want to hear from the Minister of Agriculture as to what is causing the farm income crisis and how he intends to solve it."
In addition to 40-year-low wheat supplies, world "total grains" supplies are also very low. The 2000/2001 stocks/use ratio for world total grains is projected to be 17.89%. In only nine years out of the last 40 has the level been lower. The lowest level in the last 40 years came just five years ago, in 1995/96. Ending stocks of total grains have fallen 28% from their peak 14 years ago. In only five of the last fourteen years, did the world produce more grain than it consumed.
"We have a 65-day supply of grain in the world. With a population over 6 billion, increasing uncertainty over climate change, and increasing difficulty wringing more production out of a shrinking land base, this does not seem like a burdensome oversupply," said Ollikka.
In February 2000, the NFU prepared a brief for the Standing Committee on Agriculture. That brief demonstrated that world supplies were low and that oversupply is not the cause of the farm income crisis. "Recent USDA figures support the NFU's position," concluded Ollikka.
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For More Information:
Cory Ollikka, NFU President: (780) 383-2148
Fred Tait, NFU Vice-President: (204) 252-2773
Darrin Qualman, Exec. Sec.: (306) 652-9465