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Ano XV – Nº 1 – Jan./Fev./Mar. 2006 102

Agricultural TradeInternationalAg Baseline Projections

1 Economic Research Service, coordenador deste estudo; e-mail: [email protected] publicado em USDA - ERS. Briefing Rooms. Agricultural Baseline Projections to 2015, n. OCE 2006-1, February 2006. Disponível em: <http://www.ers.usda.govpublications/oce061/oce20061f.pdf>.

With strong world economic growth, globalagricultural trade is projected to rise throughoutthe baseline. Agricultural trade will remain verycompetitive, reflecting expanding production in anumber of foreign countries.

The growing economies of developingcountries provide a foundation for gains in demandfor agricultural products and increases in trade.Broad-based economic growth and increasingurbanization lead to diet diversification in mostdeveloping regions, generating increased demandfor livestock products and feeds, as well as for fruits,vegetables, and processed products. Developing-country import demand is further reinforced bypopulation growth rates that remain nearly doublethe growth rates of developed countries.

International trade in animal products,however, remains heavily dependent on demandfrom developed countries and from market accessachieved under existing global trade agreements.Trade is also affected by disease-related concernssuch as bovine spongiform encephalopathy (BSE),avian influenza (AI), and foot-and-mouth disease(FMD). Strong policy support for domesticallyproduced meat is expected to motivate growth infeed grain trade, especially to those regions wherelimited land availability or agroclimatic conditionspreclude expanding domestic crop production,such as North Africa, the Middle East, and Eastand Southeast Asia.

Strong competition is expected ininternational commodity markets, not only fromtraditional exporters such as Argentina, Australia,and Canada, but also from countries that aremaking significant investments in their agriculturalsectors, including Brazil, Russia, Ukraine, andKazakhstan.

Rapid expansion of ethanol and biodieselproduction in some countries is projected to havea significant impact on global demand for cornand vegetable oils and on world pricerelationships. The continued expansion of oilseedcrushing capacity in a number of countries isexpected to augment the demand for oilseeds morethan for protein meals and vegetable oils.

Baseline trade projections to 2015 arefounded on assumptions concerning trends inforeign area, yields, and use, and on theassumption that countries comply with existingbilateral and multilateral agreements affectingagriculture and agricultural trade. The baselineincorporates the effects of trade agreements anddomestic policy reforms in place or signed byNovember 2005.

Domestic agricultural and trade policies inindividual foreign countries are assumed tocontinue to evolve along their current paths, basedon the consensus judgment of USDA's regionaland commodity analysts. In particular, economicand trade reforms underway in many developing

Ronald G. Trostle1

Ano XV – Nº 1 – Jan./Fev./Mar. 2006103

countries are assumed to continue. Similarly, thedevelopment and use of agricultural technologyand changes in consumer preferences areassumed to continue evolving based on pastperformance and analysts' judgments regardingfuture developments.

Brazil, Argentina, and Indonesia. Growth in globalproduction is derived mostly from rising yields. Thegrowth rate in crop yields has slowed somewhatduring the last several decades and is projectedto continue to do so.

• Slower growth in aggregate cropproduction is offset by slower growth in worldpopulation. Nonetheless, population is a significantfactor driving overall growth in demand foragricultural products. Additionally, rising percapita income in many countries generates growthin demand for vegetable oils and livestock andhorticultural products.

Rising unabated since the early 1990s,global trade in soybeans and soybean productshas surpassed wheat-the traditional leader inagricultural commodity trade-and total coarsegrains (corn, barley, sorghum, and other).Continued strong growth in global demand forvegetable oil and protein meal is expected tomaintain soybean and soybean-product trade wellabove wheat and coarse grains trade throughoutthe next decade.

• These three major commodity groupings-wheat, coarse grains, and oilseeds (includingsoybeans)-compete with each other and withother crops for increasingly limited temperatecropland. However, previously uncropped landin tropical regions of Brazil and Indonesia is beingconverted to soybean and palm oil production.

• Virtually no growth in overall global wheatand coarse grain trade occurred in the 1990s,largely reflecting reductions in imports by theformer Soviet Union (FSU) and Central and EasternEurope (CEE). In the coming decade, overall gainsin global grain trade come from a broad range ofcountries, particularly from developing countriesin Africa and the Middle East.

• In the projections, total area planted to allcrops changes little in most countries other than

Growth in wheat imports is concentrated inthose developing countries where robust growthin income and population underpins increases indemand. Important growth markets include Sub-Saharan Africa, Brazil, Mexico, and Egypt. Worldwheat trade (including flour) expands by 20 milliontons (18 percent) between 2006 and 2015 to morethan 130 million tons.

• Egypt maintains its position as the world'slargest importing country, as imports climb slowlyto nearly 9 million tons. Imports by Brazil, anotherlarge importer, are projected to surpass 7 milliontons. Brazil's climate does not favor wheat, andin some key wheat-producing states, winter cornis expected to have better returns than wheat.

• Imports by developing countries in Sub-Saharan Africa, North Africa, and the Middle Eastrise 7 million tons and account for nearly 40percent of world wheat trade. In most developing

(1) Soybeans and soybean meal in soybean-equivalent units.Source: USDA-ERS (2006).

(1) Predominatly South and Southeast Asia.(2) Former Soviet Union and Other Europe; prior to 1999, incudes Czech Republic,

Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.(3) EU-25 excludes intra-trade after 2002, EU-15 intra-trade before 2003, Slovenia

before 1992.Source: USDA-ERS (2006).


countries, little change in per capita wheatconsumption is expected but imports expandmodestly because of population growth and limitedpotential to expand production. Nigeria hasemerged as a major wheat importer.

• Changing consumption patterns will boostthe wheat imports of some major developingcountries. In Indonesia, diversification of diets andstrong economic growth are projected to increaseper capita wheat consumption. Mexicanconsumers are projected to continue substitutingwheat for corn in their diets.

• Stocks of low-quality wheat are large atthe beginning of the projection period. Low pricesfor this feed-quality wheat during the next coupleof years, and lower wheat-to-corn price ratiosduring most of the projection period, enable wheatto compete effectively with corn for feed use in anumber of countries. South Korea, for example, isprojected to substitute 1 million tons of feed wheatfor corn annually by 2015.

• Shares of the world wheat market heldby Canada, the EU, and the United States declineslightly, offsetting increases by Australia, Argentina,Ukraine, and Kazakhstan.

• In Canada, increased demand for barleyand oilseeds is expected to cause wheat area todecline, which causes Canadian exports to trendslowly downward.

• The EU lowered the set-aside rate from10 percent to 5 percent in 2004 in response to thedrought-reduced 2002 crop and low stock levels.These projections assume that the set-aside ratereverts back to 10 percent for the duration of theprojections.

• Russia, Ukraine, and Kazakhstan havebecome significant wheat exporters in recentyears. Low costs of production and investment intheir agricultural sectors have enabled their worldmarket share to climb to 14 percent in recentyears. Exports from Ukraine and Kazakhstan areprojected to continue gaining market share, morethan offsetting a slight decline in the share held byRussia. However, because of the region's weatherextremes, high year-to-year volatility in productionand trade can be expected.

• Exports by Turkey, China, and other minorexporters trend slowly downward during theprojection period.

• Although India has exported some wheatin recent years, exports are expected to cease asstocks are drawn down.

(1) Former Soviet Union and Other Europe; prior to 1999, incudes Czech Republic,Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

(2) EU-25 excludes intra-trade after 2002, EU-15 intra-trade before 2003, Sloveniabefore 1992.

Source: USDA-ERS (2006).

The top five wheat exporting nations (theUnited States, Australia, the European Union (EU),Canada, and Argentina) account for about 75percent of world trade from 2006 through 2015.This is down from the average of 85 percent duringthe latter part of the 1990s, mostly due to increasedexports from the Black Sea area. U.S. wheatexports are projected to account for about 23percent of global wheat trade, down from 25percent in recent years.

(1) Includes rye, oats, millet and mixed grains.Source: USDA-ERS (2006).

Growth in trade of coarse grains is stronglylinked to expansion of livestock activities inregions unable to meet their own forage and feedneeds. Key growth markets include Mexico, NorthAfrica and the Middle East, China, and Southeast Asia.


• Corn is the dominant feed grain traded ininternational markets. Corn accounts for anaverage of 76 percent of all coarse grain tradethrough the projection period, followed by barley(16 percent), and sorghum (5 percent).

• The commercialization of livestockfeeding has been a driving force behind thegrowing dominance of corn in internationalfeedgrain markets as well as the gains in globalprotein meal markets. Hogs and ruminants, suchas cattle and sheep, are capable of digesting abroad range of feedstuffs, making demandrelatively price-sensitive across alternate feedsources. However, as pork and poultry productionbecome increasingly commercialized, higherquality feeds are used.

• World coarse grain trade is projected toincrease about 2 percent a year, with cornaccounting for a growing share. Mexico'scomposition of imports accounts for most of theshift. Following the 2002 and 2003 drop in U.S.sorghum production and exportable supplies,Mexico's imports of kibbled corn (processed cornthat is tariff free) rose sharply, reaching a record2.6 million tons (whole-corn equivalent) in 2004/05. Under the North America Free TradeAgreement (NAFTA), Mexico's over-quota tariff onU.S. and Canadian corn is eliminated by 2008.As Mexico's over-quota tariff on corn imports isfurther reduced, Mexico's grain imports continueshifting from sorghum to corn. After 2008/09,kibbled corn imports are entirely replaced bywhole-grain corn. Mexico's corn imports continueto rise through the rest of the projections, whilesorghum imports resume growth after 2011/12.

World coarse grain trade expands about 19million tons (18 percent) from 2006 to 2015. Abouttwo-thirds of global coarse grain supplies are usedas animal feed. Industrial uses, such as starch,ethanol, and malt production, are relatively smallbut growing. Food use of coarse grains,concentrated in parts of Latin America, Africa, andAsia, has generally declined over time asconsumers tend to shift consumption towardwheat, rice, and other foods as their incomes rise.

• Steady longrun growth in the livestocksectors of developing countries in Asia, LatinAmerica, North Africa, and the Middle East isprojected to account for most of the growth inworld imports during the next decade.

• Mexico's corn imports are projected to risefrom 7.3 million tons in 2006 to more than 13million tons in 2015. Imports will be stimulated byrising poultry production and a steady reductionin Mexico's over-quota tariff on corn imports fromthe United States to zero by January 1, 2008. Somecorn imports will substitute for imports of sorghum,which already have tariff-free status.

• North Africa and the Middle Eastexperience continued growth in import demandfor grain and protein meals through 2015, as risingpopulations and increasing incomes sustain strongdemand growth for domestically produced animalproducts.

• Increasing meat imports will limit coarsegrain imports in Japan, South Korea, and Taiwan.By 2015, low-priced feed wheat is projected toreplace about 1 million tons of South Korean cornimports.




(1) Republic of South Africa, Brazil, EU, former Soviet Union and others.Source: USDA-ERS (2006).


• The EU's imports of corn from other EasternEuropean countries, particularly Romania andBulgaria, are expected to increase as the lattercountries prepare for accession to the EU.

The United States dominates world trade incoarse grains, particularly corn. However,increasing use of corn for U.S. ethanol productionis assumed to limit export growth. The U.S. cornsector faces increased competition from exportsby non-EU Eastern Europe, Argentina, and Brazil.Still, the U.S. share of world corn trade is projectedto grow from 60 percent in recent years to 63percent by 2015 as few countries have similarcapability to respond to rising international demandfor corn.

• Argentina, with a small domestic market,remains the world's second largest corn exporter.As Argentina's economy expands, investmentsand planted area gradually return to cornproduction over the baseline, with exportsprojected to rise from 11 million to 16 million tons.Argentina and other South American countriesincrease corn exports to Chile to support itsexpanding pork exports to South Korea.

• The Republic of South Africa continuesexporting about 2 million tons of corn to itsneighboring countries. Uncertainties associatedwith its land reform program are assumed to limitincreases in production.

• Corn exports from non-EU EasternEuropean countries, primarily Romania andBulgaria, rise to nearly 3 million tons by 2015.Favorable resource endowments, increasingeconomic openness, greater investment in theiragricultural sectors, and preparation for joining theEuropean Union are behind the projected gainsin production and trade.

• Brazil's corn exports nearly double duringthe next decade, rising to 4.5 million tons, inresponse to higher corn-to-soybean price ratios.Brazil targets niche market demand fornongenetically modified grain. However, stronggrowth in domestic demand from its livestocksector limits more rapid expansion.

• China's corn exports decline in thebaseline, reflecting strengthening domestic

demand driven by its expanding livestock sector.It is assumed that Chinese policy will tend to favorimporting soybeans rather than corn.


As more U.S. corn is used to produceethanol, China is assumed to increase it cornproduction, slowing its decline in exports and itsincrease in imports. Nonetheless, China isprojected to become a net corn importer in 2012/13 as demand for livestock feed overtakes China'sinternal supplies of corn. China continues to exportcorn throughout the projection period, althoughin declining amounts, due to regional supply anddemand differences. Northern China runs a cornsurplus, while southern China has a corn deficit.

• Corn is the favored crop in northeastChina. Proximity to South Korea and other Asianmarkets provides a nearby source of demand,while various government measures-includingwaiver of certain transportation construction taxes,and a rebate of the value-added tax on exportedcorn-keep corn exports competitively priced ininternational markets. High ocean-freight ratesraise the delivered cost of U.S. corn to Asianmarkets, another factor that keeps Chinese corncompetitive. Shipments of corn from northeastChina to the country's southern markets are limitedby China's high internal transportation costs.

• China experienced a large buildup of cornstocks in the mid- to late 1990s due to acombination of favorable weather and local self-sufficiency policies that boosted grain productionto record levels. In the last 6 years, China's cornconsumption exceeded production, and stocks


have declined sharply. Because a continued dropin stocks is unsustainable, China is projected toincrease imports and reduce exports, and toeventually become a net corn importer, aslivestock feeding continues to increase inresponse to income growth and rising meatdemand.

which limits the growth in imports of maltingbarley. Expansion in China's brewing capacity isbeing aided by foreign investment in the industry.Australia and Canada are China's main sources ofmalting barley imports.


(2) Includes Mexico.Source: USDA-ERS (2006).

Global barley trade expands throughout thebaseline, driven by rising demand for both maltingand feed barley.

• Feed barley imports by North African andMiddle Eastern countries-where barley is preferredas a feed for large populations of camels, goats,and sheep-grow steadily through the period. Inthe mid-1990s, corn overtook barley as theprincipal coarse grain imported by these countries,due mainly to rising poultry production. This patternis expected to continue through the projectionperiod. However, the North Africa and MiddleEast region is expected to remain the world'slargest barley importing area.

• Saudi Arabia-the world's foremost barleyimporter-accounts for over 30 percent of worldbarley trade through the baseline. Saudi Arabia'sbarley imports are used primarily as feed forcamels, goats, and sheep.

• International demand for malting barleyis boosted by strong growth in beer demand inmany developing countries, notably China-theworld's largest malting barley importer. China'sbeer demand is rising steadily due to growth inincomes and population. China's breweries userice and other grains, as well as malting barley,


(2) Former Soviet Union.Source: USDA-ERS (2006).

Historically, global barley exports haveoriginated primarily from the EU, Australia, andCanada. However, Ukraine and, to a lesserextent, Russia, have emerged as importantcompetitors in international feed barley marketsand remain so throughout the baseline period.

• Barley production is expected to increasein the EU-25 as a result of Common AgriculturalPolicy (CAP) reform and EU enlargement. Theabolition of EU intervention for rye, combined withhigher barley prices in the acceding countries, willstimulate the allocation of more area to barleyproduction. Within the enlarged EU-25, barley tradewill rise. However, EU-25 exports to non-EUcountries are projected to hover around 3 million tonsover the projection period (16 percent of world trade).

• The FSU remains a major barley exporterthroughout the baseline as exports exceed 5 milliontons. Together, the FSU and EU-25 account forabout 50 percent of world barley trade throughoutthe baseline.

• Malting barley is a different variety andquality than feed barley and commands asubstantial price premium over feed barley. Thispremium is expected to influence plantingdecisions in Canada and Australia and, in bothcountries, malting barley's share of total barleyarea rises in the latter half of the projection period.


World sorghum trade, which averagednearly 7 million tons during the last decade,declines to just above 5 million tons by the middleof the projection period before rising through theremainder of the baseline. This trade pattern isdriven almost entirely by Mexico.

• Mexico is the world's leading sorghumimporter, although its imports fell in 2002 and 2003due to reduced U.S. production and exportablesupplies. Since then, Mexico's sorghum importshave recovered somewhat. However, sorghum'sshare of Mexico's total coarse grain importsdeclined as imports of duty-free kibbled cornincreased rapidly. Whole-grain corn imports alsoare rising as Mexico's over-quota tariff on U.S. andCanadian corn is reduced to zero by 2008. In theprojections, Mexico's sorghum imports increaseslightly in the later years, but remain around 3million tons. Even at this reduced import level,Mexico is expected to account for more than 55percent of world imports.

• Japan imports a fairly constant volume ofsorghum (1.3 million tons) throughout the periodto maintain diversity and stability in its feed grainsupplies.

• The United States is the largest exporterof sorghum, accounting for about 80 percent ofworld trade in recent years. During the projectionperiod, the U.S. share declines slightly as itssorghum exports to Mexico account for a smallershare of world trade.

• The primary sorghum markets forArgentina, the world's second largest exporter, areJapan, Chile, and Europe. In Argentina, prices andprofitability favor planting other crops, particularlysoybeans and corn, so sorghum exports only riseslightly during the projection period.

• Brazil has begun to export small quantitiesof sorghum and the volume is projected to riseduring the projection period. Because of specialsoil characteristics in the Campos Cerrado regionof Brazil, sorghum is increasingly planted betweencrops of soybeans or cotton to protect soils fromthe negative effects of solar radiation.



Strong income and population growth indeveloping countries generates increasingdemand for vegetable oils for food consumptionand for protein meals used in livestock production.World soybean trade grows at an average annualrate of 3.6 percent through the projection period,compared with rates of 2.8 and 2.2 percent forsoybean oil and soybean meal.

• Many countries with limited opportunityto expand oilseed production continue investmentin oilseed crushing capacity, such as China andsome countries in North Africa, the Middle East,and South Asia. As a result, import demand forsoybeans grows faster than for either soybean mealor soybean oil throughout the baseline. However,strong competition in international protein mealmarkets is expected to pressure crushing marginsand shift some of the import demand for oilseedsto cheaper meals. The steady competitivepressure of new oilseed crushing capacity isexpected to result in some inefficient crushersgoing out of business.

• China's expansion of domestic crushingcapacity instead of importing protein meal andvegetable oil significantly influences thecomposition of world trade by raising internationalimport demand for soybeans and other oilseedsrather than for soybean products.


• Brazil's rapidly increasing soybean areaenables it to gain a larger share of world soybeanand soybean meal exports, despite increasingdomestic feed use. Its share of world exports ofsoybeans plus the soybean equivalent of soymealexports rises from about 32 percent in recent yearsto 45 percent by 2015.

• The expansion in Argentine soybean areaslows as incentives to grow corn and sunflowerseed improve and conversion of new farmlandapproaches its practical limits.

strong gains in soybean imports as China seeks tocapture the value added from processing oilseedsinto protein meal and vegetable oil.

• East Asia's trade outlook is dominated bya continuing shift from importing feedstuffs toimporting meat and other livestock products. Asa result, the growth in this region's import demandfor protein meal and oilseeds slows over the baseline.This process occurs most noticeably in Japan.

• As Argentina seeks to operate itsexpanding crushing facilities at full capacity, it isprojected to increase its soybean imports fromBrazil and other South American countries tonearly 3 million tons a year by the end of the period.




• The EU has been the world's leadingimporter of soybean meal, and until 2002, ofsoybeans. However, increases in grain andrapeseed meal feeding are expected to continueto slow the growth in EU soybean and soybeanmeal imports. Increased barley production due to2003 CAP reforms, greater supplies of coarsegrains from acceding countries, and morerapeseed meal available as a result of the biofuelsinitiative, combine to slow the growth of soybeanmeal consumption. These factors are only partiallyoffset by an increase in the dairy quota that wouldincrease soybean meal feeding.

• China will face policy decisions regardingtradeoffs in producing or importing corn andsoybeans. The baseline projections assume thatChinese policies will tend toward maintainingdomestic corn production and importing soybeans.Thus, China accounts for over 70 percent of theworld's 27-million-ton growth in soybean importsover the next 10 years. Significant investments inoilseed crushing infrastructure by China drive

• The three leading soybean exporters-theUnited States, Brazil, and Argentina-account formore than 90 percent of world trade throughoutthe baseline.

• With continuing area gains, Brazilmaintains its position as the world's leadingexporter of soybeans and soybean products.Although combating soybean rust diseaseincreases production costs, soybeans remain moreprofitable than other crops in most areas of Brazil.It has been assumed that some land in southernBrazil will shift from oilseed to corn productionduring the middle of the projection period inresponse to higher corn prices and more limitedcompetition from U.S. corn exports. Still, withexpanded soybean plantings in the Central West,the growth rate for Brazil's soybean planted areais projected to average nearly 4 percent a year,reaching about 30 million hectares by 2015.


• In the United States, projected declinesin soybean acreage and increased domestic crushlimit exportable supplies.

• Argentina's export tax structure favorsdomestic crushing of whole seeds and exportingthe products. To more fully utilize its large andexpanding crushing capacity, while diverting someland to corn production and exports, it is assumedthat Argentina will import some soybeans from Brazil,Paraguay, Uruguay, and Bolivia. Argentina's soybeanexports hold steady at about 7 million tons.




• Despite increased domestic feeding ofgrains, the EU remains the world's principaldestination for soybean meal throughout the projectionperiod. Lower import prices for meal relative tosoybeans pressure crush margins, curtailing soybeanimports in favor of soybean products.

• The North Africa and Middle East regionbecomes a larger importer of soybean meal in theprojections as the demand for livestock feed boostsimport demand in a number of countries.

• Latin America, Southeast Asia, and theformer Soviet Union remain important growthmarkets for soybean meal, provided avianinfluenza can be controlled.

• Mexico's strong growth in demand forprotein feed and vegetable oils is projected tocontinue. The crushing industry is also expectedto continue expansion. This will boost soybeanimports but slow the growth in soybean meal imports.


• Argentina, Brazil, and the United Statesremain the three major exporters in internationalprotein meal markets.

• Argentina, the world's largest exporter,increases its share of soybean meal exports fromless than 45 percent in recent years to more than53 percent in the latter portion of the projectionperiod. The export shares of Brazil, the UnitedStates, and other exporters fall. Argentinamaintains high utilization of its growing crushingcapacity and continues to expand soybean mealexports by importing soybeans from Brazil andother South American countries.

• In Brazil, strong growth in domestic mealconsumption due to rapid expansion of the poultryand pork sectors limits increases in soybean mealexports. Also, domestic soybean crushingcapacity is not expected to grow as fast as soybeanmeal consumption

• Significant expansion in domestic crushingin China and large imports of oilseeds in thebaseline result in Chinese soybean meal exportsrising to more than 1 million tons annually by theend of the projections. China's exports, along withsmall increases in exports from South America,keep international protein meal markets verycompetitive.

• The EU continues to be a small but steadyexporter of soybean meal to Russia and other EastEuropean countries. India remains an exporter,although export volume declines as domestic use,especially for poultry feed, rapidly expands.

• Import demand for soybean oil rises innearly all countries and regions. Although India


and China remain the world's largest importers,income and population growth in the North Africaand Middle East region and in Latin America(particularly Central America and the Caribbean)drive more rapid gains in soybean oil imports.

A strong emphasis on exporting soybeanproducts pushes Argentina's and Brazil's combinedshare of world soybean oil exports from less than80 percent in recent years to about 85 percent bythe end of the baseline.

• Argentina is the leading exporter ofsoybean oil, reflecting the country's large crushcapacity, its small domestic market for soybeanoil, and an export tax structure that favors theexports of products rather than soybeans.Increases in crush and soybean oil exports aresupported by gains in Argentine soybeanproduction due to extensive double-cropping,further adjustments to crop-pasture rotations, andthe addition of marginal lands in the northwest partof the country. Argentina also increases soybeanimports from other South American countries inorder to more fully utilize its crushing capacity.

• Brazil's expansion of soybean productioninto new areas of cultivation enables it to increaseboth its volume of soybean oil exports and its shareof world trade.

• The European Union and the United Statesremain the world's next largest soybean oilexporters throughout the baseline, although theirexport volumes and shares of world trade continuea downward trend. In the EU, exportable suppliesof vegetable oils are limited by the growth inbiodesel.

(1) Asia less India and China.(2) Includes Mexico.Source: USDA-ERS (2006).

• In India, lower tariffs on soybean oil (heldin check by World Trade Organization (WTO)tariff-binding commitments) compared with tariffsfor other vegetable oils support continued largeimports of soybean oil. Other factors that contributeto India becoming the world's largest soybean oilimporter include burgeoning domestic demand forvegetable oils and limitations on domesticproduction of oilseeds. Low yields, associated witherratic rainfed growing conditions and low inputuse, inhibit growth of oilseed production in India.

• In China, growing demand for high-qualityvegetable oils outpaces domestic oil productionand fuels a small expansion in soybean oil imports.Land-use competition from other crops constrainsarea planted to vegetable oil crops in China.

(1) Europe Union-25 excludes intra-trade after 2002, EU-15 intra-trade before 2003.Slovenia before 2005.


(1) European Union, former Soviet Union and Other Europe.(2) Includes Mexico.Source: USDA-ERS (2006).

Global rice trade is projected to grow 2.5percent per year from 2006 through 2015. By 2015,global rice trade is projected to reach nearly 33million tons, nearly 15 percent above the recordset in 2002.


• Long-grain varieties account for aroundthree-fourths of global rice trade and are expectedto account for the bulk of trade growth over thenext decade. Long-grain rice is imported by abroad spectrum of countries in South andSoutheast Asia, much of the Middle East, nearlyall of Sub-Saharan Africa, and most of LatinAmerica. Indonesia, Nigeria, Iran, Iraq, thePhilippines, and Saudi Arabia are typically the toplong-grain import markets.

• Medium- and short-grain rice account for10-12 percent of global trade, with Japan, SouthKorea, Taiwan, Turkey, and Jordan the majorimporters. Expansion in medium-grain rice tradeis projected to be much smaller than for long grain.Among the Northeast Asian buyers, only SouthKorea is projected to increase purchases over thenext decade. All rice imports by Japan, SouthKorea, and Taiwan are the result of commitmentsunder the WTO.

• Aromatic rice, primarily basmati andjasmine, makes up most of the rest of global ricetrade. Aromatics typically sell at a substantialprice premium over long- and medium-grainvarieties. Aromatics are imported mostly for high-income consumers.

• Indonesia and Bangladesh, two of theworld's leading rice-importing countries, willexperience rising food demand due to growingpopulations. However, land constraints andalready high cropping intensities indicate littleopportunity for either country to significantlyexpand production. Thus, their imports areprojected to increase over the next decade andaccount for 22 percent of the increase in rice trade.

• Sub-Saharan Africa and the Middle Eastare also major destinations for internationallytraded rice. In both regions, strong demand growthis driven by rapidly expanding populations. Butopportunities to expand production are limited dueto constraints such as agroclimatic conditions inthe Middle East and infrastructure deficiencies inSub-Saharan Africa. Sub-Saharan Africa accountsfor 30 percent of the increase in world rice tradeduring the projection period.

Asia remains the largest rice-exportingregion throughout the projection period.

• Thailand and Vietnam, the world's largestrice-exporting countries, account for nearly halfof all rice exports in the baseline. Both countriesproduce and export primarily long?grain rice.Rising production, mostly due to higher yields, anddeclining per capita consumption, drive theexpansion in exports from both countries.

• The United States is projected to remainthe world's third-largest rice-exporting countryduring the first half of the baseline. Rising domesticdemand and a slower growth rate in yieldsconstrains the expansion of U.S. rice exports.

• Midway through the baseline, Indiabecomes the third largest rice exporter. India hasbeen a major exporter since the mid-1990s,although export levels have been rather volatile,primarily due to fluctuating production and stocklevels. Exports are projected to increase over thenext decade as high internal prices stimulateproduction and exportable supplies. India exportsboth low-quality, long-grain rice and smallerquantities of high-quality basmati rice.

• In recent years, Pakistan has replacedChina as the world's fifth-leading exporter. This isdue primarily to declining exports from Chinarather than an increase in Pakistan's exports.Pakistan has little ability to expand rice area, andits agricultural sector is confronting a growing watershortage. Rice exports are stable at around 2.2million tons. Pakistan exports both high-qualitybasmati and low-quality, long-grain rice.

• Rice exports from China have declinedfrom over 2 million tons in most years during the



half-decade ending in 2003 to less than 0.9 milliontons during the last few years. Production growthis projected to be very slight during the nextdecade as higher yields are nearly offset bystagnant-to-declining area planted to rice.Consumption growth is negligible as declining percapita rice consumption offsets rising population.China exports high-quality, medium/short-grainrice to Northeast Asian markets and low-quality,long-grain rice to Sub-Saharan Africa and somelower income Asian markets.

stocks in 2003/04. Its cotton imports are expectedto grow more slowly than the rapid increase since2001. However, during the next decade, theincrease in cotton imports by China is projectedto more than offset the decline in imports by othercountries, and China accounts for 46 percent ofworld imports by 2015.

• India's textile industry has beenaccelerating in recent years, but cotton use is notexpected to grow as rapidly as in China, despiteIndia's growing textile exports. India's exportorientation and pace of income growth havegenerally lagged China's, limiting its growth incotton consumption.

• In recent years, Turkey's textile industryhas benefited from favorable trade access to theEU, its major export market for textiles and apparel.However, the end of the MFA quotas will now givelower cost competitors the same favorable accessto EU markets. Turkey's cotton imports areprojected to decline slowly over the next 10 years.

• The EU, Japan, Taiwan, and South Koreaall steadily reduce their cotton imports as textiletrade reforms and/or higher wages in thesecountries drive textile production to lower wagecountries.


(1) Includes Mexico.(2) Malasia, Philippines, Thailand and Vietnam.(3) Bangldesh, India and Pakistan.(4) European Union, former Soviet Union and Other Europe.Source: USDA-ERS (2006).

Completion of the Multi-Fiber Arrangement(MFA) phaseout at the end of calendar year 2004eliminated the quotas that governed much of theworld's trade in textiles and apparel for more than30 years. These restrictions were removed perWTO commitments by the United States, the EU,and Canada, and their removal has been a majorinfluence on world trade patterns in cotton, textiles,and apparel. For apparel production, labor costsare decisive in determining the location ofproduction. As a result, textile production and rawcotton consumption will increase in countrieswhere labor costs are low. High-cost labormarkets in Europe and East Asia continue toreduce their cotton imports through the baseline.

• The textile industries in China, India, andPakistan are the major beneficiaries of the MFA'selimination.

• China has been importing record amountsof cotton following the depletion of government

Globalization is expected to continue tomove raw cotton production to countries whereresource endowments and technology result in thelowest production costs. Land is a key input factor.Traditional producers with large land basessuitable for cotton production are expected tobenefit from post-MFA trade patterns. Such


producer/exporter regions include the UnitedStates, Sub-Saharan Africa, Australia, and Brazil.

• The United States continues as the world'sleading cotton exporter throughout the baselineperiod, with annual exports remaining around 16million bales. Exports dip to 15.5 million bales in2006/07, but grow to almost 17 million bales by2015/16.

• The Central Asian countries of the formerSoviet Union have been the principal competitorsof the United States in world raw cotton marketsfor the last decade. However, governmentpolicies in Central Asia promoting investment intextiles have increasingly resulted in exports oftextile products rather than exports of raw cotton.

• Sub-Saharan Africa has overtaken CentralAsia as the principal competitor. Its cotton exportshave risen in large part due to economic reforms.A large correction in the foreign exchange valueof the currency of the major cotton exportingcountries of West Africa in 1994 led to nearly adecade of growth in West Africa's cottonproduction. As West Africa's production gainsbegan to lag at the end of the 1990s, severalsouthern African countries began increasing theircotton production, aided by reforms such as endingmarketing board monopolies. Continued increasesin output are expected as producers take advantageof more export-oriented government policies.

• Improved Indian cotton crop yields, in partdue to the adoption of genetically modified cotton,have raised India's output in recent years, increasingexportable supplies. This is expected to continue inthe early part of the projection period.

Increased market access achieved underglobal trade agreements was behind much of thegains in animal product trade over the past decade.During the baseline, per capita income growth ina broad number of importing countries is thedriving force behind rising global meat demand.However, animal diseases remain a dampeningforce in world meat trade.

• BSE in Canada and the United States hasresulted in changes in Canada's beef and live cattleexports to the United States. In 2004 and 2005,Canadian beef exports recovered all of the declinefollowing its 2003 BSE case. Canadian exports tothe United States of live cattle under 30 months ofage are assumed to continue. Canadian beefexports, after an initial decline associated with theincrease in live cattle exports, are projected toremain flat over the baseline period.

• EU enlargement results in greatershipments between the EU-15 and the acceding10 countries and restrained trade of meat outsidethe EU-25. EU beef exports remain well belowthe annual WTO export-subsidy limit of 817,000tons, as a stronger euro limits their competitivenessand policy changes lower beef production and theneed to remove beef from the domestic market.

• Argentine exports rose sharply during thelast 2 years. However, export taxes and otherrecent policy changes have made Argentina'sexports less competitive. Beef exports areprojected to decline throughout the baseline, butremain above their pre-2004 levels.

• The baseline assumes that Brazil does notgain nationwide FMD-free status. However,exports from Brazil's expanding pork sector areexpected to be competitive in Russia and otherprice-sensitive markets, and in non-FMD-freemarkets.

• U.S. poultry exports face strongcompetition from other countries. Brazilian poultryproduction and exports rise rapidly, bolstered bylow production costs and very competitive pricesin international markets.

• Because of avian influenza, Thailand'sexports of chilled and frozen poultry meat havebeen banned by importers. However, Thailand'sexports of fully cooked poultry products have

(1) Major exporters.Source: USDA-ERS (2006).


expanded rapidly and partially offset the loss ofuncooked poultry exports.

consumer demand outpaces gains in domesticproduction. Russia remains a large market for EU-subsidized beef exports as well as Brazilian beef.

(1) Select importers.Source: USDA-ERS (2006).

(1) Select importers.(2) EU-25 excludes intra-trade after 2002, EU-15 intra-trade before 2003, Slovenia

beore 1992.Source: USDA-ERS (2006).

Traditionally, beef trade occurred largelybetween developed countries. However, Braziland India have become large exporters of lowerquality beef that is imported by lower incomecountries and countries with less stringent importrestrictions concerning FMD. The baselineassumes gradual recovery of U.S. and Canadianexports to Japan and South Korea.

• Higher income countries, such as Japanand South Korea, increase beef imports, reflectingdomestic cattle sectors that are constrained by landavailability. These imports are primarily of higherquality beef. U.S. beef exports to these countriesare projected to rebuild. Overall imports by Japanand South Korea rise to levels attained prior to theU.S. BSE case in 2003, but the United States losesmarket share because of the increased presenceof Australia and New Zealand in these markets.

• U.S. beef imports, primarily of grass-fedground beef and other processed products fromAustralia and New Zealand, decline slightlythrough the period. However, rising Asian importsof beef from Australia and New Zealand enablethese exporters to maintain their trade levels.

• Robust import growth of U.S. higherquality beef is projected for Mexico.

• The baseline assumes that Russia's tariffrate-quota (TRQ) for beef, first imposed in 2003,remains in effect until 2009. In the longer run, thegrowth in Russia's beef imports resumes as rising

• Mexican pork imports increase nearly400,000 tons between 2006 and 2015, makingMexico the fastest growing pork importer.Increases in income and population are theprimary drivers of Mexico's increasing demandfor pork products.

• Higher income countries of East Asia, suchas Japan, Hong Kong, and South Korea, increasepork imports as their domestic hog sectors areconstrained by environmental issues and importedfeed costs. In South Korea and Japan, consumerconcerns about BSE boost pork consumption andimports.

• As with beef, the baseline assumes thatthe TRQ that Russia imposed for pork in 2003remains in effect until 2009. Although the TRQinitially lowers pork imports, Russia remains amajor destination for competitively priced porkexports from the EU and Brazil as demand growthcontinues to exceed Russian meat producers'ability to respond.

• China's pork production and exportscontinue to rise rapidly. Although its imports alsorise, China's net pork exports rise slightly duringthe projection period.

• Russia is expected to remain the world'slargest poultry importer, with gains in consumerincome fueling increased demand for poultryproducts. Even with rapid gains in production,


Russia's domestic output is expected to lag gainsin domestic demand.

(1) Selected importers.(2) EU-25 excludes intra-trade after 2002, EU-15 intra-trade before 2003, Sloveniabeore 1992.Source: USDA-ERS (2006).

• Russia's TRQ on poultry imports is assumedto remain in effect thorough 2009. Over thisperiod, the low-tariff quota expands slowly andthe over-quota tariff rate is gradually lowered.During the quota period, imports from the UnitedStates are given the largest share of the quota,averaging approximately 75 percent of the total.

• In Mexico, the world's second largestimporter, strong economic growth raises per capitapoultry consumption. Domestic poultry productionrises rapidly but lags increasing consumerdemand.

• Poultry consumption growth in China ismet largely by expanding domestic production,but imports are also projected to grow.

• Exports from Thailand and China will belimited to fully cooked products for most of theprojection period because of avian influenza. Mostof these exports are likely to be higher valueboneless products. For Thailand, exports of cookedchicken products replace some, but not all, of thedecline in its frozen poultry exports.

• Poultry imports into Saudi Arabia continueto rise throughout the baseline. However,consumer preference for freshly killed birds alsokeeps domestic production growing.

• Rising consumer incomes in manydeveloping countries is expected to providegrowing markets for lower valued poultryproducts.

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