When analysts discuss growing import demands for grains, they usually focus on middle income developing and developed countries with a growing middle class.  A recent report by the Economic Research Service (ERS) of USDA, International Food Security Assessment 2012-22, outlines the grain import needs of 76 lower income countries that now have 814 million food insecure people living on less than 2,100 calories per day.  These are commercial markets, but need financial help when grain imports are larger than normal or growth in export earnings slows down.

The 76 lower income countries are in Asia, Sub-Saharan Africa, North Africa and Latin America/Caribbean.  India is included in this group, but China is not.  With population growth over the next ten years driven by current social customs, the key factors for food security and food imports are domestic food production and the financial capacity to pay for imports.  The share of the population food insecure is expected to decline from 24 percent to 21 percent, while the amount of food needed to close the food security gap will remain constant.  The number of food insecure people will increase by 37 million by 2022, a 4.6 percent increase, while the total population expands by 16.4 percent.  In Sub-Saharan Africa the share of food insecure people will decline, but the percentage of the world total will increase.

Grain production in these 76 countries increased from 498 million metric tons (MMT) in 2003 to 617 MMT in 2011 and is projected to increase to 739 MMT in 2022.  Commercial grain imports have grown for 75 MMT in 2003 to 111 MMT in 2011.  By 2022, imports are expected to increase 38 percent to 153 MMT.  Food aid in grain equivalents declined from 8 MMT in 2003 to 5 MMT in 2011.  The assumption is that food aid would remain stable over the coming ten years.  Grain yields increased by 1.6 percent per year for 2000 to 2010, while population grew by 1.9 percent.  Their average grain yield was 1.7 MT per hectare in 2008-10, 53 percent of the world average of 3.2 MT per hectare.  In 16 countries, yields were less than 1.0 MT per hectare.  Lack of technology, like irrigation, fertilizer, improved seeds and machinery, restrains grain yield growth.  Agricultural value added per worker for countries with available data was a low $1,158.

Among the 39 countries from Sub-Saharan Africa, grain production increased from 81 MMT in 2003 to 107 MMT in 2011.  Production is projected to increase to 150 MMT in 2022.  Commercial imports increased from 17 MMT to 25 MMT from 2003 to 2011, while food aid declined from 5 MMT to 3 MMT.  Food aid is assumed to remain stable, while commercial imports are projected to increase to 32 MMT by 2022.  Grain yields are projected to increase 1.6 percent per year in the next ten years, while population grows 2.4 percent, grain imports expand 3.2 percent and export earnings increase 5.1 percent.  The Congo, Burundi, Eritrea and Lesotho have almost 100 food insecurity and is not likely to change over the next ten years.

The 22 Asian countries in the analysis account for two-thirds of the people in the 76 lower income countries, with India accounting for 56 percent of the regional total.  Grain production in the region increased from 369 MMT in 2003 to 458 MMT in 2011, and is projected to grow to 529 MMT in 2022.   Commercial grain imports increased from 25 MMT to 36 MMT and are projected to 45 MMT in 2022; imports will continue to be less than 10 percent of consumption.   Food aid declined from 3 MMT in 2003 to 1 MMT in 2011.  Grain yields for 2012 to 2022 are projected to increase by an average of 1.1 percent annually, the same as the population.  Imports of grain will increase by 4.9 percent per year, while export earnings grow by 5.5 percent per year.  North Korea is the most food insecure nation in the region with grain yields increasing 0.5 percent annually, slightly faster than population at 0.4 percent.

The Latin America/Caribbean region includes 11 countries that increased grain production from 14 MMT in 2003 to 16 MMT in 2011, while imports grew from 12 MMT in 2003 to 16 MMT in 2011.  Grain imports are expected to be 21 MMT in 2022, while production will increase to 20 MMT.  Food aid averaged less than one-half million MT per year.  Grain yields are expected to grow 0.8 per year over the next ten years, while population grows 1.2 percent.  Export earnings are projected to increase 4.4 percent per year allowing grain imports to grow 2.2 percent per year.  Haiti is the most food insecure country in the region, followed by Guatemala with 70 percent of the population food insecure.

The North Africa region, Algeria, Egypt, Morocco and Tunisia, increased grain production from 33 MMT in 2003 to 36 MMT in 2011, while imports increased much faster from 21 MMT in 2003 to 34 MMT in 2011.  For 2022, production is projected at 40 MMT, while imports are expected to be 54 MMT.  Food aid is inconsequential.  Average grain yields are expected to increase 1.1 percent annually over the next ten years and match population growth.  Export earnings growth is expected to average 5.7 percent allowing grain import growth to average 5.2 percent.  Arable land is scarce in Egypt and it has the highest yields among the 76 countries analyzed.  Land is less scarce in Algeria and more abundant in Morocco and Tunisia.

North Africa is the most food secure region analyzed, but depends heavily on food imports now and will be more dependent ten years from now.  Egypt uses irrigation, while the other countries rely on rainfall and have more variable yields.  Egypt will have to rely on export earnings, projected to grow 6.3 percent per year, to feed itself.  That is key for all the regions with increased exports as part of the plan to avoid increased food insecurity.  Countries that rely on raw material exports are particularly vulnerable to periods of low prices.  Asia and Sub-Saharan Africa must rely first on domestic production to avoid increased food insecurity.  Since most of Sub-Saharan Africa’s agriculture is rain fed, variability of yields results in low prices in good crop years and food shortages in other years.

The analysis by ERS is hopeful, but dependent on export earnings growth to generate revenue to continue grain imports increases.  That requires a steady world economy with a growing demand for raw materials and commodities.  Low grain production yields and the variability of yields will continue to put pressures on international supply chains to respond to changing supply and demand conditions.  The countries will need financial assistance when import demands are particularly large and when export earnings growth slows.

Ross Korves is an Economic Policy Analyst with Truth About Trade and Technology

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