No ceiling on food prices.

• Author: Brown, Lester R.
• Position: WORLD WATCHER

WORLD FOOD PRICES have reached the highest level on record. Soaring costs already are a source of spreading hunger and political unrest, and it appears likely that they will climb further in the months ahead. As a result of an extraordinarily tight grain situation, this year's harvest will be one of the most closely watched in years. In 2010, the world produced 2,180,000 tons of grain and consumed 2,240,000 tons, a consumption excess that was made possible by drawing down stocks. To avoid repeating this shortfall and to cover this year's estimated 40,000,000-ton growth in demand, the world grain harvest needs to increase by at least 100,000,000 tons. Yet, that only would maintain the current precarious balance between supply and demand. To get prices down, it would take perhaps another 50,000,000 tons--for a total increase of 150,000,000 tons. Can the world boost the grain harvest to that degree?

In assessing the world grain harvest prospect, we focus on the big three rice, wheat, and corn--that together account for nearly 90% of the harvest. Barley, oats, sorghum, rye, and millet make up the rest.

We start by looking at rice because, as an irrigated crop, its production fluctuates little. The average annual gain in the world rice harvest, which totaled 452,000,000 tons last year, has been 7,000,000 tons. Let us assume that we get a 10,000,000-ton gain in rice.

Wheat, now the world's leading food grain, is much more difficult to assess because so much of the harvest is rainfed, making yields variable. However, most wheat is the winter variety, which is planted in the fall and is dormant in winter before resuming growth in early spring. So, we know that this year's wheat area planted is up by three percent. We also have an early sense of the crop's condition.

China, India, the U.S., and Russia collectively grow half of the world's wheat. China--the top producer--was, until very recently, suffering the worst drought in its winter wheat-growing region in 60 years. Although rain and snow in late February and early March lessened the drought's effect, China's wheat harvest could drop from 115,000,000 to 110,000,000 tons. India, meanwhile, officially is expecting an 82,000,000-ton harvest, up 1,000,000 tons. In the U.S.--the third-ranking wheat producer--the winter wheat crop condition is among the worst in the last 20 years. The Department of Agriculture estimates the harvest will drop from 60,000,000 tons to 56,000,000, and this may be...