OPEC COUNTRIES: DEMAND FOR FOOD IMPORTS THROUGH 1978

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500200024-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 38
• Document Creation Date: December 16, 2016
• Document Release Date: November 9, 2004
• Sequence Number: 24
• Publication Date: December 1, 1975
• Content Type: IR

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Confidential
Intelligence Report
OPEC Countries- Demand for Food Imports Through 1978
On file Department of Agriculture and
Department of Commerce release
instructions apply.
Confidential
ER IR 75-23
December 1975
Copy N2 70
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OPEC Countries: Demand for Food
Imports 'I7lrough 1978
Rapidly expanding demand, lagging domestic agricultural production, and
enormous oil wealth are making OPEC countries a much more important force
in internationa, food markets. In 1974, one-fourth of world rice exports and
one-tenth of wheat exports wept to O}EC countries. With the recent rapid growth
of about 15% annually in OPEC food imports likely to continue for the next
few years, the influence of these imports on international markets will grow further.
In particular, grain prices could become even more volatile in years of tight supply.
We project OPEC food imports in 1978 of about $10 billion at 1974 prices,
more than double the 1974 level. OPEC countries purchased one-third of their
food imports from the United States in 1974, and we expect this share to increase
by 1978.
Yn looking at OPEC food imports through 1978:
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fi# If consumer demand were the sole criterion, imports would increase even
faster than projected. Physical and financial constraints in certain
countries almost certainly will limit growth.
? We estimate that OPEC imports of grain will grow at a 15% rate, to
17 million tons in 1978, compared with nearly 10 million tons in 1974.
Wheat and rice imports will constitute the bulk of this new demand.
? Imports of processed foods - including meat, daily products, and bakery
goods - will boom because OPEC countries will not be able to greatly
expand domestic output of these goods in the short run.
? Iran and Iraq will increase their food imports faster than will other OPEC
countries; together they will account for nearly half of OPEC grain
imports by 1978.
Note: Comments and queries regarding this report are welcomed. They may be
directed to of the Office of Economic Research
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Agricultural production within OPEC countries can be expected to increase
only about 3% annually, mainly because of inadequate water control, insuf';icient
agricultural investment in the past, and poor producer inceutives.
imports will account for a larger share of OPEC consumption, given the slow
growth of domestic food production in the face of a 6% annual growth in demand.
Demand is incruasin~; twice as fast as population because of the rise in private
incomes and government subsidies for ronsum3rs.
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I. This repor. estimates OPEC demand for major food imports through 1978
and describes OPEC dependence on the United States for such imports. The analysis
concentrates on the factors that can influence the level of imports during this
period, such as government policies, larger disposable incomes, shifts in consumer
preferences for food, the possibility for higher domestic output of food in the
short run, and physical restrictions on imports.
2. Specific projections of demand, production, and imports are based on
World Bank, IMF, and USDA sources and on our own assessments. These estimates
all assume normal weather conditions and no substantial change in stock levels.
The analysis for the most part rests on aggregate data and general judgments. We
did not have available, for example, data permitting detailed estimates of c',ianges
in personal incomes, food prices, and income elasticities.
3. OPEC countries included in this discussion are Algeria, Ecuador,
Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, and VenczueIa, with
a combined population of 283 million. The smaller OPEC countries -- Gabon, Qatar,
and the United Arab Emirates - with about I million persons are not included
in the tables or discussion, for lack of data.
Background
4. Many of the 283 million people living in the major OPEC countries are
poorly fed. Algeria even ranks near the bottom of the list of all developing countries
in regard to per capita food supplies, even below Bangladesh and India. Data on
the amount of food available, although far from exact for any developing country,
indicate that the diet in OPEC countries is low in terms of bath calories and protein
and that a considerable share of food must be imported. According to FAO
estimates for 1970, 'the per capita supply of food, including the imports in most
OPEC countries, were 10%-30% below the minimum daily requirment of dietary
energy (see Figure 1). Indonesia, with half of ODE population, has consumption
levels 11% below minimum. FAO also estimates the protein supply in OPEC
countries to be 50%-60% of the supply in Japan and Western Europe. In these
circumstances, newly acquired oil wealth has sparked a rapid rise in demand for
more food and a higher quality diet.
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Figure 1
SELECTED OPEC 'COUNTRIES: POPULATION AND FOOD SUPPLY AS A PERCENT
OF NUTRITIONAL REQUIREMENTS
POPULATION:I
Aabia
Arabia Venezuela
Growth Rate
(Percent)
L`ietary Energy Supply
2
Percent of Minimum Requirements, 1970
ALGERIA
ECUADOR
INDONESIA
IRAN
IRAQ
LIBYA
NIGERIA
SAUDI PRABIA
VENEZUELA
As rl nndyear.
2 Requirements in terms of ralories per capita were estimated by considering physiological requirements plus
10% for waste at household level.
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5. Food production in the OPEC countries has been increasing slowly. As
a group the OPEC countries produced about 36 million metric tons of grain in
1974' consisting of 17 million tons of rice, 13 million tons of coarse grains,'
and 6 million tons of wheat (see Table 11). This level if production shows an
average increase of only 2% annually over the level of 1966-70. Substantial
year-to-year fluctuations have occurred in individual countries because of the
variability of rainfall (see Figure 2). Indonesia is the only OPEC country in which
grain production, mainly rice, has been increased substantially - by restoring old
irrigation systems and introducing new high-yielding seeds. Like all other OPEC
countries, Indonesia nonetheless remains heavily dependent on timely rainfall to
obtain good crops.
6. Food imports by OPEC countries rose sharply after the late 1960s. Grain
imports ruse to nearly 10 million tons in 1974, 2.6 times the 1966-70 average
of 3.8 million tons (see Table 2). Iran and Iraq accounted for the major part
of the increase. In 1974, Iran imported 2.1 million tons, nearly 11 times the
1966-70 level and 21% of total OPEC grain imports. Although still small in volume
by comparison, Iraq's imports of grain reached an estimated 875,000 tons in 1974,
nearly eight times the 1966-70 level. Algeria and Indonesia also im.3orted substantial
volumes of grain in 1974, 1.9 million and 1.8 million tons, respectively. In 1974,
grain imports by all OPEC countries consisted of aboui two-thirds wheat, with
the remainder made up of nearly equal amouats of rice ^nd coarse grains (see
Tables 3-5`. The value of all agricultural imports showed an even greater increase,
from the 1966-70 average of $1.3 billion to $4.6 billion in 1974 (see Table 6),
because of (a) sharp price rises for grain, vegetable oils, and sugar and (b) growth
in the share of high-value foods, such as meats and other processed foods.
7. Factors affecting all thrE - aspects of the problem - demand, production,
and imports - are presented in greater detail in the following discussion and country
sections. Government policy is highlighted as a factor that influences all aspects
of the problem. The various OPEC governments are anxious to raise food
consumption levels and improve the health of their people. They are trying to
make food available to all income levels by subsidizing or controlling food prices
and by importing food to supplement domestic production. These policies tend
to help the consumers and at the same time discourage domestic production. The
1. Production data for 1974 refer for the most part to the crop harvested in the last half of 1973 and
consumed during 1974. Production data are presented in this manner to facllitat. the addition of production
and import data, which refer to calendar years, to derive an estimate of apparent consumption during the
calendar year.
2. Corn, oats, barley, sorghum, and millet.
3. For numbered tables, see the Appendix.
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SELECTED OPEC COUNTRIES: PRODUCTION' AND IMPORTS2 OF GRAIN
6
19f6.70 1971
Annual Average
1966-70 1971
Annual Average
Imports
Production (Lagged one half year)
1968-70 1971
Annual Average
1966.70 1971
AnnualAverage
1 Includes wheat, milled rice, corn, oats, barley, millet, and sorghum. Data refer to crops harvested for the most part
in the last half of the previous year and consumed during the yea stated. Data era presented in this manner in order to
facilitate the addition of production and import data, which refer to calendar years, to derive an estimate of the total grain
available during any on'j year.
2 Corn. oats, barley, sorghum, wheat, and rice.
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governments also have policies designed to increase domestic production. These
various policies - especially their effect on food imports - are examined in this
report.
8. As a group, the OPEC countries by 1974 had expanded their apparent
consumption of grains 4% annually on the average compared with 1966-70 (see
Figure 3). Demand for :neat, vegetable oils, and luxury foods showed even larger
increases. We estimate that demand for grain in OPEC countries as a group will
rise 6% annually through 1918, as shown below:
Production
Imports
Apparent
Consumption
1974 annual average
increase over 1966-70
2
17
4
Projected 1968 annual
average increases over
1974
3
15
6
The Middle Eastern OPEC countries account for the largest share of the projected
jump in consumption, with Iran, Iraq, Saudi Arabia, and Libya each experiencing
increased demand of at least 10% annually (see Table 7;. The overall rate is held
to 6%, mainly t ccause demand in Indonesia - which accounts for half the OPEC
population - probably will not grow faster than 3.5% annually.
9. The sharp rise in population accounts for about half of the increasing
demand. Population growth rates, while subject to dispute,' equal or exceed 3%
in most OPEC countries. Chances are nil for a downturn in these rates over the
next few years. A number of OPEC countries, particularly those in the Middle
East, consider a large population desirable. Most of the others have religious and
political barriers to introduction of birth control progams. Even successful birth
control programs would not appreciably slow population growth for a decade or
more.
10. Increasing per capita demand accounts for the other half of the expansion.
Governments of Middle East OPEC countries in particular arc encouraging higher
4. Estimates of the Demographic Analysis Division of the US Department of Commerce, presented in Figure 1,
are generally lower than those from alternative sources such as the IMF and World Bank reports and country
sources.
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OPEC COUNTRIES GRAIN PRODUCTION, IMPORTS,
AND TOTAL SUPPLY'
1966-70
Annual Average
1978
Projection
Grains include wheat, milled rice, corn, oats, barley, sorghum, and millet. Production data refer to
crops harvested for the most part in the last half of the previous year and consumed in the year stated.
507813 1175
food consumption and better nutrition: (a) directly through subsidies and other
policies designed to keep food prices low and (b) indirectly through policies that
lead to higher private incomes. 'The rapid growth in oil revenues is being translated
into rising incomes mainly through stepped-up local government expenditures. In
OPEC countries outside the Near East, incomes are rising more slowly; in these
countries, people use a larger proportion of any additional income t'>' improve their
meager diets.
11. In most OPEC countries, real personal consumption outlays have been.
rising approximately 25% per year since 1973, resulting in a sharp increase in the
demand for greater quantities and higher quality foods. People with higher incomes
are switching from coarse grains and rota crops to wheat and rice as well as
increasing their consumption of meat and dairy products. City dwellers in particular
are increasing their intake of meat, bakery products, and other prepared foods.
In all OPEC countries, the rural-urban migration is continuing.
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12. The thousands of foreign technicians and workers, brought in by OPEC
governments to push development, are accentuating the demand for more and better
quality food.
Supply Elements
13. OPEC governments arc currently giving higher priority to agriculture. with
plans to expand food production at a rapid rate during the next few years. They
will do well, however, to increase food output 3% a year, compared with 2% since
the late 1960s.
14. In most OPEC countries, bringing new land iv to cultivation requires
expen0ve investments in irrigation or drainage. Although OPEC countries can easily
buy or produce chemical fertilizers that will improve yields, they lack adequate
water supplies and/or water control necessary for the effective use of large amounts
of fertilizer and improved seeds. In Algeria, Libya, and most notably Iraq,
substantial efforts are needed to raise low crop yields and increase the cultivated
area because of past neglect and poor cultivation practices.
15. Government policies act as disincentives to agricultural production in at
least six of the OPEC countries, especially in Iran, Ecuador, and Venezuela (see
Table 3). These policies include low fixed prices to producers, subsidized food
imports that compete with locally grown food, and government preemptive buying
at noncompetitive prices - all policies designed to keek prices low for consumers.
In other instances, production is discouraged by (a) the imposition of export taxes
and controls, (b) restrictions on credit, and (c) lack of security in land tenure.
Efforts to stimulate agricultural production are limited by the partly conflicting
objectives of rapidly raising urba:i living standards and holding down inflation. In
most OPEC countries these objectives are still being given priority over agricultural
developments.
16. An almost univeral problem among OPEC countries is the inadequacy
of past investment in agricultural t,-insport and marketing facilities. Recently, nearly
all of the countries have stepped up efforts to shift more investment to agriculture,
but results have been slow in coming.
Imports
17. Based on our projected grain production and demand figures, OPEC
import requirements for grain will total 17 million tons, or nearly 70% more than
the 1974 level. This expansion implies a growth rate of 15% annually, only slightly
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less than the 17% annual increase experienced between the late 1960s and 1974.
Dependence on imports, however, increases from 21% of OPEC grain consumption
to nearly 30% in 1978. Iran and Iraq will increase their food imports faster than
will other OPEC countries; together they will account for nearly half of OPEC
grain imports by 1978, as shown in Table S.
18. Grain imports could be below this projected level because of physical
constraints, such as limitations on port capacity and rudimentary marketing and
distribution systems. Indeed, the above projection would be even higher if it were
not for these constraints. Iran, Iraq, and Nigeria will continue to have serious
transport congestion. Foreign exchange problems in the case of some OPEC
members - especially Algeria - will be another factor holding down imports. In
poor crop years, however, top priority will be given to food imports, thus permitting
the volume to shoot up even more steeply.
19. Wheat will make up about the same share of the imports in 1978 as
in 1974. OPEC imports of wheat amounted to 6.3 million tons in 1974, about
two-thirds of the total grain imported and 15% of the value of all agricultural
imports. Rice imports reached 1.9 million tons and coarse grains nearly the same
amount. The demand for bread is rising even faster than the booming demand
for rice and feedgrains. Some OPEC countries are installing more flour mills and
bakeries, largely to process imported wheat. Imports of rice and coarse grains will
increase also, even though they are Vie major grains produced in OPEC countries.
20. Imports of other foods, especially meat and processed foods, will also
continue to increase rapidly. The Middle Eastern OPEC countries - particularly
Iran and Iraq - are also planning to boost livestock production by importing
breeding stock and feedgrains.
2:. In the long run the budding livestc: k industry will raise feedgrain imports
substantially. In the short run, however, feedgrain imports probably will continue
to increase at about the same rate as wheat imports because (a) some imported
breeding animals will be located in rural areas where they will feed mainly on
grass and (b) others will be fed on domestic feedgrains replaced in the human
diet by imported wheat. To the extent that domestic livestock plans fall behind
schedule, additional imports of meat and other products will take place. In turn,
projected feedgrain imports could be cut back. The value of all OPEC food imports
in 1978 probably will reach about $10 billion at 1974 prices.
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Impact of OPEC Imports in World Markces
22. OPEC grain imports at the projected levels are bound to have an
appreciable impact in world wheat and rice markets. In 1974, OPEC imports of
1.9 million tons of rice accounted for one-fourth of the estimated 7.5 million
tons imported by all countries. Middle Eastern OPEC countries are expected to
buy increasing quantitites of high-quality rice. Whereas OPEC imports of wheat
accounted for 10% of the wheat entering wcrld trade in 1974, by 1978 the share
will be as high as 15%. OPEC ability to buy even at inflated prices gives it special
weight in world markets. In case of a world shortfall, most OPEC countries will
not have to cut their purchases. OPEC now accounts for only a tiny share of
world trade in coarse grains; even with rapid growth through 1978, such imports
will continue to be small.
23. The physical restraints already mentioned will keep OPEC states from
building large surplus stocks within their own countries as a matter of national
policy or for use as either strategic or economic weapons. Large foreign exchange
holdings, however, do give the rich OPEC countries the potential to speculate in
grain and other international commodity markets. Although some rich individuals
from OPEC countries may speculate, we have no evidence to predict massive
intervention by OPEC governments in these markets.
24. The United States traditionally has been an important supplier of wheat
to all OPEC countries and a less important supplier for other agricultural goods.
OPEC countries have looked to Western Europe for meat and processed foods and
to South Asia for rice. The changes in the US share of OPEC rice and coarse
grain purchases, as shown in the following tabulation, reflect US ability to supply
products at a time of world shortage.
By volume
Wheat
39
66
55
64
Rico
39
41
10
22
Coarse grains
32
50
54
44
The US share of the value of all OPEC ag:,-icultural imports has risen steadily,
however, from 20% in 1971 to 33% in 1974.
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25. We predict that the US share of OPEC grain purchases will grow, political
relations permitting. The United States is the largest and most reliable supplier
of wheat and feedgrains. The least affluent OPEC members will continue to seek
food on concessionary terms from the United States. Sales of US processed foods
have expanded as OPEC consumers have developed a taste for US brands; they
probably will meet more competition from European suppliers in the futuri_.
26. We expect US agricultural sales to OPEC countries to continue to grow
faster than US sales to other areas. In US fiscal year (FY) 1975, OPEC countries
accounted for 8% of the val':.: of all US agricultural exports, compared with about
5% in FY 1974 and earlier years. Iran was primarily responsible for the sharp
increase in FY 1975, as indicated in the following tabulation:
Value of US exports
to OPEC countries
1,040
1,726
Iran
183
757
Iraq
63
124
Saudi Arabia
92
124
Subtotal
338
1,005
Indonesia
156
72
Other
546
649
While prices of the commodities sold to Iran rose, volume, especially with rice
and other grains, grew much more. We expect that sales to Iran, Iraq, and Saudi
Arabia will continue to expand briskly, making them even more important US
customers by 1978. Sales to other OPEC countries will expand less rapidly and
be less consistent. Indonesia will cut back purchases of grain from the United States
when its crops are good and expand them when crops are poor.
Country Descriptions
27. Iran is the largest importer of agricultural goods among the OPEC
countries. The degree of self-sufficiency in grain has fallen dramatically since the
late 1960s, mainly because of the government's neglect of agriculture and its p, iicies
leading to increased demand.
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Iran: Agricultural Profile
Population (million)
33.2'
GNP (billion US $)
61
Per capita "NP (US $)
1,830
Food production (index: 1961-65 = 100)
129
145
Per capita food production (index: 1961-65 = 100)
112
105
Agricultural imports (million US $)
1211
800
Agricultural share of total imports (percent)
6 2
8
Grain self-sufficiency (percent)
98
74
Production
Total grain
6,140
6,000
Wheat
4,264
4,200
Rice (milled)
766
894
Coarse grains
1,110
906
Sugar
489
650
Imports
Total grain
191
2,085
Sugar (raw)
124
300
Exports
Cereals
74
....
1. Data for mid-1975.
2. Data for 1968-70.
28. Iranian officials indicate that demand for agricultural products has been
rising by 12% annually. With Iran's population growing by about 3% annually,
the rapid demand growth mainly reflects rising per capita incomes and government
welfare programs. Real GNP increased 25% annually in 1974 and 1975. This growth
has been accompanied by a rapid rural/urban shift of workers and the emergence
of a middle class of well-to-do managers and businessmen. Moreover, the Iranian
government is subsidizing the costs of major food items, such as cereals, vegetable
oil, and sugar, in an effort to raise the daily per capita food intake. As a result
of these income-related factors, the demand for high-protein foods is rising rapidly.
The government reports that meat consumption has increased from 8 kilograms
per capita in 1960 to about 20 kilograms in 1975. Apparently much of the increase
has occurred in the last two years.
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29. We estimate that demand for food will continue to grow 12% annually
through 1978. Demand for grain will likely grow at least 10% a year, reflecting
a rapid rise in animal feeding as well as human consumption.
30. Iranian agricultural output has not kept pace with population growth.
Rice, cotton, and sugar beets have posted good gains in the past few years; wheat
and dairy products have increased slightly; and barley and tobacco have declined.
31. The lackluster perfor-ance of agriculture has been due to low government
priority, inadequate water supply, and basic institutional problems, which are slow
to change. Despite an extensive program of large-scale dam construction begun
in 1962, water distribution systems have not been completed, and more than half
of Iran's agriculture continues to be primarily dependent on rainfall. Wheat - Iran's
principal grain - especially requires adequate rainfall because almost two-thirds of
the area is not irrigated. The shortage of water remains the major constraint to
expand cultivation in general. With more irrigation the cultivated area could be
doubled.
32. The government has begun programs to expand credit to small farmers,
to teach modern farming techniques, and to improve marketing and pricing systems.
The livestock industry, subject to earlier neglect, is now receiving governmental
encouragement, Nomadic herding is being replaced by modern methods, and the
quality of the herds is being improved through imports of foreign breeding stock.
33. Tehran's Five-Year Plan (FY 1973-78) calls for expanding agricultural
output 7% annually. These goals are unrealistic because of both the natural
limitations and the slow pace of the bureaucracy. A 4% annual growth rate seems
more plausible. Some land normally in grain production is being shifted to
horticultural use, with the resuli that grain output may not increase faster than
2% annually.
Imports
34. Iran's agricultural imports nearly doubled in value in 1974 and are
expected to increase another 25%, to about $1 billion, in 1975. Iran is now the
sixth largest market for US agricultural products.
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35. Grails imports have increased from an annual average of 190,000 tons
in 1966-70 to 2.1 million tons in 1974. If domestic production grows at the low
rate predicted, demand for imported grains would reach 6 million tons by 1978.
36. Transport problems may limit Iran's ability to move this amount of grain
to the consumers. Port and rail facilities, strained by a combination of industrial,
military, and consumer imports, are now backlogged. Internal distribution is
hobbled by inadequate storage, road, and rail service facilities. The government
plans to boost nominal port capacity in Iran for all commodities from the present
4 million tons to 28 million tons in 1978, a goal impossible to meet. We estimate
that the improvements that will take place will allow grain imports of about 5.5
million tons in 1978.
Iraq
37. After years of neglect, Baghdad is beginning to pay attention to
developing agriculture and improving diets. Iraq starts with the advantage of better
agricultural land than other Persian Gulf countries.
38. The huge increase in oil revenues has led to direct improvements in
consumer food intake. Controls on food imports have been cut rick sharply, and
subsidies have been used on an increasing scale to hold down the prices of basic
foods. These policy changes, together with new income distribution programs and
expanded disposable income, have led to a marked increase in household demand
for food. The increase is particularly pronounced in the cities, where half of Iraq's
11 million people now live.
39. After practically no change in th : low per capita food intake from 1960
to 1973, consumer food demand began spurting in response to these new forces.
We foresee a rise of about 10% annually for at least the next few years. A third
of the increase will be attributable to population expansion, estimated at 3.4%
per year. The remainder will be linked to the higher standards of income and
consumption and to the growing degree of urbanization.
40. Wheat, barley, and rice are the principal grain crops. Nongrain crops
include melons, dates, citrus fruits, cotton, oil seeds, tobacco, broadbeans, and
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Iraq: Agricultural Profile
Population (million)
11.01
GNP (billion US $)
13
Per capita GNP (US $)
1,180
Food production (index: 1961-65 = 100)
127
153
Per capita food production (index: 1961-65 = 100)
107
105
Agricultural imports (million US $)
911
570
Agicultural share of total imports (percent)
16 2
20
Grain self-sufficiency (percent)
95
67
Production
Total grain
2,384
1,782
`Wheat
1,176
957
Rice (milled)
273
145
Coarse grains
935
680
Sugar
6
20
Imports
Total grain
113
875
Sugar (raw)
283
393
1. Data for mii-1975.
2. Data for 1968-70.
lentils. Livestock accounts for 35% of the value of agricultural output. Most
livestock are in migratory herds, grazing on open lands rather than eating
concentrated feeds.
41. Food production has apparently increased at an annual average rate of
3% since the late 1960s, or perhaps slightly behind the population growth rate.
Livestock and a few crops such as dates have done reasonably well, whereas grain
production has failed to keep pace with population. Except for the bumper crop
year that ended in 1973, grain output in the 1970s has not topped the average
of the late 1960s. Moreover, the fluctuations in output have been the most severe
among OPEC countries. Output swung from a low of 1.5 million tons in 1972
to 3.7 million tons in 1973.1 Scanty rainfall reduces acreage and yields in both
rain-fed and irrigated acreage. In recent years, rice acreage also has been trimmed
because of (a) the dispute with Syria over the Euphrates water and (b) serious
salinity problems in some irrigated areas.
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42. The government is now attempting to push agricultural production.
Agricultural investment in the, upcoming development plan (1976-80) features
improved field drainage systems to overcome salinity and to speed land reclamation.
In 1974, land reform legislation gave farmers and cooperatives tenure, which should
lead to improved farming techniques. Increased fertilizer production is planned for
the next five years. These greatly expanded efforts will take years before they
are translated into substantially higher yields. We thus do not expect output to
increase by more than 3% a year over the short term.
Foreign Trade
43. The erratic pattern of grain imports in recent years makes any projection
difficult. In 1971, because of a major drought, Iraq imported 1.3 million tons
of grain; in 1971-74 imports averaged about 700,000 tons. Based on our projections
of production (from a 1971-74 average base) and demand, we expect imports to
reach 1.8 million tons in 1978, assuming average weather. During this period, Iraq
will continue to diversify agricultural imports, increasing purchases of meats,
breeding animals, dairy products, and processed foods.
44. With only a small arable acreage, Saudi Arabia must import most of its
food. Despite substantial government spending on agriculture, output is not
expected to keep pace with rapidly rising demand.
45. We project a 10% annual rise in the demand for food through 1978.
Population is expected to grow 3.8% annually during the r ext five years,
attributable to improved diet, better health care, government programs to encourage
births, and, most important, the inflow of sizable numbers of foreign workers and
their families. About a tenth of the population is now foreign, and the government
expects that half a million more laborers and technicians will be needed.
46. Agriculture in Saudi Arabia is undergoing a massive transiormation. The
amount of arable land appears to have increased from less than I million hectares
in 1971 to about 1.4 million at present, and further expansion to nearly 4.2 million
hectares is planned by 1990. The major constraint is paucity of water to make
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Saudi Arabia: Agricultural Profile
Population (million)
6.1 t
GNP (billion US $)
42
Per capita GNP (US $)
6,890
Food production (index: 1961-65 = 100)
120
155
Per capita food production (index: 1961-65 = 100)
105
115
Agricultural imports (million US $)
1732
570
Agricultural share of total imports (percent)
222
15
Grain self-sufficiency (percent)
50
4`.)
Production
Total grain
479
622
Wheat
150
150
Coarse grains
329
472
Sugar
Imports
Total grain
472
657
Sugar (raw)
68
175
1. Data for mid-1975.
2. Data for 1968-70.
the land productive. Some expansion is under way in deep-well drilling, and the
government plans to expand the supply of desalinated water greatly by 1980. While
achievement of the ambitious acreage expansion is unlikely, substantial progress
in output - possibly to a 6% annual growth rate for agriculture in general and
4% for grains - can be expected as increased acreage, better water supplies, and
improved technology begin to pay off.
Foreign Trade
47. With imports of about 660,003 tons of grain in 1974, Saudi Arabia was
dependent on foreign supplies for about 50% of its grain needs. We estimate imports
at about a million tons in 1978, despite improvements in domestic agriculture.
One reason for this greater dependence on foreign grain is the likely cultivation
of vegetables, often at the expense of less profitable grain crops. The large number
of foreign workers will accelerate imports as they buy food that closely reflects
their tastes.
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48. Indonesia accounts for half of OPEC population and grain production.
It is also distinctive among member states for its striking increase in agricultural
output in the past five years. The government likely will continue strong support
of agriculture.
Indonesia: Agricultural Profile
Population (million)
131.2'
GNP (billion US $)
22
t- r capita GNP (US $)
170
Food production (index: 1961-65 = 100)
112
147
Per capita food production (index: 1961-65 = 100)
98
108
Agricultural imports (million US $)
2562
680
Agricultural share of total imports (percent)
352
i8
Grain self-sufficiency (percent)
94
92
Production
Total grain
13,199
17,522
Wheat
....
....
Rice (milled)
10,421
14,928
Coarse grains
2,778
2,594
Sugar (raw)
663
1,025
Imports
Total grain
973
1,784
Sugar (raw)
79
200
Exports
Grain
107
214
1. Data for mid-1975.
2. Data for 1968-70.
49. Oil revenues have yet to be translated into the sharply rising per capita
food demand experienced in some other OPEC countries. The increased demand
for food is coming mainly from population pressures. The huge population is
growing by at least 2.5% annually; continued migration from farms to cities has
meant an even higher growth in urban areas. To date birth control programs have
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had no appreciable effect on demographic rates. The food-population problem is
aggravated by the concentration of people in Java, where most farmers cultivate
extremely small tracts. We expect total demand for food to increase at about 3.5%
annually; in addition to the minimum 2.5% population growth, increases in per
capita income will add 1% annually, assuming moderate success in agricultural and
industrial development plans.
50. The deterioration of agriculture in Indonesia, which began during World
War II and continued through the Sukarno era, was reversed in 1970. Real growth
in the sector has subsequently averaged 4.2% despite a drought in 1972. Programs
initiated during the First Five-Year Plan (1969-73) that had positive effects on
yields and output included
? rehabilitation of irrigation systems;
? promotion of high-yielding varieties of rice, more fertilizer, and new
farming practices; and
? improvement in marketing systems.
Most attention has been given to rice production, which has increased by about
6% annually since the late 1960s.
51. The World Bank has estimated that rice production will increase 3.5%
annually through 1978. The government is planning to continue price support
programs, build decentralized storage facilities, increase fertilizer production, and
expand its extension service to include other crops as well as rice. The government
is also expected to boost expenditures on transportation and communications to
enhance domestic marketing. Realizing the seriousness of its food-population race,
the government has obtained foreign technical assistance for agriculture.
Foreign Trade
52. If rice production and demand both increase by 3.5%, grain imports
would continue at the 1974 level of about 2 million tons. In this period, wheat
imports will grow relative to rice imports. While wheat is not grown locally,
Indonesians are developing a taste for bread and bakery products. Imports of meat,
dairy products, and processed foods no doubt will increase. The major constraint
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to larger food imports will be the projected decline in the current account surplus,
a decline attributable to high loan repayments not offset by new foreign aid.
Libya
53. With only 2% of its land arable, Libya imports almost all of its food.
Per capita food imports are among the highest of the OPEC nations. Nonetheless,
because the population is so small (2.4 million), the food import bill aggregated
only $375 million in 1974.
Libya: Agricultural Profile
Population (million)
2.4'
GNP (billion US $)
11
Per capita GNP (US $)
4,600
Food production (index: 1961-65 = 100)
140
203
Per capita food production (index: 1961-65 = 100)
119
14:,
Agricultural imports (million US $)
1052
375
Agricultural share of total imports (percent)
172
12
Grain self-sufficiency (percent)
37
25
Production
Grain
Imports
Grain
26?,
376
Sugar (raw)
67
92
1. Data for mid-1975.
2. Data for 1968-70.
54. Libyan demand for food has climbed more than 15% annually since 1970
because of large increases in petroleum earnings and personal incomes. The
population is growing, nearly 4% annually, and large numbers of foreign workers
are being brought in, to man development projects. Rural to urban migration and
government expenditure of $350 million in 1975 for meat, rice, flour, and sugar
subsidies also help explain the greater and more expensive consumption of food.
Growth in demand will probably fall in the next few years, to a still hefty 10%,
because of foreign exchange limitations.
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55. Lithya produces about 25% of the cereal it consumes, as well as some
fruits and vegetables. Most output comes from rain-fed land in a narrow coastal
belt and is subject to wide annual variations, depending on the weather.
56. Over the past 15 years, opportunities in the petroleum sector have caused
a wholesale exodus of people and capital from agriculture. Production thus
stagnated in the 1960s and early 1970s. In an effort to reverse this trend, the
Revolutionary Command Council (RCC) has elevated the importance of'gricultural
development and earmarked almost one-third of the funds budgeted under the
1973-78 development plan fcr agricultural projects. Efforts are concentrated on
extending irrigation facilities to reclaim land and to make existing acreage more
productive. In addition, the livestock and dairy industries are being enlarged, and
machinery and improved farming techniques introduced. This program has started
to pay off in increased output; agricultural production probably will increase at
a 3% rate over the next few years.
Imports
57. The larger part of Libya's grain neec.s must be imported even though
grain is the most important domestic crop. Grain imports vary considerably
depending on the size of local harvest. On the average, they have increased about
10% annually in recent years. Imports of coarse grains, used to feed the e- - , pqnding
livestock population, are growing even more rapidly. Despite increasing
balance-of-payments pressures, we expect Libya to increase its grain imports to
600,000 tons by 1978, compared with 376,000 tons in 1974.
Nigeria
58. The bulk of Nigeria's large population is in the subsistence sector. This
results in a high degree of self-sufficiency in foodstuffs.
59. Food demand is expected to increase moderately faster than the 2.5%-3%
annual population growth for the next several years. Most of the increase in per
capita food consumption will result from a rise in the urban population and a
sharp increase in incomes. As for the rural areas, higher oil revenues will begin
to have a substantial impact only after several years.
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Nigeria: Agricultural Profile
Population (million)
62.01
GNP (billion US $)
21
Per capita, GNP (US $)
330
Food production (index: 1961-65 = 100)
101
104
Per capita food production (index: 1961-65 = 100)
88
79
Agricultural imports (million US $)
993
276
Agricultural share of total imports (percent)
102
10
Grain self-sufficiency (percent)
97
95
Production
Total -,rain
7,130
7,594
Wheat
6
4
Rice (milled)
252
339
Coarse grains
6,872
7,251
Sugar (raw)
14
303
Imports
Total grain
219
408
Sugar (raw)
60
1403
1. Data for mid-1975.
2. Data for 1968-70.
3. Data for 1973.
60. Modernization of Nigerian agriculture will proceed slowly. Although the
national development plan nominally gives a high priority to agriculture, in practice
it places much greater emphasis on industry, where concrete results are more quickly
re Jized. Nevertheless, we expect food output to continue to keep pace v;'ith risLig
demand in the t??-,t rural areas and even to provide much of the basic needs of
the growing cities. i'dchnology is being improved, and land is available to permit
the increase.
Foreign Trade
61. Nigeria does not produce wheat. The increasing urban demand for bread
products thus will lead to increased wheat imports. In 1974, Nigeria imported
375,000 tons of wheat, compared with an annual average of about 170,000 tons
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in the late 1960s. Perhaps as much as a quarter of the 1974 wheat imports was
destined for relief of Nigeria's drought-stricken northern areas and for transshipment
to the drought-affected countries, of the Saliel. These imports for reexport declined
in 1975; the slack was taken up by purchases to meet rising interna, urban demand.
We expect that wheat imports will continue to climb next year; by 1978, grain
imports could reach as much as 900,000 tons. Any larger quantities will be difficult
to Handle because the congested ports are not expected to be enlarged much during
the next few years. The rise in urban demand will also lead to increased imports
of meat and processed foods.
62. Three-quarters of Venezuela's people already live in urban areas, and the
rural-urban shift is continuing. Th1 remaining cash farmers are turning to the
production of high-value foods s.tch as meats.
Venezuela: Agricultural Profile
Population (million)
12.01
GNP (billion US $)
32.32
Per capita GNP (US $)
2,690
Food production (index: 1961-65 = 100)
133
176
Per capita food production (index: 1961-65 = 100)
110
122
Agricultural imports' (million US $)
1733
540
Agricultural share of total imports (percent)
103
12
Grain self-sufficiency (percent)
49
36
Production
Total grain
771
759
Wheat
1
1
Rice (milled)
150
193
Coarse grains
620
565
Sugar (raw)
447
551
Imports
Grain
799
1,350
Sugar (raw)
....
1.7
Exports
Grain
40
....
Sugar (raw)
41
2
1. Data for mid-1975.
2. Estimated.
3. Data for 1968-70.
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63. Venezuelans have a higher per capita caloric and protein intake than
people in other OPEC states. Demand for food can be expected to increase faster
than the 3% population growth rate because of higher incomes and recently
instituted income distribution programs.
64. Agricultural production has increased 5% annually since 1965, led by
higher meat and sugar production. Rice output has increased sufficiently to cover
rises in domestic demand and allow a small amount for exports. Venezuela produces
almost no wheat. Production of feedgrains has fallen despite increased demand
to feed livestock. The 5% annual overall output expansion rate is expected to
continu; for at least several years; the decline in feed grain output probably will
be reversed.
65. Caracas began an ambitious program to stimulate production in 1974
by streamlining agricultural credit facilities, raising support prices, increasing
investment in irrigation and drainage facilities, and upgrading technical assistance.
Foreign Trade
66. We estimate that grain imports will increase 7.5% annually from 1974
to 1978, or from 1.4 million to 1.8 million tons. Wheat will continue to make
up the largest share of the volume as the demand for bread products grows and
as domestic acreage is shifted toward feedgrains. Imports of feedgrains will gradually
rise; they will be constrained because of the current account deficits expected by
1977.
Algeria
67. Algerian dependence on food imports is rising because of the
government's inattention to agricultural development and its current land reform
program. Algeria ranks as the lowest or all OPEC members in per capita food
consumption.
68. Food consumption has been growing about 4% annually, slightly in excess
of the 3.2% population growth rate. Pressures for improvement in the Algerian
23
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Algeria: Agricultural Profile
Population (million)
16.81
GNP (billion US $)
12
Per capita GNP (US $)
710
Food production (index: 1961-65 = 100)
97
101
Per capita food production (index: 1961-65 = 100)
84
72
Agricultural imports (million US $)
1742
479
Agricultural share of total imports (percent)
202
10
Grain self-sufficiency (percent)
75
41
Production
Grain
1,794
1,286
Wheat
1,391
850
Coarse grains
403
436
Sugar
7
253
Imports
Grain
597
1,855
Sugar (raw)
254
2783
1. Data for mid-1975.
2. Data for 1968-70.
3. Data for 1973.
diet will pick up through at least 1978 as a consequence of the steady migration
to the cities, the growth in foreign population, and the return of workers from
Europe. A further stimulus comes from government subsidies for basic foods such
as cooking oil, semolina, flour, and sugar. Algiers spent $500 million for food
subsidies in 1974; the amount will probably reach $800 million in 1975.
69. Algerian agricultural production declined during the early and mid-1960s
and has subsequently stagnated. The exodus of ! French farmers and other disruptions
associated with the war for independence accounted for most of the initial decline.
Subsequently, heavy emphasis, on industrialization has left agricultural development
largely neglected. Crops are -ntlnerable to drought, flash floods, and drying winds
from the Sahara. Since i970, Algeria has experienced two good and two poor
harvests.
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70. Weather aside, past and current Algerian policies preclude any substantial
increase in agricultural output for several years. Algeria is investing in an ambitious
industrial development program; agriculture gets only the crumbs. Moreover, Algeria
is implementing an agrarian reform program, Which aims at distributing privately
held property to landless peasants and at settling many of the nomadic peoples.
Present .wners presumably are liquidating their capital, and the new owners cannot
be expected to maintain let alone step up production for at least several years.
Imports
71. Over the past decade, food imports have been gradually increasing, with
wide year-to-year variations, depending on the domestic harvests. Wheat is the
principal agricultural import. Algeria is the world's largest importer of durum wheat,
used in making couscous, the national ~,iish. In 1974, Algeria imported 1.6 million
tons of wheat to supplement a subnormal grain harvest of 1.3 million tons. The
country also is importing increasing quantities of coarse grains - 250,000 tons
in 1974 - to help feed its expanding livestock population.
72. Foreign exchange constraints compel the country to limit grain imports
to the minimum needed to satisfy domestic demand; upgrading imports to more
expensive foods is currently out of the question. Still, with domestic production
stagnating, population increasing 3% to 4% annually, and urban migration
continuing, imports will probably rise at least 5% annually through 1978. By then,
grain imports will total 2.3 million tons, or more than 60% of the country's grain
consumption.
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APPENDIX
STATISTICAL TABLES
Table 1
OPEC Countries: Production of Grain'
Average
1966-70
1971
19.'2
1973
1974
Total
32,524
35,086
35,372
35,409
36,168
Algeria
1,794
2,059
1,644
2,452
1,286
Ecuador
473
522
482
504
477
Indonesia
13,199
14,995
15,768
14,775
17,522
Iran
6,140
5,107
6,366
6,477
6,000
Iraq
2,384
2,227
1,458
3,668
1,782
Libya
154
70
85
113
126
Nigeria
7,130
8,603
8,135
6,194
7,594
Saudi Arabia
479
623
615
622
622
Venezuela
771
880
819
604
759
1. Including wheat, milled rice, corn, oats, barley, sorghum, and millet. Data refer to crops harvested for the
most part in the last half of tlr. previous year and consumed during the year stated. Data arc presented in this
manner in order to facilitate the addition of production and import data, which refer to calendar years, to derive
an estimate of the total grain available during any one year.
OPEC Countries: Imports of Grain'
Average 1974 Divided
1966-70 1971 1972 1973 1974 by 1966-70
Total 3,839 7,137 6,083 9,268 9,906 2.6
Algeria 597 592 1,095 1,829 1,855 3.1
Ecuador 78 116 136 155 197 2.5
Indonesia 973 1,231 1,259 2,737 1,784 1.8
Iran 191 1,186 950 1,053 2,085 10.9
Iraq 113 1,306 118 536 875 7.7
Kuwait 134 229 180 207 319 2.4
Libya 263 441 302 435 376 1.4
Nigeria 219 409 325 421 408 1.9
Saudi Arabia 472 591 599 655 657 1.4
Venezuela 799 1,036 1,119 1,240 1,350 1.7
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OPEC Countries: Imports of Wheat'
Average
1967-70
1971
1972
1973
1974
Total from all countries'
2,751
4,989
4,116
5,619
6,260
Algeria
561
558
922
1,600
1,600
Ecuador
67
93
114
125
150
Indonesia
422
713
501
900
750
Iran
156
1,000
776
791
1,460
Iraq
109
955
61
400
600
Kuwait
75
112
104
100
125
Libya
202
244
230
338
250
Nigeria
172
405
317
414
375
Saudi-Arabia
275
313
372
411
350
Venezuela
712
596
719
540
600
From the United States3
1,496
1,960
2,703
3,095
3,993
Algeria
249
121
496
553
810
Ecuador
63
89
134
111
150
Indonesia
216
273
323
574
40
Iran
29
429
569
597
1,397
Iraq
264
8
8
210
575
Kuwait
Libya
Negl.
2
Negl.
4
Negl.
....
5
Ne 1.
Nigeria
174
361
304
339
258
Saudi Arabia
131
124
150
175
209
Venezuela
606
551
719
531
554
Percent from the United States
54
39
66
55
64
1. Including flour converted to wheat basis with factor of 0.75.
2. For 1967-70, UN,'-AO, Trade Yearbook, 1972; for 1971-73, '.yid., 1973.
3. USDA, ERS, US Foreign Agricultural Rode Statistical Rep,2rt, calendar years 1967-74. Includes major
products made from fcedgrain.
4. Data for 1967.
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OPEC Countries' : Imports of Rice'
Average
1967-70
1971
1972
1973
1974
Total from all countries
754
957
1,119
2,122
1,870
Algeria
5
6
16
5
5
Ecuador
2
1
1
2
21
Indonesia
522
494
734
1,657
1,009
Iran
14
60
80
65
190
Iraq
3
97
45
135
265
Kuwait
35
56
54
51
94
Libya
18
23
16
24
26
Nigeria
Negl.
Negl.
6
4
3
Saudi Arabia
155
220
167
179
257
From the United States
547
375
460
206
409
Algeria
....
....
....
5
....
Ecuador
9
Indonesia
473
258
318
112
57
Iran
4
60
54
....
189
raq
....
....
....
9
31
Kuwait
8
3
4
4
28
Libya
1
1
4
2
2
Nigeria
Negi.
Negl.
1
4
3
Saudi Arabia
61
53
79
70
90
1. Venezuela is a rice-exporting country.
2. Polished rice.
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OPEC Countries: Imports of Coarse Grains'
Total from all countries=
Algeria
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Saudi Arabia
Venezuela
From the United States3
Algeria
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Saudi Arabia
Venezuela
Percent from the United States
1,191
848
1,527
1,776
28
157
224
250
22
21
28
26
24
24
180
25
126
94
197
435
254
12
1
10
61
22
56
100
174
56
73
100
4
2
3
30
58
60
65
50
440
400
700
750
380
427
832
774
22
Negl.
22
....
2
1
29
4
I
Negl.
172
25
37
28
131
178
26
....
Ne,~.
10
2
5
Negl.
1
4
Negl.
Neil.
19
3
21
27
1
6
2
Negl.
261
383
450
540
32
50
54
44
1. Corn, oats, barley, and sorghum.
2. UN, FAO, Trade Yearbook, 1972 and 1973 and 1974 estimated.
3. USDA, ERS, US Foreign Agriculture Trade Statistical Report, calendar years 1967-74. Includes major products
made from feedgrain.
30
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OPEC Countries: Imports of Agricultural Goods
Average
1968-70
1971
1972
1973
1974
Total from all countries
1,316.6
1,899.3
2,318.9
3,250.0
4,629.9
Algeria
174.1
297.8
340.0
375.0
479.0
Ecuador
20.4
26.1
28.9
36.9
95.0
Indonesia
256.0
301.0
460.0
700.0
680.0
Iran
121.0
246.0
309.8
444.5
800.0
Iraq
91.1
218.9
157.4
311.8
570.0
Kuwait
104.0
120.1
147.5
171.8
245.0
Libya
104.8
160.5
171.8
321.6
375.0
Nigeria
99.1
124.3
171.3
213.5
275.9
Saudi Arabia
173.1
225.0
254.8
379.4
570.0
Venezuela
173.0
179.6
277.4
295.5
540.0
From the United States
290.3
374.3
473.6
713.2
1,540.3
Algeria
22.3
17.7
40.0
71.2
170.5
Ecuador
12.7
18.5
21.0
30.7
56.7
Indonesia
86.8
98.5
134.0
188.8
101.2
Iran
16.6
59.6
76.0
108.9
534.2
Iraq
2.2
6.3
1.6
32.4
114.8
Kuwait
4.9
4.9
4.6
8.7
21.3
Libya
4.6
5.2
3.9
6.4
26.0
Nigeria
21.4
31.4
22.6
40.9
82.3
Saudi Arabia
26.2
23.7
32.8
65.5
110.0
Venezuela
92.6
108.5
137.1
159.7
323.3
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 Approved For Release 2005/01/C1pnfi&518DP86T00608R000500200024-0
OPEC Countries: Estimated Growth Rates
for Grain Production and Demand Through 1978
Production
Demand
Algeria
3
4.5
Ecuador
3
6
Indonesia
3.5
3.5
Iraq
3
10
Kuwait'
N.A.
6
Libya
3
10
Nigeria
2.7
3.8
Saudi Arabia
4
10
Venezuela
3
5.5
Average
3
6
1. Estimate applies to imports only, as domestic production
is negligiale.
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OPEC Countries: Disincentives to Agricultural Production
Restriction Restriction
Controls on Controls on on Credit on Movement
Producer Consumer Noncompete- Export Export Imports and Land of Agrcul-
Prices Prices tive Buying Controls Taxes Subsidies Tenure ture Goods
Algeria
Staple food x
Ecuador
Most basic foods X.
Coffee
Sugar
Bananas
Milk x
Indonesia
Rice x x X.
Sugar
Iran
Wheat X.
Rice X
Oilseeds and vegetable oils X.
livestock, meat, and milk x
Nigeria
Cocoa 1 x
Seed cotton x x
Venezuela
Grains x x
x x
x
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OPEC Countries: Projected Production, Imports,
and Requirements of Grains
Thousand Metric Tons
Apparent
Consump-
Production Imports tion
Tota12 36,670 9,740 46,410
Algeria 1,286 1,855 3,141
Ecuador 477 197 674
Indonesia 17,522 1,784 19,306
Iran 6,000 2,085 8,085
Iraq2 2,284 709 2,993
Kuwait Negl. 319 319
Libya 126 376 502
Nigeria 7,594 408 8,002
Saudi u hia 622 657 1,279
Venezuela 759 1,350 2,109
Production
Imports
Total
Require-
ments
41,100
16,800
57,900
1,400
2,300
3,700
500
300
800
20,100
2,100
22,200
6,300
5,400
11,700
2,600
1,800
4,400
Negl.
400
400
100
600
700
8,400
900
9,300
700
1,206
1,900
1,000
1,800
2,800
1. Based on estimated growth rate for production and demand, as shown in Table 7.
2. Iraq's ,roduction and imports were averaged during 1971-74 to provide a base foi rejecting because the
amounts fit.ctuated widely from year to year. Thus data shown here differ from those showia in Tables 1 and 2.
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