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CAUSES OF THE CRISIS 35


Figure 2.12 Trends in stocks, prices, and biofuel production: U.S. maize 2.0


Stock/use ratio


1.6 1.8


1.4 1.2


1.0 0.8 0.6 0.4 0.2


0.0


Sources: Data on stocks, usage, and biofuels were calculated by the authors using data from USDA (2008c); data on maize prices were calculated by the authors using data from IMF (2008b).


Note: 2005 = 1 for all series.


Corn bushels used for biofuels Corn price


of wheat grew rapidly in the 1960s and 1970s but stagnated in the 1980s and declined in the 1990s. The long-term decline in production is, again, almost entirely due to the structural changes taking place in the former USSR coun- tries. Hence, when the former USSR and China are excluded from the global estimates of wheat stocks/use ratios (Figure 2.13), the recent crisis is marked by fairly moderate declines in wheat stocks, in contrast to the 1970–74 crisis, when stocks in the United States were severely depleted by exports to the USSR and China (that is, the Communist countries kept their stock-to-use ratios constant at the expense of stocks-to-use ratios in the Western coun- tries). The short-term wheat story appears to be a combination of some poor harvests (2002, 2003, and 2006) and increasing international demand: average annual production growth was 1.7 percent during 2000–08, whereas average annual export growth was 2.3 percent despite rising prices. In the case of wheat we show below that surges in foreign demand entirely explain the sharp decline in U.S. stocks in 2007.


For rice, the exclusion of China suggests that there has been virtually no change in the global stock-to-use ratio. China is estimated to have had


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