World cereal production in 2007 is on track to reach a record level of 2.095 billion tons, a rise of 4.8 percent over 2006 levels, the UN Food and Agriculture Organization (FAO) said in a tentative forecast issued on Wednesday.

But with stocks at their lowest level over the past two decades, total supplies would still be barely adequate to meet increased demand, boosted by the fast-growing bio-fuels industry, according to the FAO.

International prices for most cereals have risen significantly in 2006 and 2007 so far and are likely to remain high in 2007 and 2008, according to FAO's latest Crop Prospects and Food Situation report. As a result, the cereal import bill of the low-income food deficit countries (LIFDCs) is forecast to increase by about one-quarter in the current season.

The early forecast for coarse grains production in 2007 has been revised upward to around 1.051 billion tons, 7.1 percent up from last year and a record high, according to the report.

The bulk of the increase is expected in maize, which accounts for about 70 percent of the total.

Fast growth in demand for maize-based ethanol production is expected to boost total industrial use of coarse grains in 2007-2008 by 9 percent, the report said.

Expectations for the world wheat harvest are down slightly since the FAO's April forecast, but at just below 621 million tons production is still expected to be 4 percent above the previous year's level.

FAO's early and tentative forecast for world rice production in 2007 points to a slightly larger crop at some 422 million tons, which would match the 2005 record.

For the LIFDCs as a group, the report predicts 2007 cereal output to be similar to last year's good level. However, excluding China and India, the largest producers, the aggregate crop of the remaining countries is forecast to decline slightly.

In North Africa, a sharp decline is expected in 2007 cereal production, reflecting dry conditions in Morocco that are expected to halve the country's wheat production this year.

Despite improved food supplies in many of the countries normally most at risk from food insecurity, following record or bumper 2006 cereal crops food difficulties persist in 33 countries worldwide.

Emergency assistance is required for large numbers of vulnerable farmers in Bolivia affected by serious crop and livestock losses following drought and floods during the 2007 main cropping season.

In the Democratic People's Republic of Korea, despite steady recovery in agricultural production over the past few years and a recent pledge of 400,000-ton-food aid by the Republic of Korea, the food supply situation for millions of people remains a serious concern, the report said.

In Zimbabwe, the report anticipates food shortages for millions of vulnerable people struggling under the deepening economic crisis and skyrocketing inflation, currently considered to be the highest in the world, the FAO said.