The development of agriculture up to 2022 - OECD/FAO Agricultural Outlook 2013
The global food economy before the turn of the millennium was characterized by agricultural policy-induced production surpluses in central industrialized countries. In contrast, most developing countries experienced moderate economic growth and food shortages to the point of malnutrition. There is still an inadequate food supply in some areas today, but so-called emerging countries have emerged that are exerting increasing influence worldwide.
Political reforms and economic growth over the past two decades have changed demand and supply conditions worldwide and transformed agriculture into a more market-oriented sector.
In a comparison of the two decades 2003 to 2012 and 2013 to 2022, the FAO-OECD study highlighted the following characteristic features.
- Slower growth in agricultural production in the coming decade: the average annual increase in key agricultural commodities is expected to be just 1.5% instead of 2.1% as in the previous period. Increasing scarcity of resources and growing consideration for consumer, animal and environmental protection will cause higher costs, which will impair the growth process. Internationally, there will be differences in terms of level and extent.
- Cereals: Production is expected to increase by 1.4% per year, with developing countries accounting for 57% of total growth. Thailand and Vietnam will remain leading rice exporters, while the US is expected to remain the leading exporter of wheat and coarse grains.
- Oilseeds: Production is expected to grow even faster than for cereals. The share of palm oil in total vegetable oil production is likely to remain stable at 34%.
- Sugar: Production is expected to increase by almost 2% per year, with Brazil and India being the leading producers. Global sugar consumption will continue to be dominated by developing countries.
- Biofuels: production of ethanol is expected to increase by almost 70%, while the increase in biodiesel will be even greater from a lower starting level. Biofuel production is projected to account for 28% of global sugar cane production, 15% of vegetable oils and 12% of coarse grains by 2022.
- Meat: 80% of the growth in global production is expected to come from developing countries. Growth in per capita meat consumption will slow as major developing countries converge to developed country levels.
- Dairy products: Developing countries are expected to account for 74% of the growth in global milk production. Consumption in developing countries is growing faster than production. Increasing exports from the United States, the European Union, New Zealand, Australia and Argentina are the result.
- Fisheries: Fish catches will increase by only 5%, while aquaculture is expected to grow by 35%. Aquaculture is expected to overtake wild catches as the most important source of fish for human consumption by 2015.
Consumption will increase: The increase in consumption will be caused by population growth, higher incomes, urbanization and changing eating habits, albeit at a slightly slower pace. Per capita consumption will increase fastest in Eastern Europe and Central Asia, followed by Latin America and the other Asian regions.
Agricultural trade will continue to grow: the emerging economies will contribute significantly to the
trade growth and will contribute the largest share of exports of coarse grains, rice, oilseeds, vegetable oil, sugar, beef, poultry and fish.
Nominal prices will rise in the medium term: Commodity prices are currently high by historical standards. In the near future, prices for crops are likely to fall as production increases, but meat prices are expected to remain high due to low stocks. In the longer term, prices for both plant and animal products are likely to rise, with meat, fish and biofuel prices rising more sharply.
Inflation-adjusted prices will remain high: however, they are likely to remain below the highs recorded in recent years over the next ten years.
The relationship between commodity prices and the prices actually paid by consumers for their food is generally not clear. Some findings suggest that food price inflation at consumer level is easing despite commodity prices remaining at a high level.
However, with food expenditure accounting for 20-50% of household budgets or even more in many developing countries, the affordability of food is still not guaranteed everywhere.
Uncertainty factors: Global food security continues to be threatened by production bottlenecks, price volatility and trade disruptions, especially in light of low stock levels. A widespread drought, as experienced in the United States and CIS countries in 2012, combined with low stocks of crops could lead to a 15-40% increase in prices.
Energy prices are another source of uncertainty, affecting both biofuel markets and input costs. Global trade is even more vulnerable to yield fluctuations and macroeconomic factors than production.
A devaluation of the US dollar is likely to reduce the relative competitiveness of other exporters, while increasing the purchasing power of many importers.
The markets reflect the division of the global economy: although the agricultural markets are relatively resistant to economic downturns, they continue to reflect the effects of a divided global economy characterized by a weak recovery in the developed countries and lively growth in many developing countries.
