Slower demand growth | Crop prices could fall but stabilize above pre-2008 levels
ROME, Italy (Reuters) — World food output is on track to meet the needs of a growing population after a decade punctuated by supply concerns, the Organization for Economic Co-operation and Development, and United Nations Food and Agriculture Organization have said.
Global agricultural production and consumption will rise in the next 10 years, as people in emerging countries become wealthier and eat more protein, but the increases will be slower than in the previous decade, the agencies said.
Surplus stocks and rising production should keep commodity prices stable after the “roller coaster” of the last decade marked by a record high in 2008 and global recession in 2009.
“We are recovering from a period of marked turbulence in the agricultural markets but there is no room for complacency,” said OECD secretary general Angel Gurria, while presenting the OECD-FAO 2014-23 agricultural outlook in Rome.
“The world can grow enough food over the next 10 years and it can respond to the broader challenge of feeding nine billion people by 2050,” Gurria said.
He added, however, that waste remained a threat to food security, saying around one third of crops produced in developing countries were lost post-harvest.
Agricultural markets are still unstable, after near-record prices in 2012 prompted increased production, which led to surpluses for wheat, rice, sugar and vegetable meal.
Bad weather and concerns over export restrictions were blamed for the 2012 price surge, which stoked fears of a return to the conditions that led to violent protests in countries including Egypt, Cameroon and Haiti in 2007-08.
Global food price inflation now appears lower and more stable than it has since the 2008 crisis, the OECD and FAO said.
Crop prices would drop for one or two more years before stabilizing above pre-2008 levels, but below recent peaks. Wheat prices are projected to slide about one percent a year in real terms for the next 10 years, staying around 13 percent below the previous decade’s average.
Strong demand for meat from an expanding middle class in the Middle East and Asia will keep meat prices from falling as much as feed grain prices, and meat prices in real terms will average higher than the previous decade after general price inflation.
FAO director-general Jose Graziano Da Silva called on governments to invest in roads, transportation and storage, saying only a few countries had made progress.
“India is one good case for that … also China but I would not be able to add too many more,” Da Silva said.
Gurria also said governments needed to rethink their policies on biofuels, which opponents say contribute to price inflation by consuming feedstocks that could be used for food.
“Part of the reason why we had the spikes and hikes in the prices was because we were burning food. Now I think we have gotten wiser about that,” Gurria said.
Biofuel output growth is expected to slow by 2023.
In line with lower growth in production and consumption, trade is expected to rise more slowly in the next decade. Grain and meat trade are set to advance 1.5 percent and 2.5 percent in volume each year, half the rates of the previous decade.
While the Americas will remain the dominant export region globally, Ukraine will become Europe’s biggest exporter of grain and oilseeds.
Worries about conflict in Ukraine stopping shipments helped force prices higher this year, but Gurria said there had been no substantive effect on markets, prices, availability or stocks.
The outlook is based on assumptions about government policies, markets, weather and macroeconomics, but some areas of uncertainty, including animal diseases, are not included.