DUSHANBE, June 7, 2013, Asia-Plus – According to a new report published by the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture (FAO) on June 6, global agricultural production is expected to grow 1.5 percent a year on average over the coming decade.
Limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures are reportedly the main factors behind the trend. But the report argues that farm commodity supply should keep pace with global demand.
The OECD-FAO Agricultural Outlook 2013-2022 expects prices to remain above historical averages over the medium term for both crop and livestock products due to a combination of slower production growth and stronger demand, including for biofuels.
The report says agriculture has been turned into an increasingly market-driven sector, as opposed to policy-driven as it was in the past, thus offering developing countries important investment opportunities and economic benefits, given their growing food demand, potential for production expansion and comparative advantages in many global markets.
However, production shortfalls, price volatility and trade disruption remain a threat to global food security. The OECD/FAO Outlook warns: “As long as food stocks in major producing and consuming countries remain low, the risk of price volatility is amplified. A wide-spread drought such as the one experienced in 2012, on top of low food stocks, could raise world prices by 15-40 percent.”
According to the report, China, with one-fifth of the world”s population, high income growth and a rapidly expanding agri-food sector, will have a major influence on world markets, and is the special focus of the report. China is projected to remain self-sufficient in the main food crops, although output is anticipated to slow in the next decade due to land, water and rural labor constraints.
Driven by growing populations, higher incomes, urbanization and changing diets, consumption of the main agricultural commodities are expected to increase most rapidly in Eastern Europe and Central Asia, followed by Latin America and other Asian economies.
The share of global production from developing countries will continue to increase as investment in their agricultural sectors narrows the productivity gap with advanced economies. Developing countries, for example, are expected to account for 80 percent of the growth in global meat production and capture much of the trade growth over the next 10 years. They will account for the majority of world exports of coarse grains, rice, oilseeds, vegetable oil, sugar, beef, poultry and fish by 2022.
To capture a share of these economic benefits, governments will need to invest in their agricultural sectors to encourage innovation, increase productivity and improve integration in global value chains, FAO and OECD stressed.
Agricultural policies need to address the inherent volatility of commodity markets with improved tools for risk management while ensuring the sustainable use of land and water resources and reducing food loss and waste.
