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Soybeans for sale.

10 July 2017, Paris/Rome – Global food commodity prices are projected to remain low over the next decade compared to previous peaks, as demand growth in a number of emerging economies is expected to slow down and biofuel policies have a diminished impact on markets, according to the latest 10-year agricultural outlook published today by the OECD and FAO.

The OECD-FAO Agricultural Outlook 2017-2026 says that the completed replenishment of cereal stocks by 230 million metric tonnes over the past decade, combined with abundant stocks of most other commodities, should also help limit growth in world prices, which are now almost back to their levels before the 2007-08 food price crisis.

The report foresees per capita demand for food staples remaining flat, except in least developed countries. Additional calories and protein consumption over the outlook period are expected to come mainly from vegetable oil, sugar and dairy products. Growth in demand for meat is projected to slow, with no new sources of demand projected to maintain the momentum previously generated by China.

By 2026, average calorie availability is projected to reach 2 450 kcal per person per day in least developed countries, and to exceed 3 000 kcal in other developing countries. Food insecurity and malnutrition in all its forms will nonetheless remain a persistent global problem, requiring a coordinated international approach, according to the report.

Future growth in crop production is projected to be principally attained through higher yields – 90 percent of the increase in maize production is expected to come from increased yields and just 10 percent from area expansion.

Growth in meat and dairy production, by contrast, is expected to come from both larger herds and higher output per-animal. Milk production growth will accelerate when compared to the previous decade, most notably in India and Pakistan. It is foreseen that aquaculture would dominate growth in the fish sector and farmed fish production will be the fastest-growing protein source among all commodities analysed in the Outlook.

The growth in agriculture and fish trade is projected to slow to about half the previous decade’s growth rate, and average less than 2 percent per year in volume terms for most commodities. Nevertheless, agricultural trade is expected to remain more resilient to economic downturns than trade in other sectors. For nearly all commodities, exports are projected to remain concentrated in a few supplying countries, which may imply a greater susceptibility of world markets to supply shocks.

 “Real prices of most agricultural and fish commodities are expected to decline slightly over the ten-year Outlook period,” OECD Secretary-General Angel Gurría said at the launch event in Paris. “As we have seen in the past, unexpected events can easily take markets away from these central trends, so it is essential that governments continue joint efforts to provide stability to world food markets. It is equally important that we look ahead as we seek to meet the fundamental challenge facing world food and agriculture: to ensure access to safe, healthy, and nutritious food for a growing world population, while at the same time using natural resources more sustainably and making an effective contribution to mitigating climate change.”

“The report foresees that the average calorie availability per person per day will increase in least developed countries and in most emerging economies,” said FAO Director-General José Graziano da Silva. “But we also know that more food alone is not enough to eliminate undernourishment and other forms of malnutrition. Access to the additional calories is extremely important. More challenging is the fight against malnutrition: Fighting malnutrition requires a diversified, safe and nutritious diet, ideally produced with a lower environmental footprint.”

Focus on Southeast Asia

Every year the Outlook contains a special feature, and this year it covers Southeast Asia.

Economic growth has been strong and the agriculture and fish sectors have developed rapidly in the region. The report finds that this broad-based growth has enabled the region to significantly reduce undernourishment in recent years. However, the growth of agriculture and fisheries, in particular in the export-oriented fish and palm oil sectors, has led to rising pressure on natural resources.

A greater focus on sustainable development in Southeast Asia will slow the growth of palm oil production, according to the Outlook. Across the agricultural sector, yields will continue to increase, but cropland is projected to expand by only 10 percent over the next 10 years, compared to 70 percent over the previous decade.

Improved resource management and increased R&D will be needed to achieve sustainable productivity growth across the agricultural sector. Support for rice production could also be reoriented to facilitate the diversification of agriculture. Given the region’s sensitivity to climate change, investments to facilitate adaption will be required.

Other findings from the report include:

  • Large low-income groups will keep growth in per capita global meat demand at 1 percent over the next ten years, compared to 6 percent increase over the previous decade.
  • Per capita demand for sugar is expected to increase more rapidly, at 8.1 percent over the next ten years, compared to 5.6 percent growth over the previous decade.
  • India is projected to be the most populous country by 2026. With high and still rising per capita consumption levels for milk, the country is projected to account for 42 percent of the increase in global milk production over the coming decade.
  • Biofuel production is projected to grow by 17 percent over the next ten years, compared to a 90 percent increase over the previous decade.
  • Yield gains are projected to account for 85 percent of the increase in wheat production and 90 percent of the increase in maize production, keeping the increases in harvested area to 2 percent. By contrast, a 14 percent expansion in soybean area, mainly in South America, is projected, accounting for about 60 percent of the global production increase.
  • Fish is projected to account for half of animal protein consumed in China and Southeast Asia by 2026.
  • The total production of fish from aquaculture is projected to overtake production from capture fisheries in the middle of the outlook period.

 

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