OECD-FAO Agriculture Outlook: Higher output to keep food prices low

FRANCE – Growth in agricultural output is expected to keep food prices low over the coming decade, according to an annual report by the Organisation for Economic Co-operation and Development and the UN’s Food and Agriculture Organization.

Based on the statistics released on July 8, global demand for agricultural products is projected to grow by 15% over the next ten years while agricultural productivity growth is expected to increase slightly faster.

This is projected to cause inflation-adjusted prices of the major agricultural commodities to remain at or below their current levels.

The agricultural sector will be characterized by yield improvements and higher production intensity as a result of technological advances and innovation.

Though the global agricultural land use as expected will remain constant, agricultural operations are set to benefit from higher output.

Population growth, urbanisation and rising food use

Agriculture is an important sector in promoting food security and ensuring the growing global population is sustained.

Worldwide, the use of cereals for food is projected to grow by about 150 million tonnes over the outlook period reflecting a 13% increase, with rice and wheat accounting for the bulk of the expansion.

The report reveals that consumption levels of sugar and vegetable oil are projected to rise.

Rapid urbanisation in low and middle-income countries will likely see a shift in trend towards prepared and more processed foods.

Also, health and wellness trends may see a change in preferences towards lower consumption of red meat and a shift from vegetable oils to butter.

Demand for feed crops is projected to outpace animal production growth in countries where the livestock sector is evolving from traditional to commercialised production systems.

Meanwhile, use of agricultural commodities as feedstock to produce biofuels is expected to grow primarily in the developing countries. 

In Latin American and the Caribbean which accounts for 14% of global production, its share of the world’s exports of agricultural and fisheries products is projected to rise from the current 23% to 25% by 2028.

Challenges and uncertainties ahead

The most important factor behind the projected growth in food use of staple products is population growth, which is expected to rise fastest in Sub-Saharan Africa and South Asia.

The report however identifies that most needy regions are expected to see slow income growth and hence only small improvements in their nutritional status.

Though overall undernourishment is expected to decline, it may not be possible to reach the Zero Hunger target by 2030 given the current rates of improvement, notes FAO Assistant Director-General for Economic and Social Development Máximo Torero.

“The Outlook makes abundantly clear that trade is critical for global food security,” said OECD Director for Trade and Agriculture Ken Ash.

“Regions that are experiencing rapid population growth are not necessarily those where food production can be increased sustainably, so it is essential that all governments support open, transparent and predictable agro-food markets.”

Also, direct greenhouse gas emissions from agriculture are expected to grow by some 0.5% annually over the coming decade, below the 0.7% rate of the past 10 years, and below the projected output growth rate, indicating declining carbon intensity.

Other challenges identified by the group include disruptions from trade tensions, the spread of crop and animal diseases, growing resistance to antimicrobial substances, regulatory responses to new plant-breeding techniques, and increasingly extreme climatic events.

Uncertainties also include evolving dietary preferences in light of health and sustainability issues and policy responses to alarming worldwide trends in obesity.

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