OECD-FAO Agricultural Outlook 2015-2024

Real prices for global agricultural products will continue their gradual decline over the coming decade due to a combination of strong crop yields, higher productivity and slower growth in global demand warn OECD and FAO in a new report.

The 2015-2024 Agricultural Outlook is a collaborative effort of the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. The report brings together the commodity, policy and country expertise of both organisations and input from collaborating member countries to provide an annual assessment of prospects for the coming decade of national, regional and global agricultural commodity markets.

According to the report, prices for crops and livestock products showed diverse trends in 2014. Among crops, two years of strong harvests put further pressure on prices of cereals and oilseeds. Tighter supplies due to factors including herd rebuilding and disease outbreaks supported record high meat prices, while the prices of dairy products dropped steeply from historic highs. Further adjustments to short-term factors are expected in 2015, before the medium-term drivers of supply and demand take hold.

In real terms, prices for all agricultural products are expected to decrease over the next ten years, as production growth, helped by on trend productivity growth and lower input prices, outpaces slowing demand increases, anticipates the OECD-FAO report. The major changes in demand are in developing countries, where continued but slowing population growth, rising per capita incomes and urbanisation all increase the demand for food. For this reason, the prices of meat and dairy products are expected to be high relative to the prices of crops.

The report also notes, that the market projections not only cover OECD member countries (European Union as a region) but also FAO member countries, notably Brazil, the Russian Federation, India, People's Republic of China and South Africa. The report perceives that Brazil is poised to become the foremost supplier in meeting additional global demand, mostly originating from Asia. Opportunities exist to extend the benefits of Brazil’s growth to the poorest and to reduce the pressure on natural resources.

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