Farm commodity prices over the next 10 years could be up to 40% higher than the previous decade, according to a report released today (15 June)
The joint OECD-FAO Outlook 2010-19 report predicted that average wheat and coarse grain prices could be 15-40% higher in real terms than their 1997-2006 average, although there was unlikely to be any return to the commodity boom of 2007/08.
Future vegetable oil prices were expected to be more than 40% higher than the 1997-2006 period.
Prospects for the dairy sector were similarly positive, with prices expected to be 16-45% higher on average over the next 10 years. However, rises in livestock prices were expected to be less marked, despite rising demand for meat in emerging economies.
The report said that sustained economic growth in emerging markets was an important factor underpinning demand growth and prices, with continued expansion of biofuel output creating additional demand for wheat, coarse grains, vegetable oils and sugar.
It also said that global agricultural output would be able to meet the 70% increase in food production required to feed the higher population predicted in 2050. Brazil was the fastest growing agricultural producer, with output expected to increase by over 40% between now and 2019. Production growth of more than 20% was also likely in China, India, Russia and Ukraine.
“The agricultural sector has shown resilience to recent price shocks and the economic downturn. On the whole this year’s outlook is cautiously more positive than in recent years,” OECD secretary-general Angel Gurría said.
“But, going forward, governments should implement measures to ensure that farmers have at their disposal better tools to manage future risks, such as production contracts, insurance schemes and futures markets.”