Farmers could see this year’s low prices remain throughout next decade, according to a global report.
Two top international bodies have said food prices could fall gradually in real terms until 2024, as they rise below the rate of inflation.
The Organisation for Economic Co-operation and Development (OECD) and the United Nations Food and Agriculture Organisation (UNFAO) report that crop yields should stay strong, productivity will rise and demand growth will be sluggish.
Lower oil prices will also push down food prices, as fuel and fertiliser becomes cheaper.
OECD secretary general Angel Gurría said the outlook was calmer than in recent years, but he could not rule out further price spikes.
“Governments should take advantage of the current conditions to concentrate on developing policies that raise productivity, boost innovation, better manage risk and ensure that robust agriculture systems benefit consumers and farmers alike,” he said.
What the OECD/UNFAO predicted up to 2024:
- Cereals – World wheat production will rise 12% and coarse grains 15%. India, Russia and China will grow most of the extra wheat. Wheat consumption will increase 13%. Prices will rise just behind inflation, after the current, short-term impact of low oil prices and big stocks.
- Oilseeds – Global production will rise 1.6% a year, short of the 3.5% experienced over the past decade. More efficient production will keep a lid on prices. Oilseed rape production in Europe and Canada is expected to grow much more slowly.
- Sugar – World prices are expected to be much more volatile, trending upwards but falling in real terms. Production will rise 2.2% a year, with consumption increasing 2%. Most of that new demand will come from Africa and Asia, with little growth in developed countries.
- Meat – Cheaper grain should make the sector more profitable. Total production will rise 17%, with poultry capturing more than half of that expansion. Pig and beef consumption is likely to stay stable. Prices should stay higher than the past 10 years, but they will slide in real terms.
- Dairy – World milk production should grow 1.8% a year, with three quarters of the growth coming from developing countries, especially Asia. The rise in consumption will come much more from developing countries than wealthier nations. The extra dairy trade is expected to stay in the hands of the biggest exporters: particularly New Zealand and the EU.