OECD upbeat about market prospects

4 May 2001

OECD upbeat about market prospects

By Philip Clarke, Europe editor

AGRICULTURAL markets are poised for significant recovery following a trough of record lows, according to a leading international economic organisation.

A new report by the Organisation for Economic Co-operation and Development (OECD) paints a brighter picture of commodity prospects than seen for several years.

“World prices are expected to rise gradually to 2006, and more for some meats and dairy products than for cereals and oilseeds,” it says.

A growing world economy and population will boost recovery, claims the OECD Agricultural Outlook 2001-2006 report, published in Paris on Friday (04 May).

This will be supported by broad-based growth in the OECD area and continued fast recovery in Asia, Latin America and Russia, it predicts.

“This is characterised by world demand for farm products growing faster than production and stocks-to-use ratios tightening appreciably,” says the report.

Cereal and oilseed prices are forecast to return to 1994 levels by 2006, equivalent to about a 20% recovery.

Dairy prices, which are already at or above 1994 levels, will stage an even stronger price increase.

But it is not all good news. “Pig meat will continue to move in cycles, with a price dip projected over the outlook period,” it claims.

“Projected beef prices in Europe will also be subject to additional pressure by the spread of BSE and the need to reduce production in response to lower demand.”

The report also calls for further reform of government support policies to agriculture to make them less trade distorting.

“Higher prices may facilitate such reform for governments and make it more
acceptable for farmers.”

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