A Review OECD-FAO Agricultural Outlook 2010

ISBN  978-92-64-08375-2

A recently published Agricultural Outlook report tells us that while many markets are in slow recovery mode from the worldwide recession, the projections for the future is beginning to look more positive.

The OECD and FAO have come together once again to produce their join annual publication 'Agricultural Outlook 2010' that looks at world agriculture tomorrow based on projections from today. This reports starts from the premise that 2009 saw the world plunged into the worst recession since the 1930s.

This has had a huge impact on the macroeconomic environment affecting many areas of agriculture and commodity markets. For example, prices for oil increased dramatically affecting the poorest regions of the world. It is now estimated that there are more than one billion people in developing countries still suffer starvation.

The world recession now being followed by a slow recovery is moving us towards more sustainable methods of production. It says a two-speed recovery is underway with many OECD countries suffering high levels of unemployment and the larger developing countries showing stronger growth and faster recovery, helping fuel world income growth.

That's the overview. However, when we look at what this latest report says about cereals specifically, we find that there is even more room for optimism.

The report suggests that over the next 10 years prices for the principle cereals are likely to remain unchanged or to slightly decline, but still exceed the levels achieved from 2000-10. The ratio between wheat and maize is likely to fall to 1.1 to 1.2 (down from 1.3-1.6). We are also likely to see an increase in world cereal production in the order of 1.3 percent to reach 2564 million tonnes by 2019. Utilisation is likely to increase also by some 1.4 percent.

An indicator of food security is based on cereal stocks. The OECD says stocks will increase by some 580 million tonnes by 2019, overcoming the low levels of 2006-07 by just over 25 percent or 153 million tonnes, leading to a world stock-to-use ratio improving to 23 percent which is a much more comfortable level and well below that for the first 10 years of 2010.

As for trade, the report tells us that total world trade will exceed 313 million tonnes by 2019. That's up some 50 million tonnes (or 21 percent) from current levels. What is really interesting is that the OECD projects that developing countries will increase their imports by some 2.3 percent per annum to 256 million tonnes. This is maintaining the same rate of increase these countries have experienced since 2000.

The report also shows that world wheat output will increase by 1.1% per annum to 746 million tonnes by 2019 up 90 million tones (14 percent). After several years of fast growth driven by high international market prices it is expected to grow at a slower rate. In OECD countries, the growth rate of wheat is expected to be lower 0.8 percent per year.

However the report indicated that the growth rate for wheat in the Developing countries will be higher, but may not reach more than 1.3 percent per year well below the previous 10 years rate.

The report showed that global cereal production was slightly down on the previous year. The reasons were lower demand for feed grains resulting from limited meat production and a slow expansion in the use of cereals in industrial utilization, that is, maize for the production of ethanol.

This report is a must for anyone with interest in the agricultural community, dealing with many aspects of global farming and economics, along with the predictions for the next decade in the growth of cereal farming, dairy and meat and the changes for both the OECD countries and the developing countries.



This blog is written by Martin Little The Global Miller, published and supported by the GFMT Magazine from Perendale Publishers.