Global agricultural production is expected to grow 1.5 percent a year on average over the coming decade, compared with annual growth of 2.1 percent between 2003 and 2012, according to a new report published by the Organisation for Economic Co-operation and Development (OECD) and Food and Agriculture Organisation (FAO).
Limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures are the main factors behind the trend. But, the report argues that farm commodity supply should keep pace with global demand, the report added. The ‘OECD-FAO Agricultural Outlook 2013-2022’ expects prices to remain above historical averages over the medium term for both crop and livestock products due to a combination of slower production growth and stronger demand, including for bio-fuels.
The report says agriculture has been turned into an increasingly market-driven sector, as opposed to policy-driven as it was in the past, thus offering developing countries important investment opportunities and economic benefits, given their growing food demand, potential for production expansion and comparative advantages in many global markets.
However, production shortfalls, price volatility and trade disruption remain a threat to global food security. The OECD-FAO Outlook warns: “As long as food stocks in major producing and consuming countries remain low, the risk of price volatility is amplified. A widespread drought such as the one experienced in 2012, on top of low food stocks, could raise world prices by 15-40 percent.”
China, with one-fifth of the world’s population, high income growth and a rapidly expanding agro-food sector, will have a major influence on world markets, and is the special focus of the report. China is projected to remain self-sufficient in the main food crops, although output is anticipated to slow in the next decade due to land, water and rural labour constraints.
Presenting the joint report, OECD Secretary-General Angel Gurría said: “The outlook for global agriculture is relatively bright with strong demand, expanding trade and high prices. But this picture assumes continuing economic recovery. If we fail to turn the global economy around, investment and growth in agriculture will suffer and food security may be compromised.” “Governments need to create the right enabling environment for growth and trade,” he added. “Agricultural reforms have played a key role in China’s remarkable progress in expanding production and improving domestic food security.”