Agricultural Outlook 2013-2022...2000 2004 2008 2012 2016 2020 NORTH AMERICA WESTERN EUROPE ... Cotton will continue to lose market share to man-made fibres. China’s cotton production

Agriculture has become a more market-driven sector

Robust demand and stagnating productivity

keep commodity prices firm

China will improve its food security and remain

self-sufficient in main food crops while increasing

trade in selected commodities.

OilseedsRiceRaw sugar

Coarse grains

WheatWhole milk powder

Beef

Pigmeat

Poultry

FishVegetable oils

Fishmeal

Oilseed meals

Fish oils

USD/t

20072002 2012 2017 2022

Crops Livestock and Fish Products Fats and Meals

Figure 1. Price trends for agriculture and fish commodities to 2022 (nominal)

Crop prices are expected to fall from current highs

and hold firm over the medium -term

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For decades, global agriculture was characterised by policy-induced production surpluses in industrialised countries and stagnating growth in developing countries. Policy reforms and economic growth across the globe have been changing demand and supply fundamentals sufficiently to turn agriculture into a more market-driven sector which provides investment opportunities, particularly in developing countries. Agricultural trade is projected to increase with developing countries capturing most of the export growth (see Figure 3).

Expansion of agricultural production is likely to slow at least in the medium term with slower area and productivity growth (see Figure 2 and 4). Supply should keep pace with demand at prices that are expected to remain relatively high. In this context, measures to reduce food loss and waste will be important in meeting rising demand and for increasing productivity.

With one-fifth of the world’s population, high income growth and a rapidly expanding agri-food sector, China is a special focus of this Outlook. Developments in Chinese agriculture may have a major influence on world markets. With increasing production constraints and strong demand growth, additional agricultural imports may be anticipated. Still, China should remain self-sufficient in the main food crops despite its relatively limited per capita agricultural resource endowments. Food security has improved as high income and agricultural growth has reduced the number of undernourished people from 21% in 1990 to 12% today but more still needs to be done as the economy expands.

Commodity prices are currently high by historical levels (see Figure 1). In the first years of this Outlook, crop and livestock prices are expected to diverge, reflecting different supply situations. Most crop prices are projected to fall in response to a rebound in production while reduced global livestock inventories allow only a limited supply response keeping meat prices high. Rising prices for both crop and livestock products are projected over the coming decade due to a combination of slower production growth and stronger demand, including for biofuels, and a supportive macroeconomic environment. Meat, fish and biofuel prices are projected to rise more strongly than primary agricultural products.

OECD - FAO Agricultural Outlook 2013-2022

Figure 3. Net exports of agriculture and fish

Note: Only covers commodities in the Outlook. BRICS include Brazil, Russian Federation, India, China, South Africa

Figure 2. Average annual growth in net agriculture and fish production

Percent

Cereal markets grow slower, established

exporters maintain their lead positions

Oilseeds are the fastest growing crops

Rising oil prices underpin price projections

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-6020042000 2008 2012 2016 2020

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WESTERN EUROPE

E. EUROPE & C. ASIA SS AFRICA

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OCEANIA

World agriculture and fish production growth slows

from 2.1 to 1.5 percent per annum

The Americas are the main net supplier of agriculture

and fish products

Trade deficit of Asia and Middle East and North

Africa continues to increase

OECD WorldLeast Developed Rest of WorldBRICS

Note: Net exports refer to exports minus imports

Although relatively resilient to economic downturns, agricultural markets continue to reflect the impact of a two speed global economy with weak recovery in developed countries and vibrant growth in many developing countries. Rising oil prices are an important and uncertain assumption underlying the agricultural price projections. A depreciating US dollar is expected to reduce the relative competitiveness of other exporters while increasing the purchasing power of many importers.

Relatively low stock-to-use ratios raise concerns about the vulnerability of global cereal markets, but production is expected to increase 1.4% per year with 57% of the total growth coming from developing countries. Thailand is projected to be the leading exporter of rice followed closely by Viet Nam while the United States is expected to remain the dominant exporter of wheat and coarse grains.

Oilseed production is set to increase faster than cereals, mainly due to yield gains. Palm oil will expand in line with other vegetable oils, maintaining its share at 34% of total vegetable oil production throughout the outlook period.

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Developing countries lead growth in global milk

production; developed countries dominate exports

India will trade places with China as the top cotton

producer

Biofuel consumes significant amounts of

agricultural commodities

Poultry leads meat consumption growth

Growth in fish production is from aquaculture

Sugar consumption expected to grow fast in

developing countries

Food security is a top policy priority for China

China is on track to achieve MDG goals on reducing

undernourishment

Most of production gains due to productivity

Note: For milk changes in cows and milk yields

Sugar production will increase by almost 2% p.a., primarily from sugar cane in Brazil and India the leading producers. Developing countries will continue to dominate world sugar use and are expected to experience the fastest rates of growth of consumption. Brazil will remain the leading exporter with around 50% of world trade.

Cotton will continue to lose market share to man-made fibres. China’s cotton production is expected to decline 17% while production in India is projected to increase 25%, positioning it as the world’s largest producer.

Ethanol production is expected to increase 67% over the next ten years with biodiesel increasing even faster but from a smaller base. By 2022, biofuel production is projected to consume a significant amount of the total world production of sugar cane (28%), vegetable oils (15%) and coarse grains (12%).

Developing countries are expected to account for 80% of the growth in global meat production. Per capita meat consumption growth will slow as major developing economies approach the levels of developed countries, while poultry remains the least expensive and most popular choice and accounts for around 50% of the increase in meat consumption.

Global milk production is expected to increase at a slower rate in the next decade as feedbased dairy operations struggle with high feed costs, while pasture based systems face land competition and water shortages. Developing countries are expected to generate 74% of global milk production gains over the next decade, with India and China alone accounting for 38% of the increase. Global consumption of dairy products in developing countries is projected to grow faster than production, with higher exports from the United States, the European Union, New Zealand, Australia and Argentina.

Capture fisheries’ output is projected to rise by only 5% by 2022 with aquaculture increasing by 35%, despite a slowing growth rate due to higher feed costs and more limited availability of production locations. Aquaculture is projected to surpass capture fisheries as the main source for human consumption by 2015.

Focus on China

With comparatively little agricultural land and water resources, China has made food security and self sufficiency in the key food crops of rice and wheat top policy priorities. Agricultural output grew 4.5 times over the 1978-2011 period following agricultural and rural reforms. However, food price inflation has been rising in recent years, and output is anticipated to slow in the next decade with increasing resource and rural labour constraints.

Increased availability of food and higher incomes have improved food security significantly with the number of undernourished falling by almost 100 million since 1990, despite adding an additional 200 million people to its population. Reducing the number of persons undernourished remains a major challenge.

Area

Yield

Sugar cane Coarse grainsCotton0

15

20

10

5

25Percent

Figure 4. Production changes 2022 relative to 2010-12 average

Rice Wheat Oilseeds Milk

Figure 5. Indices of agriculture and fish consumption and production in China

Oilseeds are the major imported commodity

Targets for grain area and production should be met

Cotton land and use are declining

Higher coarse grain imports to sustain

livestock expansion

Growth in milk production sharply lower than

last decade

More than half of all aquaculture production will

originate in China

Key uncertainties concern economic growth and production constraints

Modest further opening of trade is projected

Growth of consumption will modestly outpace

production

Consumption

Production

Merritt Cluff ([email protected])Trade and Markets DivisionFood and Agriculture Organization of the United Nations

Wayne Jones ([email protected])Trade and Agriculture DirectorateOrganisation for Economic Co-operation and Development

For enquiries or further information contact:

or visit our website: www.agri-outlook.org

Consult this publication on line at http://dx.doi.org/10.1787/xx-en.

This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases.Visit www.oecd-ilibrary.org for more information.

OECD-FAO Agricultural Outlook 2013-2022

OECD-FAO Agricultural Outlook 2013-2022The nineteenth edition of the Agricultural Outlook, and the ninth prepared jointly with the Food and Agriculture Organization of the United Nations (FAO), provides projections to 2022 for major agricultural commodities, biofuels and fish. Notable in the 2013 report is the inclusion of cotton for the first time and a special feature on China.

Higher costs and strong demand are expected to keep commodity prices well above historical averages with a high risk of price volatility given tight stocks, a changeable policy environment and increasing weather-related production risks. China is projected to maintain its self-sufficiency in certain key food commodities while increasing its trade and integration in world agricultural markets.

Contents

Outlook in Brief

Chapter 1. Overview

Chapter 2. Feeding China: Prospects and Challenges in the next Decade

Chapter 3. Biofuels

Chapter 4. Cereals

Chapter 5. Oilseeds and oilseed products

Chapter 6. Sugar

Chapter 7. Meat

Chapter 8. Fish and seafood

Chapter 9. Dairy

Chapter 10. Cotton

Glossary

Methodology

Statistical Annex

The projections and past trends are presented in the statistical annex and can be viewed in more detail at http://dx.doi.org/agr-outl-data-en.

Supplementary information can be found at www.agri-outlook.org.

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It is projected that China’s consumption growth will slightly outpace its production growth by some 0.3% p.a., similar to the trend of the previous decade (see Figure 5). As a result, a further but modest opening of China’s agricultural sector is anticipated although these prospects vary by commodity.

The government has instituted a policy to prevent any further exit of land from agriculture while the 12th Five-Year Plan sets specific targets for area and production of wheat, rice, coarse grain, soybeans and tubers. This Outlook indicates that these targets could be met or exceeded in the next decade.

China’s imports of oilseeds are expected to rise by 40% over the 2013-22 period, accounting for 59% of global trade. Sugar imports should stay above the tariff rate quota level over the projection period.

Cotton area is projected to decline 21% as cotton use declines with the intensification of competition in textiles from India and other countries with lower labour costs. This trend of decreasing cotton use is a reversal from the last decade.

Livestock, both the meat and dairy sectors, will continue to expand, with increasing feed requirements which will result in higher imports of coarse grains, likely beyond the current tariff quota. China is expected to become the world’s leading consumer of pigmeat on a per capita basis, surpassing the European Union by 2022.

Milk production should exhibit considerably slower growth while dairy product consumption is expected to increase 38% by 2022, with fresh dairy products responsible for most of this growth. Dairy imports are projected to rise 20% with skimmed and whole milk powder accounting for 82% of total dairy imports.

China should maintain its leading role in global fisheries as its aquaculture production continues to increase, albeit at half the rate of the previous decade. China is expected to account for 63% of global aquaculture production in 2022 and remain the world’s leading fish exporter.

Key uncertainties around the agricultural outlook for China include the ongoing sustainability of high levels of economic growth, increasing resource constraints on production and the potential for increased production variability due to climate change generally in the form of more frequent and severe weather events. Uncertainties will persist, and ongoing monitoring and information sharing is advised.

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