Agricultural Outlook Prospects, Productivity and Policies Wayne Jones,OECD Trade and Agriculture 10 November 2011
Dec 02, 2014
Agricultural OutlookProspects, Productivity and Policies
Wayne Jones,OECD Trade and Agriculture
10 November 2011
Prospects for agriculture are good…
Global consensus on medium term prospects for agriculture and fisheries
• Higher average prices
• Increasing production
• Growing non-food use
• Expanding trade
Higher average commodity prices% change in average real prices 2001-10 to 2011-2020
Wh
eat
Maiz
e
Ric
e
Oil
seed
Oil
see..
.
Veg.
Oil
Raw
S..
.
Beef
Pig
meat
Pou
ltry
Fis
h
Bu
tter
Ch
eese
SM
P
WM
P
Eth
an
ol
Bio
di.
..
-10
0
10
20
30
40
50
60
Rising agricultural and fish production
60
70
80
90
100
110
120
130
140
150
160
N.America L.America W.Europe E.Europe&C.AsiaN.Africa&M.East S.S.Africa Asia&Pacific Oceania
EU production projectionsEU27 Production: % change 2011-2020 vs. 2001-10
0 5 10 15 20 25 30 35
Oilseeds
Veget. Oils
Protein meals
Wheat
Cheese
Poultry
Pigmeat
Coarse grains
-25 -20 -15 -10 -5 0
Sugar
Skimmed Milk …
Beef
Butter
Whole Milk Powder
Fish
Rice
Rising non-food demandShare of global production used for biofuel feedstocks
Sugar cane Vegetable oil Coarse Grains Sugar beet Wheat0%
5%
10%
15%
20%
25%
30%
35%
2020 2008-2010Percent
Expanding global trade
N.America13%
L.America27%
W.Europe6%E.Europe&C.Asia
11%N.Africa & M.East0%
S.S.Africa-1%
Asia&Pacific38%
Oceania4%
Share of export gains 2011-2020
EU production projectionsEU 27 Net position 2011- 2020 vs. 2001-2010: exports minus imports in thousand tonnes (absolute difference)
0 1000 2000 3000 4000 5000
WheatOilseedsPigmeatCheese
Skimmed Milk Powder
-6000 -5000 -4000 -3000 -2000 -1000 0
Veget. OilsSugar
Coarse grainsProtein meals
FishRiceBeef
ButterPoultry
Whole Milk Powder
Good global prospects but rising…
…production costs
…market/price volatility
…resource constraints
…and slowing productivity growth
Rising production costs
• FACEPA and agri-benchmark farm level analysis
• Variable costs have gone up – mainly energy and feed
• Impacts different by farm type and prod’n structure
• Costs have risen less than input prices (farmers adjust)
• Farm income rises with farm size
Greater market/price volatility…
• Weather (climate change)
• Low stocks
• Energy prices
• Exchange rates
• Inelastic demand
• Ag and trade policy
Resource constraints: water shortages
• 47% population under severe water stress by 2050
• Irrigation costs rise with energy prices
• Water pricing to agriculture will increase
• 60% freshwater withdrawals by agriculture (2010)
• 40% freshwater withdrawals used by agriculture (2050)
The need to increase productivity growth
• Growing demand for food and fuel
• Increasing competition for land
• Important water constraints
• Uncertain impacts of climate change
Improving agricultural productivity growth is not an option to consider - it is an essential requirement fro increasing global food supplies on a sustainable basis.
Slower agricultural TFP growthAverage annual growth rate by period (%)
Slower projected global output growth…Global agricultural production growth
2.60%
1.70%
0.0%
1.0%
2.0%
3.0%
2001-2010 2011-2020
Productivity and Sustainability
• Need to reduce waste/carbon footprint (sustainable consumption and production)
• Need to increase productivity in a more sustainable manner
• Productivity and sustainability can be complimentary outcomes
•Precision farming (fertilizer/crop protection)
•More efficient water use (drip irrigation)
•Eco-system approaches (intensify production, conserve organic matter)
Governments can help
Governments need to link policies to priorities
• Invest in innovation
• Improve sustainability
• Facilitate producer risk management
EU policy reforms
Since 1992 several reforms of the Common Agricultural Policy have aimed at reducing distortions to production and trade in agriculture
Post 2013:
• Reduce market distortions
• Strengthen AKS systems
• Target environmental policies
OECD Trade and Agriculture
www.agri-outlook.org