Prices of farm commodities to drop gradually: Report

Prices of farm commodities would decline gradually over the next 10 years as production would exceed demand, according to a report by the Organisation for Economic Co-operation and Development (OECD) and United Nation's Food and Agriculture Organization (FAO).

However, the prices would not fall below the rates that prevailed in early-2000, said the report Agricultural Outlook 2015-2024 released in Paris on Wednesday. Lower oil prices would also contribute to lower food prices as energy and fertilisers cost would come down, it noted.

"Strong crop yields, higher productivity and slower growth in global demand should contribute to a gradual decline in real prices for agricultural products over the coming decade, but nonetheless, prices will likely remain at levels above those in the early-2000s," FAO-OECD said in a statement.

The growth in production would be on the back of higher productivity and lower input prices, the report said.

Global wheat production is projected to increase to 786.7 million tonnes by 2024 from the average output of 700 million tonnes in 2014, while rice output is estimated to increase to 564.1 million tonnes from 494 million tonnes in the period under the review, it said. Oilseed output would increase to 516.4 million tonnes from 425.2 million tonnes, while sugar production is likely to rise to 275.6 million tonnes against 257.7 million tonnes, it added.

While the share of global production and consumption will be stable in next 10 years, agri-trade will increase more slowly than in the previous decade, the report noted.

Presenting the report, OECD Secretary General Angel Gurria said: "The outlook for global agriculture is calmer than it has been in recent years, but there is no room for complacency. We cannot rule out the risk of new price spikes in the coming years."

FAO Director-General Jose Graziano da Silva said the least-developed countries "remain significantly behind advanced economies; this is cause for concern, as it means hunger in these countries could persist."