World farm commodity prices could remain flat for 10 years: Annual report

Prices of global farm commodities may stay flat or even drop for the next 10 years as production outpaces demand, said a report on Monday as Indian farmers look to boost their income by increasing exports.

The annual report of Organisation for Economic Co-operation and Development (OECD) and the UN’s Food and Agriculture Organization (FAO) was presented in Rome. It provides a consensus assessment of the 10-year prospects for agricultural and fish commodity markets at national, regional and global levels.

The report predicts that yield improvements and higher production intensity, driven by technological innovation, will result in higher output even as global agricultural land use remains broadly constant.

Direct greenhouse gas emissions from agriculture, meanwhile, are expected to grow by some 0.5 percent annually over the coming decade, below the 0.7 percent rate of the past 10 years, and below the projected output growth rate – indicating declining carbon intensity.

At the same time, new uncertainties are emerging on top of the usual risks facing agriculture.

These include disruptions from trade tensions, the spread of crop and animal diseases, growing resistance to antimicrobial substances, regulatory responses to new plant-breeding techniques, and increasingly extreme climatic events. Uncertainties also include evolving dietary preferences in light of health and sustainability issues and policy responses to alarming worldwide trends in obesity.

Worldwide, the use of cereals for food is projected to grow by about 150 million tonnes over the outlook period – amounting to a 13 percent increase – with rice and wheat accounting for the bulk of the expansion, the statement said.

The most significant factor behind the projected growth in food use of staple products is population growth, which is expected to rise fastest in Sub-Saharan Africa and South Asia.

 The report finds that consumption levels of sugar and vegetable oil are projected to rise, reflecting the ongoing trend towards prepared and more processed foods, notably in many rapidly-urbanising low and middle-income countries.

In addition, the demand for feed crops is projected to outpace animal production growth in countries where the livestock sector is evolving from traditional to commercialized production systems, while the use of agricultural commodities as feedstock to produce biofuels is expected to grow primarily in the developing countries.  

Trade in agricultural and fisheries commodities should expand over the coming decade at around 1.3 percent annually, slower than over the past decade (3.3 percent average), as growth in global import demand is expected to slow.

“Global agriculture has evolved into a highly diverse sector, with operations ranging from small subsistence farms to large multinational holdings,” said FAO Director-General José Graziano da Silva and OECD Secretary-General Angel Gurría in the report.