Source: Rita Jane Gabbett, MEATINGPLACE, 7/15/19


Global demand for agricultural products is projected to grow by 15% over the coming decade, while agricultural productivity growth is expected to increase at a slightly faster rate, causing inflation-adjusted prices of the major agricultural commodities to remain at or below their current levels, according to an annual report by the Organisation for Economic Co-operation and Development and the UN’s Food and Agriculture Organization (OECD-FAO).

The Outlook projects 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, including 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, according to the report.

Population growth, urbanization and lifestyles
Worldwide, the use of cereals for food is projected to grow by about 150 million metric tons over the outlook period — amounting to a 13% increase — with rice and wheat accounting for the bulk of the expansion. 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.

“Regrettably, the most needy regions are expected to see slow income growth and hence only small improvements in their nutritional status,” warned FAO Assistant Director-General for Economic and Social Development Máximo Torero. “The findings point to an overall decline in undernourishment; however, at current rates of improvement, we would remain far off track from reaching the Zero Hunger target by 2030.”

“The Outlook makes abundantly clear that trade is critical for global food security,” said OECD Director for Trade and Agriculture Ken Ash. “Regions that are experiencing rapid population growth are not necessarily those where food production can be increased sustainably, so it is essential that all governments support open, transparent and predictable agro-food markets.”

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% annually, slower than over the past decade (3.3% average), as growth in global import demand is expected to slow. On the export side, both Latin America and Europe are projected to increase their sales to foreign markets.

Prices
Several years of strong supplies have reduced the international prices of most agricultural commodities, with cereal, beef and sheepmeat prices showing short-term rebounds. For nearly all commodities covered in the Outlook, real prices are projected to remain at or below current levels over the coming decade, as productivity improvements continue to outpace demand growth.

Consumption
Per-capita consumption of staple foods is expected to be stagnant, as demand is saturated, for most of the world’s population. Meat demand is expected to be relatively strong in the Americas, while low incomes continue to constrain meat consumption in Sub-Saharan Africa.

Fresh dairy products will meet much of the additional demand for protein in South Asia (notably India and Pakistan). More widely, per capita consumption of sugar and vegetable oils is expected to rise, driven by urbanisation and the shift to more processed and convenience foods.

Robust demand for animal products provides incentives to expand production in the livestock sector through larger herds. Paired with improvements in offtake rates, demand for animal feed will be stimulated, with feed crops such as maize and soybeans expected to increase their shares in the global crop mix. Hence, the growth in feed use of cereals is expected to exceed the expansion of food use over the coming decade.

Biofuels formed a major source of crop demand growth between 2000 and 2015, but the expansion will be lower over the coming decade, with additional demand coming mainly from Indonesia, using vegetable oil for biodiesel, and China and Brazil, using cassava and sugarcane for ethanol.

Production
The foreseen growth in livestock production will be based on an expansion of herds, greater feed use and a more efficient use of feed.

Agriculture continues to be a significant contributor to global greenhouse gas emissions. Direct emissions of agriculture, mostly from livestock, as well as rice and synthetic fertilizers, are expected to grow by 0.5% p.a. over the coming decade, compared with 0.7% p.a. over the past 10 years. This is lower than the growth in agricultural production, indicating a declining carbon intensity as productivity increases.

Trade
World agricultural markets face a range of new uncertainties that add to the traditionally high risks facing agriculture. On the supply side, these include the spread of diseases such as African Swine Fever, growing resistance to antimicrobial substances, regulatory responses to new plant breeding techniques and responses to increasingly likely extreme climatic events.

On the demand side, they include evolving diets, reflecting perceptions with respect to health and sustainability issues, and policy responses to alarming trends in obesity. A further factor is the heightened uncertainty with respect to future trading agreements between several important players on world agricultural markets. Escalating trade tensions have the potential to reduce and redirect trade, with repercussions for international and domestic markets.

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