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OECD-FAO Agricultural Outlook Jonathan Brooks Mexico City, 6 th November 2014

OECD-FAO Agricultural Outlook Jonathan Brooks Mexico City, 6 th November 2014. Context. High food prices in 2007-08 caught most by surprise, but such events are not unprecedented.

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OECD-FAO Agricultural Outlook Jonathan Brooks Mexico City, 6 th November 2014

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  1. OECD-FAO Agricultural Outlook Jonathan Brooks Mexico City, 6th November 2014

  2. Context • High food prices in 2007-08 caught most by surprise, but such events are not unprecedented. • Since then there has been a strong supply response and prices have fallen back, although maize prices peaked again in 2012/13 due to drought in the United States. • Good harvest for most crops in 2013-14, with reduced crop price volatility • Meat prices peaked in 2014, while dairy prices fell sharply from historic highs • Low oil prices • Uncertainty on future of biofuel mandates

  3. Real food prices still high but returning to levels of the mid-1990s Source: IMF

  4. Commodity price volatility back to pre-crisis levels(Number of commodities whose volatility was above 25%) Source: Baffes (2014) from ICE, CME, and World Bank calculations. 4

  5. Highlights of the Outlook • Real food prices expected to decline slightly, but remain above levels before food price crisis. • Changing relative prices: • Coarse grain and oilseed prices increase relative to food staples – feed and fuel demand • Meat and dairy prices increase relative to crops – higher incomes and protein demand • Agricultural markets expected to be less volatile than in recent years (recovery in stocks) • Optimistic outlook for India – despite doubts about the viability of government food programmes.

  6. Modest declines in real prices Index, 2011-2013 = 1, Based on Production Value

  7. Outlook assumes constant policies and “normal” market conditions, but there are risks: • Slower economic growth in emerging economies (BRIICS) • Energy prices & links to commodity markets • Agricultural and trade policies • Trade agreements • Biofuel policies Long-term structural uncertainties: • Rate of agricultural productivity growth • Consumption patterns (including waste) • Natural resource constraints & environmental impacts • Climate change

  8. Nominal maize price (US$/t), 2000 - 2023 10th to 90th percentile range (coefficient of variation in 2023 = 12.2%)

  9. Policy settings need to be robust to alternative future outcomes • Medium-term Outlook will be influenced by how we address long- term challenges: global food security, sustainable resource use, climate change • Agenda needs to focus more on public good provision and move away from income support and associated distortions • Improve agricultural productivity sustainably – raises farmers’ incomes and lowers food prices • Keep markets open: • Market information can help countries avoid rash responses (AMIS and Rapid Response Forum) • Importance of multilateral reform and post Bali WTO agenda • Avoid policies that contribute to higher and more volatile food prices

  10. For more information • Access the OECD-FAO Agricultural Outlook • www.agri-outlook.org • Visit our websites • www.oecd.org/tad • http://www.fao.org/economic/en/ • Connect with us • www.twitter.com/OECDagriculture • Contact us • tad.contact@oecd.org • EST-Projections@fao.org

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