merritt cluff, trade and markets division · global agricultural outlook. ... – biofuels – what...

Issues in the medium term outlook for

agriculture

Merritt Cluff, Trade and Markets Division

Trade and Markets Division

• Outline FAO’s projection work.

• Confirm some major trends and issues in the global agricultural outlook.

• Create better dialogue between TCI and EST:

what collaboration is possible?

Objectives


OECD-FAO Agricultural Outlook

• Joint OECD-FAO report

• Country collaborators

• 10 year horizon

• Projection/ scenario, not forecast

• Major temperate commodities in trade


• FAO’s medium term projection work– Collaboration with OECD and its member countries

– Integrated with World Bank/IMF/UN macroeconomic projections

– Global scope, with templates for countries

• Model based– Policy specific, good for OECD, improving for non-OECD

– Large partial equilibrium model of supply and demand balances, and prices for temperate commodities (18), and countries and regions

(54)

– Database of timely information

• Issues oriented– Identify and assess current and emerging issues

– Publication examines key issues each year, ie Bio-fuels, Price levels, Price Variability etc.

The OECD-FAO Agriculture Outlook


• Prices: – Have food commodity prices risen to a higher plateau? What does this mean

and for whom?

– Causes – demand or higher costs?

– What is the nature of price transmission in various countries to global price

changes – how efficient are global markets?

– Are commodity prices more volatile now, and why? What to do about it? –

G20 discussions

• Impact of demand changes:– Population growth slowing, perhaps more rapidly than expected?

– Income growth – will high GDP growth continue in DCs, and what does it mean?

– Biofuels – what impacts on markets, and opportunities?

• Trade: – Changing regional profile of production

– How does changing trade patterns affect impacts of shocks, including weather, animal diseases, macroeconomic crises?

• Policies: Tariffs, Export taxes, Self Sufficiency Policies Etc?

What issues for the next decade?


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1974 1979 1984 1989 1994 1999 2004 2009 2014 2019

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)/to

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Wheat Maize (Corn) Rice Beef (s.axis)

Prices are now rising in real terms?


-20

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20

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60

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120

140

160

2007-08 average 2010-19 average

Most commodity prices at higher average levels

Percentage change in world prices in real terms relative to 1997-06


Higher Fertilizer Prices

8


9


10


11


Low price transmission? Maize prices


Low price transmission? Wheat prices


Rising demand: drivers

• Population growth

• Income growth

• Urbanisation

• Change in diets

• Responsiveness to prices/income

• Biofuel policy, mandates


Net Addition to population starting to fall quickly during the projection period

Source: UN-Statistics/population

2008


By region fall in net addition is highestin Asia region

Source: UN-Statistics/population

2008


Growth in recover may be slower than period prior to the “Great Recession”, but still strong?

Source: IMF April, 2010 to 2015, extended to

2020


Will cumulative growth be this strong?

Source: IMF April, 2010 to 2015, extended to

2020


Mr Engel and calories

Note: t-stats in parentheses

Source: FAOSTAT (2010) & Cosimo (2010))


Annual growth in per capita consumption


Development of per-capita meat consumption


World oil prices likely to remain high

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120

1982 1986 1990 1994 1998 2002 2006 2010 2014 2018

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Outlook 2010


Ethanol production growing steadily

Feedstocks used for ethanol production over the projection period

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60

80

100

120

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160

180

2007-09 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Other feedstocks

Roots and tuber

Sugar Beet

Molasses

Wheat

Biomass based

(2nd generation)

Sugar Cane

Coarse grains

billion littres


Biodiesel production growing steadily

Feedstocks used for biodiesel production over the projection period

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5

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45

2007-09 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Biomass-based (2nd

generation)

Other feedstocks

(animal fats)

Jatropha

Vegetable Oil

billion littres


Biofuel use of global feedstock production

+ 90 Mt

0%

5%

10%

15%

20%

25%

30%

35%

40%

Sugar Cane Molasses Vegetable oil Coarse grains Sugar Beet Wheat

2007-09 2019

Share of feedstocks used for biofuel production from global production


Net agricultural production index for economic groups..


L. America and E. Europe growing strongest

in net agricultural production

27


-10

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OECD non-OECD

Trade: what does growth imply?

Exports in 2019 compared to the 2007-2009 average (%)


Where are key policy changes leading?

• Less distortive subsidies by developed countries

• Increasing distortion by some developing

countries

• Responses to price crises

– Export tariffs/restrictions

– Self-sufficiency policies

– Input subsidies

• Volatility: G20 discussions29


Nominal rate of assistance to agriculture

30Anderson et al, 2008


Conclusions

• Projection frameworks provide forward looking assessments of issues.

– Market functioning, demand changes, policies

– Global and local

• Can FAO outlook/projection work be useful to TCI?

– Commodity issues can be central to longer term investment.

– What data needs are required?

• Is there potential for greater collaboration?– What issues concern TCI and how can these be assessed in a forward

looking framework?

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merritt cluff, trade and markets division · global agricultural outlook. ... – biofuels – what...

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