The organization for Economic Cooperation (OECD) and Development and the Food and Agricultural Organisation (FAO) in a new report has warned that said that global agricultural production would slow down to about 1.5 per cent annually over the next 10 years which could lead to rise in food prices.
“Global agricultural production is expected to grow 1.5% a year on average over the coming decade, compared with annual growth of 2.1% between 2003 and 2012.”
The report pointed out that limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures are the main factors behind the trend.
According to the two UN agencies, there is need to increase the supply of farm commodities in order to keep pace with the increasing global demand for food.
“Agricultural policies need to address the inherent volatility of commodity markets with improved tools for risk management while ensuring the sustainable use of land and water resources and reducing food loss and waste,” OECD-FAC suggested.
OECD Secretary-General Mr. Angel Gurría presenting the report noted that “the outlook for global agriculture is relatively bright with strong demand, expanding trade and high prices. But this picture assumes continuing economic recovery. If we fail to turn the global economy around, investment and growth in agriculture will suffer and food security may be compromised.”
OECD-FAO Outlook report insisted that production shortfalls, price volatility and trade disruption remain a threat to global food security.
“As long as food stocks in major producing and consuming countries remain low, the risk of price volatility is amplified. A wide-spread drought such as the one experienced in 2012, on top of low food stocks, could raise world prices by 15-40 percent,” the report further warned.
FAO Director-General Jose Graziano da Silva further stressed the importance of increasing agricultural production saying that “High food prices are an incentive to increase production and we need to do our best to ensure that poor farmers benefit from them. Let’s not forget that 70 percent of the world’s food insecure population lives in rural areas of developing countries and that many of them are small-scale and subsistence farmers themselves.”
The report noted despite the agricultural sector shifting from a policy- driven sector to becoming increasingly market-driven, developing countries have failed to take advantage.
The 2013-2022 Agricultural Outlook explained that increased investment in the sector “offers developing countries important investment opportunities and economic benefits, given their growing food demand, potential for production expansion and comparative advantages in many global markets.”
The Agricultural Outlook expects prices to remain above historical averages over the medium term for both crop and livestock products due to a combination of slower production growth and stronger demand, including for biofuels.
According to the report, China, with one-fifth of the world’s population, high income growth and a rapidly expanding agri-food sector, will greatly influence world markets, as it is projected to remain self-sufficient in the main food crops, although output is anticipated to slow in the next decade due to land, water and rural labour constraints.
Mr. Gurria said “Governments need to create the right enabling environment for growth and trade, adding that “Agricultural reforms have played a key role in China’s remarkable progress in expanding production and improving domestic food security.”
With China’s consumption growth expected to outpace its production growth by some 0.3% per year, signaling a further but modest opening of China’s agricultural sector, the report said, the country’s imports of oilseeds are expected to rise by 40% over the next ten years, accounting for 59% of global trade.
According to FAO estimates, China’s food security has improved with the number of undernourished falling by almost 100 million since 1990, despite adding an additional 200 million people to its population. Ensuring the food security of the estimated 158 million persons still undernourished remains a major challenge.
The report observed that “driven by growing populations, higher incomes, urbanization and changing diets, consumption of the main agricultural commodities will increase most rapidly in Eastern Europe and Central Asia, followed by Latin America and other Asian economies.”
The share of global production from developing countries will continue to increase as investment in their agricultural sectors narrows the productivity gap with advanced economies.
Developing countries, according to the report, are expected to account for 80 percent of the growth in global meat production and capture much of the trade growth over the next 10 years. They will account for the majority of world exports of coarse grains, rice, oilseeds, vegetable oil, sugar, beef, poultry and fish by 2022.
“To capture a share of these economic benefits, governments will need to invest in their agricultural sectors to encourage innovation, increase productivity and improve integration in global value chains, FAO and OECD stressed.
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