Although farm production is expanding faster in developing countries than in developed economies, the poorest nations will be increasingly dependent on world markets and thus more vulnerable to price fluctuations because their own growth is not keeping pace with their population increase, according to a new United Nation report.
The joint study by the UN Food and Agriculture Organization (FAO) and the 30-member Organization for Economic Co-operation and Development (OECD) of industrialized nations calls for greater investment in education, training and infrastructure in these countries to improve production capacity.
Brazil, India and China are increasingly important in shaping the future of world agricultural trade, according to the OECD-FAO Agricultural Outlook 2006-2015.
In developing countries as a whole rising incomes and increasing urbanization are changing people’s diets, leading to greater demand for and imports of meat and processed foods in particular, but also for the animal feed needed for their production.
Growing market opportunities in certain developing countries are coupled with a shift in production and exports of farm commodities away from OECD countries towards other developing economies. This is expected to increase over the next 10 years and as a result global competition among exporters will get tougher, the report says.
The traditional main wheat exporters - Argentina, Australia, Canada, the European Union (EU) and the United States - are likely to maintain their dominant positions, but output from Ukraine and Kazakhstan is creating growing competition. The US is expected to remain the largest wheat exporter in coming years but its market share is likely to fall.
Similar trends prevail in other commodity markets, with rapidly growing exports from Latin American countries in particular. Global average yields for wheat and coarse grains like maize should rise by around 1 per cent a year between 2006 and 2015. Wheat and coarse grain output by 2015 is expected to be 13 per cent and 18 per cent higher respectively than in 2005.
With likely strong energy prices, production of bioenergy from coarse grains and other cereals, oilseeds and sugar is expected to grow, creating additional demand, especially for coarse grains to produce bio-diesel as a substitute for oil-based fossil fuels.
International meat markets are expected to grow in the medium term, but they remain vulnerable to animal disease outbreaks in key supplying countries. Potential further outbreaks of BSE (mad cow disease), foot-and-mouth disease, and bird flu will challenge markets and affect trading patterns, requiring greater international cooperation.
Productivity growth and increased competition in international trade are expected to offset rising demand, and world agricultural commodity prices, adjusted for inflation, are mostly expected to continue their long-term decline, albeit slowly, towards 2015.