Agriculture weathering economic crisis better than other sectors: UN-backed report
Since food is a basic necessity, the agriculture sector has taken less of a hit than other industries as a result of the current economic crisis, according to a new report by the United Nations Food and Agriculture Organization (FAO).
Since food is a basic necessity, the agriculture sector has taken less of a hit than other industries as a result of the current economic crisis, according to a new report by the United Nations Food and Agriculture Organization (FAO).
So long as the global economy begins its recovery within the next two to three years, the “Agriculture Outlook 2009-2018” – jointly released by the Organisation for Economic Co-operation and Development (OECD) – says that drops in agricultural prices and in the production and consumption of farm goods will likely be moderate.
The recession will dampen food prices, in turn easing pressure on cash-strapped consumers, it added.
While prices have fallen from their record highs in 2008, they are still high in many countries, and the new report projected that the prices of all farm commodities, except for beef and pork, will probably not fall back to their pre-2007-2008 averages.
Crops are estimated to cost 10-20 per cent more in the next decade, when adjusted for inflation, compared with the average for the 1996-2006 period, while vegetable oil prices are expected to surge 30 per cent.
The FAO-OECD study also said that the main forces underpinning agricultural commodity prices and markets over the medium-term are an expected economic recovery, renewed food demand growth on the part of developing countries and the emerging biofuel markets.
But it cautioned that extreme price volatility, as experienced last year, could occur again, given that commodity prices are increasingly tied to oil and energy costs, with environmental experts cautioning of erratic weather conditions.
The report points to access – and not availability – as a longer-term problem, stressing that poverty reduction and economic growth will be a large part of the solution.
It also called on governments to boost domestic agricultural development through infrastructure investment and incentivizing sustainable soil and water use, among other targeted policies.