São Paulo – Agricultural production should slow down over the next ten years as against the last decade, according to the Agricultural Outlook 2012-2021 report, disclosed on Wednesday (11) by the Organisation for Economic Co-operation and Development (OECD) and by the Food and Agriculture Organization of the United Nations (FAO).
According to the two organisations, production should grow on average 1.7% a year by 2021, as against 2.6% over the last 10 years. The estimate is concerning, as there is a scenery of high volatility in food prices on the international market. The study shows that agriculture must grow 60% over the next 40 years to supply global demand.
The report says that over the last century and a half, agricultural production grew on average 2.3% a year, and that moments of higher prices were compensated by even greater answer on the side of offer, resulting in real product prices remaining weak over the decades. That is not what is taking place now.
According to the senior economist at FAO, Merritt Cluff, the global market is currently living its longest cycle of price increases of the last 40 years. The pressure comes from emerging countries, which have more and more people with higher buying power. This results in more people eating more and better. In North America and Western Europe, according to him, there has been no significant change in volume of consumption over the last decade.
The greater production was also boosted by emerging nations over the last 10 years, mainly Brazil, China, India and Russia, the so-called "BRIC". Over the next decade, the offer of developing nations should continue growing above the global average, around 1.9% a year, but below the average of the last decades. In this respect, these countries are going to dominate further and further in the agricultural area and in commodity trade.
Apart from the pressure of demand, another factor that has been strongly influencing food prices is the price of oil, highly volatile in recent years. Other elements putting pressure on foods are the higher cost of inputs, lower volume of natural resources available, higher environmental restrictions, as well as the impact of global heating. All of this has contributed to offer answering more slowly.
Although the rhythm of growth of the world population is going to continue below food production, prices are going to remain at a high level over the next decade, according to the study, as the growing demand includes further factors, like higher income, urbanisation, changing feeding habits and the growing demands of the biofuel industry.
The text shows that the growth in the cultivated area should be small, so the greater offer will have to come from productivity gains.
In this line, the OECD secretary general, Angel Gurría, said that sustainable production in more open markets is essential to guarantee the food safety in global scale. He recommends that governments resign their practices that distort international trade and create a favourable environment to the development of agricultural activities considered sustainable.
The director general at the FAO, José Graziano, added that "high real prices for agricultural commodities provide higher incentives for farmers and rural development." "Especially where markets are open and price mechanisms function well, and where farmers also have the capacity to respond [to demand]", he said. Hence the need to expand the productivity and sustainability, especially in developing nations.
In this area, the report informs that 25% of the world’s agricultural area is "highly degraded", that lack of water is a serious problem in several countries, that many fishing areas are running a risk, not to mention the matter of climate change.
In this respect, both organisations answer to the adoption of a series of policies, like the creation of an appropriate institutional environment for the activity, the providing of incentives to infrastructure and the training of labour, especially regarding relations with small farmers. Another priority should be the reduction of waste. According to the FAO, losses are as much as one third of all that is produced worldwide.
*Translated by Mark Ament
