The document summarizes projections from the 2011-2020 OECD-FAO Agricultural Outlook report. It finds that global agricultural production and trade will increase over the projection period, driven by population and income growth in developing countries. Commodity prices are projected to remain higher on average than the previous decade. Production growth will concentrate in developing regions like Latin America and Eastern Europe, while trade of many agricultural products like vegetable oils and rice is expected to rise 10-30%.

1. OECD‐
OECD‐FAO
Agricultural Outlook 2011‐2020
Agricultural Outlook 2011‐
Pavel Vavra
OECD Trade and Agriculture
The Outlook for EU Agriculture, COPA-COGECA, Brussels, 29 June, 2011
OECD-FAO Agricultural Outlook
• Agricultural Outlook ‐ a set of
conditional projections
published in an OECD‐FAO
bli h d i OECD FAO
annual report
• Comprehensive, dynamic partial
equilibrium model
• The datasets are available at
www.agri‐outlook.org
i tl k
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2. Key macroeconomic assumptions
• Global economic recovery
underway (fragile in OECD, but
more robust in BRICs)
• 2.2% Inflation in OECD area but
higher elsewhere
• Weak US dollar and higher oil
prices
• Stable policy regimes
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Slowdown in population growth
Annual percentage change
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2

3. Urbanisation – a key driver
Rural Population Urban Population
9000
8000
7000
• Rural population numbers are
6000
expected to stagnate.
ons
5000
Millio
4000
• All additional population is to 3000
live in urban areas 2000
1000
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
4500
4000
3500
• Move to urban areas to take 3000
Millions
2500
place mainly in developing 2000
countries 1500
1000
500
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Developed urban Developing Urban
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World oil prices to remain relatively high
USD/Barrel
120
100
80
60
40
20
0
1985 1990 1995 2000 2005 2010 2015 2020
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3

4. Main commodity projections
• Commodity prices in real terms to remain above last
decade average levels
– Income, population and biofuels growth
– Higher cost structure
• Latin America and Eastern Europe are the fastest growing
production regions
• Developing countries driving the global demand and trade
gains
• G
Growing food deficits expected in Sub-Saharan countries
i f d d fi it t di S bS h ti
• Meat, dairy products, vegetable oils and sugar should
experience the highest increases in demand
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Most commodity prices at higher average levels
Percentage change in world prices in real terms relative to 2001-2010 base
60
50
40
30
20
10
0
-10
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4

5. Production shifts to developing countries
Share of global agricultural and fish production gains
Production gains between 2008/10 - 2020 valued at world reference prices (2004/06)
N.America
10%
Oceania
2%
L.America
21%
Asia&Pacific
45%
W.Europe
3%
E.Europe&C.Asia
7%
N.Africa&M.East
S.S.Africa 3%
9%
0-15% over the decade 15-30% over the decade +30% over the decade
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Production shifts to developing countries
Share of global agricultural and fish production gains Sugar, vegetable oil and poultry production
Production gains between 2008/10 - 2020 valued at world reference prices (2004/06) are expected to record the highest growths
SMP
WMP
N.America
10% Cheese
Butter
Oceania
2%
Poultry
Pigmeat
L.America
Beef
21%
Asia&Pacific
45% Fish
Sugar
W.Europe
3% Veget. Oils
E.Europe&C.Asia
EE &C A i Protein meals
7% Oilseeds
N.Africa&M.East
S.S.Africa 3%
9% Rice
Coarse grains
0-15% over the decade 15-30% over the decade +30% over the decade Wheat
0 10 20 30 40
Per cent change: 2020 compared to 2008-2010 average
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6. Large differences in milk production gains
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Fish production growth driven by aquaculture
Capture Aquaculture
Million tonnes
180
160
140
120
100
80
60
40
20
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
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7. Ethanol production growing steadily
Feedstocks used for ethanol production over the projection period
160
140 Other
120 Sugar beet
100 Non agricultural
feedstock
80 Molasse
60 Wheat
40 Biomass-based
Sugar Cane
20
Coarse grains
-
Bnl 2008- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2010
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Strong growth of global biodiesel production
Feedstocks used for biodiesel production over the projection period
Bnl
40
Jatropha
35
30
Non
25 agricultural
feedstock
20
Biomass-
based
15
10
Vegetable oil
5
-
2008-2010011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2
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8. Biofuels production represents an important share of global
feedstock utilisation
Share of feedstocks used for biofuel production from global production
2020 2008‐2010
Percent
35%
30%
25%
20%
15% + 90 Mt
10%
5%
0%
Sugar cane Vegetable oil Coarse Grains Sugar beet Wheat
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Food remains the main driver for wheat
Food Use Feed Use Biofuel Use Other use
Developing 2008/10
+ 34 Mt
Developing 2020
Developed 2008/10
Developed 2020
0 100 200 300 400 500
Million tonnes
World
2008/10
World
2020
0 200 400 600 800
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9. …while feed and fuel push coarse grain demand up
Food Use Feed Use Biofuel Use Other use
Developing 2008/10
Developing 2020 + 50 Mt
+ 50 Mt
Developed 2008/10
Developed 2020
0 100 200 300 400 500 600 700 800
Million tonnes + 90 Mt
World
2008/10
World
2020
0 200 400 600 800 1 000 1 200 1 400
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Driven by economic growth, meat consumption
increases especially in developing countries
Consumption of meat from 2008-10 average to 2020, per cent
World Developing/Developed
Developing
Beef
Developed
D l d
Pork
Poultry
Sheep
0 10 20 30 40 0 10 20 30 40
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10. Outlook for dairy products consumption
Butter Cheese SMP WMP
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Per capita consumption evolution differs by product
Per capita consumption of WMP Per capita consumption of cheese
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11. Global trade to grow by 10-30%
Imports : Share of the import gains Vegetable oils, rice and SMP
trade growing the fastest
N.America
10%
Oceania
L.America
SMP
1%
Asia&Pacif 9% WMP
ic Cheese
37%
Butter
W.Europe
15%
poultry
E.Europe&
C.Asia Pigmeat
S.S.Africa N.Africa& 4% Beef
9% M.East
15%
Fish
Exports: Share of the export gains
Sugar
N.America
13%
Veget. Oils
Oceania
4% Protein meals
Oilseeds
Asia&Paci
fic
38% L.America Rice
27%
Coarse grains
S.S.Africa Wheat
‐1%
E.Europe W.Europe 0 10 20 30 40
N.Africa&
&C.Asia 6%
M.East Per cent change 2020 compared to 2008-2010 average
11%
0%
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Sugar exports remain highly concentrated
and lead by Brazil
2008‐10 2020
Million tonnes r.s.e .
70
60
50
40
30
20
10
0
World Brazil Thailand Australia Mexico India South
Africa
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12. While sugar imports are more diversified
OECD Emerging economies
Million tonnes r.s.e. Million tonnes r.s.e.
6 6
5 5
4 4
3 3
2 2
1 1
0 0
European United Korea Japan
China Indonesia Russia India
Union States
2008‐10 2020
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Stochastic analysis of projected agricultural production
Impact on world coarse grain prices
• Monte Carlo simulations on yields, oil and fertiliser prices, macroeconomic variables.
• 500 model runs show more upside potential for world coarse grains prices
10% percentile baseline median 90th percentile
USD/t
350
300
250
200
150
100
50
0
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
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13. Key Market Drivers
Income changes impact mainly demand for meat and dairy products
1 % additional income growth p.a. 1% less income growth p.a.
beef and veal
sheep meat
cheese
butter
sugar
poultry meat
whole milk powder
whole milk powder
pork
coarse grains
wheat
vegetable oil
rice
‐2,5% ‐2,0% ‐1,5% ‐1,0% ‐0,5% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5%
Impact of a 1% increase/decrease of annual GDP growth on global commodity consumption (average over projection period)
Yield growth and changes have important impact on global commodity prices
yields increase by 5% yields decrease by 5%
wheat
i
rice
coarse grains
protein meals
poultry meat
oilseeds
‐30% ‐20% ‐10% 0% 10% 20% 30%
Impact of 5% increase/decrease in yields of cereals on world commodity prices (average over projection period)
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Key Market Drivers
• Demand growth – above all in
developing countries
• C
Convergence i consumption
in ti
patterns
• Developing countries raise meat
consumption
• Increased health and nutrition
concerns
• Supply adjusting to higher
production costs
• International investment
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14. Key issues and uncertainties
• Traditional uncertainties:
– Weather and economic stability
– Developments in trade and
domestic policies
• Biofuels policies and biofuel
developments
• Food security and climate
change
• Increased price volatility
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OECD Trade and Agriculture
www.oecd.org/agriculture
Contact
tad.contact@oecd.org
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