OECD-FAO Outlook Anticipates Higher Food Prices For Another Decade
2011-06-17 16:09:49
Higher food prices and volatility in commodity markets are here to stay, according to a new report by the Organization for Economic Cooperation and Development (OECD) and the UN Food and Agriculture Organization (FAO).
The OECD-FAO Agricultural Outlook 2011-2020, released on Friday, says that a good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the Outlook states that over the coming decade real prices for cereals could average as much as 20% higher and those for meats as much as 30% higher, compared to the decade ended in 2010. These projections are well below the peak price levels experienced in 2007-08 and again this year.
Higher prices for commodities are being passed through the food chain, leading to rising consumer price inflation in most countries. This raises concerns for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition, the report says. "While higher prices are generally good news for farmers, the impact on the poor in developing countries who spend a high proportion of their income on food can be devastating," said OECD Secretary-General Angel Gurría.
He called upon governments to "improve information and transparency of both physical and financial markets, encourage investments that increase productivity in developing countries, remove production and trade distorting policies and assist the vulnerable to better manage risk and uncertainty."
FAO Director General Jacques Diouf said: "In the current market context, price volatility could remain a feature of agricultural markets, and coherent policies are required to both reduce volatility and limit its negative impacts."
"The key solution to the problem will be boosting investment in agriculture and reinforcing rural development in developing countries, where 98% of the hungry people live today and where population is expected to increase by 47% over the next decades." Action should focus in particular on smallholders in low-income food-deficit countries, he added.
The Outlook, which covers fisheries for the first time, sees global agricultural production growing more slowly over the next decade than in the past 10 years. Farm output is expected to rise by 1.7% annually, compared to the 2.6% growth rate of the past decade. Despite this slower growth, production per capita is still projected to rise by 0.7% annually.