Agriculture more resilient to global crisis
OECD-FAO Agricultural Outlook 2009-2018 published:
Because food is a basic necessity, the agriculture sector is showing
more resilience to the global economic crisis than other industries. But
the risks could increase if the economic downturn deepens, according to
a new report by the OECD and FAO released recently.
Falls in agricultural prices and in the production and consumption of
farm goods are likely to be moderate as long as the economic recovery
begins within two to three years, says the OECD-FAO Agricultural Outlook
2009-2018.
As the downturn lowers food prices, pressure is eased on
recession-hit consumers who have less money to spend, it says.
Food prices have come down from the record peaks of early 2008 but
they remain high in many poor countries. Over the coming decade prices
for all farm commodities except beef and pigmeat - even when adjusted
for inflation - are unlikely to fall back to their average levels before
the 2007-08 peaks.
Average crop prices are projected to be 10-20 percent higher in real
terms (adjusted for inflation) for the next 10 years compared with the
average for the period 1997-2006. Prices for vegetable oils are expected
to be more than 30 percent higher.
An expected economic recovery, renewed food demand growth from
developing countries and the emerging biofuel markets are the key
drivers underpinning agricultural commodity prices and markets over the
medium term.
The report warns that episodes of extreme price volatility similar to
the hike in 2008 cannot be ruled out in coming years, particularly as
commodity prices have become increasingly linked to oil and energy costs
and environmental experts warn of more erratic weather conditions.
Although agricultural production, consumption and trade are expected
to increase in developing countries, food insecurity and hunger is a
growing problem for the world's poor.
The report argues that the longer term problem is access to food
rather than food availability, with poverty reduction and economic
growth a big part of the solution. Agriculture growth is key for
sustainable development and poverty reduction since 75 percent of the
poor in developing countries live in rural areas.
The report says that, in addition to more effective international
aid, governments can best support domestic agricultural development
through targeted policies such as infrastructure investment,
establishing effective research and development systems and providing
incentives for sustainable use of soil and water.
It also emphasises the need for greater opening of agricultural
markets and broadening economic development beyond farming in poor rural
regions. |