OECD-FAO Agricultural Outlook

1999-1142 (online)
1563-0447 (print)
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The joint OECD-FAO Agricultural Outlook provides market projections for major agricultural commodities, biofuels and fish. Each yearly edition contains a special country or regional focus.

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OECD-FAO Agricultural Outlook 2011

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17 June 2011
9789264106765 (PDF) ;9789264106758(print)

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This is the seventeenth edition of the Agricultural Outlook and the seventh co-edition prepared jointly with the Food and Agriculture Organization of the United Nations (FAO). This report provides world market trends for biofuels, cereals, oilseeds, sugar, meats, dairy products and, for the first time, the fisheries sector over the 2011-20 period. This edition also includes an evaluation of recent developments, key issues and uncertainties in those commodity markets. The projections are the result of close co-operation with national experts in OECD and non-OECD countries. A jointly developed modelling system, based on the OECD’s AGLINK and on the FAO’s COSIMO models, facilitates consistency in the projections.  In the context of the G20 discussions on agriculture, a section of the report is devoted this year to the policy responses to price volatility.

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  • Foreword
    The Agricultural Outlook is prepared jointly by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. The main purpose of the report is the attempt to build consensus on global prospects for the agriculture, fisheries and food sectors, and on emerging issues which affect them. Accordingly, the projections and assessments provided in the report are the result of close co-operation with national experts in OECD countries as well as some key non-OECD countries and agro-industry organisations, reflecting the combined knowledge and expertise of this wide group of collaborators. A jointly developed modelling system, based on the OECD's Aglink and FAO’s Cosimo models facilitates consistency and analysis of the projections. The fully documented outlook database, including historical data and projections, is available through the OECD-FAO joint internet site www.agri-outlook.org.
  • Acknowledgements
    This Agricultural Outlook is jointly prepared by the OECD and FAO Secretariats. At the OECD, the Outlook report was authored by the Agro-Food Trade and Markets Division of the Trade and Agriculture Directorate: Wayne Jones (Division Head), Céline Giner (Outlook and baseline co-ordinator), Pavel Vavra, Linda Fulponi, Ignacio Pérez Domínguez, Garry Smith, Gregoire Tallard and Shinichi Taya. Additional Directorate contributions were provided by Claire Jolly (International Futures Programme), Kevin Parris (Agricultural Policies and Environment Division) and Carl-Christian Schmidt (Fisheries Policies Division). The OECD Secretariat is grateful for the contributions provided by Pierre Charlebois, Brooke Fridfinnson and Nathalie Hamman of Agriculture and Agri Food Canada and Stefan Tangermann of the University of Gottingen. Research and statistical assistance were provided by Armelle Elasri, Alexis Fournier, Gaëlle Gouarin and Claude Nenert. Meetings organisation and document preparation were provided by Christine Cameron. Technical assistance in the preparation of the Outlook database was provided by Frano Ilicic. Many other colleagues in the OECD Secretariat and member country delegations furnished useful comments on earlier drafts of the report.
  • Acronyms and Abbreviations
  • Outlook in Brief
    Commodity prices rose sharply again in August 2010 as crop production shortfalls in key producing regions and low stocks reduced available supplies, and resurging economic growth in developing and emerging economies underpinned demand. A period of high volatility in agricultural commodity markets has entered its fifth successive year. High and volatile commodity prices and their implications for food insecurity are clearly among the important issues facing governments today. This was well reflected in the discussions at the G20 Summit in Seoul in November, 2010, and in the proposals for action being developed for consideration at its June 2011 meeting of Agriculture Ministers in Paris.
  • Overview
    The Agricultural Outlook is a collaborative effort of the Organisation for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. Bringing together the commodity, policy and country expertise of both Organisations and input from collaborating member countries, it provides an updated annual assessment of the medium-term development of global commodity markets, using the Aglink-Cosimo model1 to generate a consistent set of commodity projections and for the analysis of issues. The baseline projection is not a forecast about the future, but rather a plausible scenario of what can be expected to happen under a certain set of assumptions, such as the macroeconomic environment over the coming ten years, as well as current agricultural and trade policy settings around the world.
  • Statistical tables: Overview
  • Special feature
    Last year’s Outlook featured an assessment of price volatility, price transmission and policy prescriptions which may help encourage more transparent and efficient markets, as well as address the impacts of volatility, especially on poor consumers. By August 2010, two months after the release of the Outlook, the anticipation of further bouts of high price volatility was realised as a shortfall in crop production (see the Cereals Chapter), and policy actions so impacted markets that prices rose precipitously toward 2007-08 levels by early 2011. International concern over volatility has been pronounced and in November 2010 the G20 at its Seoul Summit, requested that "…the FAO, IFAD, IMF, OECD, UNCTAD, WFP and the World Bank work with key stakeholders to develop options for G20 considerations on how to better mitigate and manage the risks associated with price volatility of food and other agricultural commodities without distorting market behaviour, ultimately to protect the most vulnerable."
  • Biofuels
    World ethanol prices increased by more than 30% in 2010 in the context of a new commodity price spike of ethanol feedstocks, mainly sugar and maize, and firm energy prices. This situation contrasts with 2007/08 where ethanol price movements did not follow the pace of the commodity price increases and ethanol profit margins were reduced. The US became for the first time a net exporter of ethanol in 2010, while exports from Brazil were reduced significantly in a context of sky-high raw sugar prices and relatively more competitive corn-based ethanol when compared to the previous years.
  • Statistical tables: Biofuels
  • Cereals
    As 2010 progressed, the global supply outlook worsened after a severe drought in the Russian Federation – prompting the country to impose a ban on grain exports – and unexpected weather events adversely affected other major grain producing countries. Within a few months, the forecast for 2010 world cereal production, initially expected to be the second highest on record, had to be revised downward by roughly 31 Mt. Actual 2010 production fell 1.4% below 2009 levels.
  • Statistical tables: Cereals
  • Oilseeds and oilseed products
    The oilseeds complex has gone through a turbulent period characterised by considerable price swings and by prices trending upward compared to previous years. After the dramatic rise and subsequent drop seen in 2008, during 2009, prices embarked on a steady upward trend, reflecting a progressive tightening in global supplies, the resumption in demand growth (following the global economic crisis), and robust buying interest by main importing countries. Growing supply tightness relative to demand caused global stock-to-use ratios to fall below historic levels.
  • Statistical tables: Oilseeds and oilseed products
  • Sugar
    The world sugar market continues to experience considerable price volatility. The world indicator price for raw sugar witnessed a succession of peaks and downward corrections in 2010 before soaring to a 30-year high of USD 36.08 cts/lb (USD 795.4/t) in February 2011. Market fundamentals driving volatile prices were large global sugar deficits in the previous two seasons and adverse weather in a number of countries that reduced the size of the expected rebound in production to higher prices (Figure 6.1). World sugar stocks, which had already been drawn down, fell to their lowest level in 20 years in 2010-11, supporting higher as well as more volatile market prices.
  • Statistical tables: Sugar
  • Meat
    The meat sector is adjusting to the supply and demand imbalances in the feed sector of the past three years, which has incited swings in feed prices. Beef and sheep meat farmers are enjoying a period of higher prices, but those producing white meats, require supply adjustment to avoid further financial difficulties. Faced with high production costs, restricted access to credit, high energy costs and a subdued demand during the financial crisis, cattle farmers culled their herds. This initially resulted in a sustained supply of meat products, and prices fell sharply. Prices started to recover as economies pulled out of recession. The red meats sector had liquidated breeding animals and was unable to rapidly satisfy the increasing post-recession demand. As a result, prices recovered strongly in 2010. The supply of pig and particularly poultry meat responded more quickly to the higher demand and, as a result, prices recovered at a slower pace than those of red meats.
  • Statistical tables: Meat
  • Fish
    After a difficult 2009, characterised by a sharp decline of fish prices and a contraction in demand and trade, the seafood sector expanded again in 2010 and early 2011. This recovery was partly due to higher average fish prices as well as to growing demand. Consumer demand has been particularly strong in developing countries supported by the faster than expected economic upturn.
  • Statistical tables: Fish
    After a difficult 2009, characterised by a sharp decline of fish prices and a contraction in demand and trade, the seafood sector expanded again in 2010 and early 2011. This recovery was partly due to higher average fish prices as well as to growing demand. Consumer demand has been particularly strong in developing countries supported by the faster than expected economic upturn.
  • Dairy
    After sharply increasing (2007), dramatically falling (2008) and quickly rebounding (2009), international dairy prices remained at relatively high but stable levels over much of 2010. Toward the end of the year and early 2011, global prices strengthened rapidly but stayed well below the peak levels of 2007/08 with the exception of record high butter prices (Oceania). Much of the strength in the dairy markets could have been attributed to a combination of strong demand in the Russian Federation and South East Asia, and constrained supplies from Oceania. Imports of milk powders to China have soared, fuelled by rising income but also food safety concerns, in the aftermath of the milk adulteration incidents. Steep increases in grain and energy prices have put upward pressure on feed costs, curtailed supply expansion and have been additional factors underpinning prices. The global dairy sector is entering into a decade of relatively high prices, continuing strong demand for milk and dairy products but also higher production costs and possibly continued market variability. The outlook period starts amid geopolitical turmoil in North Africa and Middle East, the uncertain impact of the earthquake tragedy in Japan, and a global economy adjusting to higher energy costs.
  • Statistical tables: Dairy
  • Glossary of terms
  • Methodology
    This section provides information on the methodological aspects of the generation of the present Agricultural Outlook. It discusses the main aspects in the following order: First, a general description of the agricultural baseline projections and the Outlook report is given. Second, the compilation of a consistent set of the assumptions on macroeconomic projections is discussed in more detail. A third part presents an important model element that has been improved for last year Outlook, i.e., the representation of production costs in the model’s supply equations. Then the 4th part presents the methodology developed for the stochastic analysis conducted with the AGLINK-COSIMO model.
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