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 2012

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11 July 2012
9789264173071 (PDF) ;9789264173026(print)

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This is the 18th edition of the Agricultural Outlook and the eighth prepared jointly with the Food and Agriculture Organization of the United Nations (FAO). It brings together the commodity, policy and country expertise of both organisations, and input from collaborating member countries. The report provides world market trends for biofuels, cereals, oilseeds, sugar, meats, fish and dairy products over the 2012-2021 period and contains an evaluation of recent developments, and key issues and uncertainties in those commodity markets. A jointly-developed modelling system, based on the OECD’s AGLINK and on the FAO’s COSIMO models, facilitates consistency in the projections. This edition includes a special feature on the challenge of increasing agricultural productivity growth in a sustainable manner.

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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.

  • Acronyms and Abbreviations
  • The Outlook in Brief

    Recent OECD-FAO Agricultural Outlook reports have focused on high and volatile agricultural commodity prices, stressing that prices would come down as markets respond but would remain on a higher plateau underpinned by continuing strong demand and rising costs for some inputs. As anticipated, prices have started to ease but remain at relatively high levels. Food price inflation at the retail level has fallen significantly from its peak in 2008 and its contribution to overall inflation has moderated. Nevertheless, food price inflation remains high in many developing countries and is still outpacing overall inflation in the majority of countries examined.

  • Overview of the OECD-FAO Agricultural Outlook 2012

    The Agricultural Outlook is produced collaboratively by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. It brings together the commodity, policy and country expertise of both organisations and input from collaborating member countries to provide an annual assessment of medium-run projections of national, regional and global agricultural commodity markets. The projections of the Agricultural Outlook constitute a plausible scenario of what may happen under a certain set of assumptions, such as normal weather conditions, a specific macroeconomic environment over the coming ten years, population trends, as well as current agricultural and trade policy settings of countries around the world. The projections cover production, consumption, stocks, trade and prices for the different agricultural products for the period 2012 to 2021. The evolution of markets over the outlook period is typically described using the annual growth rate or percentage changes for the final year of 2021 relative to a three-year base period of 2009-11. Given the uncertainties which envelope agricultural markets, the final section of the Overview discusses important assumptions affecting the future evolution of agricultural markets and the sensitivity of the baseline projection to these conditioning factors. One aspect of uncertainties concerning future agricultural supplies is the role to be played by agricultural productivity growth. This is addressed comprehensively in the special feature on achieving sustainable agricultural productivity growth in the second chapter of this report.

  • Achieving Sustainable Agricultural Productivity Growth

    In the previous three issues of the Outlook, the rapid rise in agricultural commodity prices since 2006 has drawn significant attention. It has been projected that commodity prices will remain not only high but also highly volatile during the next decade, if not beyond. The policy landscape has also changed considerably. A decade ago, cereal prices, adjusted for inflation, stood at historic lows (for at least 50 years), OECD governments were providing producers with large subsidies to support incomes, and developing countries were protesting that subsidies were depressing commodity prices. Within the last ten years, however, real food commodity prices have doubled, underpinned by high economic growth in emerging developing countries, and higher global prices for energy and associated inputs. Initially, relatively low prices for agricultural commodities, in combination with stimulative bioenergy policies, kick-started the rapidly growing demand for agricultural feedstocks. But the resulting high and volatile food prices generated not only concern for food security but raised the spectre of future shortages and focus about the inability to feed the world, in a context of climate change, resource scarcity (i.e. land, water and nutrients) and disparate economic opportunities. There have been rising demands by civil society for green growth in agriculture, given its important impact on the environment. In 2011, agricultural heads from the G20 countries requested advice on improving productivity growth in agriculture and how to address rising concerns for food security and sustainability, and the resilience of the agri-food system, particularly for small family farmers and low income countries. As a follow-up a 2012 Interagency Report to the Mexican G20 Presidency entitled Sustainable Agricultural Productivity Growth and Bridging the Gap for Small Family Farms has been prepared.

  • Biofuels

    Biofuels were added to the Outlook in 2008 as an emerging sector that would increasingly affect agricultural markets. This has certainly turned out to be the case with currently some 65% of EU vegetable oil, 50% of Brazilian sugarcane, and about 40% of US corn production being used as feedstock for biofuel production. Today, it would be inconceivable to prepare an agricultural projection without taking biofuels into account. The biofuels chapter has been expanded this year to provide a more detailed description of the very complex US biofuel policy and an analysis of the policy options facing the US Environmental Protection Agency over the medium term.

  • Cereals

    Despite record cereals production in 2011, international prices remained elevated. The bumper crop helped to replenish stocks and moderate prices in the second half of 2011, but a weakening US dollar and low freight rates bolstered export prices in early 2012.

  • Oilseeds and Oilseed Products

    In mid-2010, international prices in the oilseed complex embarked on a new upward trend reflecting a progressive tightening of global supplies, combined with steady growth in demand for oils and meals. Spill-over effects from increasingly tight grain markets contributed to this development.

  • Sugar

    World sugar prices continued to experience tremendous volatility in the lead up to this year’s Outlook. Prices in 2011 bounced between highs and lows as market fundamentals remained obscured under a shroud of conflicting information: early projections of an emerging global surplus and, at the same time, ongoing tight supplies and high prices in several markets. For example, adverse weather and low yields resulted in a large drop in production in Brazil, the leading sugar producing and exporting nation, after consecutive years of growth. Apart from sugar fundamentals, commodity markets in general have seen prices giving way to a generally weaker macroeconomic environment, rising oil and energy prices, and expectations of increasing supplies. World sugar prices started 2012 at lower levels and are expected to continue a downward drift over the remainder of the year as the global sugar market returns to a significant global production surplus in 2011/12 (October to September crop year) in response to recent high prices. This would follow a nearly balanced market in 2010/11 and large global deficits in the previous two years (). With world sugar production in the current season estimated at a new record level, some stock rebuilding is expected to commence. Overall, global stocks and stocks-to-use ratios will remain at relatively low levels at the beginning of the Outlook period.

  • Meat

    The market situation for the meat sector is characterised by high nominal output prices for all meats, underpinned on the demand side by rapidly growing developing economies and on the supply side by high input costs, notably for feed grain and energy related inputs such as transport and cold chain storage. As feed costs moderate somewhat, increased profitability should assure expansion. These factors tend to favour greater domestic supply responses in developing countries, particularly for cheaper meats and meat cuts (poultry), and also where low input systems, including pasture, predominate. On the policy front, the prospects of a further opening of international meat trade that may result from the accession to the WTO of the Russian Federation, which is among the world’s largest meat importers, will render a favourable trade environment for the sector. While growth in production and trade is envisaged in the short term for poultry, pig and sheepmeats, beef will initially be constrained by herds which have depleted in recent years in major exporting regions.

  • Fish and Seafood

    The terms fish and seafood or simply fish indicate fish, crustaceans, molluscs and other aquatic invertebrates, but excludes aquatic mammals and aquatic plants.

  • Dairy

    After the dramatic fall in 2009 of international dairy prices, these rebounded in 2010 and significantly strengthened through to the first half of 2011. Sustained imports of milk powder by South East Asia, Mexico and North Africa (mainly Algeria) have been predominantly behind this price firmness. China, in particular, has continued to underpin the global dairy markets as the demand fuelled by a rapidly growing middle class with increased disposable income continued to outstrip the domestic supply, which continues to be confronted with milk safety issues. Global supply response, stimulated by high returns and excellent pasture conditions in Oceania and parts of Latin America, eventually caused prices to decline in the second half of 2011. The production gains were translated into increased exports, confirming the remarkable growth in dairy trade recorded since 2009. Export volumes increased mainly from New Zealand, Argentina, the United States, and the European Union. The decline in international dairy prices are expected to be nowhere near that experienced in 2009 as global markets continue to enjoy strong demand growth in developing countries.

  • 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 how production costs are taken into account in the model’s supply equations. Then the fourth part presents the methodology developed for the stochastic analysis conducted with the AGLINK-COSIMO model.

  • Statistical Annex
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