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OECD-FAO Agricultural Outlook 2009

image of OECD-FAO Agricultural Outlook 2009
This 15th edition of the Agricultural Outlook edition presents the outlook for commodity markets during the 2009 to 2018 period, and analyses world market trends for the main agricultural products, as well as biofuels. It provides an assessment of agricultural market prospects for production, consumption, trade, stocks and prices of the included commodities. 

This edition of the Outlook was prepared in a period of unprecedented financial market turmoil and rapidly deteriorating global economic prospects. Because macroeconomic conditions are changing so quickly, this report complements the standard baseline projections with an analysis of revised short–term GDP prospects and alternative GDP recovery paths. Lower GDP scenarios result in lower commodity prices, with reductions in crop and biofuel prices about one-half those for livestock products. A sensitivity analysis to highly uncertain crude oil prices shows the important links between energy and agricultural prices. The Outlook also reports on a survey of various actors in the agri-food chain in terms of the current impacts of the global economic crisis and credit market constraints.

The issue of food security and the capacity of the agricultural sector to meet the rising demand for food remains very high on the international political agenda.  This report provides a brief overview of critical factors such as land availability, productivity gains, water usage and climate change, and suggests that agricultural production could be significantly increased, provided there is sufficient investment in research, infrastructure and technological change, particularly in developing countries.

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Macroeconomic and Policy Assumptions

This year’s Outlook was produced under highly unusual circumstances. The financial turmoil that started with problems in sub-prime mortgages in the United States evolved into a real estate slump following the bursting of the housing price bubble which morphed into a severe credit crunch that has spread into the real economy across many countries in different regions. These developments have shattered the decoupled illusion between the crisis-hit economies of the west and emerging economies. Globalisation, with its expanded supply chains and international financial flows, has created an even more interdependent world and now it seems that all countries are linked. The result is lower output and higher unemployment world-wide, shattering consumer confidence while bringing trade and international capital flows crashing down. At the time of writing, April 2009, the global economy is in the middle of its deepest and most wide-spread recession in more than 50 years. The collapse of industrial production over the past six months is continuing in almost all OECD countries, and with non-OECD countries also slowing, world growth has turned negative. What is more, it is not clear that the worst is behind us or the speed of eventual recovery.

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