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OECD-FAO Agricultural Outlook 2010

image of OECD-FAO Agricultural Outlook 2010

This is the sixteenth edition of the Agricultural Outlook and the sixth co-edition prepared by the Organisation for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO). This edition covers the outlook for commodity markets during the 2010 to 2019 period, and brings together the commodity, policy and country expertise of both organisations. The report analyses world market trends for the main agricultural products, as well as for biofuels. It provides an assessment of agricultural market prospects for production, consumption, trade, stocks, and prices of the commodities analysed.

The macroeconomic assumptions that condition the commodity projections examined are more positive in this year’s edition as compared to last year. The anticipated return to global economic growth, a rising population, emerging biofuel markets, and a higher cost structure are expected to underpin international commodity markets and prices over the outlook period under study. Developing countries are expected to be the driving force behind the expected growth in agricultural production, consumption and trade.

This year’s report also includes a special section on price volatility and price transmission from world to domestic markets. Governments are concerned about price volatility because it affects farm viability, food security and needed investment. The report analyses the evidence of and changes in price volatility over the longer term and summarises policy advice from both FAO and OECD on this issue.

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Meat

The economic downturn triggered by the financial crisis severely impacted the meat sector. Falling purchasing power and difficult access to credit affected both demand and supply. All meats were affected, although beef suffered the most compared to others, as consumers preferred cheap beef cuts and cheaper alternative sources of animal proteins. The economic crisis also accelerated structural changes in the meat industry, as evidenced by the numerous mergers and acquisitions recorded last year, of which the most notable was Perdigao and Sadia that formed the world’s largest poultry processor by market value. The structure that results from this crisis, characterised by increasing economies of scale, is expected to speed the globalisation of meat trade, as large scale operations both in production and marketing are better suited to exploit global agribusiness growth opportunities, through a larger portfolio of meat origins and meat types. In addition, economies of scale are anticipated to increase the ability of the industry to manage risk through spatial and meat product diversification, as well as through hedging on futures markets.

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