Paris, France and Rome, Italy
June 17, 2009
 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 today.
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.
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