OECD-FAO Agricultural Outlook 2016-2025: Highlights

Hubertus Gay (OECD)

2017 China Agricultural Outlook Conference

Beijing, 20-21 April 2017

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OECD-FAO Agricultural Outlook

• Joint OECD-FAO report published annually in June/July

• 10 year horizon

• Model based projection validated through global expert consensus

• Major commodities

• Global coverage

• Special theme chapter 2016: Sub-Saharan African Agriculture

• Special theme chapter 2017:Southeast Asia

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Production growth through intensification and efficiency gains, but regional differences

-5

0

5

10

15

20

25

30

35

South andEast Asia

Latin Americaand

Caribbean

NorthAmerica

Sub-SaharanAfrica

EasternEurope &

Central Asia

WesternEurope

Middle Eastand North

Africa

Oceania

% Yield Growth Area Growth

Change in arable production between 2013-15 and 2025, weighted by acreage; regions are sorted by overall arable acreage

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Projected consumption trends across major food groups

0%

5%

10%

15%

20%

25%

30%

Gro

wth

20

13/1

5 to

20

25

Food Consumption Population

• Strong demand growth for

meat, fish and dairy products

• Food consumption of cereals

stagnates

• Shift toward livestock

products induces additional

need for feed crops,

particularly coarse grains

and protein meals

• Strong increase in sugar and

vegetable oil consumption

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Protein uptake per capita

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0

20

40

60

80

100

120

140

2006 2016 2026 2006 2016 2026 2006 2016 2026 2006 2016 2026 2006 2016 2026

Sub-Saharan Africa India China Southeast Asia OECD

g/day/person

Cereals Roots and tubers Vegetable oils Meat Sugar Dairy Fish Other

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With slowing production and consumption growth, trade will grow more slowly

0

2

4

6

8

10

% 2006-15 2016-25

* Average annual growth of trade volume

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World exports to remain highly concentratedShares of top five countries in global exports in 2025

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10

20

30

40

50

60

70

80

90

100

%

5th exporter 4th exporter 3rd exporter 2nd exporter 1st exporter 2013-15 top 5

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Imports in 2025 more dispersed…but China matters!

Shares of top five importers in world imports in 2025

0102030405060708090

100%

China 5th importer 4th importer 3rd importer 2nd importer 1st importer

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Note: Agriculture and fisheries products included in the Outlook

Rising exports from Latin AmericaIncreasing imports into Africa and Asia

-100

-50

0

50

100

150

Bil

lio

ns

of

Co

nst

ant

$20

04

-06

Regional net trade

Americas Asia Africa Others

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1000

2000

3000

4000

5000

6000

0

150

300

450

600

750

900

USD/T (Meat & Dairy)

USD/T (Crops)

Wheat Rice Soybean WMP Beef and Veal

Market fundamentals point to flat real prices

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Whether this is a “new normal” depends on the historical perspective

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800

1 000

1 200

1 400

1 600

USD/tReal price Long term trend OUTLOOK LS-low LS-high

Wheat

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• Volatility from oil prices,

economic growth, exchange

rates and yield variations

• Climate change will add to

them

• Policy-induced uncertainty

not included but will

compound volatility

• A crisis more likely when the

wrong policies compound

volatility

There is a substantial risk of a major price swing in the next ten years

80% probability range for maize price

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Why price volatility might increase

• Climate change

• New production areas have less reliable agronomic conditions

• Biofuel support and mandates

• Declining demand elasticities

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Highlights of the OECD-FAO Outlook 2016-2025

• Real food prices expected to decline slightly, butremain above levels before 2007-08 food pricecrisis.

• Changing relative prices:• Consumption of staples reaching saturation in many countries• Meat and dairy prices increase relative to crops – higher incomes and animal-

protein demand• Coarse grain and oilseed prices increase relative to food staples – feed

demand

• Calmer markets but a risk of resurgent volatility

• Spread of imports across a large number ofcountries; concentration of exports among a fewkey suppliers

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We invite you to visit our website

www.agri-outlook.org

For inquiries or further information, please contact:

Hubertus Gay Holger Matthey

tad.contact@oecd.org EST-Projections@fao.org

Trade and Agriculture Directorate Trade and Markets Division

(OECD) (FAO)

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Conclusions

• Outlook maps out a “status quo” baseline.

• Outlook confirms that we must do better to meet SDG2 by 2030

• Policy reforms can help agriculture meet national objectives

– Focus on sustainable productivity growth

– Managing risks

• Those same reforms will contribute to greater food availability and improved global food security

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2000 2005 2010 2015 2020 2025

Ind

ex (

2004

-06

Bas

e)

Per capita consumption Total consumption

Production

Sub-Saharan Africa: Outlook to 2025

• Total agricultural production is

projected to expand by 2.6% p.a.,

an increasing share will come from

improved productivity

• Growth in food demand of more

than 3% p.a. expected, driven by

population growth, leaving per

capita gains modest

• Need for imports is especially high

for vegetable oils (50%), poultry

meat (36%) and sugar (23%), all

with an increasing trend

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