OECD and FAO express concern towards food security

By Melissa Coon

© Copyright Agri-Pulse Communications, Inc.

Washington, June 15 – Farm commodity prices have fallen from their record peaks of two years ago but are unlikely to drop back to their average levels of the past decade, according to the annual Organisation for Economic Co-operation and Development and Food and Agriculture Organization (OECD-FAO) Agricultural Outlook 2010-19 report.

The report predicts average wheat and coarse grain prices to be 15-40 percent higher over the next ten years than their average levels during 1997-2006. Livestock prices are expected to be less over the next 10 years, despite the fact that there is a greater demand for meat than other farm commodities. On average, prices will remain below the levels they reached during the 2007 and 2008 price spike. Beef and pork prices did not go up during that period, and the forecast calls for these costs to increase by 10 percent to 20 percent by 2019 as compared to 2007-2008 levels.

Additionally, the report predicts global agriculture output to grow more slowly over the next decade. Nevertheless, it remains on track to meet the market demand of estimated population levels in 2050. Countries like Brazil, China, India, and the Russian Federation and Ukraine are expected to excel in agricultural production.

Although the world produces enough food to feed its population, recent price spikes and the economic crisis have contributed to a rise in hunger and food insecurity, according to the report. It is estimated that about one million people are undernourished. Higher food costs will weaken food security, especially for the poor.

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The report identified price volatility as a key concern for policy-makers, due to a disturbance in agricultural commodity markets. Yet, the report adds the extent to which world price fluctuations are transmitted to domestic markets varies across the country.

The OECD and FAO remain positive, yet cautious towards the future of food security.

“The agriculture sector has shown resilience to recent price shocks and the economic downturn,” said OECD Secretary General Angel Gurria. “On the whole, this year’s outlook is cautiously more positive than in recent years. But going forward, governments should implement measures to ensure that farmers have at their disposal better tools to manage future risks, such as production contracts, insurance schemes and future markets.”

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