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Pavel Vavra
- 1. OECD‐ OECD‐FAO Agricultural Outlook 2011‐2020 Agricultural Outlook 2011‐ Pavel Vavra OECD Trade and Agriculture The Outlook for EU Agriculture, COPA-COGECA, Brussels, 29 June, 2011 OECD-FAO Agricultural Outlook • Agricultural Outlook ‐ a set of conditional projections published in an OECD‐FAO bli h d i OECD FAO annual report • Comprehensive, dynamic partial equilibrium model • The datasets are available at www.agri‐outlook.org i tl k OECD Trade & Agriculture 2 1
- 2. Key macroeconomic assumptions • Global economic recovery underway (fragile in OECD, but more robust in BRICs) • 2.2% Inflation in OECD area but higher elsewhere • Weak US dollar and higher oil prices • Stable policy regimes OECD Trade & Agriculture 3 Slowdown in population growth Annual percentage change OECD Trade & Agriculture 4 2
- 3. Urbanisation – a key driver Rural Population Urban Population 9000 8000 7000 • Rural population numbers are 6000 expected to stagnate. ons 5000 Millio 4000 • All additional population is to 3000 live in urban areas 2000 1000 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 4500 4000 3500 • Move to urban areas to take 3000 Millions 2500 place mainly in developing 2000 countries 1500 1000 500 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Developed urban Developing Urban OECD Trade & Agriculture 5 World oil prices to remain relatively high USD/Barrel 120 100 80 60 40 20 0 1985 1990 1995 2000 2005 2010 2015 2020 OECD Trade & Agriculture 6 3
- 4. Main commodity projections • Commodity prices in real terms to remain above last decade average levels – Income, population and biofuels growth – Higher cost structure • Latin America and Eastern Europe are the fastest growing production regions • Developing countries driving the global demand and trade gains • G Growing food deficits expected in Sub-Saharan countries i f d d fi it t di S bS h ti • Meat, dairy products, vegetable oils and sugar should experience the highest increases in demand OECD Trade & Agriculture 7 Most commodity prices at higher average levels Percentage change in world prices in real terms relative to 2001-2010 base 60 50 40 30 20 10 0 -10 OECD Trade & Agriculture 8 4
- 5. Production shifts to developing countries Share of global agricultural and fish production gains Production gains between 2008/10 - 2020 valued at world reference prices (2004/06) N.America 10% Oceania 2% L.America 21% Asia&Pacific 45% W.Europe 3% E.Europe&C.Asia 7% N.Africa&M.East S.S.Africa 3% 9% 0-15% over the decade 15-30% over the decade +30% over the decade OECD Trade & Agriculture 9 Production shifts to developing countries Share of global agricultural and fish production gains Sugar, vegetable oil and poultry production Production gains between 2008/10 - 2020 valued at world reference prices (2004/06) are expected to record the highest growths SMP WMP N.America 10% Cheese Butter Oceania 2% Poultry Pigmeat L.America Beef 21% Asia&Pacific 45% Fish Sugar W.Europe 3% Veget. Oils E.Europe&C.Asia EE &C A i Protein meals 7% Oilseeds N.Africa&M.East S.S.Africa 3% 9% Rice Coarse grains 0-15% over the decade 15-30% over the decade +30% over the decade Wheat 0 10 20 30 40 Per cent change: 2020 compared to 2008-2010 average OECD Trade & Agriculture 10 5
- 6. Large differences in milk production gains OECD Trade & Agriculture 11 Fish production growth driven by aquaculture Capture Aquaculture Million tonnes 180 160 140 120 100 80 60 40 20 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 OECD Trade & Agriculture 12 6
- 7. Ethanol production growing steadily Feedstocks used for ethanol production over the projection period 160 140 Other 120 Sugar beet 100 Non agricultural feedstock 80 Molasse 60 Wheat 40 Biomass-based Sugar Cane 20 Coarse grains - Bnl 2008- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 OECD Trade & Agriculture 13 Strong growth of global biodiesel production Feedstocks used for biodiesel production over the projection period Bnl 40 Jatropha 35 30 Non 25 agricultural feedstock 20 Biomass- based 15 10 Vegetable oil 5 - 2008-2010011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2 OECD Trade & Agriculture 14 7
- 8. Biofuels production represents an important share of global feedstock utilisation Share of feedstocks used for biofuel production from global production 2020 2008‐2010 Percent 35% 30% 25% 20% 15% + 90 Mt 10% 5% 0% Sugar cane Vegetable oil Coarse Grains Sugar beet Wheat OECD Trade & Agriculture 15 Food remains the main driver for wheat Food Use Feed Use Biofuel Use Other use Developing 2008/10 + 34 Mt Developing 2020 Developed 2008/10 Developed 2020 0 100 200 300 400 500 Million tonnes World 2008/10 World 2020 0 200 400 600 800 OECD Trade & Agriculture 16 8
- 9. …while feed and fuel push coarse grain demand up Food Use Feed Use Biofuel Use Other use Developing 2008/10 Developing 2020 + 50 Mt + 50 Mt Developed 2008/10 Developed 2020 0 100 200 300 400 500 600 700 800 Million tonnes + 90 Mt World 2008/10 World 2020 0 200 400 600 800 1 000 1 200 1 400 OECD Trade & Agriculture 17 Driven by economic growth, meat consumption increases especially in developing countries Consumption of meat from 2008-10 average to 2020, per cent World Developing/Developed Developing Beef Developed D l d Pork Poultry Sheep 0 10 20 30 40 0 10 20 30 40 OECD Trade & Agriculture 18 9
- 10. Outlook for dairy products consumption Butter Cheese SMP WMP OECD Trade & Agriculture 19 Per capita consumption evolution differs by product Per capita consumption of WMP Per capita consumption of cheese OECD Trade & Agriculture 20 10
- 11. Global trade to grow by 10-30% Imports : Share of the import gains Vegetable oils, rice and SMP trade growing the fastest N.America 10% Oceania L.America SMP 1% Asia&Pacif 9% WMP ic Cheese 37% Butter W.Europe 15% poultry E.Europe& C.Asia Pigmeat S.S.Africa N.Africa& 4% Beef 9% M.East 15% Fish Exports: Share of the export gains Sugar N.America 13% Veget. Oils Oceania 4% Protein meals Oilseeds Asia&Paci fic 38% L.America Rice 27% Coarse grains S.S.Africa Wheat ‐1% E.Europe W.Europe 0 10 20 30 40 N.Africa& &C.Asia 6% M.East Per cent change 2020 compared to 2008-2010 average 11% 0% OECD Trade & Agriculture 21 Sugar exports remain highly concentrated and lead by Brazil 2008‐10 2020 Million tonnes r.s.e . 70 60 50 40 30 20 10 0 World Brazil Thailand Australia Mexico India South Africa OECD Trade & Agriculture 22 11
- 12. While sugar imports are more diversified OECD Emerging economies Million tonnes r.s.e. Million tonnes r.s.e. 6 6 5 5 4 4 3 3 2 2 1 1 0 0 European United Korea Japan China Indonesia Russia India Union States 2008‐10 2020 OECD Trade & Agriculture 23 Stochastic analysis of projected agricultural production Impact on world coarse grain prices • Monte Carlo simulations on yields, oil and fertiliser prices, macroeconomic variables. • 500 model runs show more upside potential for world coarse grains prices 10% percentile baseline median 90th percentile USD/t 350 300 250 200 150 100 50 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 OECD Trade & Agriculture 24 12
- 13. Key Market Drivers Income changes impact mainly demand for meat and dairy products 1 % additional income growth p.a. 1% less income growth p.a. beef and veal sheep meat cheese butter sugar poultry meat whole milk powder whole milk powder pork coarse grains wheat vegetable oil rice ‐2,5% ‐2,0% ‐1,5% ‐1,0% ‐0,5% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5% Impact of a 1% increase/decrease of annual GDP growth on global commodity consumption (average over projection period) Yield growth and changes have important impact on global commodity prices yields increase by 5% yields decrease by 5% wheat i rice coarse grains protein meals poultry meat oilseeds ‐30% ‐20% ‐10% 0% 10% 20% 30% Impact of 5% increase/decrease in yields of cereals on world commodity prices (average over projection period) OECD Trade & Agriculture 25 Key Market Drivers • Demand growth – above all in developing countries • C Convergence i consumption in ti patterns • Developing countries raise meat consumption • Increased health and nutrition concerns • Supply adjusting to higher production costs • International investment OECD Trade & Agriculture 26 13
- 14. Key issues and uncertainties • Traditional uncertainties: – Weather and economic stability – Developments in trade and domestic policies • Biofuels policies and biofuel developments • Food security and climate change • Increased price volatility OECD Trade & Agriculture 27 OECD Trade and Agriculture www.oecd.org/agriculture Contact tad.contact@oecd.org OECD Trade & Agriculture 28 14