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Highlights: OECD/FAO Agricultural Outlook Report

June 15, 2010

On Tuesday, June 15 The Organisation for Economic Co-operation and Development (OECD) and the UN Food and Agriculture Organization (FAO) held a press conference to release their annual joint agricultural outlook report. This report uses market analysis to project the outlook for key agricultural products over a ten-year period (from 2010-2019). Collaborators include experts in OECD countries as well as countries that are not members with the OECD. The report also addresses risks and uncertainties that could influence the agricultural market.

Highlights from the report include the following:

Big Picture: Global agricultural production is anticipated to grow more slowly in the next decade than it did in the past decade.

Net Production: The main source of growth for world agricultural production will be developing countries. Latin America is the fastest-growing region of production. Brazil is projected to grow more than 40% in the next decade. Russia, Ukraine, China and India are also expected to grow between 20-30%. Demand in these nations is rising as a result of population growth, rising incomes, and urbanization. As incomes rise, diets are expected to slowly move away from staple foods towards more meats and dairy products. Production in OECD countries, in contrast, is projected to grow 10%.

Crop Prices: Average crop prices over the next ten years are projected to be above the trend levels of the past decade (excluding recent peaks). Vegetable oil prices are expected to increase by more than 40%. In addition, a lower supply of meat, higher feed costs and rising demand will cause an increase in average meat prices; pigmeat is an exception to this trend because of the expected increase in supply in both Brazil and China.

Biofuel Production: A larger percentage of coarse grains will be used to produce ethanol in the next decade than was used in the past decade. Sugar cane production for ethanol production is expected to reach nearly 35% in the next decade.  Compared to 9% in the last decade, 16% of the global production of vegetable oil is projected to be used for producing biodiesel by 2019.

For more information from the Agricultural Outlook report, click here.

To view the press conference, click here.

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