“There is no reason why Africa cannot be self-sufficient when it comes to food” Barack Obama, President of USA- July 2009.
Agriculture has proved more resilient to the global crisis than other sectors, according to the annual Agricultural Outlook report, published by the Organisation for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO).
Although the scenario varies by commodity, the sector as a whole is expected to be relatively better off because of the recent period of high incomes and income-elastic demand for food.
Downstream sectors are still having difficulties to access credit, liquidity is low, and trade finance remains constrained, the report says, but the agricultural sector seems to be withstanding the recession fairly well.
For the next 10 years, average prices for agricultural products are projected at or above levels of the decade prior to the 2007-08 peaks. Prices for vegetable oils, for example, are expected to increase by about 30%, and crop prices by 10% to 20%. While meat prices are not expected to surpass the average, dairy prices are expected to be only slightly higher.
Prospects for the biofuel markets remain uncertain, mainly because of unpredictable factors such as the future trend in crude oil prices, changes in policy interventions and developments in second-generation technology. As long as crude oil prices remain between $60 and $70 per barrel, the report says, biofuels will also be struggling against fossil fuels.
As long as the economic recovery begins within the next two to three years, says the report, falls in agricultural prices and in the production and consumption of farm goods are likely to be moderate.
A deeper and more prolonged recession with lower GDP and incomes, however, would affect demand and prices for higher-price products, such as beef, pork and dairy. The reductions in crop and biofuel prices associated with lower GDP scenarios are only about one half of those for livestock.
The FAO further estimates that global food production needs to increase by more than 40% by 2030, and 70% by 2050, compared with average 2005-07 levels.
Some 1.6 billion hectares—half of that in Africa and Latin America—could be added to the current 1.4 billion hectares of cropland. Expansion of arable land, however, has always been slow. Bringing more marginal land into production, the FAO says, would also require considerable investment in regions like central and eastern Europe and sub-Saharan Africa.
In the future, water availability and climate change will be important variables in agricultural production.
Although food prices have come down from record peaks last year, they remain high in many poor countries.
The report continues: “Behind this fairly positive outlook for agricultural commodity markets lies a more disturbing story about hunger and food insecurity for some one billion people. Food security is not only about solving the urgency in the short-term; it is also about addressing the longer term issues of poverty alleviation and economic growth.”
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