The new edition of the OECD-FAO Agricultural Outlook provides a comprehensive medium-term baseline for agricultural commodity markets at national, regional and global levels, along with an initial scenario which explores the impact of the COVID-19 outbreak.
Providing a consensus assessment of the ten-year prospects for agricultural and fish commodity markets, the baseline projections highlight fundamental economic and social trends driving the global food sector.
• Over the coming decade, the relative importance of food, feed and biofuel use will not change significantly, as no major structural shifts in demand for agricultural commodities are expected. An expanding global population remains the main growth factor although the consumption profiles and projected trends vary depending on the development status of individual countries.
• Per-capita food expenditure expands globally, but falls as a share of income, most significantly in middle-income countries. Average per capita food availability is projected to reach about 3,000 kcal and 85 g of protein per day bt 2029, fats and staples accounting for about 60% of the additional calories.
• Due to the ongoing transition in global diets towards higher consumption of animal products, fats and other foods, the share of staples in the food basket is projected to decline by 2029 for all income groups.
• Differing income levels and varying income growth projections between countries will lead to diverging nutritional patterns over the coming decade. In particular, consumers in middle-income countries are expected to use their additional income to transform their diets from staples to higher-value products.
• Environmental and health concerns in high-income countries are expected to support a transition from animal-based protein towards alternative sources, as well as the more immediate substitution away from red meat, notably beef, towards poultry and fish.
• Growth in feed consumption is mainly due to the ongoing expansion of the livestock herd and aquaculture production in low-and middle-income countries.
• About 85% of global crop output growth over the next ten years is attributed to yield improvements resulting from:
– More intensive input use
– Investments in production technology
– Better cultivation practices
Further intensification of land use through multiple harvests per year will account for another 10%, while cropland area expansion is projected to account for only 5% and will play a much smaller role than over the last decade, improving the sustainability of agriculture.
• Global trade in primary agricultural commodities will increase only marginally relative to production, as, without any trade-promoting policy changes, international shipments will be largely determined by total market size. Trade is going to be increasingly important for food security in resource-constrained countries, where imports account for a large share of their total calorie and protein consumption. On the exporter side of the market, trade plays a central role in securing rural livelihoods.
• World agricultural markets face a range of other uncertainties in addition to the COVID-19 pandemic. On the supply side, these include:
– The spread of diseases/pest such as African Swine Fever or locust invasions
– Growing resistance to antimicrobial substances
– Regulatory responses to new plant breeding techniques
– Responses to extreme climatic events.
On the demand side, they include evolving diets, reflecting perceptions with respect to health and sustainability concerns, and policy responses to trends in obesity.
• The report added that digital innovation in agro-food supply chains will have important impacts on both supply and demand. And, future trade agreements and changing trade relations between several important players will also impact agricultural markets.
Environmental impact of agricultural production
• Direct emissions from agriculture account for about 11% of global GHG emissions. Livestock (in particular ruminants) are currently responsible for two-thirds of agriculture’s direct emissions, mainly through enteric fermentation.
• Other important sources of direct GHG emissions include the application of synthetic fertilisers to agricultural soils (13%) and anaerobic decomposition of organic matters on paddy rice fields (10%).
• Geographically, most of the increase in direct emissions is projected to occur in emerging and low-income regions due to higher output growth in production systems that are more emission-intensive. Sub-Saharan Africa alone is expected to account for 48% of the global increase in direct GHG emissions, and the Asia Pacific for another 46% (50% of which will originate from India and China).
Environmental effects of agricultural land use
• Agriculture currently uses 40% of the world’s land, 70% of which is pasture land. Globally, agricultural land use is expected to remain at current levels during the coming decade as an increase in cropland offsets a decrease in the pasture, in line with historic trends. However, trends in land use, and their underlying determinants, differ around the world.