Launch of the 2014 OECD-FAO Agricultural Outlook, Remarks by Angel Gurría, Secretary-General, OECD
11 July 2014 – Rome, Italy
Excellencies, Ladies and Gentlemen,
I am delighted to be here in Rome for the launch of this year’s Agricultural Outlook. This is the 20th Outlook produced by the OECD, and the tenth produced jointly with the United Nations Food and Agriculture Organisation. Allow me to express my appreciation to Mr Graziano and his team for their continued partnership.
It is particularly significant that India is the focus of this anniversary edition of the Outlook: India has more farmers than any other country in the world, and its importance in world food markets continues to grow.
World food supply will continue to grow to meet demand
This year’s Outlook offers good news. It confirms that globally, production of most agricultural commodities increased in 2013 following the effects of adverse weather conditions a year earlier. But more importantly, it suggests that production will continue to grow to meet the demands of rising populations and higher incomes.
We predict that global cereal production will increase by almost 370 million tonnes by 2023 – a 15% increase in ten years. We expect sugar production to increase by about 20% over the coming decade, and that biofuel production will continue to expand, albeit at a slower pace than over the last ten years.
The message is clear: the world can grow enough food over the next ten years, and respond to the broader challenge of feeding 9 billion people by 2050.
Markets are settling after unusually high prices
The Outlook also offers good news when it comes to prices. Global markets are returning to more “normal” conditions after a period of unusually high prices. Indeed, over the last decade, the world experienced a major food price spike, followed by two “aftershocks”.
Back in 2007 and 2008, the spike in food prices caught us by surprise. Droughts in several regions coincided with growing demand in the developing world. The spike in prices was aggravated by low food stocks, the hoarding of commodities, and by the trade policy responses of many countries.
While higher prices pose a number of challenges, we should not forget that they provide important incentives to farmers, who have responded accordingly. Whereas cereal production grew by 9% in the seven years before the food price spike, it has grown by 17% in the seven years since.
Getting the policy mix right: addressing productivity, trade, and access to food
Production is on the rise. Prices are falling after a major spike. But what does all of this mean for policy-makers as we look to the future? Allow me to share a couple of thoughts:
First, we need to make more progress on the trade front. We saw how using trade measures during the recent period of high food prices was rather like standing up in a stadium in order to see better: the first to do so benefited in the short run, but the end result was that everyone was worse off.
We need to keep world food markets open and to build trust in trading relationships. OECD countries need to do their bit. This includes reducing trade-distorting domestic support, phasing out export subsidies and taxes, and improving the terms of market access.
At the same time, the international community needs to respond to the post-Bali WTO agenda. Agriculture was a major stumbling block in Bali, with some arguing that developing countries needed specific dispensations in order to address their food security concerns. Instead, we should be focusing on getting the domestic policy mix right.
This brings me to my second point: we still face a challenge with access to food. Higher food prices imposed undeniable hardship on the world’s poorest people, who spend a large share of their incomes on food. They also did more harm than good to poor farmers, who are more often than not net buyers of food staples.
We need to extend social protection to cushion the effects of price shocks, help farmers manage risks, and continue to invest in agricultural productivity so that farmers can respond effectively to price signals. Globally, we are making progress. For example, the World Bank reports that social safety net programs are being built on a national scale in 98 countries, up from just 72 in 2000.
Third, we need to keep a focus on improving productivity and reducing waste. This year’s Outlook points to the need for continued investment in research and development, as well as extension services, to achieve productivity gains – especially in developing countries. Investments in the infrastructure for food storage and transport could also have a huge impact: post-harvest losses alone account for up to a third of production in developing countries.
We should also re-think our biofuel policies. Here I am not suggesting that we curb biofuels themselves, but rather that we take a much closer look at biofuel mandates and subsidies, which distort prices and introduce an element of inflexibility in the demand for feed stocks.
Changes in any one of these factors could have a major impact on the outlook for world food markets. Achieving these gains in ways that are both inclusive and sustainable is a formidable challenge.
Ladies and gentlemen,
The implications of this report are clear: we are recovering from a period of marked turbulence in the agricultural markets. But we cannot be complacent. We must do more – on trade, on productivity, and to tackle poverty.
The OECD stands ready to play its role – in partnership with the FAO and others – as it works to promote Better Agricultural Policies for Better Lives.
OECD-FAO Agricultural Outlook