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Opening remarks by Angel Gurría, OECD Secretary-General, delivered at Les Echos & Passion Céréales Conference
Paris, 22 February 2012
(As prepared for delivery)
Ladies and Gentlemen,
Let me welcome you to this important Conference on “Agriculture in a Global Context”. It is a pleasure to introduce this event and I thank Les Echos and Passion Céréales for making it happen here at the OECD.
You have defined the context of this conference as one in which the global geopolitical and economic landscape is undergoing profound transformation. And you have rightly placed agriculture at the centre of this development.
A changing global architecture
Indeed, the economic centre of gravity is shifting towards the east and the south. Demographic and economic growth is concentrating in emerging-markets and developing countries. These countries are now topping the league in terms of population, GDP and trade. Meanwhile, several OECD countries are struggling with the economic crisis, sluggish or no growth, unprecedented levels of unemployment and unsustainable public finances.
The impacts of these shifts are very visible particularly in commodity markets. In recent years, prices of energy, minerals, metals and agricultural commodities have risen sharply and will likely stay high. As our latest OECD/FAO Agricultural Outlook from June 2011 shows, prices for cereals will be up to 20% and for meats up to 30% higher over the next decade than they were in the last one.
Why is this important? Because food prices are literally a question of vital importance. This is the case especially for the poorest of the poor, who already spend up to 80% or 90% of their income on food. Every rise in food prices drives additional people below the poverty line.
The real tragedy is that close to 1 billion people are undernourished at this very moment. Supply struggles to respond to growing demand which is caused by growing populations and rising incomes especially in emerging countries. And in just over 40 years, the world population will top 9 billion. It is clear now and was rightly emphasised by the G20 Agriculture Ministers in June 2011: to nourish the world population in 2050, we must increase food availability by 70 to 100%.
So the question is: how can we achieve this? Let me outline what we consider to be our main priorities.
Increasing agricultural productivity
First, it is fundamental that we raise agricultural productivity. To put the record straight: agricultural productivity is not falling; it may be slowing in those parts of the world where productivity is already high. But there is a lot of scope for increasing productivity particularly in large parts of Africa, Latin America, the Baltic region and parts of Asia. There, the gap between current and potential yields is enormous.
OECD analysis shows that the general failure to achieve sustained growth of agricultural productivity can be tracked down to inappropriate policies. This includes inadequate institutions and services but also failure to invest in infrastructure and in human, social and natural capital. Therefore, policies do matter!
Moreover, to unleash the full potential of increased productivity, we must step up our research efforts. This includes adapting to climate change by developing new varieties to resist drought and heat and to generate a more resilient agriculture. And technology transfers will need to have an increasingly important south-south dimension. Delaying technological change now could mean that crucial innovations come on stream too late.
Investing in agriculture
Second, it will be critical to increase investment in the future of food and farming. We need both public and private investment in innovation, education and infrastructure. And we need investment also in developing countries, so that they can contribute to supply the world’s growing needs.
For this to happen, we must get the enabling environment right. Governments must create the conditions in which individual investors, farmers and other stakeholders are willing and able to invest. They must provide stable and transparent environments which include improved governance, well-functioning markets and infrastructure.
And at the end of the day, investing in agriculture also means that governments should renounce all measures that distort production and trade. Countries should refrain from import and export restrictions as such measures prevent trade between surplus and deficit areas, where food shortages are most acute.
In the current economic context, when governments all around the world are under huge pressure to bring public deficits under control, many OECD countries are still spending scarce budgetary resources on agriculture subsidies. Getting rid of distorting subsidies would balance fiscal accounts and create savings in the budget that could be reallocated to the investment in pro-growth services. This would foster productivity gains.
Green growth for agriculture
Moreover, reducing economically and environmentally harmful subsidies would improve the well-functioning of markets so that they could provide the right signals also for the environment - prices that reflect the scarcity value of natural resources and the environmental impact of agriculture.
It should be clear by now: green-growth for the food and agriculture sector will be essential. Green growth means promoting economic growth while reducing pollution and greenhouse gas emissions. And it means minimising waste and inefficient use of natural resources, and maintaining biodiversity. Productivity growth must be increased in a sustainable way.
Enhancing international coordination
And to unleash the full potential of global agriculture, enhancing international coordination will be key. Past uncoordinated policy responses have often exacerbated crisis situations.
Between 2007 and March 2011 for example, some 33 countries implemented 87 agriculture-related export restricting measures. These and other policy measures - such as import tariffs, price controls, panic buying and biofuel support policies - have significantly destabilised international markets, while being relatively inefficient in domestic markets. However, international dialogue and policy coordination can help reducing the dangers of pro-cyclical trade policy responses.
This is why the OECD cooperates closely with other international organisations and the G20 countries. This work is resulting in concrete actions, for example the creation of the Agricultural Market Information System (AMIS) and a Rapid Response Forum, which will help coordinate policy responses and provide more timely, accurate and transparent information on global food markets.
Ladies and Gentlemen,
This was only a broad-brush sketch of the challenges ahead. The time is now ripe to engineer a shift towards policies that support innovation, productivity and sustainability and that provide farmers with the skills they need to grasp the opportunities of strong demand and high prices. The global economy must get together to work jointly for these goals.
So let me finish with a short quote from the legendary Spanish writer Cervantes who said: « Las penas con pan son menos ». In English this means: “Sorrows are less with bread.” I believe this describes well the importance of the topics which you will discuss today.
I wish you much success and a productive day of debate and exchange.