Opening Remarks by Angel Gurría, OECD Secretary-General, delivered at the press conference
17 June 2011, OECD Headquarters
Good morning and welcome to the release of the OECD-FAO Agricultural Outlook for the period 2011-2020. I am very pleased to again present this report with my good friend Jacques Diouf, Director General of the Food and Agriculture Organisation.
In two words, our outlook is cautiously optimistic.
A strong supply response to near record high commodity prices this year is expected to put downward pressure on prices in the near and medium term. Of course, it still remains to be seen to what extent the dry conditions in much of Europe affect world markets this year.
But over the coming decade, commodity prices, in real terms, are projected to average up to 20% higher for cereals and 30% higher for meats compared to the previous decade; these projections are well below the peak price levels experienced in 2007-08 and again this year.
At the same time, we expect continued volatility around these higher averages coming from a number of sources: a globally tight supply-demand situation, low stock levels, growing links between food and energy markets, high oil prices, weather related supply shocks, and exchange rate fluctuations.
From left to right:
Angel Gurría, Secretary-General of the OECD with Jacques Diouf, Director-General of the FAO - 17 June 2011, OECD
As in previous Outlooks, higher production growth from emerging economies is expected – in Latin America and Eastern Europe and to a lesser extent Asia. However, growing food deficits are expected in sub-Saharan Africa as population driven demand outpaces local production.
Global agricultural production is projected to still outpace population growth, with production per capita rising slightly.
Fisheries, which are covered for the first time in this outlook, will see production grow more rapidly due to an expanding aquaculture sector; fish farming is expected to surpass capture fisheries for the first time as the most import source of fish and seafood for human consumption.
This Outlook reinforces the conclusions contained in the report for the G20, Price Volatility in Food and Agriculture Markets: Policy Responses, coordinated by FAO and OECD on behalf of ten International Organizations.
While higher prices are generally good news for farmers, the impact on the poor in developing countries who spend a high proportion of their income on food can be devastating. Action is needed in order to:
- increase investment and improve productivity in developing country agriculture, both to increase food supplies and improve income levels in rural areas
- remove production and trade distorting policies – including for biofuels - and place greater emphasis on improving productivity growth and ensuring sustainable resource use, globally;
- assist vulnerable individuals and countries to better manage risk and uncertainty, including through humanitarian food reserves and social safety nets;
- improve information and transparency in physical and financial market; and
- improve international coordination across all of these areas, so as to ensure adequate future supplies of safe and nutritious food for the world’s growing population.
I will conclude with this final point. While our market outlook is cautiously optimistic, I am absolutely confident that the global food and agriculture system can thrive in the coming decades. Throughout history, farmers have again and again demonstrated the huge capacity they have to adapt to new circumstances, adopt new methods and technologies, and supply safe and nutritious food for growing populations. Since 1960, cereal production world-wide has doubled, and fruit and vegetable production has tripled. The increases in meat production have been even more dramatic – pork production has more than tripled and poultry has increased sevenfold.
The G20, in no small part due to the efforts of France as G20 President, is putting agriculture at the center of international attention. And acting now – along the lines I have outlined – will position the sector well for a profitable future.
Let me now turn to Jacques Diouf who will provide his comments, in particular perhaps as regards the implications of the Outlook for developing country agriculture and the need for increased investment in the sector.