Agricultural product prices will remain low for another 10 years

Global prices for agricultural products (such as grains, sugar, dairy and meat) will remain at or below current levels on average over the next 10 years. Improvements in production continue to outpace growth in demand. 

This is what the World Food Organization FAO and the Organization for Economic Cooperation and Development OECD expect in their vision on the agricultural sector from 2019 to 2028† The organizations expect agricultural production to increase by 2028% until 15, while the available agricultural area will remain more or less the same. The profit is made in improving the yield per hectare through technical innovation.

Livestock farming will also grow in the coming years, resulting in expanding livestock. More feed is needed for this, the FAO and OECD expect, as a result of which feed crops such as maize and soybeans will have an increasing share of the crops. The organizations expect the use of grains for feed to grow faster than human consumption of food in the next ten years.

Gain market share
According to the organizations, international trade remains essential for food security in a growing number of countries that import food. World agricultural trade is expected to grow at an annual rate of 1,3%. That is somewhat slower than in recent years. Regions such as Latin America, the Caribbean and Europe are expected to gain market share in global agricultural exports. The Black Sea region continues to lead the way in wheat and maize exports, most of which goes to the Middle East and North Africa.

The world's agricultural markets must learn to deal with new challenges that can be added to the traditional risks. On the supply side, the FAO and the OECD mention, among other things, the spread of infectious diseases such as African swine fever, the growing resistance to the use of antibiotics, rules for the use of new breeding techniques and the consequences of climate change. On the demand side, the organizations see challenges in changing diets, the latest trends in health and sustainability and the fight against obesity.

Tensions in world trade worry the two organizations. If this escalates, trade threatens to be restricted with all the consequences that entails. According to the FAO and OECD, this restricts trade worldwide, causing damage not only to the international markets, but also to the home markets.

Eric the Thrush

Eric is a member of the editorial staff of Boerenbusiness. As a descendant of an arable family, farmer's blood flows through Eric's veins. He considers himself a generalist, but with a preference for economics, trends, markets and marketing.

e.delijster@boerenbusiness. Nl

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