OECD projects prices increases for agricultural products

GLOBAL - Stiffer competition between countries exporting wheat, oilseeds, sugar and livestock will intensify over the next ten years, bringing down prices, according to forecasts by the Organisation for Economic Co-operation and Development (OECD) and the UN.

While those buying the commodities will benefit from the lower prices and the increased ability to source products from more developing countries, farmers in OECD countries will have to make additional efforts to improve their efficiency as profit margins fall, the organisations stated in a forecast report released this week.

Over the next decade developing countries are expected to import more agricultural products due to rising populations and increasing incomes, according to the forecast. They will be able to export part of their requirements from low-cost producing countries in the developing world.

"As a result, competition in global commodity markets will intensify in the medium term," the organisations state. "Coupled with marked productivity gains at the world level, this will result in a further drop in real prices for most agricultural commodities."

While the reports projects world prices for wheat and coarse grains should remain fairly close to the current high levels, prices for rice are set to increase between 2004 and 2014 in nominal terms.

The OECD forecasts that livestock and dairy products prices will stay mostly below recent levels. Prices peaked at US$2.96 per 100kg carcass weight equivalent (cwe) in 2004. A gradual recovery in US beef output should push them lower over the next decade.

Source: foodnavigator.com