The EC has produced a comparative summary of prospects for agricultural markets for the period up to 2017, based on FAPRI, OECD/FAO and USDA analyses. The following projections are outlined:
Wheat: A return to normal supply after six years of significant shortfalls. ‘Wheat production is projected to increase from 603 million tonnes in 2007/08 to 688 million tonnes in 2017/18. Demand will continue to grow ‘driven mostly by population growth in Asia, Africa and Middle East’. ‘Wheat prices are projected to decrease from the peak levels reached during the 2007/08 marketing year but are expected to remain high’ (+75% in nominal terms over the projection period compared to the past decade).
Maize: High prices driven by growing demand has generated a ‘strong supply response’. On the basis of ‘growth in yields and in area, production is expected to be in line with consumption in 2017/18, both reaching 896 million tonnes’. In the light of this situation, ‘maize prices are expected to remain high’ (some 85% above the average of the past decade over the projection period).
Barley: Use is expected to ‘remain relatively flat’, with the EU nevertheless remaining a major exporter, with net exports of ‘4.7 million tonnes in 2017/18’.
Sorghum: Production is expected to increase slightly due to yield improvement, however world feed use of sorghum is expected to decrease from 29 million tonnes to 26 million tonnes. Sorghum prices however are expected to increase relative to maize. The USA will remain ‘the largest exporter of sorghum, accounting for around 75% of world trade’.
Rice: In recent years ‘consumption has repeatedly exceeded production and stocks have dramatically decreased’. Stocks are not generally expected to recover ‘as consumption keeps rising in line with population growth’. Price increases of 64% are projected by FAPRI, although the OECD/FAO analysis believes that reserves will be rebuilt and price pressures will ease, with increase in prices in the next decade being consequently lower at around 37%.
Sugar: Consumption is expected to expected to increase faster than production, with stocks consequently decreasing and prices rising (up 30% on average compared to the last decade).
Cotton: Consumption growth is expected to exceed production growth, with the stock-to-use ratio deteriorating and prices rising by 30% over the period compared to the past decade.
Meat: Consumption is expected to grow ‘driven by world population growth and economic development’ (+ 1.9% per annum). ‘Growth for the poultry and pork sector (+2.0% per year) is slightly higher than for sheep (+1.8%) and beef (+1.7%). ‘Price prospects indicate … only a moderate growth of meat prices over the period 2008-17’.
Dairy: ‘Milk production should increase by about 20% reaching 802 million tonnes by 2017’, while according to the OECD/FAO analysis world trade is dairy products is expected to increase by around one-third, thus ‘outpacing production’. The EU is expected to lose ground on global markets. Both FAPRI and the OECD/FAO see milk powder prices ‘coming down by 30% off the record highs of 2007 in the first half of the projection period, with stable prices in the second half of the period. Similar trend are expected for cheese prices. For butter however OECD/FAO project a 13% reduction in prices, while FAPRI sees a ‘sharper reduction of 22%’.
Oilseeds: Demand is expected to be higher for vegetable oils than for meals, as a result of meal production exceeding growth in demand for feed in the livestock sector. ‘FAPRI expected that soymeal prices will decline from their current peak but would still remain high’ (up 60% in the projection period compared to the average of the past decade). Soybean oil prices are projected to continue to rise (up by 179% in the projection period compared to the average of the past decade). Increases in soybean prices are expected to be slightly lower at +91%. An almost 10% increase in the area under soya is expected over the projection period.
The production of sunflowers is ‘projected to recover and grow by 2.2% annually’ in the coming period while rapeseed production also shows signs of expansion. The EU is expected to remain the main producer of rapeseed, accounting for 39% of the market.
EC, July 31st 2008
http://ec.europa.eu/agriculture/analysis/tradepol/worldmarkets/outlook/2008_2017_en.pdf
Given the prospect of nominal prices of cereals substantially above those of the past decade, ACP countries will need to pay renewed attention to issues of food security and, where appropriate, local agricultural development. This situation is increasingly leading ACP officials to take a second look at various ‘contentious issues’ in the interim EPAs which have a direct bearing on the use of existing policy tools for the promotion of agricultural development and household food security (e.g. import- and export-licensing arrangements linked to industry development programmes). Given the international concern over the political, economic and social consequences of rising food prices, there would appear to be a need for particular flexibility on the part of the EC in responding to ACP concerns over these ‘contentious issues’.