Pavel Vavra

1

OECDOECD‐‐FAOFAOAgricultural Outlook 2011Agricultural Outlook 2011‐‐20202020

OECD Trade and Agriculture

The Outlook for EU Agriculture, COPA-COGECA, Brussels, 29 June, 2011

Pavel Vavra

OECD-FAO Agricultural Outlook

• Agricultural Outlook ‐ a set of conditional projections

bli h d i OECD FAOpublished in an OECD‐FAO annual report

• Comprehensive, dynamic partial equilibrium model

• The datasets are available at i tl k

OECD Trade & Agriculture 2

www.agri‐outlook.org

2

Key macroeconomic assumptions

• Global economic recovery underway (fragile in OECD, but more robust in BRICs)more robust in BRICs)

• 2.2% Inflation in OECD area but higher elsewhere

• Weak US dollar and higher oil prices


• Stable policy regimes

Slowdown in population growth

Annual percentage change


3

Urbanisation – a key driver

5000

6000

7000

8000

9000

ons

Rural Population Urban Population

• Rural population numbers are expected to stagnate.

0

1000

2000

3000

4000

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Millio

3500

4000

4500

• All additional population is to live in urban areas

Move to urban areas to take


0

500

1000

1500

2000

2500

3000

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Millions

Developed urban Developing Urban

• Move to urban areas to take place mainly in developing countries

World oil prices to remain relatively high

100

120USD/Barrel

40

60

80

100


0

20

1985 1990 1995 2000 2005 2010 2015 2020

4

• Commodity prices in real terms to remain above last decade average levels

– Income, population and biofuels growth– Higher cost structure

Main commodity projections

Higher cost structure

• Latin America and Eastern Europe are the fastest growing production regions

• Developing countries driving the global demand and trade gains

G i f d d fi it t d i S b S h t i


• Growing food deficits expected in Sub-Saharan countries

• Meat, dairy products, vegetable oils and sugar should experience the highest increases in demand

Most commodity prices at higher average levels

Percentage change in world prices in real terms relative to 2001-2010 base

50

60

10

20

30

40


-10

0

10

5

N.America10%

Production shifts to developing countries

Share of global agricultural and fish production gains Production gains between 2008/10 - 2020 valued at world reference prices (2004/06)

L.America21%

Asia&Pacific45%

Oceania2%


W.Europe3%

E.Europe&C.Asia7%

N.Africa&M.East3%S.S.Africa

9%

0-15% over the decade 15-30% over the decade +30% over the decade

N.America10%

Production shifts to developing countries

Butter

Cheese

WMP

SMP

Sugar, vegetable oil and poultry production are expected to record the highest growths

Share of global agricultural and fish production gains Production gains between 2008/10 - 2020 valued at world reference prices (2004/06)

L.America21%

W.Europe3%

E E &C A i

Asia&Pacific45%

Oceania2%

Veget. Oils

Sugar

Fish

Beef

Pigmeat

Poultry

Butter


E.Europe&C.Asia7%

N.Africa&M.East3%S.S.Africa

9%

0-15% over the decade 15-30% over the decade +30% over the decade

0 10 20 30 40

Wheat

Coarse grains

Rice

Oilseeds

Protein meals

Per cent change: 2020 compared to 2008-2010 average

6

Large differences in milk production gains


Fish production growth driven by aquaculture

160

180

Capture AquacultureMillion tonnes

60

80

100

120

140


0

20

40

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

7

Ethanol production growing steadily

Feedstocks used for ethanol production over the projection period

140

160

Other

60

80

100

120 Sugar beet

Non agricultural feedstock

Molasse

Wheat

Biomass-based


-

20

40

2008-2010

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Biomass-based

Sugar Cane

Coarse grains

Bnl

Strong growth of global biodiesel production

Feedstocks used for biodiesel production over the projection period

35

40

Jatropha

Bnl

15

20

25

30

Non agricultural feedstock

Biomass-based


-

5

10

2008-20102011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Vegetable oil

8

Biofuels production represents an important share of global feedstock utilisation

Share of feedstocks used for biofuel production from global production

35%

2020 2008‐2010Percent

+ 90 Mt15%

20%

25%

30%


0%

5%

10%

Sugar cane Vegetable oil Coarse Grains Sugar beet Wheat

Food remains the main driver for wheat

+ 34 MtDeveloping 2020

Developing 2008/10

Food Use Feed Use Biofuel Use Other use

0 100 200 300 400 500

Developed 2020

Developed 2008/10

Developing 2020

Million tonnes

World


0 200 400 600 800

World 2020

World 2008/10

9

…while feed and fuel push coarse grain demand up

+ 50 MtDeveloping 2020

Developing 2008/10

Food Use Feed Use Biofuel Use Other use

+ 50 Mt

+ 90 Mt0 100 200 300 400 500 600 700 800

Developed 2020

Developed 2008/10

Million tonnes


0 200 400 600 800 1 000 1 200 1 400

World 2020

World 2008/10

Driven by economic growth, meat consumption increases especially in developing countries

Consumption of meat from 2008-10 average to 2020, per cent

World

BeefDeveloping

D l d

Developing/Developed

Pork

Poultry

Developed


0 10 20 30 40

Sheep

0 10 20 30 40

10

Outlook for dairy products consumption


Butter Cheese SMP WMP

Per capita consumption evolution differs by product

Per capita consumption of WMP Per capita consumption of cheese


11

Global trade to grow by 10-30%Imports : Share of the import gains

N.America10%

L.America9%Asia&Pacif

ic37%

Oceania1%

Vegetable oils, rice and SMP trade growing the fastest

Cheese

WMP

SMP

Exports: Share of the export gains

W.Europe15%

E.Europe&C.Asia4%N.Africa&

M.East15%

S.S.Africa9%

N.America13%

OceaniaVeget. Oils

Sugar

Fish

Beef

Pigmeat

poultry

Butter


L.America27%

W.Europe6%

E.Europe&C.Asia11%

N.Africa&M.East0%

S.S.Africa‐1%

Asia&Pacific38%

Oceania4%

Per cent change 2020 compared to 2008-2010 average

0 10 20 30 40

Wheat

Coarse grains

Rice

Oilseeds

Protein meals

Sugar exports remain highly concentratedand lead by Brazil

70

2008‐10 2020Million tonnes r.s.e.

20

30

40

50

60


0

10

World Brazil Thailand Australia Mexico India South Africa

12

While sugar imports are more diversified

6 6

OECD Emerging economies

Million tonnes r.s.e. Million tonnes r.s.e.

1

2

3

4

5

1

2

3

4

5


0

1

European Union

United States

Korea Japan

2008‐10 2020

0

1

China Indonesia Russia India

Stochastic analysis of projected agricultural production Impact on world coarse grain prices

• Monte Carlo simulations on yields, oil and fertiliser prices, macroeconomic variables.• 500 model runs show more upside potential for world coarse grains prices

10% percentile baseline median 90th percentileUSD/t

150

200

250

300

350


0

50

100

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

13

Key Market DriversIncome changes impact mainly demand for meat and dairy products

whole milk powderpoultry meat

sugarbuttercheese

sheep meatbeef and veal

1 % additional income growth p.a. 1% less income growth p.a.

‐2,5% ‐2,0% ‐1,5% ‐1,0% ‐0,5% 0,0% 0,5% 1,0% 1,5% 2,0% 2,5%

ricevegetable oil

wheatcoarse grains

porkwhole milk powder

Impact of a 1% increase/decrease of annual GDP growth on global commodity consumption (average over projection period)

Yield growth and changes have important impact on global commodity prices

i

wheat

yields increase by 5% yields decrease by 5%


‐30% ‐20% ‐10% 0% 10% 20% 30%

oilseeds

poultry meat

protein meals

coarse grains

rice

Impact of 5% increase/decrease in yields of cereals on world commodity prices (average over projection period)

• Demand growth – above all in developing countries

C i ti

Key Market Drivers

• Convergence in consumption patterns

• Developing countries raise meat consumption

• Increased health and nutrition concerns


• Supply adjusting to higher production costs

• International investment

14

Key issues and uncertainties

• Traditional uncertainties: – Weather and economic stability

– Developments in trade and domestic policies

• Biofuels policies and biofueldevelopments

• Food security and climate change


change

• Increased price volatility

OECD Trade and AgricultureOECD Trade and Agriculture

www.oecd.org/agriculture


Contact

[email protected]

Business

Pavel Vavra