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Wayne Jones OECD Trade and Agriculture
Fertilizers Europe, Brussels, 19 October 2011
Food Security The need to increase productivity
OECD Trade & Agriculture 3
Good prospects for agriculture
global consensus on
medium term prospects for
agriculture and fisheries
• Higher average prices
• Growing food demand
• Increasing biofuel market
• Expanding trade
OECD Trade & Agriculture 4
Higher average commodity prices
% change in average real prices 2001-10 to 2011-2020
-10
0
10
20
30
40
50
60
OECD Trade & Agriculture 5
Growing demand
N.America 6%
L.America 10%
W.Europe 4%
E.Europe&C.Asia 5%
N.Africa&M.East 7%
S.S.Africa 11%
Asia&Pacific 56%
Oceania 1%
Share of global consumption gains
0-15% over the decade 15-30% over the decade +30% over the decade
OECD Trade & Agriculture 6
Increasing production of biofuels
Share of global production used for biofuel feedstocks
0%
5%
10%
15%
20%
25%
30%
35%
Sugar cane Vegetable oil Coarse Grains Sugar beet Wheat
2020 2008-2010
Percent
OECD Trade & Agriculture 7
Expanding trade
N.America 13%
L.America 27%
W.Europe 6%
E.Europe&C.Asia 11%
N.Africa & M.East
0%
S.S.Africa -1%
Asia&Pacific 38%
Oceania 4%
Share of export gains
OECD Trade & Agriculture 8
Future fertilizer demand?
Higher yields vs lower costs?
• Higher fertilizer prices
• Precision farming
• Seed technology
• Crop protection
• Environmental pressures
OECD Trade & Agriculture 9 9
Production costs, 2010, Heartland (USD/acre)1
Item Corn Soybeans Wheat
Operating costs: Seed 67.61 57.49 24.61
Fertilizer 105.82 (41%) 16.88 (14%) 83.89 (59%)
Chemicals 30.08 16.64 5.83
Custom operations 10.80 5.50 7.11
Fuel 26.79 (10%) 13.01 (11%) 10.28 (7%)
Other operating costs 14.24 12.90 11.47
Total operating costs 255.34 122.42 143.13
1 Data shown is for U.S. Heartland (corn belt)
Energy prices mainly affect fertilizer costs
OECD Trade & Agriculture 10
Good prospects but…
• Rising prod’n costs
• Environmental pressures
• Greater volatility
• Slower output growth
Risk management has, and
always will be, critical to
success in agriculture
OECD Trade & Agriculture 11
Volatility: food export restrictions
Region Export restricting countries
Export restricting measures
Africa 9 15
Asia 15 49
LAC 5 15
Others 4 8
Total 33 87
Sample of 105 countries 2007 to end-March 2011
Source: Ramesh Sharma, 2011 - based on WTO Annex 1 information
OECD Trade & Agriculture 12
The need to increase productivity growth
• Growing demand for food, feed and fuel
• Increasing competition for land
• Important water constraints
• Uncertain impacts of climate change
Improving agricultural productivity growth is not an option to consider –– it is an essential requirement for increasing global food supplies on a sustainable basis.
OECD Trade & Agriculture 13
• 47% pop’n under severe water stress by 2050
• Irrigation costs rise with energy prices
• Water pricing to agriculture will increase
• 60% freshwater withdrawals used by agr (2010)
• 40% freshwater withdrawals used by agr (2050)
Agriculture share of water use to decline
OECD Trade & Agriculture 14
Slower global output growth
Global agricultural production growth
2.60%
1.70%
0.0%
1.0%
2.0%
3.0%
2001-2010 2011-2020
OECD Trade & Agriculture 15
Wheat area and yield growth
Area harvested Annual % growth in yield
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
90.000
100.000
North America Europe Asia and Pacific Africa
Kh
a
1995 2000 2005 2010 2015 2020
0
0,5
1
1,5
2
2,5
3
3,5
NorthAmerica
Europe Asia andPacific
Africa
An
nu
al g
row
th r
ate
2000-2010 2010-2020
OECD Trade & Agriculture 16
Coarse grains area and yield growth
Area harvested Annual % growth in yield
0
20.000
40.000
60.000
80.000
100.000
120.000
North America Europe Asia and Pacific Africa
Kh
a
1995 2000 2005 2010 2015 2020
0
0,5
1
1,5
2
2,5
3
3,5
NorthAmerica
Europe Asia andPacific
Africa
An
nu
al g
row
th r
ate
2000-2010 2010-2020
OECD Trade & Agriculture 17
Oilseeds area and yield growth
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
90.000
North America Europe Asia and Pacific Africa
Kh
a
1995 2000 2005 2010 2015 2020
0
0,5
1
1,5
2
2,5
NorthAmerica
Europe Asia andPacific
Africa
An
nu
al g
row
th r
ate
2000-2010 2010-2020
Area harvested Annual % growth in yield
OECD Trade & Agriculture 18
Global total factor productivity growing
• Slower pace in developing
countries and LDCs
• Faster pace for emerging
and transition economies
• R&D the main driver;
benefits exceed costs
• Public sector remains the
main actor
• Wide diversity in R&D
support
OECD Trade & Agriculture 19
-1
-0,5
0
0,5
1
1,5
2
2,5
3
3,5
4
All developed countries All developing countries
% g
row
th r
ate
1970-79 1980-89 1990-99 2000-07
Average annual growth rate by period (%)
Agriculture TFP growth
OECD Trade & Agriculture 20
Agricultural TFP growth by region
Average annual growth rate by period (%)
OECD Trade & Agriculture 21
R&D expenditures by region in USD 2000
Page 21INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Public Agricultural R&D Spending Trends, Public Agricultural R&D Spending Trends,
19761976--81, 198181, 1981--91, 199191, 1991--20002000
Source: Source: PardeyPardey et al. 2006et al. 2006
OECD Trade & Agriculture 22
The challenge for governments
Governments need to link
policies to priorities
• Invest in innovation
• Improve sustainability
• Facilitate producer risk
management
OECD Trade & Agriculture 23
Developing countries: enabling environment
Invest in education and extension
Reduce/remove distorting ag/trade policies
Develop better functioning markets
Adapt research and innovation to smallholders
OECD Trade & Agriculture 24
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