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The growth in global agricultural production is expected to slow in this decade due to limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures, the Food and Agricultural Organisation of the United Nations, said in a report.
In the decade between 2013 and 2022, the global agricultural production is likely to grow at 1.5% a year on average as compared to 2.1% between 2003 and 2012. The supply of farm commodities, however, should keep pace with global demand, the report said.
The FAO expects prices to remain above historical averages over the medium term for both crop and livestock products due to a combination of slower production growth and stronger demand, including for biofuels.
The agriculture has been turned into an increasingly market-driven sector, as opposed to policy-driven as it was in the past, thus offering developing countries important investment opportunities and economic benefits, given their growing food demand, potential for production expansion and comparative advantages in many global markets.
However, production shortfalls, price volatility and trade disruption remain a threat to global food security. "As long as food stocks in major producing and consuming countries remain low, the risk of price volatility is amplified. A wide-spread drought such as the one experienced in 2012, on top of low food stocks, could raise world prices by 15-40 percent," the report jointly published by OECD and FAO, said.
China, with one-fifth of the world's population, high income growth and a rapidly expanding agri-food sector, will have a major influence on world markets, and is the special focus of the report. China is projected to remain self-sufficient in the main food crops, although output is anticipated to slow in the next decade due to land, water and rural labour constraints.
Presenting the joint report in Beijing, OECD Secretary-General Angel Gurría, said, "The outlook for global agriculture is relatively bright with strong demand, expanding trade and high prices. But this picture assumes continuing economic recovery. If we fail to turn the global economy around, investment and growth in agriculture will suffer and food security may be compromised."
"Governments need to create the right enabling environment for growth and trade," he added. "Agricultural reforms have played a key role in China's remarkable progress in expanding production and improving domestic food security."
FAO Director-General José Graziano da Silva, said: "High food prices are an incentive to increase production and we need to do our best to ensure that poor farmers benefit from them. Let's not forget that 70 percent of the world's food insecure population lives in rural areas of developing countries and that many of them are small-scale and subsistence farmers themselves."
He added: "China's agricultural production has been tremendously successful. Since 1978, the volume of agricultural production has grown almost five fold and the country has made significant progress towards food security. China is on track to achieving the first millennium development goal of hunger reduction.
While China's production has expanded and food security has improved, resource and environmental issues need more attention. Growth in livestock production could also face a number of challenges. We are happy to work with China to find viable and lasting solutions."
Developing countries to gain
Driven by growing populations, higher incomes, urbanization and changing diets, consumption of the main agricultural commodities will increase most rapidly in Eastern Europe and Central Asia, followed by Latin America and other Asian economies.
The share of global production from developing countries will continue to increase as investment in their agricultural sectors narrows the productivity gap with advanced economies. Developing countries, for example, are expected to account for 80 percent of the growth in global meat production and capture much of the trade growth over the next 10 years. They will account for the majority of world exports of coarse grains, rice, oilseeds, vegetable oil, sugar, beef, poultry and fish by 2022.
To capture a share of these economic benefits, governments will need to invest in their agricultural sectors to encourage innovation, increase productivity and improve integration in global value chains, FAO and OECD stressed.
Agricultural policies need to address the inherent volatility of commodity markets with improved tools for risk management while ensuring the sustainable use of land and water resources and reducing food loss and waste.
