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Developing countries shaping future of world agri-trade: Report

Written by: Staff
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New Delhi, July 4 (UNI) Productivity growth in the world's poorest nations is not keeping pace with the food needs of their rising populations, says a joint report by the OECD and FAO.

Because of this, the poorest developing countries will be increasingly dependent on world markets for their food security and so more vulnerable to price fluctuations in world markets, according to the report, OECD-FAO Agricultural Outlook 2006-2015.

To improve domestic production capacity in these countries greater investment in education, training and infrastructure development is needed, it added.

The report adds that Brazil, India and China are of increasing importance in shaping the future of world agricultural trade. In developing countries as a whole, rising incomes and increasing urbanisation are causing changes to people's diets. This leads to greater demand for and imports of meat and processed foods particularly, but also for the animal feed needed for their production.

Growing market opportunities in certain developing countries are coupled with a shift in production and exports of farm commodities away from OECD countries towards other developing economies. This is expected to increase over the next 10 years and as a result global competition among exporters will get tougher, the report says.

The traditional main wheat exporters -- Argentina, Australia, Canada, the European Union and the United States -- are likely to maintain their dominant positions, but output from Ukraine and Kazakhstan is creating growing competition.

The United States is expected to remain the largest wheat exporter over the coming years, but its market share is likely to fall.

Similar trends prevail in other commodity markets, with rapidly growing exports from Latin American countries in particular.

The report estimates that global average yields for wheat and coarse grains like maize should rise by around one percent a year between 2006 and 2015.

Wheat output by 2015 is expected to be 13 percent higher than in 2005. Coarse grain production is estimated to rise by 18 percent over the same period.

In a context of assumed strong energy prices, production of bioenergy from coarse grains and other cereals, oilseeds and sugar is expected to grow, creating additional demand for these commodities.

In particular, much of the growth in demand for coarse grains will be for producing bio-diesel to be used as a substitute for oil-based fossil fuels.

Growth is expected to continue in international meat markets in the medium term, but they remain vulnerable to animal disease outbreaks in key supplying countries.

Potential further outbreaks of BSE (mad cow disease), foot-and-mouth disease, and avian influenza will challenge markets and affect trading patterns, requiring greater international attention and cooperation.

Continued productivity growth and increased competition in international trade are expected to offset rising demand, and world agricultural commodity prices, adjusted for inflation, are mostly expected to continue their long-term decline -- albeit slowly -- towards 2015.

UNI BBS VD GC1743

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