Prices To Remain High, Possibly More Volatile
3 June 2008 A new outlook report published by the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization (FAO) predicts that commodity prices should ease from current levels, but over the next decade they will still be far above historic levels.
OECD and FAO are concerned that the current high food prices will hit the poor and hungry people hardest, particularly urban net food buyers and rural non-food producers in low income countries. Humanitarian aid is needed now, they stated, but sustainable solutions and an emphasis in boosting these countries’ agricultural production are the long-term goals.
In comparing averages of the coming decade with those of the past, real prices (nominal prices corrected for inflation), are projected to increase in by less than 10% for rice and sugar, under 20% for wheat, around 30% for butter, coarse grains, and oilseeds, and over 50% for vegetable oils, the report stated.
At the same time, the report warns that prices may become more volatile as stock levels remain low and some of the demand for agricultural commodities becomes less responsive to price changes.
The report also notes that both consumption and production are growing fastest in developing countries for all agricultural commodities except wheat. By 2017, these countries are expected to dominate trade in most farm products. For example, Brazil’s share of world meat exports is expected to grow to 30% by 2017.
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