What will the next ten years look like for global agriculture? According to the latest outlook report by the Food and Agriculture Organization (FAO) and the Organization for Economic Co-operation and Development (OECD), the panorama seems lukewarm.
The industry will grow at about half the rate of the previous decade, due to the slowing down of consumption growth and agricultural production.
Less healthy diets, the threat of protectionism, the power of technology to improve production and changes in consumption are other highlights of the “Agricultural Outlook 2018-2027,” published on July 3rd.
Consumption: cereals go down, sugar goes up
Between 2018 and 2027, world demand for agricultural commodities will slow down, keeping prices low. The main reason? Less demand from China, which in the previous decade had been an important source of demand for agricultural commodities. Even the emergence of other sources won’t be enough to maintain the same growth rate.
Thus, the growth of agricultural products consumption will be mostly sustained by population growth, especially in regions and countries like Sub-Saharan Africa, India, Middle East and North Africa.
Cereals, roots, and tubers won’t register growth in consumption, since, in many countries, they’re close to reaching a saturation point. Demand for meat will slow down, due to constraints on disposable income and variations in regional preferences. Milk, however, will register a faster growth.
Two notable exceptions to overall demand deceleration will be sugar and vegetable oils, whose consumption per capita will grow in developing countries. The reason? Urbanization is on the rise in these countries, and with it, the need for processed foods.
Developing countries will have the largest growth
Despite the stagnation of the demand for agricultural commodities, global agricultural production will grow 20% until 2027 – but with a big difference between regions.
Sub-Saharan Africa, South and East Asia, the Middle East and North Africa will register a strong production growth, while developed regions – especially Western Europe – will have the smallest growth.
Trade: the threat of concentration and protectionism
Over the next ten years, the main exporting regions will remain the Americas and Oceania, despite the emergence of Russia and Ukraine in the cereal markets. “The high concentration of export markets may increase the susceptibility of world markets to supply shocks, stemming from natural and policy factors,” the OECD and FAO warn.
Another concern for the organizations is the global rise of protectionist trade policies. They leave a recommendation: “agricultural trade plays an important role in ensuring food security, underscoring the need for an enabling trade policy environment.”
North Africa and the Middle East more dependent on imports
In this year’s outlook, FAO and OECD focus on the Middle East and North Africa, since these are regions where “rising food demand and limited land and water resources lead to rising import dependence for basic food commodities.” To add to that, “food security is threatened by conflict and political instability.”
Agriculture and fish production should grow 1.5% per year in both regions, mostly through productivity improvements.
The role of technology
If FAO and OECD’s predictions seem discouraging, the truth is that the organizations admit that “developments of new technologies such as digital and precision agriculture or new plant breeding techniques could improve agricultural productivity beyond the rate currently projected in the Outlook.”
The document identifies new technologies as tools that can bring positive change to specific regions. This is the case of Sub-Saharan Africa, where “fertilizer, pesticides, improved seeds, and other technologies such as mechanization and irrigation have the potential to introduce substantial productivity gains, as adoption is typically low among the small-scale production units that characterise the region.”
In the Middle East and North Africa, a more efficient agriculture – essential due to the scarcity of arable land and water – “will depend on innovation.”
Less healthy diets for developing countries
The concern with populations’ health is evident in the Agricultural Outlook. The organizations predict that the consumption per capita of sugar and vegetable oil will grow in developing countries, due to more demand for processed foods.
“Changes in levels of food consumption and the composition of diets imply that the “triple burden” of undernourishment, over-nourishment, and malnutrition will persist in developing countries,” the report underlines.