The document discusses global prospects for agriculture between 2011-2020. It finds that there will likely be higher average commodity prices, growing global food demand, an increasing market for biofuels, and expanding agricultural trade. However, rising production costs, environmental pressures, and greater output volatility may pose challenges. Slower global agricultural output growth is also expected. Governments are encouraged to boost innovation, improve sustainability, facilitate risk management, and develop enabling policies to support productivity growth in developing countries.

2. Food Security
The need to increase productivity
Wayne Jones
OECD Trade and Agriculture
Fertilizers Europe, Brussels, 19 October 2011

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 3

4. Higher average commodity prices
% change in average real prices 2001-10 to 2011-2020
60
50
40
30
20
10
0
-10
OECD Trade & Agriculture 4

5. Growing demand
Share of global consumption gains
N.America
6%
L.America
10%
Oceania
1%
W.Europe
4%
E.Europe&C.Asia
5%
Asia&Pacific N.Africa&M.East
56% 7%
S.S.Africa
11%
0-15% over the decade 15-30% over the decade +30% over the decade
OECD Trade & Agriculture 5

6. Increasing production of biofuels
Share of global production used for biofuel feedstocks
2020 2008-2010
Percent
35%
30%
25%
20%
15%
10%
5%
0%
Sugar cane Vegetable oil Coarse Grains Sugar beet Wheat
OECD Trade & Agriculture 6

7. Expanding trade
Share of export gains
N.America
13%
Oceania
4%
Asia&Pacific
38%
L.America
27%
S.S.Africa
-1%
W.Europe
N.Africa & E.Europe&C.
Asia 6%
M.East
0% 11%
OECD Trade & Agriculture 7

8. Future fertilizer demand?
Higher yields vs lower costs?
• Higher fertilizer prices
• Precision farming
• Seed technology
• Crop protection
• Environmental pressures
OECD Trade & Agriculture 8

9. Energy prices mainly affect fertilizer costs
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)
9
OECD Trade & Agriculture 9

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 10

11. Volatility: food export restrictions
Sample of 105 countries 2007 to end-March 2011
Region Export restricting Export restricting
countries measures
Africa 9 15
Asia 15 49
LAC 5 15
Others 4 8
Total 33 87
Source: Ramesh Sharma, 2011 - based on WTO Annex 1 information
OECD Trade & Agriculture 11

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 12

13. Agriculture share of water use to decline
• 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)
OECD Trade & Agriculture 13

14. Slower global output growth
Global agricultural production growth
3.0%
2.60%
2.0%
1.70%
1.0%
0.0%
2001-2010 2011-2020
OECD Trade & Agriculture 14

15. Wheat area and yield growth
Area harvested Annual % growth in yield
3,5
100.000
90.000 3
80.000
Annual growth rate
2,5
70.000
60.000 2
Kha
50.000 1,5
40.000
1
30.000
20.000 0,5
10.000
0
0 North Europe Asia and Africa
North America Europe Asia and Pacific Africa America Pacific
2000-2010 2010-2020
1995 2000 2005 2010 2015 2020
OECD Trade & Agriculture 15

16. Coarse grains area and yield growth
Area harvested Annual % growth in yield
3,5
120.000
3
100.000
Annual growth rate
2,5
80.000 2
Kha
1,5
60.000
1
40.000
0,5
20.000 0
North Europe Asia and Africa
0 America Pacific
North America Europe Asia and Pacific Africa
2000-2010 2010-2020
1995 2000 2005 2010 2015 2020
OECD Trade & Agriculture 16

17. Oilseeds area and yield growth
Area harvested Annual % growth in yield
90.000
2,5
80.000
70.000 2
Annual growth rate
60.000
1,5
50.000
Kha
40.000
1
30.000
20.000 0,5
10.000
0 0
North America Europe Asia and Pacific Africa North Europe Asia and Africa
America Pacific
2000-2010 2010-2020
1995 2000 2005 2010 2015 2020
OECD Trade & Agriculture 17

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 18

19. Agriculture TFP growth
Average annual growth rate by period (%)
1970-79 1980-89 1990-99 2000-07
4
3,5
3
2,5
% growth rate
2
1,5
1
0,5
0
All developed countries All developing countries
-0,5
-1
OECD Trade & Agriculture 19

20. Agricultural TFP growth by region
Average annual growth rate by period (%)
OECD Trade & Agriculture 20

21. R&D expenditures by region in USD 2000
Public Agricultural R&D Spending Trends,
1976-81, 1981-91, 1991-2000
Source: Pardey et al. 2006
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 21
OECD Trade & Agriculture 21

22. The challenge for governments
Governments need to link
policies to priorities
• Invest in innovation
• Improve sustainability
• Facilitate producer risk
management
OECD Trade & Agriculture 22

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 23

24. OECD Trade and Agriculture
www.agri-outlook.org
Follow us on Twitter: @OECDagriculture
Contact
tad.contact@oecd.org
OECD Trade & Agriculture 24