UN: Foodgrain prices will see steady decline in next 10yrs

TNN

New Delhi, 06 Jul 2015: A UN report has projected steady decline in prices of foodgrains over the next decade, attributing the gradual price fall to increase in overall agricultural production and diversification of dietary choices towards meat and dairy products. 

 

The report, released last week, however, emphasized that prices of foodgrains would not fall below early 2000-levels "despite the advantageous scenario regarding global food pricing". 

 

It noted that additional agricultural production would be driven by use of innovative methods to improve yields in Asia, Europe and North America and by expansion of agricultural area in South America. It also said the low cost of energy during the period will bring down the input (energy and fertilizer) cost of farm production, leading to decline in prices of foodgrains.

 

 

The ’Agricultural Outlook 2015-2024’ is a result of collaborative effort of the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. 

 

It claims to have brought together commodity, policy and country expertise of both the organizations and inputs from collaborating member countries, including India, to provide an annual assessment of prospects for the coming decade of national, regional and global agricultural commodity markets.

 

Referring to country-specific projects, the report said India is expected to retain its position as the second largest exporter of cotton and beef by 2024. At present, Brazil is the highest beef exporter while the US is the biggest cotton exporter. 

 

The report said developing countries, excluding the least developed countries, will continue to dominate and represent 79% of additional bovine production where Brazil, India and China account for 42% of the additional production supply. 

 

It further said "rising incomes will prompt consumers to continue diversifying their diets, notably by increasing their consumption of animal protein relative to starches". 

 

"As a result, the prices of meat and dairy products are expected to be high relative to crop prices. Among crops, the prices of coarse grains and oilseeds, used for animal feed, should rise relative to the prices of food staples," it said. 

 

Exports of agricultural commodities are projected to become concentrated in fewer countries, while imports become more dispersed over a large number of countries. Thailand is foreseen to remain the main rice exporter by 2024. 

 

Vegetable oil trade will be global in nature whereas rice exports will circulate mainly within the region (south and south-east Asia) due to demand of growing population. "Except for India, rice exports from all of the traditional exporters, namely Pakistan, Thailand, Vietnam and the US, are expected to increase," said the report. 

 

India is, however, expected to be one of the biggest beneficiaries in terms of cotton export as China, despite being the top producer, will not be able to make a dent in India’s share due to its rising consumption. 

 

As far as sugar is concerned, high demand in developing countries will likely to boost prices for the commodity and spur further investment in the sector. The report suggested that the market outcome will nonetheless hinge on the ongoing competition between the profitability of sugar versus ethanol in Brazil, considered to be the world’s leading producer.