Friday, June 17, 2011

Agricultural outlook for this decade

The OECD-FAO Agricultural Outlook 2011-2020 says that a good harvest in the coming months should push commodity prices down from the extreme levels seen earlier this year. However, the Outlook states that over the coming decade real prices for cereals could average as much as 20% higher and those for meats as much as 30% higher, compared to 2001-10. These projections are well below the peak price levels experienced in 2007-08 and again this year.

The Outlook notes that “agricultural commodity prices in real terms are likely to remain on a higher plateau during the next decade compared to the previous decade. Prolonged periods of high prices could make the achievement of global food security goals more difficult, putting poor consumers at a higher risk of malnutrition.”

Global agricultural production is projected to grow at 1.7% annually, on average, compared to 2.6% in the previous decade. Slower growth is expected for most crops, especially oilseeds and coarse grains, which face higher production costs and slowing productivity growth. Growth in livestock production stays close to recent trends. Despite the slower expansion, production per capita is still projected to rise 0.7% annually.

Per-capita food consumption is expected to expand most rapidly in Eastern Europe, Asia and Latin America, where incomes are rising and populations growth is slowing. Meat, dairy products, vegetable oils and sugar should experience the highest demand increases, according to the report.

Global production in the fisheries sector is projected to increase by 1.3% annually to 2020. This is slower than growth over the previous decade, due to reduced or stagnant capture of wild fish stocks and lower growth rates in aquaculture, which underwent a rapid expansion over the 2001-2010 period. By 2015, aquaculture is projected to surpass capture fisheries as the most important source of fish for human consumption, and by 2020 should represent about 45% of total fishery production, including non-food uses.

Higher prices for commodities are being passed through the food chain, leading to rising consumer price inflation in most countries. This raises concerns for economic stability and food security in some developing countries, with poor consumers most at risk of malnutrition, the report says.

Drivers of price volatility:
  • Weather and climate change
  • Stock levels
  • Energy prices
  • Exchange rates
  • Increasing demand
  • Resource pressures
  • Trade restrictions
  • Speculation

Increase in biofuel production:

Biofuel use will continue to represent an important share of global cereal, sugar and vegetable oil production over the Outlook period. By 2020, 12% of the global production of coarse grains will be used to produce ethanol compared to 11% on average over the 2008-10 period. 16% of the global production of vegetable oil will be used to produce biodiesel compared to 11% on average over the 2008-10 period and 33% of the global production of sugar compared to 21% on average over the 2008-10 period.

Over the projection period, 21% of the global coarse grains production’s increase, 29% of the global vegetable oil production’s increase and 68% of the global sugar cane production’s increase are expected to go to biofuels.

Update on food security in Nepal (2010-11 is surplus year)

It seems like Nepal is going to have food surplus (of 110,000 tonnes) this fiscal year (2010-2011), according to the Ministry of Agriculture and Cooperatives (MoAC). Meanwhile, the number of food deficit districts has gone down to 38 form 43 reported earlier. Total production, demand, and surplus were 8.615 million tonnes, 5.4 million tonnes, and 110,000 tonnes respectively. The calculation is based on the consumption rate of 191 kg per person per year by 28.376 million people.

Dang, Dhanusha, Chitwan, Sankhuwasabha, Kaski and Dolpa districts have become food surplus districts this fiscal year. Dolpa has become a food surplus district after 10 years, according to the MoAC.

Food balance in FY 2010-11 (tonnes)
Region District Production Requirement Food balance
Mountain 16 333875 383327 -49452
Hills 38 2256322 2457399 -201077
Terai 21 2922678 2521516 401162
Total 75 8.615 million tonnes 5.4 million tonnes 110000 tonnes

Among the districts with food deficit production are six districts in the Tarai, 11 in mountains, and 21 in hills.

According to the MoAC extension of agro technology, improved seeds and increased area under cultivation among other advantages had boosted production. The overall food grain (rice, maize, wheat, millet, barley and buckwheat) output grew 11 percent in the current fiscal year.

Nepal imported 290,000 tonnes of food this fiscal year.