Wednesday, 26 June 2013 00:00
Forewarned is forearmed, but are we learning from such reports?
A must-read document for national policy makers is the OECD-FAO Agricultural Outlook – 2013-2022 launched recently. This document, which projects the state of global agriculture for the next 10 years, projects a decline in global agriculture in the coming decade.
Global agriculture production, which was 2.1 on average during the past decade, is expected to decline to an annual average of 1.5%.over the projected period. Both crop and livestock prices are expected to rise due to many factors including slowdown in production growth, stronger demand for food and biofuels.
Other reasons as pointed out in the report are production shortfalls, price volatility and trade interruptions. A major drought, if combined with low food stocks, can also trigger a rise in crop prices by 15 to 40%.
Reflecting the current global economic scenario where developing countries are in the forefront of global economic development, developing countries are expected to take centre stage on trade and production in farm goods, with emerging economies expected to account for the majority of exports of coarse grains, rice, oil seeds, vegetable oil, sugar, beef, poultry and fish while the share of trade of OECD countries is expected to continue to decline.
Global sugar production is projected to increase by almost 2% annually with the increase coming primarily from India and Brazil. In global meat production growth, developing countries as a whole, will account for 80% of the growth while they are expected to account for 74% of global milk production gains.
The report also notes there will be some uncertainty due in part to the ‘two speed’ global economic recovery where there are weak improvements in developed economies and strong growth in developing economies.
The worrying aspects of these projections are that decline in agricultural production would result in problems relating to food security and nutritional needs of the people, particularly the poorer segments of society suffering the most.
In launching the report, the OECD Secretary General had cautioned that “if we fail to turn the global economy around, investment and growth in agriculture will suffer and food security may be compromised” and also noted that if the global economy improves, the report paints “a relatively bright picture”.
If there is such an improvement, the report points out the need for governments to invest in their agricultural sectors to encourage innovation, increase productivity and integration in global value chains in order to capture a share of such economic benefits.
The Director General of the FAO speaking at the launch had also pointed out that 70% of the world’s food insecure people live in rural areas of developing countries and that many of them are small scale and subsistence farmers themselves although” investment in rural areas is still lagging behind,” while highlighting the lack of investment in food storage and transportation.
In another report released by the FAO, it is noted that malnutrition is posing major social and economic costs on countries at every income level. The 2013 report of the State of Food and Agriculture notes that productivity loss and direct health care costs as a result of malnutrition could account for up to 5% of global GDP equivalent to US$ 500 per person.
In the report’s recommendations, the FAO notes that this cost can justify government intervention in food markets through nutrition specific food price subsidies and taxes. Price subsidies could encourage the consumption of more diverse foods such as fruits and vegetables while taxes could discourage the consumption of less nutritious food.
A close study of these reports would give policy makers an idea on agricultural production and trade trends which are crucial for planning for the future., what to grow for local consumption to protect particularly the rural sector who need to be cushioned from price shocks, what to grow for export and where the markets would be for such products, Forewarned is forearmed, but are we learning from such reports?
(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)