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1. OECD
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3. OECD-FAO Agricultural Outlook 2023-2032
OECD-FAO AGRICULTURAL OUTLOOK 2023-2032
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DOI
https://doi.org/10.1787/08801ab7-en
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OECD, Food and Agriculture Organization of the United Nations
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* Agriculture and fisheries
* Trade
* OECD standards for agriculture
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* Agriculture and sustainability
OECD-FAO Agricultural Outlook
6 July 2023
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OECD/FAO (2023), OECD-FAO Agricultural Outlook 2023-2032, OECD Publishing,
Paris, https://doi.org/10.1787/08801ab7-en.
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ABSTRACT
The OECD-FAO Agricultural Outlook 2023-2032 provides a consensus assessment of
the ten-year prospects for agricultural commodity and fish markets at national,
regional, and global levels, and serves as a reference for forward-looking
policy analysis and planning. Recent surges in agricultural input prices
experienced over the last two years have raised concerns about global food
security. This year’s Outlook demonstrates that rising fertiliser costs can lead
to higher food prices. A new feature of the OECD-FAO Aglink-Cosimo model allows
the impact of changing costs of the main mineral fertilisers to be analysed
separately from costs of other production inputs. Based on this new feature, a
scenario analysis estimates that for each 1% increase in fertiliser prices,
agricultural commodity prices would increase by 0.2%. Global food consumption –
the main use of agricultural commodities – is projected to increase by 1.3% per
year over the next decade, a slower pace than the previous decade due to the
foreseen slowdown in population and per capita income growth. This year’s
Outlook also provides improved estimates for food consumption by incorporating
for the first time calculation methods to estimate food loss and waste.
This report is a collaborative effort between the Organisation for Economic
Co-operation and Development (OECD) and the Food and Agricultural Organization
(FAO) of the United Nations, prepared with inputs from Member countries and
international commodity organisations. It highlights fundamental economic and
social trends that drive the global agri-food sector, assuming there are no
major changes to weather conditions or policies.
More information can be found at www.agri-outlook.org.
--------------------------------------------------------------------------------
EXECUTIVE SUMMARY
The OECD-FAO Agricultural Outlook 2023-2032 provides an assessment of the
ten-year prospects for agricultural commodity and fish markets at national,
regional, and global levels in a context of continued economic risks,
uncertainty, and high energy prices. The report is a collaborative effort
between the OECD and FAO, prepared with inputs from Member countries and
international commodity organisations.
The surge in agricultural input prices experienced over the last two years has
raised concerns about global food security. This year’s Outlook demonstrates
that rising fertiliser costs can lead to higher food prices. The OECD-FAO
Aglink-Cosimo modelling of production yields allows at present to separate the
costs of the main mineral fertilisers used from those of other production
inputs. Based on this new feature, a scenario analysis estimates that for each
1% increase in fertiliser prices, agricultural commodity prices would increase
by 0.2%. The increase would be more significant for crops that use fertilisers
as direct inputs than for livestock products that use them indirectly, with the
exception of poultry and pigmeat production which relies heavily on compound
feed. Although this scenario focuses on the link between fertilisers and
agricultural commodities, fluctuations in energy, seeds, labour and machinery
prices would also affect food prices.
This year’s Outlook provides improved estimates for food consumption by
incorporating analytical methods to calculate food loss and waste. They
contribute to the measurement efforts needed to devise evidence-based policies
in support of the SDG 12.3 target to halve per capita food waste at the retail
and consumer levels, and to reduce food losses within production and supply
chains by 2030.
Baseline projections in this Outlook for the coming decade take into account the
IMF World Economic Outlook October 2022 downgrade in expected average economic
growth for the coming decade, from 2.7% to 2.6%, as well as the decrease in the
People’s Republic of China’s (hereafter “China”) population as of 2022. Similar
to last year’s assumptions, the current baseline projections assume that energy
prices will decrease in 2023 before resuming a slow increase to 2032. The
projections incorporate short-term assessments of the impact of the Russian
Federation’s (hereafter “Russia”) war against Ukraine (hereinafter referred to
as “war”), but no evaluation of medium-term developments in the region can be
provided at this time. Against this backdrop, the global projections of
medium-term trends for supply, demand, trade, and prices for the main
agricultural commodities and fish deviate only marginally from last year’s
projections.
Nevertheless, the war continues to add uncertainties to food, energy, and input
prices. At the onset of the war, reduced availability of grains and fertilisers
were a major concern for global markets. A year later, supply issues have
improved thanks to the enforcement and subsequent extensions of the Black Sea
Grain Initiative.
In this context, global food consumption in calories – the main use of
agricultural commodities – is projected to increase by 1.3% per year over the
next decade, a slower pace than the previous decade due to the foreseen slowdown
in population and per capita income growth. The second most important use of
agricultural commodities is as feed for livestock and increasingly aquaculture.
The Outlook highlights the rapid expansion and intensification that is expected
in the production of livestock in low- and middle-income countries, resulting in
a fast-growing demand for feed over the next decade. In contrast, in high-income
countries and some upper middle-income countries, including China, lower growth
in livestock production and improved feeding efficiency should result in slower
growth in feed demand compared to the last decade.
Demand for first generation biofuel feedstocks is expected to grow slowly over
the next ten years. Most additional biofuel use of agricultural crops is
expected to occur in India and Indonesia, driven by increasing transport fuel
use and higher biofuel blending requirements. In other key markets,
e.g. European Union, the demand for first generation biofuel feedstocks is
expected to decrease due to a decline in transport fuel use and a shift to other
feedstocks. Overall, the biofuel share of global sugarcane and vegetable oil use
is projected to increase, while the biofuel share of maize is expected to
decline.
The situation with respect to investments in technology, infrastructure, and
training remains fundamentally unchanged from last year’s projections; as such,
growth in total global agricultural production should remain at 1.1% per year.
Most of this growth will occur in middle- and low-income countries. The Outlook
assumes wider access to inputs, although if increases in energy and agricultural
input prices (e.g. fertilisers) are to resume, this would raise production costs
that could lead to food price inflation and greater food insecurity.
Global crop production growth will mainly be driven by increased productivity
rather than increased land use. Therefore, investments in raising yields and
improved farm management are essential. Assuming continued progress in plant
breeding and a transition to more intensive production systems, yield
improvements are projected to account for 79% of global crop production growth,
cropland expansion for 15%, and higher cropping intensity for 6% over the
Outlook period. Yields for crops such as oil palm and rapeseed have not
increased, however, in major producing countries over the last ten years; more
investments are needed to improve the productivity of these crops.
Similar to trends in crop production, a large share of the projected 1.3% annual
growth in livestock and fish production will result from improvements in per
animal productivity resulting from more efficient herd management and higher
feed intensity. Poultry is projected to account for about half of the global
growth in meat production due to sustained profitability and favourable
meat-to-feed price ratios. Pigmeat production is still recovering from the
outbreak of African Swine Fever (ASF) in East Asia and is projected to resume a
pre-crisis growth path in a few years. Global milk production is projected to
grow strongly in the coming decade, with half of this growth occurring in India
and Pakistan. Despite its limited growth prospects, aquaculture overtook the
global production volume of capture fisheries in 2022.
The Outlook highlights the significance of global agricultural greenhouse gas
(GHG) emissions, which are projected to increase by 7.6% in the next decade. At
the global level, growth in GHG emissions will be lower than in the previous
decade, and lower than the projected 12.8% growth in agricultural output,
indicating a faster decline in the carbon intensity of agricultural production.
Nevertheless, pioneering efforts need to be widely adopted to ensure that
agriculture contributes effectively to climate change mitigation, as set out in
the Paris Agreement, especially for livestock which is estimated to account for
80% of the increase in agricultural GHG emissions. At the same time,
agricultural production systems face the challenge to adapt to a changing
climate, including more frequent and intense extreme weather events. Mitigation
and adaption solutions include large-scale and inclusive adoption of
climate-smart and carbon-neutral production processes and technologies.
Trade in primary agricultural commodities and processed products is projected to
grow in line with production over the next decade. The COVID-19 pandemic led to
worldwide disruptions in commerce, but trade in the agricultural commodities has
proven to be resilient. Russia’s war against Ukraine has been impacting
agricultural commodity trade, especially Ukrainian exports, and prices. The
Black Sea Grain Initiative, agreed to in July 2022, and the European
Union–Ukraine Solidarity Lanes have helped, however, to re-establish trade to
support global food security. The baseline projections underscore the critical
importance of a well-functioning, transparent, and rules-based multilateral
trading system. Export bans only aggravate the adverse effect of price
uncertainties and increase prices. This results not only in a negative impact on
global food security (and livelihoods) in the short term, but undermines supply
capacity over the long term.
The medium-term projections in the Outlook are based on the assumption that
current policies will remain in place, and that consumer preferences and
production technology will evolve on-trend. These assumptions are subject to
uncertainties with respect to environmental, social, geopolitical and economic
developments, e.g. a prolonged period of high inflation or a global recession
would alter the projections. The scenario analysis presented in this report
provides indications as to the magnitude of such impacts.
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