Food Prices Predicted to Stay High and Grow Volatile

US - Food prices will remain high in the coming decade, with beef and pork prices forecasted to go up an average of 20 percent, according to the latest latest Agriculture Outlook from the Organization for Economic Co-operation and Development (OECD) and the UN Food and Agriculture Organization.

30 May 2008

2 minute read

North America

The report, published by the two agencies at the world food summit in Rome, notes that the growing demand for biofuel is one factor contributing to higher prices and suggests further review of existing biofuel policies.

World fuel ethanol production tripled between 2000 and 2007 and is expected to double again between now and 2017. The growth in biofuel production adds to demand for grains, oilseeds and sugar, so contributing to higher crop and food prices.

In OECD countries, at least, this growth of biofuel production has thus far been driven largely by policy measures and the report says that it is not clear that the energy security, environmental and economic objectives of biofuel policies will be achieved with current production technologies.

Among other findings of the report are the following:

Both consumption and production is growing faster in developing countries for all agricultural commodities except wheat. By 2017 these countries are expected to dominate trade in most farm products.
High prices will be beneficial for many commercial farmers both in developed and developing countries. However, many farmers in developing countries are not linked to markets and are unlikely to benefit from the higher prices that are forecast.
Cereal markets are expected to remain tight as stocks are unlikely to return to the high levels of the past decade.
Consumption of vegetable oils, both from oil seed crops and from palm, will grow faster than for other crops over the next 10 years. The rise is being driven both by demand for food and for biofuels.
Brazil’s share of world meat exports is expected to grow to 30 percent by 2017.