2 0 0 8 OECD-FAO Agricultural Outlook 2008-2017 OECD-FAO This is the fourteenth edition of the Agricultural Outlook and the fourth time it has been prepared jointly by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agricultural Outlook Agriculture Organization of the United Nations (FAO). This edition covers the outlook for commodity markets during the 2008 to 2017 period, and brings together the commodity, policy and country expertise of both Organisations. The report analyses world market trends for the main agricultural 2008-2017 products, as well as biofuels. It provides an assessment of agricultural market prospects for production, consumption, trade, stocks and prices of the included commodities. This Outlook was prepared in a period when agricultural and food prices have risen to record-high levels, at least in nominal terms. The report discusses the reasons for these price hikes and finds that some are of a temporary nature, notably adverse weather conditions in some key producing countries and regions, while others are likely to prove more durable. The Outlook concludes that prices are unlikely to be sustained at currently high levels and that farmers around the world will respond by boosting plantings and increasing supplies, with a return to more normal growing conditions in the main producing regions. However, it also points to growing feedstock demand from an increasing biofuel industry, sustained high oil prices, continued strong growth in food demand as incomes rise in emerging economies, and historically low global stocks as some of the factors that will keep prices higher on average than in the past decade, and possibly more volatile. The report provides a quantitative assessment of the main factors that will help sustain higher prices over the coming decade, and shows that growth in feedstock demand for biofuel production is one of the important ones. The projections and past trends are presented in the statistical annex, and can be viewed in more detail at the website www.agri-outlook.org. The market projections cover OECD countries, as well as other key agricultural players including India, China, Brazil, the Russian Federation and Argentina, and many other non-OECD countries and regions. In total, the projections encompass 39 countries and 19 regions. The projections are based O on specific assumptions regarding global macroeconomic conditions; population growth; national E C agricultural, biofuel and trade policies; production technologies; and normal weather conditions. D The Agricultural Outlook provides a picture of how agricultural markets could evolve in the coming -F A decade given the underlying assumptions. O A g r ic u lt u r a l O u t lo o k The full text of this book is available on line via these links: 2 0 www.sourceoecd.org/agriculture/9789264045903 0 8 www.sourceoecd.org/industrytrade/9789264045903 - 2 0 Those with access to all OECD books on line should use this link: 1 7 www.sourceoecd.org/9789264045903 SourceOECD is the OECD online library of books, periodicals and statistical databases. For more information about this award-winning service and free trials ask your librarian, or write to us at [email protected]. 2008 ISBN 978-92-64-04590-3 -:HSTCQE=UYZ^UX: 51 2008 10 1 P 2008 ����������������������� OECD-FAO Agricultural Outlook 2008-2017 ORGANISATION FOR ECONOMIC FOOD AND AGRICULTURE ORGANIZATION CO-OPERATIONANDDEVELOPMENT OFTHEUNITED NATIONS ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. THE FOOD AND AGRICULTURE ORGANIZATION (FAO) OF THE UNITED NATIONS The Food and Agriculture Organization of the United Nations leads international efforts to defeat hunger. FAO’s mandate is to raise levels of nutrition, improve agricultural productivity, better the lives of rural populations and contribute to the growth of the world economy. Serving both developed and developing countries, FAO acts as a neutral forum where all nations meet as equals to negotiate agreements and debate policy. FAO is also a source of knowledge providing access to information in print and electronic format. We help developing countries and countries in transition modernize and improve agriculture, forestry and fisheries practices and ensure good nutrition for all. Since our founding in 1945, we have focused special attention on developing rural areas, home to 70 per cent of the world’s poor and hungry people. FAO’s activities comprise four main areas: putting information within reach; sharing policy expertise; providing a meeting place for nations; bringing knowledge to the field. This work is published under the responsibilities of the Secretary-General of the OECD and the Director General of FAO. The views expressed and conclusions reached in this report do not necessarily correspond to those of the governments of OECD member countries, or the governments of the FAO member countries. The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Also available in French under the title: Perspectives agricoles de l’OCDE et de la FAO 2008-2017 Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD/FAO 2008 © Gettyimages/Martin Ruegner OECD freely authorises the use, including the photocopy, of this material for private, non-commercial purposes. Permission to photocopy portions of this material for any public use or commercial purpose may be obtained from the Copyright Clearance Center (CCC) at [email protected] or the Centre français d'exploitation du droit de copie (CFC) [email protected]. All copies must retain the copyright and other proprietary notices in their original forms. All requests for other public or commercial uses of this material or for translation rights should be submitted to [email protected]. FOREWORD Foreword T his is the fourth time that the Agricultural Outlook report has been prepared jointly by the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. The report draws on the commodity, policy and country expertise of both Organisations in providing a longer-term assessment of future prospects in the major world agricultural commodity markets. The report is published annually, as part of a continuing effort to promote informed discussion of emerging market and policy issues. This edition of the Agricultural Outlook offers an assessment of agricultural markets covering cereals, oilseeds, sugar, meats, milk and dairy products over the period2008 to2017. For the first time, it also includes an analysis of and projections for global biofuel markets for bioethanol and biodiesel, facilitating the discussion of interactions between these markets and those for the main agricultural feedstocks used in their production. The market assessments for all the commodities are based on a set of projections that are conditional on specific assumptions regarding macroeconomic factors, agricultural and trade policies and production technologies; they also assume average weather conditions and longer-term productivity trends. Using the underlying assumptions, the Agricultural Outlook presents a plausible scenario for the evolution of agricultural markets over the next decade and provides a benchmark for the analysis of agricultural market outcomes that would result from alternative economic or policy assumptions. This year’s Outlook is set against a backdrop of exceptional increases in prices for many agricultural commodities, and this has posed a considerable challenge in preparing the projections and assessing the “durability” of the various influences shaping these prices. That is, which of the factors that are driving up prices are temporary and which will prove to be more permanent influences? How will they individually and collectively affect price levels, price trends and price volatility in the future? How will markets react to currently high prices and a more uncertain price outlook? What are the appropriate policy responses? This report comes at a very timely moment and provides important information, with a view to enlightening the discussion on food-price increases, their causes and their likely consequences for agricultural markets as well as for the policy- formulation process. The projections and assessments provided in this report are the result of close co-operation between the OECD and the FAO Secretariats and national experts in member and some non-member countries, and thus reflect the combined knowledge and expertise of this wide group of participants. A jointly developed modelling system, based on the OECD’s Aglink and FAO’s Cosimo models, facilitated the assurance of consistency in the projections. The fully documented Outlook database, including historical data and projections, is available through the OECD-FAO joint Internet site www.agri-outlook.org. Within the OECD, this publication is prepared by the Trade and Agriculture Directorate, while at FAO, the Trade and Markets Division was responsible for the report. OECD-FAO AGRICULTURAL OUTLOOK 2008-2017 – ISBN 978-92-64-04590-3 – © OECD/FAO 2008 3 FOREWORD Acknowledgements. This Agricultural Outlook was prepared by the following staff members of the OECD and FAO Secretariats: At the OECD, the team of economic and market analysts of the OECD Trade and Agriculture Directorate that contributed to this report consisted of LoekBOONEKAMP (team leader), Marcel ADENAUER, CélineGINER, Alexis FOURNIER, Franziska JUNKER, GarrySMITH, PavelVAVRA (outlook co-ordinator) and MartinVON LAMPE. Research and statistical assistance were provided by ArmelleELASRI, AlexisFOURNIER, ClaudeNENERT and Nicolas RUIZ. Secretarial services and co-ordination in report preparation was provided by ChristineCAMERON, Nina DHUMAL, Anita LARI and Stéfanie MILOWSKI. Technical assistance in the preparation of the Outlook database was provided by FranoILICIC. Many other colleagues in the OECD Secretariat and member country delegations furnished useful comments on earlier drafts of the report. The contribution of Joe DEWBRE in reviewing and editing Chapter2 of this report and Linda FULPONI in drafting Box2.1 in that chapter is particularly acknowledged. At FAO, the team of economists and commodity officers from the Commodities and Trade Division contributing to this edition consisted of Abdolreza ABBASSIAN, ElMamounAMROUK ConcepcionCALPE, KaisonCHANG, MerrittCLUFF (team leader), Piero CONFORTI, Cheng FANG, Holger MATTHEY (baseline co-ordinator), Adam PRAKASH, Grégoire TALLARD, Peter THOENES, Koji YANAGISHIMA, and CarolaFABI from the Statistics Division. AliArslanGURKAN and AlexanderSARRIS initiated support for FAO’s Cosimo modelling project. Research assistance and database preparation was provided by ClaudioCERQUILINI, BerardinaFORZINETTI, JohnHEINE, MarcoMILO, and BarbaraSENFTER. Secretarial services were provided by RitaASHTON. Chapter2 of this report was drafted by Wyatt THOMPSON (University of Missouri) elaborating on and analysing input from the OECD and FAO Secretariats, Pierre CHARLEBOIS (Agriculture and Agrifood Canada), Frank ROSE (Lewis University, formerly CBOT) and Pat Westhoff (University of Missouri). Finally, the assistance of the Executive Director of the International Sugar Organisation, Peter Baron and his staff in reviewing the sugar projections is gratefully acknowledged. 4 OECD-FAO AGRICULTURAL OUTLOOK 2008-2017 – ISBN 978-92-64-04590-3 – © OECD/FAO 2008 TABLE OF CONTENTS TTaabbllee ooff Ccoonntteennttss Acronyms and Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The Outlook in Brief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Chapter 1. Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 The principal underlying assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Main trends in commodity markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Main developments in trade in agricultural commodities . . . . . . . . . . . . . . . . . . . . . 27 The outlook for world prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Some major issues and uncertainties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 The policy issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 What are appropriate policy responses? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Chapter 2. Are High Prices here to Stay? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Recent food commodity price hikes in an historical context . . . . . . . . . . . . . . . . . . . 42 Crop and vegetable oil price changes: What happened and what happens next?. . . 43 Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 How important are the Outlook assumptions in determining future prices? . . . . . 53 The bottom line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Chapter 3. Macroeconomic andPolicyAssumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 The main underlying assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Chapter 4. Biofuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 World market trends and prospects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Main market developments – ethanol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Main market developments–biodiesel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Key issues and uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Chapter 5. Cereals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 World market trends and prospects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Main market developments: Wheat and coarse grains . . . . . . . . . . . . . . . . . . . . . . . . 86 Main market developments: Rice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Key issues and uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Chapter 6. Oilseeds and Oilseed Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 World market trends and prospects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Main market developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Key issues and uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 OECD-FAO AGRICULTURAL OUTLOOK 2008-2017 – ISBN 978-92-64-04590-3 – © OECD/FAO 2008 5 TABLE OF CONTENTS Chapter 7. Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 World market trends and prospects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 Main market developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Key issues and uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Chapter 8. Meat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 World market trends and prospects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Main market developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Key issues and uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Chapter 9. Dairy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 World market trends and prospects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Main market developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Key issues and uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 The generation of the OECD-FAO Agricultural Outlook. . . . . . . . . . . . . . . . . . . . . . . . 150 Sources and assumptions for the macroeconomic projections . . . . . . . . . . . . . . . . . 151 The representation of production costs in Aglink-Cosimo . . . . . . . . . . . . . . . . . . . . . 152 Methodology and limitations of partial stochastic analysis . . . . . . . . . . . . . . . . . . . . 154 Annex A. Statistical Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 Annex B. Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Boxes 2.1. Measuring the impact of rising commodity prices on food prices . . . . . . . . . . . 37 2.2. Prices in cash and derivative markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.3. How income growth affects commodity demand . . . . . . . . . . . . . . . . . . . . . . . . . 50 4.1. The US Energy Independence and Security Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.1. EU sugar production downsising arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . 113 8.1. Distillers Grains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Tables 1.1. Some decline in population growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 2.1. Food price contribution to consumer price inflation (selectedcountries) . . . . . 40 2.2. Supply of wheat and coarse grains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 2.3. Demand for wheat and coarse grains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.4. Supply of oilseed and vegetable oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 2.5. Demand for vegetable oil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 2.6. World coarse grain, wheat and vegetable oil market indicator ratios . . . . . . . . 49 3.1. Slow down in population growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 A.1. Economic assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 A.2. World prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 A.3. World trade projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 A.4. Main policy assumptions for cereal markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 A.5. World cereal projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 A.6. Wheat projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 6 OECD-FAO AGRICULTURAL OUTLOOK 2008-2017 – ISBN 978-92-64-04590-3 – © OECD/FAO 2008 TABLE OF CONTENTS A.7. Coarse grain projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 A.8. Rice projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 A.9. Main policy assumptions for oilseed markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 A.10. World oilseed projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 A.11. Oilseed projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 A.12. Oilseed meal projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 A.13. Vegetable oil projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 A.14. Main policy assumptions for sugar markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 A.15. World sugar projections (in raw sugar equivalent) . . . . . . . . . . . . . . . . . . . . . . . . 187 A.16. World sugar projections (in raw sugar equivalent) . . . . . . . . . . . . . . . . . . . . . . . . 188 A.17. Main policy assumptions for meat markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 A.18. World meat projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 A.19. Beef and veal projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 A.20. Pig meat projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 A.21. Poultry meat projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 A.22. Sheep meat projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 A.23. Main policy assumptions for dairy markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 A.24. World dairy projections (butter and cheese). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 A.25. World dairy projections (powders and casein). . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 A.26. Butter projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 A.27. Cheese projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 A.28. Skim milk powder projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 A.29. Whole milk powder projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 A.30. Milk projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 A.31. Whey powder and casein projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 A.32. Main policy assumptions for biofuels markets . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 A.33. Biofuels projections: ethanol. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 A.34. Biofuels projections: biodiesel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Figures 1.1. World commodity prices at higher average levels. . . . . . . . . . . . . . . . . . . . . . . . . 18 1.2. Overall strong growth in world trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1.3. Growth in world exports dominated by developing countries. . . . . . . . . . . . . . . 28 1.4. Outlook for world crop prices to2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 1.5. Outlook for world livestock product prices to2017 . . . . . . . . . . . . . . . . . . . . . . . . 29 2.1. Food commodity prices, 1971-2007with projections to2017. . . . . . . . . . . . . . . . 36 2.2. Food expenditure shares and per capita income. . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.3. Deviations from trend of wheat and coarse grain yields . . . . . . . . . . . . . . . . . . . 44 2.4. Stocks-to-use ratios of maize and wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 2.5. Sensitivity of projected world prices to changes in five key assumptions, percentage difference from baseline values, 2017. . . . . . . . . . . . . . . . . . . . . . . . . 54 2.6. Stochastic crop prices in2008 and2017 in nominal terms. . . . . . . . . . . . . . . . . . 56 3.1. Lower GDP growth in selected countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 3.2. Despite an increase in some countries, inflation expected toremainunder control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3.3. US dollar strengthening against most other currencies . . . . . . . . . . . . . . . . . . . . 64 4.1. Production costs of major biofuel chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4.2. World ethanol projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 OECD-FAO AGRICULTURAL OUTLOOK 2008-2017 – ISBN 978-92-64-04590-3 – © OECD/FAO 2008 7 TABLE OF CONTENTS 4.3. EU ethanol market projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 4.4. Canadian ethanol market projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.5. US ethanol market projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.6. Brazil ethanol market projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 4.7. World biodiesel projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 4.8. EU biodiesel market projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.9. Canadian biodiesel market projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.10. US biodiesel market projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 4.11. Brazil biodiesel market projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 4.12. Indonesia biodiesel market projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 4.13. Malaysia biodiesel market projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 4.14. Potential impact of the US EISA on world commodity prices, 2013-17average. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 5.1. Nominal wheat, coarse grain and rice prices to remain relatively strong, increase in real prices compared to the last decade . . . . . . . . . . . . . . . . . . . . . . . 86 5.2. Growing cereal demand inside and outside the OECD . . . . . . . . . . . . . . . . . . . . . 87 5.3. Variety share of coarse grains shifts towards maize. . . . . . . . . . . . . . . . . . . . . . . 88 5.4. Stock levels stay low in historical perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 5.5. Wheat trade increases moderately. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 5.6. Sharp increase in coarse grain exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 5.7. Per capita rice food consumption expected to decrease, total use increases . . 93 5.8. World rice stocks to be partly rebuilt prices to fall after peak. . . . . . . . . . . . . . . 94 6.1. Vegetable oil prices and oilseed prices to remain strong overtheprojectionperiod . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 6.2. Demand for vegetable oil is growing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 6.3. Growing world oilseed production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 6.4. Evolution of vegetable oil trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 7.1. World sugar prices to recover in near term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 7.2. World sugar prices to trend down in real terms . . . . . . . . . . . . . . . . . . . . . . . . . . 110 7.3. Larger sugarcane production to account for most oftheadditionalsugar output. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 7.4. Changing regional patterns of sugar consumption to2017 . . . . . . . . . . . . . . . . . 111 7.5. The global stock-to-use ratio to decline in the near term. . . . . . . . . . . . . . . . . . . 112 7.6. EU sugar reform leads to lower production and exports. . . . . . . . . . . . . . . . . . . . 114 7.7. Sugar and ethanol production and exports to increase rapidly in Brazil. . . . . . 115 7.8. Global sugar exports are increasingly dominated by Brazil . . . . . . . . . . . . . . . . . 116 7.9. Net sugar imports of Russia continue to decline . . . . . . . . . . . . . . . . . . . . . . . . . . 116 7.10. The EU and China emerge as the largest sugar importers . . . . . . . . . . . . . . . . . . 117 7.11. Preferential imports to increase in the EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 7.12. Share of developing countries in world sugarcane area devoted toethanol. . . 121 7.13. US rising sugar imports, CCC stocks and HFCS exports . . . . . . . . . . . . . . . . . . . . 122 8.1. World prices for meat to strengthen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 8.2. Continued expansion in world meat production. . . . . . . . . . . . . . . . . . . . . . . . . . 127 8.3. Regional distribution of meat production increases between2005-07and2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 8.4. Contribution of different meats to production increases between2005-07and2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 8 OECD-FAO AGRICULTURAL OUTLOOK 2008-2017 – ISBN 978-92-64-04590-3 – © OECD/FAO 2008