The Agricultural Outlook 2013-2022 is a collaborative effort of the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations. It brings together the commodity, policy and country expertise of both organisations and input from collaborating member countries to provide an annual assessment of prospects for the coming decade of national, regional and global agricultural commodity markets. This year’s edition contains for the first time a chapter on world cotton markets. has been prepared with assistance from the Agricultural Information Institute (AII) of the Chinese Academy of Agricultural Sciences and the Ministry of Agriculture (MoA) of the Government of China. However, responsibility for the information and projections contained in this document remain those of the OECD and FAO, and do not necessarily reflect the views of the AII or of the MoA.

Rising demand favours developing countries: For decades, global agriculture was characterised by policy-induced production surpluses in industrialised countries and stagnating growth in developing countries. Policy reforms and economic growth across the globe have been changing demand and supply fundamentals, transforming agriculture into a more market-driven sector which provides investment opportunities. Developing countries are expected to increase their share of global production and capture most of the growth in trade.

The Outlook depicts relatively favourable prospects for world agriculture to 2022. In the near term, a dichotomy exists between world crop and livestock sectors. Crop agriculture is characterised by falling prices relative to recent peaks in response to projected large supplies and stock replenishment induced by high prices in recent years. In contrast, livestock product prices are high and increasing at the start of the outlook period, driven up by high feed costs and reduced global livestock inventories and production. Beyond the near term, markets, in general, are expected to begin to tighten and for agricultural prices to firm, with prices in real terms remaining relatively flat for most commodities. Nevertheless, agricultural commodity prices are held above pre 2007 levels, in nominal and real terms, by strong demand, higher input costs and slower productivity growth over the projection period.

This chapter has been developed and written in collaboration among FAO, OECD, the AII of CAAS, and the Ministry of Agriculture of China. However, the data, analysis and projections are those of FAO/OECD and do not necessarily represent those of its collaborating partners.

World ethanol pricesBrazil, Sao Paolo (ex-distillery). declined early in 2012 but regionally, market conditions varied. In the United States, ethanol prices began to rebound later in the year as the extent of the drought in the United States became apparent, driving up feedstock prices. In Brazil, an improved sugar cane crop in the latter half of the year improved supplies and pulled down domestic ethanol prices.

Supply and demand balances of major cereals were tight in the 2012 marketing year,See the glossary for the definition of crop marketing years for wheat, coarse grains and rice in various countries. with global production of wheat and coarse grains falling short of global utilisation and pulling down stocks. Severe droughts in 2012 in the United States, and across a large part of Europe and into central Asia have been the main cause of the reduced wheat and coarse grains crops.

The projections for oilseeds are not comparable to those published last year because cotton seed was separated from the oilseeds total. It is part of a new cotton component. Cotton seed meal and oil are still included in the protein meal and vegetable oil aggregates.

World sugar market fundamentals are decidedly bearish at the start of the Outlook. World prices have continued to follow a downward trend in the last 12 months, and with lower price volatility, as markets adjust to a third consecutive year of a global sugar surplus (). Higher global production can be largely attributed to a recovery in output the world’s largest producer, Brazil, although harvests were also larger in the European Union, the United States, Mexico, India and China. As a result, world raw sugar prices have fallen by 26% in the last 12 months and white sugar prices by 20%. Sugar prices are expected to continue to ease back through the remainder of 2012/13 on the back of abundant supplies and increasing stock cover.See the Glossary for the definition of crop marketing years for sugar and products. The replenishment of stocks will elevate stocks-to-use to a six-year high at the start of the Outlook and effectively signal the end of the period of low stocks, which has been a feature of the past four years.

The market situation for the meat sector is generally characterised by high nominal output prices, underpinned on the demand side by rising incomes from rapid growth in the developing countries, and on the supply side by high input costs, notably for feed grains, energy related inputs and labour. The combined effect of higher output prices and increased production costs tend to favor production in developing countries, where low input production systems prevail. Meat production growth has slowed, notably for poultry which in the past has experienced the highest rates of output increases. Meat demand in developing countries continues to be strong as higher incomes and urbanisation lead to food consumption changes favouring increased proteins from animal sources in diets. Consumption levels have risen substantially in many emerging economies, particularly in China and other fast growing Asian countries in the last decade. However, per capita meat consumption has been stagnant in the OECD area over the last ten years. While growth in both production and trade is envisaged in the short term for poultry, pig, sheep and buffalo meats, bovine meat markets will initially be constrained by depleted herd numbers in major exporting regions, notably in the developed countries. Developing countries will continue to strengthen their role in dictating changes in global meat production, trade and consumption.

The terms fish and seafood or simply fish indicate fish, crustaceans, molluscs and other aquatic invertebrates, but excludes aquatic mammals and aquatic plants.

Driven by robust growth in import demand from developing countries, international dairy prices rose strongly through 2010 and into the first half of 2011, peaking at levels close to those of the 2007/08 commodity boom. High returns and excellent pasture conditions in Oceania, and parts of South America, generated a supply response triggering a fall in prices. This decline in prices continued through to the second half of 2012. It was accompanied by an expansion in export volumes. With demand continuing to expand, especially from China, prices bottomed out at levels much higher than during the previous downturn in 2009. The 2012 droughts in the United States and the Russian Federation drove up grain prices, lead to lower dairy output growth in the United States and the European Union, and higher dairy prices. In early 2013, the recovery in prices intensified as reports of much drier weather conditions in Oceania began to impact market expectations of product availability. While the short term supply situation is tight, it is expected to ease over the medium term assuming normal weather conditions, keeping prices below the elevated levels of 2011.

World cotton prices in 2012 were influenced by competing forces, with world demand rising after a two-year decline and elevated stock levels creating uncertainty about future prospects. High prices for grains and oilseeds helped sustain cotton prices, which nonetheless were below those a year earlier for virtually the entire marketing year. World cotton stocks rose for the third consecutive year, but most of the increase was accounted for by official reserve building in China. Consumption continued to decline in China – the world’s largest industrial consumer by a large margin – but rose in a number of other countries as China’s yarn exports rose sharply. Lower world production is widely foreseen in the coming year, with early reports indicating an intention of US farmers to plant 4 Mha, a 19% decline. China’s area is also expected to decline, despite a relatively high support price.

This is an influenza virus that had never been identified as a cause of infections in people before the current H1N1 pandemic. Genetic analyses of this virus have shown that it originated from animal influenza viruses and is unrelated to the human seasonal H1N1 viruses that have been in general circulation among people since 1977.

This section provides information on the methodological aspects of the generation of the present Agricultural Outlook. It discusses the main aspects in the following order: First, a general description of the agricultural baseline projections and the Outlook report is given. Second, the compilation of a consistent set of the assumptions on macroeconomic projections is discussed in more detail. A third part presents how production costs are taken into account in the model’s supply equations. Then the 4th part presents the methodology developed for the stochastic analysis conducted with the AGLINK-COSIMO model.