OECD-FAO Agricultural Outlook 2009 Analyzes Interactions between Food Prices, Energy Markets and Biofuel Policies
June 2009: The 15th edition of the Organisation for Economic Co-operation and Development (OECD)-UN Food and Agriculture Organization (FAO) Agricultural Outlook addresses, among other issues, the interdependence between food and energy markets and the possible impacts of expanding demand for biofuels on agricultural commodity prices.
An advance summary published on the OECD website explains that the edition covers the outlook for commodity markets during the 2009-2018 period based on the joint expertise of the OECD and the FAO. The report analyses world market trends for the main agricultural products, as well as biofuels. Regarding the impacts of the economic crisis, the summary underlines that the agricultural sector is showing more resilience to the global economic crisis than other industries, but warns that the risks could increase if the economic downturn deepens.
The summary notes that agricultural commodity prices will be influenced by energy prices, in particular prices for crude oil. Oil prices above US$90 per barrel would imply significantly higher food prices than the current level of US$60-70. Higher oil prices would also lead to higher demand for food crops as feedstocks for biofuels. The report suggests that biofuel demand will, however, depend on other factors such as government mandated use, changes in policy interventions and advances in second generation technology development. A projected rapid expansion of mandated biofuel use will continue to have inflating price impacts for feedstocks such as wheat, maize, oilseeds and sugar. On the broader impacts of climate change, the summary highlights risks of water stress and incidence of severity of floods, as well as likely shifts in production frontiers.
The full report will published on 3 August 2009 on the OECD website.