OECD-FAO Agricultural Development Forecast for 2021-2030
Economic and social trends affecting the global agri-food sector
The Agricultural Forecast for 2021-2030 is the result of joint efforts of the Organization for Economic Cooperation and Development (OECD) and the UN Food and Agriculture Organization (FAO).
The review highlights fundamental economic and social trends affecting the global agri-food sector, without any major changes in weather conditions or policy.
According to the OECD forecasts, the world population is expected to grow from an average of 7.7 billion people in 2018-2020 to 8.5 billion people in 2030 from 2021 to 2030. Population growth is concentrated in developing regions, especially in sub-Saharan Africa, where the fastest growth is expected — 2.5% per year. It is expected that by 2030, with a population of another 137 million people, India will overtake the People's Republic of China (hereinafter referred to as China) as the most populous country in the world.
GDP growth and per capita income growth
By 2022, the global economy should recover to the level that existed before COVID-19.
According to the forecast:
• The recovery will be the fastest in Asia. China is one of the few countries that recorded positive GDP growth in 2020.
• Southeast Asia and India are projected to recover by 2021 and 2022, respectively.
• It is expected that in OECD countries and sub-Saharan Africa, GDP will recover to the level of 2019 by 2022 (i.e., the level before COVID-19).
• In the Middle East and North Africa, as well as in Latin America and the Caribbean, recovery will be slower and should be achieved by 2023.
After falling by 6% in 2020, global per capita income will recover in 2021 and 2022. It is predicted that in the next decade, the average annual growth rate in real terms will be 1.9%.
Significant growth is expected in Asia, where per capita income will increase by 5.8% per year in India and 5.3% per year in China.
Exchange rates and inflation. It is predicted that in the OECD countries, inflation will be higher than in the previous decade, at 2.9% per year, with an annual rate of 2.2% per year for the United States - 1.9% per year for Canada and 1.7% per year for the eurozone.
In Russia, inflation should decrease from 6.7% to 3.9% per annum in the next decade, from 5.3% per annum to 3.8% per annum in India and from 6.2% per annum to 3.2% per annum in Brazil. In China, there should be a slight increase in consumer price inflation compared to the last decade, at the level of 2.6% per year.
Consumption. Future food demand is directly affected by demographic changes, income growth and distribution, as well as food prices. In the long term, it is assumed that the demand for food will be further shaped by socio-cultural changes in consumption patterns and lifestyle, including continued urbanization and increased participation of women in the workforce, as well as increased consumer awareness of health and sustainability issues.
The demand for non-food uses of agricultural goods is also determined by a number of specific factors. The demand for feed has two main factors:
Firstly, the overall demand for livestock products, which determines the level of production in the livestock and aquaculture sectors.
Secondly, the structure and efficiency of production systems that determine the amount of feed needed for the production of livestock and aquaculture products.
It is expected that in countries with above-average incomes, food availability per capita will increase by 4.5% by 2030. Given the projected high income growth and strong preference for meat in some of these countries, including China, 32% of additional calories will be provided by animal products, and 19% by fats. Consumption of animal products per capita is also expected to increase, mainly as a result of the increase in consumption of dairy products per capita in India.
Dairy farming will be the fastest growing livestock sector. Global milk production is projected to grow by 22%. Production growth will be largely supported by consumer demand for fresh dairy products in Asian countries. India and Pakistan are expected to account for more than 30% of global milk production by 2030.
The growth of trade in agricultural products and fish is slowing down
It is predicted that the average volume of commodity trading will grow by 1.3% per year in the forecast period, compared with 3% per annum over the previous decade.
Also, trade in biofuels and pork will decrease in the next decade. The decline in biodiesel trade (-1.4% per year) mainly reflects the decline in import demand for palm oil biodiesel in the European Union and high domestic demand in Indonesia as the country seeks to implement its B30 program.
Trade plays an increasingly important role in ensuring food security and nutrition.
Trade is especially important for countries with limited resources, which are heavily dependent on imports of basic and expensive food products.
Cereals. Grain markets in the 2020/2021 marketing year were more dynamic than in previous years. Over the next ten years, a higher share of global grain production will be driven by higher yields, as area expansion is expected to become more limited. It is predicted that worldwide the average grain yield growth will be about 1% per year.
Grain production is expected to grow by 336 million tons over the next decade, reflecting growth achieved mainly in the main grain producing countries. More than 50% of the increase in world wheat production will be accounted for by India, the Russian Federation and Ukraine.
According to forecasts, by 2030 the share of cereals will grow to 18%, mainly due to an increase in rice trade.
According to forecasts, the world grain trade will grow by 21% and reach 542 million tons by 2030. Russia overtook the European Union in 2016 to become the largest wheat exporter and is expected to increase its leadership throughout the forecast period, accounting for 22% of global exports by 2030.
As for corn, the United States will remain the leading exporter, followed by Brazil, Ukraine, Argentina and Russia.
Sugar. It is predicted that global sugar production in the current season (October 2020 - September 2021) will decline for the third year in a row after adverse weather conditions negatively affected the prospects in some key producing countries. Global production is expected to fall below global consumption, which is projected to recover from the lower level of the 2019 season after the start of the COVID-19 pandemic.
Brazil is expected to maintain its position as the world's largest sugar producer, followed by India; these two countries, respectively, will account for about 21% and 18% of global sugar production by 2030. In absolute terms and in comparison with the base period (2018-2020), Brazil (+5.8 million tons), India (+5.1 million tons), and Thailand (+3.2 million tons) show the largest increase in production.
Overall, global average per capita consumption is expected to rise over the next decade as a result of rising incomes and urbanization in developing countries. It is predicted that sugar consumption in Asia will grow the most (in absolute terms) and by 2030 will account for more than half of global consumption.
A stronger rise in oil prices will increase competition between sugar and sugar cane-based ethanol, which will have a significant impact on Brazil, the main sugar exporter, and will affect the international sugar market.
Meat. International meat prices declined in 2020 due to the impact of COVID-19. Market disruptions related to COVID-19 have led to a reduction in incomes in low-income net meat importing countries, which has significantly undermined the purchasing power of households and forced consumers to replace the consumption of meat products with cheaper alternatives.
This year's edition of the OECD-FAO Agricultural Forecast predicts that global meat supplies will increase during the forecast period and reach 374 million tons by 2030. According to forecasts, most of the total increase in meat production will come from China, followed by Brazil and the United States. The growth of global meat production is mainly due to the growth of poultry meat production. Pork production growth will remain limited in the first three years of the forecast.
According to forecasts, the growth of global consumption of meat proteins in the next decade will increase by 14% by 2030 compared to the average for the base period 2018-2020, mainly due to income and population growth.
Globally, poultry meat is expected to account for 41% of all protein from meat sources in 2030, which is 2 percentage points more than in the baseline period. Less than the share of other meat products in the world: beef (20%), pork (34%) and lamb (5%).
Fish. In 2020, fish production, trade and consumption declined. In particular, the reduction was strong in the first half of 2020, when strict restrictions were imposed in China.
According to the FAO Fish Price Index, international fish prices were on average 7% lower in 2020 compared to 2019. In real terms, in the period 2021-2030, prices for all fish are projected to decrease; aquaculture by 0.3% per year, catch - by 1.1% per year, fish trade - by 0.9% per year, fish meal - by 0.6% per year and fish oil - by 0.4% per year.
Global fish production is projected to grow by 1.2% per year. It is expected that production will reach 201 million tons, which in general will increase by 23 million tons (+ 12.8%) compared to the base period (on average for 2018-2020) until 2030. Most of the growth will be in developing countries and in particular in Asia.
Biofuels. The COVID-19 pandemic caused a decrease in global fuel consumption for transport in 2020 by 8.5% compared to the previous year due to restrictions.
According to the OECD-FAO forecast this year, biofuels markets will largely depend on government support policies and demand for fossil fuels. Global demand for biofuels is expected to recover in 2021 and 2022 in line with the expected recovery in overall fuel demand.
Global biodiesel trade is projected to decline by 25% compared to current levels, largely reflecting declining demand for palm oil-based biodiesel in the European Union; ethanol trade will decline moderately.
As for exports, it is expected that shipments from Indonesia will decrease due to high domestic demand.
Cotton. It is predicted that world cotton production will grow by 1.5% per year and reach 28 million tons in 2030. This growth will occur due to the expansion of the area under cotton (0.5% per year) and the growth of the average yield in the world (1% per year).
India will continue to be the largest cotton producer in the world, with production growth dependent mainly on higher yields, while expansion of acreage is expected to be limited in line with recent trends. Overall, global players in cotton markets in 2030 will be the same as in the base period, which means that sub-Saharan Africa is projected to remain the third largest exporter of raw cotton by 2030.
It is predicted that by 2030 the world trade in raw cotton will exceed 11 million tons, which is 25% more than in the base period.
Conclusion
Assuming a rapid recovery after the global COVID-19 pandemic and the absence of significant changes in weather conditions or the political environment, the Agricultural Forecast for 2021-2030 presents the main trends in food and agriculture for the next decade.
While progress is expected to be made in many respects, concerted action and additional improvements at all levels are needed to achieve the SDGs by 2030, which will also require additional efforts from the agricultural sector.
