Economists Predict Slow Agriculture Price Growth

Weak world economy to restrain commodity pricing for two to three years

 

Prices for agricultural commodities will be restrained by “continued weakness in the general economy” over the next two to three years, although they will remain above their average level over the previous decade, according to a report released today by the Paris-based Organization for Economic Cooperation and Development and the Rome-based Food and Agricultural Organization.

 

Crop prices will be 10 percent to 20 percent higher over the next 10 years than they were from 1997 to 2006, the report says, and vegetable oils will rise by more than 30 percent. Meat prices won’t exceed the average of the previous decade, but dairy prices may be “slightly higher” than during that period. “The reduction in agricultural prices, production and consumption associated with lower incomes is likely to be moderate, as long as economic recovery begins within two to three years,” the report says.

 

The report warns about possible food shortages in developing countries because of higher prices and climate change. "On average, the nominal price of all commodities other than pig meat, will be 20 percent or more above their 1997-2006 average level" between 2009 and 2018, according to the report.

 

Last year, prices of wheat, rice and corn rose to record-high levels, sparking riots in developing countries around the world. This year, the FAO said last month, the number of hungry people in the world will increase to a record one billion.

“Unless we see energy prices rising rapidly, the risks are low but present” of a repeat of the surge in agricultural prices, Merritt Cluff, a senior economist at the Rome-based FAO, told the press in Paris today.

(Source: Journal of Commerce)