OECD-FAO Agricultural Outlook 2014-2023

Foreword
Acknowledgements
Table of contents
Acronyms and abbreviations
Executive summary
	Global commodity highlights to 2023
	Focus on India
	Note on macroeconomic assumptions
Chapter 1. Overview of the OECD-FAO Outlook 2014­2023
	Introduction
	The setting: Turbulent agricultural markets at the start of the outlook period
		Box 1.1. Macroeconomic and policy assumptions
		Figure 1.1. Korea and Turkey expected to exhibit the strongest GDP growth in OECD
		Box 1.2. Food price inflation
		Figure 1.2. Consumer food price inflation lower in developed countries
		Figure 1.3. Consumer food price inflation: Selected countries
		Figure 1.4. Consumer price inflation follows changes in primary commodity prices
		Figure 1.5. Real consumer prices are rising
	Consumption: Global consumption continues to increase but at a slower rate
		Growing diversity in the use of agricultural products
			Figure 1.6. Growing diversity of crop use
		Food and fuel use of agricultural commodities continues to be regulated in many countries
		Population growth and changing dietary preferences drive firm demand for meat and dairy products
			Figure 1.7. Most of the growth in meat and fish consumption will occur in developing countries
	Production: The developing world remains the epicentre of most agricultural production growth
		Figure 1.8. Production of crops rising
		Poultry continues to dominate the livestock sector
			Figure 1.9. Higher livestock production
		Yield increases will drive production growth of most crops
			Box 1.3. Enhancing agricultural productivity and food security in China
			Box 1.4. Feedstock issues and developments in the nitrogen fertiliser sector
			Figure 1.10. US ammonia capacity
			Figure 1.11. Growth in arable crop area and yield
		Growing influence of domestic policies on production decisions
			Box 1.5. The Common Agricultural Policy (CAP) of the EU for 2014-20
			Box 1.6. Japan\'s agricultural policy reform post-2014
			Box 1.7. New US farm legislation in 2014
	Trade: The Americas dominate exports, while China drives import growth in Asia
		Figure 1.12. Value of net-exports positive in Americas, Oceania and East Europe
		Table 1.1. The largest trade deficits in volume terms in 2023 will occur in Asia and Africa
		Box 1.8. Dealing with rising food imports: Policy options for West African countries
		Box 1.9. Public stockholding for food security
		Geographical separation of demand and supply spurs growth in trade
			Figure 1.13. Skim milk powder and poultry to show largest growth over the outlook period
	Prices: Global supply and demand projections point to slowly declining real prices
		Figure 1.14. Price trends in nominal terms for agricultural commodities to 2023
		Figure 1.15. In real terms, prices for livestock, dairy and ethanol are higher than in the previous decade
		Box 1.10. Macroeconomic factors influencing food prices
		Table 1.2. Granger Causality tests
	Uncertainty analysis
		Sources of uncertainty analysed
			Figure 1.16. Uncertainty around the world coarse grain price
		Relative impact of uncertainty on market outcomes, by commodity
			Figure 1.17. Uncertainty in the world wheat market in 2023 by scenario
			Figure 1.18. Comparing uncertainty by commodities in world trade (exports) in 2023 by scenario
		Milk world market price uncertainty
			Figure 1.19. Uncertainty in Australia, New Zealand and world milk production in 2023 by scenario
			Figure 1.20. Uncertainty of world market prices in 2023 by scenario
			Table 1.3. Uncertainty of world production, consumption and trade of dairy products, by scenario
		Conclusion
	References
Chapter 2. Feeding India: Prospects and challenges in the next decade
	Introduction
	The performance of India’s agriculture
		Figure 2.1. Agriculture’s share of national employment remains large in India
		Growth in agricultural output has been strong
			Table 2.1. Growth of agriculture in India increased in the last decade
			Figure 2.2. Production of major agricultural products in India
			Box 2.1. Transforming Agriculture: India’s Green and White Revolution
	Progress, but a large food insecurity problem remains
		Figure 2.3. Undernourishment in India
		Figure 2.4. Estimated daily calorie and protein intake by food item in India, 2009
		Figure 2.5. India’s average per capita calorie and protein intake as a ratio to OECD levels
	India’s agricultural resources are large
		Human resources
			Table 2.2. Share of agricultural labour and cultivators in population in India
		Land
		Water
		Capital formation
	Productivity growth has been key to increased production
		Figure 2.6. Annual change in yields of wheat and rice in India
		Figure 2.7. Yield gaps for rice and wheat, all India
	India’s trade surplus in agricultural commodities continues to grow
		Figure 2.8. India’s trade surplus in agricultural and fish products is rising
		Box 2.2. Domestic and international market integration
		Figure 2.9. Interrelationship of domestic and international markets in India
		Table 2.3. Indexes of market connection (IMC)
	Agricultural policy
		Figure 2.10. Minimum support price for key commodities in India
		Figure 2.11. Fertiliser subsidy in India
		Figure 2.12. Electricity subsidy in agriculture in India
	The outlook for India’s agricultural sector
		Key factors and constraints underlying India’s outlook
			Figure 2.13. Macroeconomic indicators in India
			Box 2.3. Short-and long-term macroeconomic challenges for India*
			Figure 2.14. Real rural wages are rising in India
			Figure 2.15. Market support prices in India and world prices for rice and wheat
			Box 2.4. The fertiliser industry in India: Its challenges and prospects in the next decade1
			Figure 2.16. Movements in fertiliser prices, India vs World
			Box 2.5. India\'s National Food Security Act, 2013
	The commodity outlook for India, 2014-23
		Overview
			Figure 2.17. India’s calorie and protein consumption projected to increase
		Cereals
			Figure 2.18. Crop area increases in India but not for cereals
			Figure 2.19. Cereal production and stock to use ratios in India
			Figure 2.20. Per capita consumption of cereals to rise in India
			Figure 2.21. Indian cereal exports may rise over the outlook period (2014-23)
			Figure 2.22. Growth in oilseed area and yields in India
			Figure 2.23. Imports of vegetable oil continue to rise in India
			Figure 2.24. Growth in the pulse sector follows higher domestic demand in India
			Figure 2.25. Indian sugar production grows but remains cyclical
			Figure 2.26. The vegetable and fruit sectors in India are growing at a fast pace
			Figure 2.27. Indian cotton production and exports will rise
			Figure 2.28. Growth in India’s biofuel production limited by feedstock availability
			Figure 2.29. Poultry underpins meat consumption growth in India
			Figure 2.30. Bovine meat production and exports in India
			Figure 2.31. Aquaculture production dominates growth in fish production in India
			Figure 2.32. More Indian fish production going for exports
			Figure 2.33. Milk output and yield growth continue strongly in India
	Risks and uncertainties
		Figure 2.34. Lower GDP growth would reduce consumption gains in India
		Figure 2.35. Comparison of assumptions on effects of NFSA on consumption in India
		Figure 2.36. Impact of lower yield growth on domestic prices in India
	Conclusions
	References
Chapter 3. Biofuels
	Market situation
	Projection highlights
		Figure 3.1. Biofuel prices to remain almost constant in real terms
	Market trends and prospects
		Main assumptions
			Box 3.1. Uncertainties around the Environmental Protection Agency (EPA) decision concerning the levels of US biofuels mandates
			Figure 3.2. Structure of US biofuel mandates in 2013, in EISA 2014 and in the EPA proposal for 2014
			Box 3.1. Uncertainties around the Environmental Protection Agency (EPA) decision concerning the levels of US biofuels mandates
			Box 3.2. The influence of petrol price controls on hydrous ethanol prices in Brazil
			Table 3.1. Simulation of gasohol and hydrous ethanol prices based on the harvest data for 2012/13
			Table 3.2. Price simulation presupposing that petrol had fully accompanied oil price variations and the Brazilian exchange rate
		Prices
		Production and use of ethanol
			Figure 3.3. Development of the world ethanol market
			Figure 3.4. Regional distributions of world ethanol production and use in 2023
		Production and use of biodiesel
			Figure 3.5. Development of the world biodiesel market
			Figure 3.6. Regional distributions of world biodiesel production and use in 2023
		Trade in ethanol and biodiesel
		Feedstocks used to produce biofuels
			Figure 3.7. Share of feedstocks used for ethanol production
			Figure 3.8. Share of feedstocks used for biodiesel production
	Main issues and uncertainties
		Box 3.3. Sub-national policies supporting biofuels
Chapter 4. Cereals
	Market situation
	Projection highlights
	Market trends and prospects
		Prices
			Figure 4.1. Cereal prices fall over the medium-term
		Production
			Figure 4.2. Limited potential to increase cereal production due to weak area expansion and moderate yield growth over the medium-term
			Figure 4.3. Recovery of wheat stocks led by production increases in the Russian Federation
			Figure 4.4. A rapid recovery of coarse grains stocks is led by higher production of US corn
			Figure 4.5. Stabilisation of world rice stocks and progressive reduction in Thailand
		Use of cereals
			Figure 4.6. Increasing food and feed demand for wheat in developing countries
			Figure 4.7. African countries increase their share in world rice imports
			Figure 4.8. Increasing biofuel and feed demand for coarse grains
			Figure 4.9. Increasing use of non-conventional feeds led by dried distiller’s grains
			Box 4.1. Campaign to prevent bread waste in Turkey
			Table 4.1. Bread waste statistics
			Box 4.2. Structural changes in the feed market
			Table 4.2. Production and price changes of commodities requiring feeds in 2023 based on the counterfactual scenario
		Trade of cereals
			Figure 4.10. Wheat export shares for major countries
			Figure 4.11. Rapid expansions of coarse grains exports
			Figure 4.12. Cereal net trade in China
			Box 4.3. Contribution of agricultural investments to stabilising international rice price volatility under climate change
			Table 4.3. Policy scenarios and simulation results for rice under climate change conditions
			Figure 4.13. Rice export shares of major countries
	Main issues and uncertainties
	References
Chapter 5. Oilseeds and oilseed products
	Market situation
	Projection highlights
	Market trends and prospects
		Prices
			Figure 5.1. Oilseed prices remain at a higher plateau
		Oilseed production and crush
			Figure 5.2. Share of global oilseed crush among leading regions
		Vegetable oil production and consumption
			Figure 5.3. Biodiesel to use a large share of vegetable oil consumption
		Protein meal production and consumption
			Figure 5.4. Growth in protein meal consumption and animal production
		Trade in oilseeds and oilseed products
			Figure 5.5. Share of vegetable oil exports in 2023
	Main issues and uncertainties
		Box 5.1. Policy options for biofuel in Indonesia: Implications for vegetable oil markets
		Figure 5.6. Potential influence of the National Indonesian Energy Policy (KEN) on global vegetable oil markets
	Reference
Chapter 6. Sugar
	Market situation
		Figure 6.1. World sugar balance moves into a fourth consecutive production surplus
	Projection highlights
		Figure 6.2. World sugar prices to recover in the near term and to remain on a higher plateau
		Figure 6.3. The global sugar stock-to-use ratio to follow a downward trend
	Market trends and prospects
		Prices
		Production and use of sugar
			Figure 6.4. Most of the additional ethanol and sugar increases will come from sugarcane production
			Figure 6.5. Much higher growth in sugar demand is expected in developing countries
			Figure 6.6. Sugar production and exports to increase in Brazil as ethanol output expands
			Figure 6.7. China’s sugar stock-to-use ratio to decline
			Box 6.1. Some market impacts of EU sweetener production quotas
			Table 6.1. EU sugar market effects of continuing production quotas from 2013 to 2023
			Box 6.2. The US sugar programme under pressure to remove surpluses
		Trade
			Figure 6.8. Contrasting trends among major sugar importers
			Figure 6.9. Sugar exports will stay concentrated and dominated by Brazil
	Main issues and uncertainties
Chapter 7. Meat
	Market situation
	Projection highlights
		Figure 7.1a. World prices in nominal terms
		Figure 7.1b. World prices in real terms
	Market trends and prospects
		Prices
			Figure 7.2. Meat to feed price ratios should return to historical trend
		Production
			Figure 7.3. Growth of meat production by region and meat type
			Figure 7.4. Countries with the greatest share of additional meat production by meat type
			Figure 7.5. Cattle cycle: Inventory of beef cows in the United States
		Consumption
			Box 7.1. Income and meat consumption
			Figure 7.6. Yearly meat consumption per capita increases as income levels rise
			Box 7.1. Income and meat consumption (cont.)
			Figure 7.7. Regional composition of meat consumption
			Figure 7.8. Per capita meat consumed in the world
		Trade
			Box 7.2. Exports of buffalo meat from India
			Figure 7.9. Buffalo meat exports from India, 2012-13
			Figure 7.10. Changes in the net trade of meat by type and region
	Main issues and uncertainties
		Box 7.3. Global agenda for sustainable livestock
	References
Chapter 8. Fish and seafood
	Market situation
	Projection highlights
	Market trends and prospects
		Prices
			Figure 8.1. World fish prices in real terms expected to remain high
		Production
			Figure 8.2. Asian countries dominate fisheries production
			Figure 8.3. Aquaculture surpassing capture fisheries for human consumption
			Box 8.1. Recycling fish residue in the fishmeal and oil market
		Consumption
			Figure 8.4. Increase in fish consumption by region between the base period and 2023
			Figure 8.5. Reduction in the inclusion rate of fishmeal in animal feed rations
		Trade
			Figure 8.6. Trade of fish for human consumption
	Main issues and uncertainties
	References
Chapter 9. Dairy
	Market situation
	Projection highlights
	Market trends and prospects
		Prices
			Figure 9.1. World dairy prices in nominal terms
			Figure 9.2. World dairy prices in real terms
		Production
			Figure 9.3. Outlook for milk production
			Box 9.1. Challenges and opportunities facing China’s dairy sector
			Figure 9.4. China’s dairy product imports continue to increase over the outlook period
		Consumption
			Figure 9.5. Major dairy product consumption
			Box 9.2. Milk and dairy products in human nutrition
		Trade
			Figure 9.6. Dairy product exporters
			Figure 9.7. Major dairy product importers
	Main issues and uncertainties
	Reference
Chapter 10. Cotton
	Market situation
	Projection highlights
	Market trends and prospects
		Prices
			Figure 10.1. Cotton prices rise between 2000-09 and 2014-23
		Production of cotton
			Figure 10.2. World cotton production by major producer
			Box 10.1. China’s cotton policies drive large changes in world ending stocks
			Figure 10.3. Cotton ending stocks rise sharply
			Figure 10.4. Cotton area relative to area for total grains and oilseeds in major producing countries
		Consumption of cotton
			Figure 10.5. World per capita consumption of cotton remains below peak
			Figure 10.6. World cotton consumption rebounds, but relatively slowly
		Cotton trade
			Figure 10.7. World cotton trade shares by exporter
			Figure 10.8. World cotton trade shares by importer
	Main issues and uncertainties
		Figure 10.9. World cotton stocks shift out of China
Glossary of terms
	A-H1N1
	Average Crop Revenue Election (ACRE) program
	APEC
	Aquaculture
	Australia-US Free Trade Agreement (AUSFTA)
	Avian influenza
	Atlantic beef/pigmeat market
	Baseline
	Biofuels
	Biomass
	Bovine Spongiform Encephalopathy (BSE)
	BRICS
	Capture fisheries
	Cereals
	Common Agricultural Policy (CAP)
	Coarse grains
	Conservation Reserve Program (CRP)
	Consumer price index for food (CPIF)
	Common Market Organisation (CMO) for sugar
	Crop year, coarse grains
	Crop year, cotton
	Crop year, oilseeds
	Crop year, rice
	Crop year, sugar
	Crop year, wheat
	Decoupled payments
	Developed countries
	Developing countries
	Direct payments
	Doha Development Agenda
	Domestic support
	Economic Partnership Agreements (EPAs)
	El Niño
	Energy Independence and Security Act (EISA) 2007
	Ethanol
	Everything-But-Arms (EBA)
	Export credits (with official support)
	Export restitutions (refunds)
	Export subsidies
	FCE Act, 2008
	Gur, jaggery, khandasari
	Health Check Reform of the Common Agricultural Policy
	High Fructose Corn Syrup (HFCS)
	Industrial oilseeds
	Intervention purchases
	Intervention purchase price
	Intervention stocks
	Inulin
	Isoglucose
	Least squares growth rate
	Live weight
	Loan rate
	Market access
	Marketing allotments (US sugar program)
	Marketing year, protein meals
	Marketing year, vegetable oils
	Market Price Support (MPS) Payment
	Methyl Tertiary Butyl Ether (MTBE)
	Milk quota scheme
	Non-Recourse loan programme
	North American Free Trade Agreement (NAFTA)
	Oilseed meals
	Oilseeds
	Pacific beef/pigmeat market
	Payment-In-Kind (PIK)
	PROCAMPO
	Producer Support Estimate (PSE)
	Protein meals
	Purchasing Power Parity (PPP)
	Renewable Energy Directive (RED)
	Renewable Fuel Standard (RFS and RFS2)
	Saccharin
	Scenario
	Single Farm Payment
	SPS Agreement
	Stock-to-use ratio
	Stock-to-disappearance ratio
	Support price
	Tariff-rate quota (TRQ)
	Uruguay Round Agreement on Agriculture (URAA)
	Vegetable oils
	Voluntary Quota Restructuring Scheme
	WTO
		Summary table for developed and developing countries
Methodology
	The generation of the OECD-FAO Agricultural Outlook
	Sources and assumptions for the macroeconomic projections
	The representation of production costs in Aglink-Cosimo
	The new feed demand system
	The methodology of stochastic simulations with Aglink-Cosimo
		Step i): Estimating variability based on historical data
			Table 1. Macroeconomic variables treated as uncertain and the calculated CV of the one-year-ahead forecast errors (in %)
			Table 2. Commodity yields treated as uncertain and the calculated CV (in %)
		Steps (ii and iii): deriving the stochastic behaviour of the drivers and generating 600 sets of alternative values of the stochastic terms that mimic this stochastic behaviour
			Figure 1. Box plots of the multiplicative stochastic terms (2014-23)
		Step iv): running the Aglink-Cosimo model for each of the 600 alternative uncertainty scenarios
			Table 3. Rate of success in the solutions for the five scenarios
Statistical Annex
	Table A.1. Economic assumptions
	Table A.2. World prices
	Table A.3.1. World trade projections, imports
	Table A.3.2. World trade projections, exports
	Table A.4.1. Biofuel projections: Ethanol
	Table A.4.2. Biofuel projections: Biodiesel
	Table A.5. Main policy assumptions for biofuel markets
	Table A.6. World cereal projections
	Table A.7.1. Wheat projections: Production and trade
	Table A.7.2. Wheat projections: Consumption, food use, per capita
	Table A.8.1. Coarse grain projections: Production and trade
	Table A.8.2. Coarse grain projections: Consumption, feed use, per capita
	Table A.9.1. Rice projections: Production and trade
	Table A.9.2. Rice projections: Consumption, per capita
	Table A.10. Main policy assumptions for cereal markets
	Table A.11. World oilseed projections
	Table A.12.1. Oilseed projections: Production and trade
	Table A.12.2. Oilseed projections: Consumption, domestic crush
	Table A.13.1. Protein meal projections: Production and trade
	Table A.13.2. Protein meal projections: Consumption
	Table A.14.1. Vegetable oil projections: Production and trade
	Table A.14.2. Vegetable oil projections: Consumption, per capita food use
	Table A.15. Main policy assumptions for oilseed markets
	Table A.16. World sugar projections
	Table A.17.1. Sugar projections: Production and trade
	Table A.17.2. Sugar projections: Consumption, per capita
	Table A.18. Main policy assumptions for sugar markets
	Table A.19. World meat projections
	Table A.20.1. Beef and veal projections: Production and trade
	Table A.20.2. Beef and veal projections: Consumption, per capita
	Table A.21.1. Pigmeat projections: Production and trade
	Table A.21.2. Pigmeat projections: Consumption, per capita
	Table A.22.1. Poultry meat projections: Production and trade
	Table A.22.2. Poultry meat projections: Consumption, per capita
	Table A.23.1. Sheep meat projections: Production and trade
	Table A.23.2. Sheep meat projections: Consumption, per capita
	Table A.24. Main policy assumptions for meat markets
	Table A.25. World fish and seafood projections
	Table A.26.1. Fish and seafood projections: Production and trade
	Table A.26.2. Fish and seafood projections: Reduction, food use, per capita
	Table A.27.1. World dairy projections: Butter and cheese
	Table A.27.2. World dairy projections: Powders and casein
	Table A.28.1. Butter projections: Production and trade
	Table A.28.2. Butter projections: Consumption, per capita
	Table A.29.1. Cheese projections: Production and trade
	Table A.29.2. Cheese projections: Consumption, per capita
	Table A.30.1. Skim milk powder projections: Production and trade
	Table A.30.2. Skim milk powder projections: Consumption, per capita
	Table A.31.1. Whole milk powder projections: Production and trade
	Table A.31.2. Whole milk powder projections: Consumption, per capita
	Table A.32. Fresh dairy products projections: Production and consumption per capita
	Table A.33. Milk projections: Production, inventories, yield
	Table A.34. Whey powder and casein projections
	Table A.35. Main policy assumptions for dairy markets
	Table A.36. World cotton projections
	Table A.37.1. Cotton projections: Production and trade
	Table A.37.2. Cotton projections: Consumption
	Table A.38. Main policy assumptions for cotton markets
	Table B.1. Information on food price changes