Directorate for Food, Agriculture and Fisheries ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES OECDOCDE Perspectivas del mercado mundial de agroalimentos Buenos Aires, Argentina OECD Gregoire Tallard

Directorate for Food, Agriculture and Fisheries 2 The OECD provides: Economic analysis with a policy focus Information on countries’ experience A forum for policy discussion and coordination

A global outreach OECD Member Countries Countries/Economies Engaged in Working Relationships with the OECD

Directorate for Food, Agriculture and Fisheries 4 OECD Work on Food and Agriculture Providing economic and policy information and advice that supports government efforts to improve the domestic and international performance of their policies

Directorate for Food, Agriculture and Fisheries 5 Current market situation Record harvests 2004/05 in grains, oilseeds resulted in price reductions Lower sugar stocks despite larger 2004/05 harvests lead to higher prices Bad weather in major exporting regions pushed up dairy prices Animal diseases continue to disrupt meat trade Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 6 Agricultural World Market Context: The Evolving Economic Environment Changing consumer demand Growing civil society voice Changing market structures Increasing globalisation Shifting competition focus Growing role of standards Situation Assumptions Outlook Issues Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 7 Main assumptions - macroeconomic - Rapid global expansion slowed by oil prices in 2004 Sustained, broad-based growth in the medium to longer term US dollar to remain strong relative to most Latin American currencies Inflation to remain relatively low Slowing population growth Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 8 Main assumptions - unchanged policies - Provisions of US 2002 FSRI Act to continue EU 2003 CAP reform and EBA Enlarged EU of 25 countries URAA commitments to continue –No new WTO agreement –No new WTO accessions Existing regional agreements (NAFTA, MERCOSUR) Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 9 OECD-FAO Outlook : Main trends Increasing competition in world markets Population, income growth stimulate consumption and imports in developing countries … and South-South trade Renewed export subsidy use in EU (weak USD) Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 10 OECD-FAO Outlook : Main trends Meat, sugar, cotton, oilseeds from South America Continued productivity growth in agriculture Downward pressure continues on real commodity prices Changes in food chain affect trade Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 11 Production growth in developing countries outpaces OECD Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 12 Consumption growth in developing countries outpaces OECD Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 13 Brazil and Argentina become leading oilseed exporters 1996 vs vs Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 14 OECD countries continue to dominate coarse grain exports 1996 vs vs Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 15 Growth in coarse grain imports concentrated outside OECD 1996 vs vs Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 16 Growing Competition in Meat and Grains Net Trade Markets Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 17 Market trends and developments - world prices - Situation Assumptions Outlook Issues Rice prices to increase more significantly than wheat and maize

Directorate for Food, Agriculture and Fisheries 18 Market trends and developments - world prices - Situation Assumptions Outlook Issues Nominal oilseed prices increase, but real prices flat or declining

Directorate for Food, Agriculture and Fisheries 19 Market trends and developments - world prices - Situation Assumptions Outlook Issues Meat prices to decline from their relatively high 2004 levels

Directorate for Food, Agriculture and Fisheries 20 Market trends and developments - world prices - Dairy prices remain stable after dropping from their 2004 peaks Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 21 World prices remain low in real terms Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 22 Some issues and uncertainties (1) Trade affected by changing diets –Share of cereal imports declines as imports of higher-value products increase –Increased importance of non-OECD exporters –South-south trade flows dominate in rice, vegetable oil, sugar Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 23 Some issues and uncertainties (2) Numbers that are likely to be wrong: Situation Assumptions Outlook Issues CEREALS China’s imports –How much will they allow? OILSEEDS China’s demand –How much is enough? MEAT BSE –related import bans affects beef trade

Directorate for Food, Agriculture and Fisheries 24 China’s grain imports??? Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 25 China’s oilseed needs??? Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 26 How will BSE affect trade in Canada and USA ???? Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 27 Risks: What is not in the numbers Biofuels –Embedded in the outlook but independent of oil price or of policy incentives Accession beyond EU 25 –Bulgaria and Romania Macroeconomic factors & yields –Trend growth rate and normal weather are never observed Situation Assumptions Outlook Issues

Directorate for Food, Agriculture and Fisheries 28 What are we doing We do not produce “predictions” We do “projections” by bringing together experts knowledge of Member countries to develop a consensual baseline