Global farm commodity prices will fall in real terms over the next decade under pressure from growing competition and productivity gains, the OECD said today.
In a survey of trends for 2005-2014, the OECD said growth in farm trade would continue to lag that of other goods because of persistent import barriers.
"While agricultural commodity prices are on average increasing, they are expected to decline in real terms . . . relative to movements in prices overall," the Paris-based OECD said in its annual outlook of agriculture trends.
Developing countries will import more food and feedstuffs as living standards improve, but most of the increased demand will be met by other developing country producers, it added.
In rich countries, overall demand will rise only moderately, with other factors such as food safety, the environment and animal welfare taking precedence in determining preferences over traditional factors such as price and income.
Overall output in the 14 products covered by the report will also grow much faster in developing countries than in the world's 30 richest states covered by the OECD, particularly of sugar, rice, beef, butter and milk powders.
Both agricultural demand and trade is forecast to rise over the decade, pushed higher by growing incomes and populations in developing countries.
The OECD area will maintain its dominant share of exports of bulk commodities, such as cereals and oilseeds, with rising domestic livestock production in developing countries fuelling the rise in feedstuff needs.
But traditional exporters could face rising competition from transitional economies, such as Russia and Ukraine. The projections assume that existing farm support and protection policies, both in developed and developing countries, will remain in place through 2014.
However, the outlook could change markedly if the World Trade Organization's free trade talks, due to be finished by end-2006 or early 2007, leads to a significant lowering of trade barriers and subsidies, it added.