PARIS — Prices for agricultural commodities are likely to remain higher than over the past decade because of the biofuel industry’s growing use of feedstock and renewed food demand in developing nations, a report said Wednesday.
Prices also may be more volatile as a result of oil and energy costs and erratic weather, the Organization for Economic Co-operation Development said in its Agricultural Outlook for 2009-18.
“Because food is a basic necessity, the agriculture sector is showing more resilience to the global economic crisis than other industries,” the report said.
Prices are not expected on average to remain at the current levels, which are near the record high of 2007-08.
However, they are “unlikely to fall back to their average levels before the 2007-08 peaks,” the report added.
Average agricultural prices in real terms are expected to be 10 percent to 20 percent higher in 2009-18 compared with the 1997-2006 decade that preceded the price peak.
The report was prepared by experts at the Paris-based OECD and the Rome-based Food and Agriculture Organization.
Farmers will respond to renewed food demand from developing countries and from the emerging biofuels market by increasing supplies as an expected economic recovery takes place over the next two to three years, the report said.
“Extreme” price volatility is possible, primarily because of the impact of changing energy and oil costs on the agriculture sector as well as erratic weather conditions, the report said.
Food insecurity and hunger remain a problem for the world’s poor, but “access to food rather than food availability” is the greater problem in the longer term, the report said.
The report also highlighted the link between agricultural prices and energy costs, which can make up a substantial portion of a farmer’s overall expenses.
The report’s forecast assumed crude prices of about $70 a barrel by the end of 2018. Oil costs about that much now.
