Global Food Prices Set to Stagnate as
Population Growth Slowing
Manisha Jha manishajha03
Isis Almeida isiscarol14
July 4, 2016 — 5:00 AM EDT
World population growth to slow to 1% a year over next
decade
Food demand growth expected to slow progressively: OECD-FAO
Food prices will stagnate over the next decade as the
population growth rate declines and income expansion in emerging economies
slows.
Food costs will stabilize at a level slightly higher than in
the years before the 2007-08 price spike, the Organization for Economic
Cooperation and Development and the United Nations’ Food & Agriculture
Organization said in a joint report. Population growth, the main driver of food
prices, will slow to 1 percent annually through 2025, the organizations said.
Global food costs more than doubled since 2000 as population
expanded and rising incomes meant more demand for meat, which usually costs
more than grains and oilseeds, FAO data showed. Costs reached a record in 2011,
prompting Cargill Inc., one of the world’s largest crop traders, to call the
end of an era of falling agricultural commodity prices.
"Global population growth, the main driver of demand
increases, is declining, while income growth in emerging economies is projected
to be weaker," the OECD and FAO said. "At the same time, consumers,
especially in populous emerging economies, show a declining propensity to spend
income gains on consuming more basic foodstuffs."
A gauge of agricultural commodity prices declined in the
past three years in the longest slump since 2001. The Bloomberg Agriculture
Subindex rebounded 12 percent this year on concern adverse weather would reduce
soybean crops in South America at a time El-Nino induced dryness slashed cane
crops in Asia, sending global sugar prices into a bull market.
With global food supplies set to match demand in the 10
years to 2025, prices will stagnate once inflation is excluded, according to
the report. Global cereal production is projected to grow 12 percent by 2025,
driven by yield improvements, while usage is projected to expand 14 percent. In
nominal terms, agricultural commodity prices will rise as oil is forecast to
increase to $83.20 a barrel in 2025 from $39.30 a barrel, the organizations
said.
"Global demand growth varies between commodities, but
overall is projected to be slower than in the previous decade," according
to the report. "With overall market growth projected to slow, agricultural
trade is expected to expand at about half the rate of the previous
decade."
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