1. OECD-FAO Agricultural Outlook Jonathan Brooks Mexico City, 6 th November 2014

2. Context »High food prices in 2007-08 caught most by surprise, but such events are not unprecedented. »Since then there has been a strong supply response and prices have fallen back, although maize prices peaked again in 2012/13 due to drought in the United States. »Good harvest for most crops in 2013-14, with reduced crop price volatility »Meat prices peaked in 2014, while dairy prices fell sharply from historic highs »Low oil prices »Uncertainty on future of biofuel mandates 2

3. Real food prices still high but returning to levels of the mid-1990s 3 Source: IMF

4. Commodity price volatility back to pre-crisis levels (Number of commodities whose volatility was above 25%) Source: Baffes (2014) from ICE, CME, and World Bank calculations. 4

5. Highlights of the Outlook »Real food prices expected to decline slightly, but remain above levels before food price crisis. »Changing relative prices: ›Coarse grain and oilseed prices increase relative to food staples – feed and fuel demand ›Meat and dairy prices increase relative to crops – higher incomes and protein demand »Agricultural markets expected to be less volatile than in recent years (recovery in stocks) »Optimistic outlook for India – despite doubts about the viability of government food programmes. 5

6. 6 Index, 2011-2013 = 1, Based on Production Value Modest declines in real prices

7. Outlook assumes constant policies and “normal” market conditions, but there are risks: »Slower economic growth in emerging economies (BRIICS) »Energy prices & links to commodity markets »Agricultural and trade policies »Trade agreements »Biofuel policies Long-term structural uncertainties: »Rate of agricultural productivity growth »Consumption patterns (including waste) »Natural resource constraints & environmental impacts »Climate change 7

8. 8 Nominal maize price (US$/t), 2000 - 2023 10 th to 90 th percentile range (coefficient of variation in 2023 = 12.2%)

9. Policy settings need to be robust to alternative future outcomes »Medium-term Outlook will be influenced by how we address long- term challenges: global food security, sustainable resource use, climate change »Agenda needs to focus more on public good provision and move away from income support and associated distortions »Improve agricultural productivity sustainably – raises farmers’ incomes and lowers food prices »Keep markets open: ›Market information can help countries avoid rash responses (AMIS and Rapid Response Forum) ›Importance of multilateral reform and post Bali WTO agenda »Avoid policies that contribute to higher and more volatile food prices 9

10. For more information 10 Access the OECD-FAO Agricultural Outlook www.agri-outlook.org Visit our websites www.oecd.org/tad http://www.fao.org/economic/en/ Connect with us www.twitter.com/OECDagriculture Contact us tad.contact@oecd.org EST-Projections@fao.org