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Soaring Food Prices and the EastAgri Region

Soaring Food Prices and the EastAgri Region. Stefan Tangermann Director for Trade and Agriculture. EastAgri 2008 Annual Meeting, 11 September 2008. Cereal prices in real terms, schematic. Cereal prices in real terms, schematic. Cereal prices in real terms, schematic.

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Soaring Food Prices and the EastAgri Region

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  1. Soaring Food Prices and the EastAgri Region Stefan Tangermann Director for Trade and Agriculture EastAgri 2008 Annual Meeting, 11 September 2008

  2. Cereal prices in real terms, schematic

  3. Cereal prices in real terms, schematic

  4. Cereal prices in real terms, schematic

  5. Cereal prices in real terms, schematic } Transitory ? ? }20-30% • Bad weather • Low stocks • Panic • High oil price • Weak dollar • Biofuels (1/3 of which: Biofuels) } Long-term

  6. Wheat prices in real terms Historical Projected March 2008

  7. Maize prices in real terms Historical Projected June 2008

  8. Rice price in real terms Historical Projected May 2008

  9. Oilseed price in real terms Historical Projected April 2008

  10. World commodity prices trend higher Percent growth between : average 2008-2017 and average 1998-2007

  11. Is the bubble bursting? Weekly spot prices Wheat Maize Rice(right handaxis) Source: FAO

  12. What happens to world prices, if … Change in world prices expected for 2017, relative to baseline Scenario 1: Biofuel production constant at 2007 level Scenario 2: Scenario 1 + Oil price constant at 2007 levels (72$) Scenario 3: Scenario 2 + Lower income growth in EE5 countries (half annual growth rate) Scenario 4: Scenario 3 + Progressive appreciation of the USD exchange rates to reach 10% higher rates in 2017 Scenario 5: Scenario 4 + Yields for wheat, oilseeds and coarse grains 5% higher than over the production period

  13. Are China and India pushing up prices? Supply balance cereals (incl. rice) China India Historical Projected

  14. Oilseeds: Brazil mirrors China Supply balance oilseeds China Brazil Historical Projected

  15. OECD countries loose export share

  16. Will the CIS be the world's break basket? Historical Projected

  17. Russia will feed its livestock Historical Projected

  18. CIS oilmeal surplus will grow Oilmeal net trade Historical Projected

  19. … as will surplus of vegetable oil Vegetable oil net trade Historical Projected

  20. Butter: CIS intra-trade and overall net imports Historical Projected

  21. Cheese: CIS intra-trade and overall net imports Historical Projected

  22. CIS to remain major meat import region Historical Projected

  23. Conclusions • World prices will calm down … but remain higher than in the past … oil price, biofuel support policies are major drivers • Global production and consumption shifts increasingly towards non-OECD countries • CIS has potential to be major grains exporter

  24. Thank You Trade and Agriculture Directorate Visit our website: www.oecd.org/agriculture Contact us: tad.contact@oecd.org

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