World Agricultural Outlook, Risks, and Challenges for the Coming 10 years

Transcription

1 World Agricultural Outlook, Risks, and Challenges for the Coming 10 years Annelies DEUSS Trade and Agriculture Directorate, OECD PRIMAFF Open Seminar 11 December 2018, Tokyo, Japan

2 Outline of the presentation Part 1: OECD-FAO Agricultural Outlook Prices Consumption Production Trade Risks and uncertainties How examine the impacts of these uncertainties? Part 2: The economic effects of public stockholding policies for rice in Asia The Economic Effects of Public Stockholding Policies for Rice in Asia

3 Part 1: OECD-FAO Agricultural Outlook Joint OECD-FAO report published annually in June/July 10 year horizon Model based projection validated through global expert consensus Major commodities Global coverage Special theme chapter 2018: Middle East and North Africa OECD-FAO Agricultural Outlook #AgOutlook 3

4 Prices Consumption Production Trade Risks & Uncertainties Index = The food price crisis, ten years later FAO Food Price Index (real) Real prices to be contained by strong supply growth, ample stocks and weakening demand growth 100 Prices spiked due to a perfect storm of market shocks reinforced by policy responses OECD-FAO Agricultural Outlook #AgOutlook 4

5 Wheat Maize Other coarse grains Rice Soybean Other oilseeds Vegetable oils Protein meals White sugar Raw sugar Poultry Pork Beef Sheep Butter Cheese Skim milk powder Whole milk powder Fish Ethanol Biodiesel Cotton Prices Consumption Production Trade Risks & Uncertainties Declining real prices are expected for almost all commodities % 2 Annual real price change over the coming decade Cereals Oilseeds Sugar Meat Dairy Biofuels OECD-FAO Agricultural Outlook #AgOutlook 5

6 Prices Consumption Production Trade Risks & Uncertainties Growth in demand for agricultural commodities slows down except for dairy % Due to per capita demand growth (food & other uses) Due to population growth Average annual growth rate in demand (%) Cereals Meat Fish Fresh dairy Sugar Vegetable oil OECD-FAO Agricultural Outlook #AgOutlook 6

7 Prices Consumption Production Trade Risks & Uncertainties Most additional food demand will come from Sub-Saharan Africa, India and China Growth in demand (Million tonnes per decade) Rest of World MENA China India Sub-Saharan Africa OECD Cereals Meat Fish Fresh dairy Sugar Vegetable oil OECD-FAO Agricultural Outlook #AgOutlook 7

8 Prices Consumption Production Trade Risks & Uncertainties Biofuel growth slows down, reducing the demand growth for feedstocks bln L 140 World ethanol production World biodiesel production % 25 Maize used for biofuels Sugarcane used for biofuels Vegetable oil used for biofuels OECD-FAO Agricultural Outlook #AgOutlook 8

9 Prices Consumption Production Trade Risks & Uncertainties Crop and meat production will increase without major changes in total land use Yield (t/ha) MENA Western Europe Eastern Europe and Central Asia Maize Americas Sub-Saharan Africa South and East Asia Area harvested (Million ha) Ruminant meat production (Million tonnes) Western Europe Oceania Ruminant meat South and East Asia Eastern Europe and Central Asia MENA Americas Sub-Saharan Africa Pasture (billion ha) OECD-FAO Agricultural Outlook #AgOutlook 9

10 Prices Consumption Production Trade Risks & Uncertainties As demand growth slows down, so do agricultural trade volumes Annual growth rate of trade volumes (%) % Wheat Maize Rice Soybean Poultry Pork Beef Skim milk powder OECD-FAO Agricultural Outlook #AgOutlook 10

11 Prices Consumption Production Trade Risks & Uncertainties Trade: Specialisation between regions is increasing over time 150 Agricultural trade balances by region, in constant value, (bln USD) Americas 100 Oceania Eastern Europe and Central Asia Western Europe Sub-Saharan Africa MENA South and East Asia OECD-FAO Agricultural Outlook #AgOutlook 11

12 Prices Consumption Production Trade Risks & Uncertainties Exporter concentration remains high Export shares of top 5 exporters in 2027, by commodity 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Soybean Pork Maize Skim Milk Powder Poultry Whole Milk Powder Sheep Vegetable Oils Protein Meals Rice Butter Sugar Cheese Wheat Beef Cotton OECD-FAO Agricultural Outlook #AgOutlook 12

13 Prices Consumption Production Trade Risks & Uncertainties Importer concentration less pronounced except for some products Import shares of top 5 importers in 2027, by commodity 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Soybean Cotton Sheep Pork Vegetable Oil Protein Meal Butter Skim Milk Powder Beef Cheese Maize Whole Milk Powder Poultry Sugar Rice Wheat OECD-FAO Agricultural Outlook #AgOutlook 13

14 Prices Consumption Production Trade Risks & Uncertainties Index = FAO Food Price Index (real) Real prices to be contained by strong supply growth, ample stocks and weakening demand growth How do risks and uncertainties affect the baseline projections? OECD-FAO Agricultural Outlook #AgOutlook 14

15 Prices Consumption Production Trade Risks & Uncertainties Agricultural markets are always uncertain Structural Policy Demand Income growth Biofuel policies Food and health policies Supply Oil prices Pests and diseases Climate risk Potential of precision agriculture Regulation of new plant breeding techniques Trade Emergence of new market players Trade disputes Bilateral and regional trade agreements (CTTP, NAFTA, Brexit) Increasing policy uncertainties are adding to market risks OECD-FAO Agricultural Outlook #AgOutlook 15

16 Prices Consumption Production Trade Risks & Uncertainties Risk Can predict possibility of future outcome (variance known) Can be parametrized Uncertainty Cannot predict possibility of future outcome (variance unknown) Cannot be parametrized Medium-term Agricultural Outlook Analysed using partial stochastics Partial: does not capture all sources of variability that can affect agricultural markets Stochastic analysis: estimation of possible future variations based on historical variations for key agricultural and macroeconomic drivers OECD-FAO Agricultural Outlook #AgOutlook 16

17 Prices Consumption Production Trade Risks & Uncertainties Despite downward trend, risk of temporary price increases remains USD/t 350 Real maize price: Baseline and 90% interval Grey range includes 90% of simulated prices from the stochastic analysis OECD-FAO Agricultural Outlook #AgOutlook 17

18 Prices Consumption Production Trade Risks & Uncertainties Risk Can predict possibility of future outcome (variance known) Can be parametrized Uncertainty Cannot predict possibility of future outcome (variance unknown) Cannot be parametrized Medium-term Agricultural Outlook Analysed using partial stochastics Medium-term Agricultural Outlook Analysed using scenarios Partial: does not capture all sources of variability that can affect agricultural markets Examples of scenarios: - Impact of export tax by large exporter - Impact of change in public stockholding policies Stochastic analysis: estimation of possible future variations based on historical variations for key agricultural and macroeconomic drivers OECD-FAO Agricultural Outlook #AgOutlook 18

19 Outline of the presentation Part 1: OECD-FAO Agricultural Outlook Prices Consumption Production Trade Risks and uncertainties How examine the impacts of these uncertainties? Part 2: The economic effects of public stockholding policies for rice in Asia The Economic Effects of Public Stockholding Policies for Rice in Asia

20 Why examine public stockholding policies? Since the food price crisis, public stockholding policies have regained popularity. Public stockholding programmes are considered as policy tools that can be deployed to: shield consumers from food price spikes provide more stable domestic prices for both producers and consumers However, these programmes may also have additional and unintentional impacts on domestic and international markets, depending on how they function and the scale of intervention. This report: what are their market impacts over the medium term? Focus on: public stockholding programmes for rice in Asia 20

21 This report The Economic Effects of Public Stockholding Policies for Rice in Asia 8 Asian countries: Bangladesh, China, India, Indonesia, Japan, Korea, Philippines, and Thailand 2 parts: Part 1: In-depth review of the functioning of public stockholding programmes Part 2: Examine the medium-term markets impacts 21

22 Part 1: Review functioning of public stockholding programmes Approach: comparable across countries Organize review around 5 questions: 1. Which agencies are in charge of public stocks? 2. What are the main purposes for keeping public stocks of rice? 3. How does the country acquire rice for its public stocks and at which prices? 4. How does the country release rice from its public stocks and at which prices? 5. Are there any trade restrictions in place? Generalize the process of acquisition and release of rice from public stocks 22

23 Part 1: Review functioning of public stockholding programmes Generalization of the process of acquisition and release of rice from public stocks DOMESTIC MARKET Market price DOMESTIC MARKET Market price DOMESTIC MARKET Procurement price DOMESTIC MARKET Subsidized price INTERNATIONAL MARKET Import price INTERNATIONAL MARKET Export price 23

24 Part 1: Review functioning of public stockholding programmes Generalization of the process of acquisition and release of rice from public stocks Note: situation until 2014 for Thailand and up to and including 2016 for the other countries 24

25 Part 2: Medium-term market impacts of alternative public stockholding strategies What would happen to domestic and international markets over the medium term ( ) if all eight countries set their public stock levels of rice to either a low or Motivation: periods of high (low) prices or price volatility can motivate countries to behave in the same way (e.g ) Establish bounds to global market impacts that derive from changes in public stock Compare three scenarios: high level at the same time? policies across the region Baseline scenario: business as usual assume no changes in policies and macroeconomic environment during Low-level scenario: set public stock norm to 2 weeks of national consumption by 2020 High-level scenario: set public stock norm to 3 months of national consumption by 2020 Transition period towards low-level/high-level scenarios: 3 years ( ) 25

26 Impact analysis Market impacts on: Procurement Private stocks Prices Availability Public expenditure Impact of a global production shock 26

27 Key findings Relative impacts vary by country, but there are several common trends: Short-term Effects of changing public stockholding policies are more pronounced during the transition period when countries adjust their public stocks to the new levels than during the remainder of the projection period. Medium-term Changing stockholding policies can have structural impacts over the medium term on overall procurement, domestic and international prices, availability, private stock levels, and public expenditure. Shock In the event of a global production shock, the immediate impacts on prices and availability are less severe if countries hold larger public stocks than if they hold smaller ones, but keeping low levels of public stocks enables faster recovery towards the no-shock situation 27

28 Key findings Relative impacts vary by country, but there are several common trends: Short-term Effects of changing public stockholding policies are more pronounced during the transition period when countries adjust their public stocks to the new levels than during the remainder of the projection period. Medium-term Changing stockholding policies can have structural impacts over the medium term on overall procurement, domestic and international prices, availability, private stock levels, and public expenditure. Shock In the event of a global production shock, the immediate impacts on prices and availability are less severe if countries hold larger public stocks than if they hold smaller ones, but keeping low levels of public stocks enables faster recovery towards the no-shock situation 28

29 Impact on procurement Aggregate procurement by all countries except China kt High-level scenario Baseline Low-level scenario Short-term Effects most pronounced Medium-term Structural impacts Note: Shaded area indicates projection period Source: OECD simulations 29

30 Impact on domestic producer prices Percentage change compared to baseline scenario, % Bangladesh China India Indonesia Japan Korea Philippines Thailand Low-level scenario compared to baseline % 20 Medium-term Structural impacts Bangladesh China India Indonesia Japan Korea Philippines Thailand Short-term High-level scenario compared to baseline Effects most pronounced Source: OECD simulations 30

31 Key findings Relative impacts vary by country, but there are several common trends: Short-term Effects of changing public stockholding policies are more pronounced during the transition period when countries adjust their public stocks to the new levels than during the remainder of the projection period. Medium-term Changing stockholding policies can have structural impacts over the medium term on overall procurement, domestic and international prices, availability, private stock levels, and public expenditure. Shock In the event of a global production shock, the immediate impacts on prices and availability are less severe if countries hold larger public stocks than if they hold smaller ones, but keeping low levels of public stocks enables faster recovery towards the no-shock situation 31

32 Impact of a global production shock Impact of a 3% global production shock in 2024 on the world price of rice under the low- and high-level scenario Global prices under low- and high-level scenario, without and with shock, Low-level High-level Percentage change under low- and highlevel scenario with shock compared to a situation without shock, USD/t Low-level with shock High-level with shock Global production shock in 2024 % Low-level High-level Source: OECD simulations Shock Immediate impacts less severe if larger public stocks Faster recovery if smaller public stocks 32

33 Policy recommendations When considering a consistent change (increase or decrease) in the levels of public stocks, governments should take into account that: the impacts are not limited to the short term; there can also be persisting structural impacts over the medium term, this not only affects domestic markets, but can also have spillover effects in international markets, When considering a consistent increase in the levels of public stocks, governments should take into account that this raises fiscal costs discourages private sector engagement in stockholding activities 33

34 More information The Economic Effects of Public Stockholding Policies for Rice in Asia Further information on the Agricultural Outlook Both publications are available on OECD ilibrary For questions or inquiries 34