A combination of strong growth in global food, feed, biofuel, and fibre demand and a weaker US dollar will keep agricultural commodity prices high for the next ten years, a senior analyst from the US Department of Agriculture told a grains industry conference in Melbourne today.
Mike Dwyer, director of the global policy analysis division within the USDA’s Foreign Agricultural Service said there were a number of key factors that would drive global agricultural markets to 2020.
The central ‘mega-trend' over the next decade would be strong demand growth, especially from emerging markets, boosting global prices and profitability.
He said as the global economy was emerging from the worst recession in decades, but the effects had been uneven with developing countries holding up better than the developed world.
Mr Dwyer predicted ‘logarithmic growth’ of consumer incomes through to 2020, especially in large emerging markets where much of the growth in global import demand for agricultural products was concentrated.
In a break from the past where global recessions usually hammer commodity prices, he said this time prices were down slightly from 2008 but still high by historical standards.
He said the price volatility grain producers had been experiencing had been exacerbated by errors in government policy, where shrinking supplies and food security concerns had led some countries to restrict exports. This had had the effect of distorting markets and increasing world prices.
For the last 20 years, although area of global grain production actually fell 1 percent, the growth in global production of those commodities was in yields, with grain yields increasing by 28pc.
However he said demand for food commodities was now growing significantly faster than the historical rate of yield growth, and future price increases for Australian farmers would only be tempered by more land coming into production or through the rapid introduction of greater use of biotechnology.
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