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WORLD AGRICULTURAL SITUATION Niagara Falls, October 2009 Farmers had a miserable time in 2008 and early 2009 Scarce credit owing to banking crisis Reduced demand owing to recession Fall in trade with product backed up on domestic markets Collapse in commodity prices in 2nd half 2008 High input prices especially for fuel, fertiliser and feed Global Recovery 2009-2010 World emerging from deepest recession in 60 years Recovery led by Asia Massive intervention by govts. to stimulate economic activity Economic Growth-advanced economies Economic Growth–developing countries Real GDP Growth (%) – World & Advanced countries Source: IMF Recovery in the BRIC Countries Trade and commodity prices are recovering Trade is picking up especially with Asia Commodity prices are recovering Food and agriculture was more resilient to the recession than other sectors Trade volume & Commodity prices (% changes) Developing countries driving growth in farm exports Export growth from 2006-08 average to 2018 60 50 40 30 % 20 10 0 -10 Wheat Coarse grains Oilseeds OECD Sugar Pigmeat Non-OECD Poultry World SMP Exchange rate movements (Index 2000=100) Major currencies Emerging and developing economies Commodity Price Developments Commodity and Petroleum Prices Impact on farmers Oil prices rising faster than food prices Low inflation & interest rates Large govt. fiscal imbalances Stable food and agric. markets Inflation & Interest Rates Government Fiscal Balances (% GDP) Source: IMF Major Food Crops - prices Source: IMF Major Food Crops - stocks 2) Corn, soybeans wheat, rice. Source: IMF Major Food Crops - demand Source: IMF Major Food Crops - biofuel Source: IMF EU Demand for vegetable oil 2018 USA 2006-08 2018 Indonesia 2006-08 non-biofuel use 2018 biofuel use 2006-08 0 5 10 15 20 Million tonnes Source: OECD 25 30 35 Meat & Dairy prices Source: OECD Meat consumption increases are mainly in developing countries 350000 Sheep 250000 200000 Poultry 150000 Pork 100000 50000 Beef OECD Source: OECD non-OECD 2018 2006-2008 2018 2006-2008 2018 0 2006-2008 thousand tonnes 300000 WORLD Policy needs Correct fiscal imbalances Increase investment in agriculture Incentives to mitigate and adapt to climate change Strengthen banking regulations to reduce excessive risk taking Strengthen competition policy especially in retail distribution sector Include risk management instruments in farm programs Conclusions The world economy is growing again – along with trade - but growth is slow and uncertain Farm commodity markets are strengthening However, credit to remain tight; weather patterns irregular Overall the future looks better for farmers – until of course the next economic recession due around 2020 www.ifap.org Thank you for your attention … the farmers’ voice at the world level