No.1††June†2006††
 Food Outlook
  Global Market Analysis

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MARKET SUMMARIES

WHEAT

COARSE GRAINS

RICE

CASSAVA

OILSEEDS, OILS AND OILMEALS

SUGAR

MEAT AND MEAT PRODUCTS

MILK AND MILK PRODUCTS

SHORT-TERM FORECASTS FOR COMMODITY MARKETS: LINKING MARKET DEVELOPMENTS

THE RISE IN CRUDE OIL PRICES STIMULATES ETHANOL-RELATED DEMAND FOR AGRICULTURAL COMMODITIES

MEDIUM-TERM PERSPECTIVE: AFRICA TO IMPORT MORE FOOD

FERTILIZERS

OCEAN FREIGHT RATES

Statistical appendix

Market indicators and food import bills

Announcement

MEDIUM-TERM PERSPECTIVE: AFRICA TO IMPORT MORE FOOD

The second edition of the OECD-FAO Agricultural Outlook will be released in July 2006. The report draws on the commodity expertise of both organizations and provides an assessment of global commodity markets over the medium term to 2015 under specific assumptions concerning the macroeconomic environment, technology trends and agricultural and trade policies. From work undertaken for the Agricultural Outlook, it is expected that Africa will increase its dependence on basic food imports over the medium term, not only of cereals, but also of meat and certain dairy products. The common driving factors are continued high population growth (an average of 2.2 percent per year) and a projected economic growth (an average of over 4 percent per year) that is high by historical standards.

With almost 14 percent of the world population, but only less than 2 percent of the world income, Africa, as a continent, is a net importer of all of its basic food commodities. It is a significant player in some international food markets, with almost 30 percent share of the world rice and wheat trade and 25†percent share of the world whole milk powder trade. Trade shares of other products are lower, at 15†percent for coarse grains and from 5 to 10 percent for meat products. These shares are set to be sustained or to increase over the medium term.

food outlook

Import levels are expected to increase as output, while growing relatively fast, is not able to match foreseen demand. Wheat and rice imports are the largest in quantity terms. Import patterns vary significantly, as the figures indicate. While wheat imports are expected to grow by almost 6 million tonnes in Africa, growth in rice imports is almost exclusively expected in LDCs. Similarly, growth in meat imports is expected to occur in countries outside of the North Africa region.

food outlook

Particularly for LDCs, the increasing import dependence for food items has implication for food security in cases where international prices increase. While the medium-term projection indicates prices that are expected to remain constant or to fall modestly in real terms, recent high energy prices, if sustained, could well generate much higher food prices. While some LDC countries of Africa are now net exporters of crude oil, and others are exporters of other non-agricultural commodities whose prices have also increased significantly in the past year, if higher food prices do eventuate, they will impact adversely on many LDCs, whose populations are under-nourished. As the Agriculture Outlook indicates in its current projection, these countries already continue to struggle to increase their per caput food consumption.

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For more information on the OECD-FAO Agriculture Outlook: 2006 to 2015 please contact Merritt.Cluff@fao.org or Holger.Matthey@fao.org.

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GIEWS††global information and early warning system on food and agriculture