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South to reap a rich harvest in
trade
By Gustavo Capdevila
GENEVA - Over the next decade, South-South
trade will account for an increasing share of
global agricultural trade flows, according to a
new report by the United Nations Food and
Agriculture Organization (FAO) and the
Organization for Economic Cooperation and
Development (OECD) released Tuesday.
During the 2005-2014 period, agricultural
output will grow at a slower rate than in the
previous decade, while consumption will expand,
driven by economic development and an increase in
population in the developing countries. The report
also predicts the emergence of new leading players
in agricultural trade, headed up by China, which
will pose a challenge to the wealthy
industrialized nations that currently dominate the
global market, partially thanks to the subsidies
they provide their farmers, totaling over US$1
billion a day in 2004.
The stiffer
competition resulting from an increase in exports
by developing countries is expected to lead to a
drop in real prices for most agricultural
commodities. The new report, "Agricultural Outlook
2005-2014", was presented in Rome and Geneva by
representatives of FAO and the OECD, whose 30
member nations include all of the world's
industrialized countries.
One of the main
conclusions of the joint report is that both
production and consumption of basic farm products
will experience sustained growth over the next 10
years. OECD official Loek Boonekamp noted that
growth in demand in the developing nations will
exceed production and lead to an increase in the
volume of trade that will even extend to
value-added products, like dairy and meat
products.
One of the most significant
changes forecast for the coming decade is an
increase in agricultural trade among the countries
of the developing South. Boonekamp predicted that
an expansion in South-South trade for certain
commodities will be seen relatively soon, while
FAO expert Merritt Cluff stated that developing
nations will play a leading role in the future of
agriculture.
With regard to imports, China
will play a decisive role, said Cluff. By the end
of the period in question, the Asian giant will be
importing 10 million tons of wheat, 5-10 million
tons of coarse grains and 42 million tons of
oilseeds. Demand for farm products will increase
in developing countries as a whole because of a
growth in population and per capita income,
predicted the FAO official.
Food demand is
more sensitive to a rise in income in the
developing world than in the industrialized
nations, said Cluff. This phenomenon has already
been observed by both experts in a number of
developing nations, particularly in East Asia and
several African countries. In terms of exports,
Cluff pointed to the emerging position of Brazil
and other leading South American suppliers, such
as Argentina. Brazil has traditionally played a
major role in the markets for certain products,
including sugar and oilseeds, a sector in which
the South American giant is capturing an
increasingly larger share of the world market.
The forecasts place Brazil in a
significantly competitive position as a low-cost
supplier of oilseeds, coarse grains, beef, poultry
and pork. Argentina will find itself in a similar
position, although perhaps not to such a great
extent, added the FAO expert. The transition
economies of Russia and Ukraine have also
demonstrated considerable potential to markedly
increase exports, Cluff said.
The growing
competition represented by the increase in exports
from these nations will pose a serious challenge
to the OECD exporter countries, where production
is more costly but highly subsidized. It will
become increasingly difficult for the wealthy
nations to compete on the world agricultural
market, despite the hefty financial support they
provide to their farmers. Even this will not allow
them to maintain market share, said Cluff.
Coinciding with the release on Tuesday of
the joint FAO-OECD report, the OECD also presented
its own "Agricultural Policies: Monitoring and
Evaluation" study, which reveals that support to
the agricultural sector in the organization's
member countries totaled almost $378 billion in
2004. Cluff stressed that this sum included all
forms of support to the sector, including funding
for research. The total represents 1.16% of the
combined gross domestic product of these nations,
the wealthiest in the world. Producers in
developing nations lack this kind of financial
support, he added.
The United Nations has
acknowledged that it faces difficulty in studying
agricultural conditions in Africa because no
detailed information or statistics are available.
Nevertheless, according to FAO estimates, imports
of agricultural products will expand considerably
in Africa over the coming years. Cluff reported
that wheat imports to the continent are expected
to reach almost 8 million tons, representing a 30%
increase over current volumes. These projections
spell a growing food dependency on the part of the
African nations, and especially the least
developed countries among them. As a result, they
will become increasingly vulnerable to price
fluctuations on the world market, and their
expenditures on food imports will rise
significantly.
The FAO-OECD report also
forecast that growth in agricultural commodity
trade will continue to under-perform relative to
non-agricultural trade, due in large part to the
persistence of high trade barriers.
(Inter
Press Service) |
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