OECD sees agriculture prices rising off lows

OECD sees agriculture prices rising off lows

BRUSSELS (Reuters): Global agricultural markets are set to
emerge from a prolonged downturn, which has seen many commodities
hit historic lows, as broad-based economic growth lifts prices
over the next five years, the OECD said on Friday.

In its yearly Agricultural Outlook 2001-2006, the Paris-based
Organization for Economic Cooperation and Development (OECD)
predicted some meats and dairy products would benefit more than
cereals and oilseeds over the period.

Beef prices in Europe would continue to be pressured by the
health scare associated with mad cow disease, and lower demand
for red meat meant output needed to be trimmed, the OECD said.

But worldwide economic expansion, particularly in developing
countries, would cause demand for farm products to exceed
production and lead to lower stocks and higher prices.

"A growing world economy and population over the medium term
supported by more broadly-based economic growth in the OECD area
and continuing fast recovery of Asia, Latin America and Russia
from the financial turmoil of the late 1990s, will lead to a
market turnaround," the OECD report predicted.

"Demand will expand more rapidly in developing countries aided
by increased spending power, urbanization, improving diets and
higher population growth."

As demand increased, production of agricultural commodities
would rise too, although not quite at the same pace.

Livestock products and feedstuffs were expected to take a
bigger share of total production at the expense of food grains.

Non-OECD countries would account for the bulk of the increase
in production, but that will be insufficient to meet higher
consumption patterns, and more imports would be needed from OECD
countries, the report said.