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.