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FAO, OECD see swine fever in China among risks to food markets

World prices seen weaker in real terms in decade ahead

FAO OECD event
The launch event for the FAO/OECD Agricultural Outlook 2019-2028 on July 8, 2019 at FAO headquarters in Rome. (Photo (c) FAO/Giuseppe Carotenuto) Photo credit must be given: ©FAO/Giuseppe Carotenuto. Editorial use only. Copyright ©FAO.

Paris | Reuters — The spread of a deadly pig disease in China that has disrupted the world’s biggest pork market is one of the major risks to a well-supplied global agricultural sector, the FAO and OECD said on Monday.

African swine fever was highlighted in the annual agricultural outlook for 2019-2028 from the Food and Agriculture Organization of the United Nations (FAO) and the international Organization for Economic Co-operation and Development (OECD).

The outlook forecast broadly stable agricultural markets in the coming decade as productivity gains help output to keep pace with rising demand for food, livestock feed and crop-based biofuels.

The organizations projected global demand for agricultural products will grow by 15 per cent during the decade, while ag productivity growth is expected to increase slightly faster, keeping inflation-adjusted prices of major ag commodities at or below current levels.

China is grappling with African swine fever, which has spread across much of the country in the past year. There is no cure or vaccine for the disease, often fatal for pigs although harmless for humans.

The FAO/OECD forecast a five per cent fall in Chinese pork output this year, while imports were forecast to rise to almost two million tonnes from an average 1.6 million tonnes per year in 2016-2018.

Pork production was then projected to recover in 2020 to 2018 levels, before resuming a longer-term growth path, supported by robust underlying demand, the FAO and OECD said.

But African swine fever’s impact was still unclear, compared with the spread of the fall armyworm crop pest in China and other parts of Asia which was seen as manageable using pesticides, the organizations said.

“Measures to contain the outbreak are assumed to moderately depress global pork production in the short term,” they said.

“As their success is uncertain the medium term impact of the epidemic may become more severe than currently anticipated.”

Other observers have projected a steeper fall in Chinese pork production as herds are culled and given suspicions that cases are being under-reported, while the authorities have said outbreaks are slowing and output recovering.

The FAO/OECD forecast lower prices in real terms over the decade for most major agricultural commodities, a trend they have predicted in previous reports.

In addition to disease threats and perennial weather risks, another big issue for agricultural markets was rising trade tensions.

Chinese tariffs as part of a trade dispute with Washington would prevent U.S. pork benefiting from short-term demand for imports, with Brazil, Canada and the European Union expected to win share, the FAO and OECD said.

Asia would continue to drive global demand for pork, while poultry would lead global growth in meat demand, accounting for half of additional consumption in the next 10 years, the organizations estimated.

Dairy, however, was expected to be the single fastest-growing livestock sector, fuelled by brisk demand in India and Pakistan, they said.

— Reporting for Reuters by Gus Trompiz in Paris. Includes files from Glacier FarmMedia Network staff.

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