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Report: Global agricultural export competition will intensify

Report: Global agricultural export competition will intensify

   The Organization for Economic Cooperation and Development’s (OECD) latest 'Agricultural Outlook' report predicts global competition between exporters of wheat, rice, oilseeds, sugar and livestock will intensify over the next 10 years in both developed and developing countries.

   The report was produced for the first time in collaboration with the UN Food and Agriculture Organization.

   “Stiffer competition, combined with higher productivity, will result in a further drop in real prices for most basic food commodities. Farmers will thus have to make continued efforts to improve efficiency. Policy reforms could help improve agricultural markets,” the OECD said.

   The OECD said that increasing export supplies by low cost non-OECD countries and a continued high degree of protection in many of the OECD markets, together with rising demand growth in developing countries will result in an increase in their share of the global trade in farm products.

   The report estimates that total world cereal output will increase by more than 1 percent annually with most of the growth occurring in non-OECD areas.

   Increasing imports by China and other Asian countries could drive nominal prices higher in the near term, but international wheat prices are expected to fall in real terms by around 11 percent over the next 10 years, according to the OECD.

   World rice prices are expected to increase in real terms over the projection period, reversing the downward trend of the past 30 years.

   At the same time, the OECD also publishing its latest 'Agricultural Policies: Monitoring and Evaluation' report, which includes an assessment of the implementation of the common agricultural policy in the 10 new member states that joined the European Union in 2004.

   Findings of the report include:

   * Enlargement has increased the diversity of EU farm structures.

   * Although enlargement brought in large amounts of land and labor, the value of agricultural production increased by less than 10 percent.

   * Farm income in new member states is likely to increase significantly over the medium term.

   * Levels of support in new member states were estimated to be well below levels of the existing 15 EU countries in 2004, but given the relatively small addition their agricultural sectors make to the EU, average support to farmers across the newly enlarged EU relative to farm receipts was reduced by only one percentage point.

   The OECD said the average level of support to farmers in its 30 member countries remained unchanged last year at 30 percent of overall farm receipts, “most of which continues to be given through trade distorting measures such as the propping up of market prices.”

   The report welcomed moves to payments that are less linked to specific commodities in many countries.

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