“Agricultural prices will climb in the next decade on a combination of higher energy costs, falling productivity growth and rising demand, the OECD and the UN’s Food & Agriculture Organization forecast.
Extended periods of low prices for farm goods, driven by ever-increasing yields and cheap oil, “seem now a feature of a bygone era,” the Organization for Economic Cooperation & Development and the United Nation’s FAO wrote in a joint report on the outlook for agriculture through 2022.
Farm production will grow less rapidly in the future due to limited availability of suitable land, water constraints and rising costs of inputs such as fertilizer, according to the report. Corn and soybean prices rose to a record last year, and have more than doubled from 10 years ago.
“With energy prices high and rising and production growth declining across the board, strong demand for food, feed, fiber and industrial uses of agricultural production is leading to structurally higher prices and with significant upside risk,” the OECD and FAO wrote.
Agricultural production growth is predicted to slow to an average 1.5 percent a year through 2022 from 2.1 percent annually in the past decade, according to the report. That will still beat population growth, with farm output per person advancing by 0.5 percent per annum over the period.