The next ten years for global agribusiness


Global agricultural production is expected to continue growing over the next ten years but slower than in the last decade. This is one of the key messages of the report released earlier this month by the Organization for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO).

Issued annually, the “OECD-FAO Agricultural Outlook 2023-2032” provides estimates related to consumption, production, international trade, and prices of the main agricultural commodities for the next ten years.

The publication highlights the uncertain global scenario, given geopolitical tensions, extreme weather events, and increasing input price unpredictability. For these and other reasons, the OECD and FAO expect that the issue of food security will remain a priority on the global agenda.

The consequences of the war between Russia and Ukraine on the global food market are mentioned several times in the publication, highlighting the significance of the initiative that allowed the safe transport of Ukraine-produced grains. Estimates presented in the report considered the continuation of the “Black Sea Grain Initiative” as one of the assumptions, which ceased to be true this week with Russia’s refusal to renew its participation. Authorities and experts already warn of the negative effects this suspension is likely to cause on commodity prices worldwide.

The disruption of this agreement makes the challenge of feeding a population that is expected to reach 8.6 billion people by 2032 even more complex. Moreover, population growth and rising per capita income are still expected to be the main drivers of the projected 13% increase in demand for agricultural products over the next ten years.

The countries expected to witness the highest population growth rates are low-income ones, particularly those in Sub-Saharan Africa, where the average annual increase is expected to reach 2.4%, well above the global rate of 0.8%, by 2032.

On the other hand, Asia will continue to be the main region driving the increase in global food demand. This lead role of Asians is reflected in Brazilian agribusiness exports to that market, which nearly doubled between 2013 and 2022, from US$ 40.9 billion to US$ 79.3 billion.

Health and environmental concerns will also likely become key factors, especially in markets such as the European Union (EU). One of the instances of this trend mentioned in the OECD-FAO report is the Green Deal, a European strategy to achieve climate neutrality by 2050. A set of regulations derive from it and impact both the bloc’s agricultural production and trade with other countries. One of these measures, the Deforestation-Free Regulation (EUDR), prevents the circulation and entry of goods originating from open areas after 2020 and establishes a series of environmental requirements.

Concerning the global food supply, the most significant gains are expected to come from increasing productivity rather than expanding agricultural areas. Land-saving techniques and technologies implementation will be the main driver for the 12.8% increase in global production by 2032.

Countries in developing regions are expected to be the main drivers of this expansion, while markets such as the United States are projected to see limited growth. Brazil is cited as one of those responsible for the increase in the global food supply. Concerning grains, for instance, the National Supply Company (CONAB) estimates that the national harvest will reach 317.6 million tons.

International trade is also expected to grow slower than last decade. China, a major player in the import of agricultural products, is expected to begin witnessing a declining population and less accelerated economic growth, leading to a deceleration in foreign trading.

Even with the substantial impact caused by the pandemic, agricultural products trade proved to be quite resilient. While world trade fell by 12.8% between 2019 and 2020, food trade grew by 1.9%, excluding intra-EU trade. However, growth in the international food trade is expected to slow down. Between 2013 and 2022, the average annual growth was 2.94%, while in the next decade, it should be close to 1% per year.

Nevertheless, there are relevant regional differences, especially for the Latin American and Caribbean region, which is expected to increase its role as a net food exporter by 17% over the next ten years. In Brazil, net export growth is estimated to reach 18%.

As in last year’s publication, the text highlights the importance of international trade to ensure global food security, particularly in regions where agricultural production is insufficient to supply the local population, as in several countries in the Middle East and Asia.

Increased protectionism and measures that limit the flow of goods between countries—especially inputs and food—impact negatively the fight against food insecurity, which is everyone’s responsibility, not just of those affected by it.

*Sueme Mori is the Director of International Relations at the Brazilian Confederation of Agriculture and Livestock (CNA).

Written in collaboration with Pedro Rodrigues, CNA’s International Relations Advisor.

Article originally published on Broadcast