Forecasting accurately is never easy but there are clear trends in world agriculture markets. In a recent report, two of the world’s main international bodies, the OECD and the FAO (Food and Agriculture Organisation) of the United Nations have produced a major 10-year outlook for world food production, competition and prices. So, what were the key points?

World population growth is slowing to about 1% per year. World agricultural output and productivity is continuing to expand at about 2% per year.

Some key food importers such as China, India and Indonesia are encouraging national self-sufficiency in some important commodities. The era of high basic agricultural prices is, it says, quite likely over.

While the report does not see a collapse, it is clear that price pressures are going to continue. In crops, western Europe has seen practically static yields over the last 10 years, but the US and Latin America and particularly Eastern Europe have all seen strong growth and output continues to grow – this is going to put continuous pressures on price. Over the last 100 years, wheat prices have declined in real terms by an average of 1.5% per year.

Dairy demand is likely to continue to grow in the next 10 years, but not at the same rate as in the last 10 years. In particular, the demand for whole milk powder is expected to slow from a growth rate of 8% per year to 2%, while dairy prices are expected to slowly increase at an average of 2% per year.

For beef, China is expected to become more than 50% dependant on imports but Brazil and Australia are better placed than Ireland; beef prices are expected to slip in real terms, mainly because of the growth in feedlots based on cheap grain.

The report makes the valid point that capacity to produce competitively depends on land and climate, price and infrastructure. Ireland in dairying is well placed on all three. For farmers, the message has to be that in a time of static prices, bank debt is expensive even though interest rates may be low. The other core message has to be that the further farmers can move away from just being paid for the commodity value of their products, the better.