The agriculture sector is performing well compared too other industries in recession owing to high food demand, emerging biofuel markets and economic recovery.
According to the Annual Agriculture Outlook report prepared by the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO), there is no impact of global economic crisis on agriculture as compared to other sectors, as reported by Fund Strategy.
The average prices of agricultural products in the next 10 years are projected to stay at or cross the levels of the decade before 2007-08 peaks. Vegetable oils prices are expected to surge by nearly 30%, while crops prices rise by 10%-20%. Although meat prices are unlikely to cross the average price, diary products prices will see slight gain in coming years.
The projected increase in agricultural products prices is likely to stem from economic recovery, emerging biofuel markets and food demand from developing markets. A number of cleantech companies are seeking ways to enhance the crop production to meet the continuously rising food demand.
While the scenario varies in terms of commodity, the overall sector is expected to perform better on account of the recent period of high incomes and demand for food.
The report also says that the underperforming sectors are still facing a number of difficulties like credit access, low liquidity and constricted trade finance, but the agriculture sectors has shown remarkable resistance against the global recession.
According to the study, the food prices have substantially dipped after touching the peak level in 2008. Given the downturn in food prices, the pressure is shifted to consumers who have lesser money to spend on. Despite this, many developing countries continued to be battered by high food prices.
According to a Research Analyst at RNCOS, "The agriculture sector is showing strong resistance against the global economic crisis compared to other industries due to consistent strong demand for food products. However, food security is the main issue that needs to be addressed at present because it not only solves the urgency in short time period but also helps in dealing with long-term issues such as poverty alleviation and economic growth. Rise in food prices in coming years is likely to be driven by the recovery of global economy and emerging biofuel markets."
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