The pressure on recession-hit consumers would ease as the downturn leads to lower food prices, however, “episodes of extreme price volatility” could not be ruled out in the coming years, a report by the Organisation for Economic Cooperation and Development (OECD) and the United Nations Food and Agriculture Organisation (FAO) highlights.

The agriculture sector was showing more resilience to the global economic crisis than other industries, because food was a basic necessity, however, the risks to the sector could increase if the economic downturn deepened, it said.

Price volatility could occur, especially given that agricultural commodity prices were increasingly linked to oil and energy costs, the OECD/FAO 'Agricultural Outlook 2009 - 2018' report states.

Falls in agricultural prices and in the production and consumption of farm goods were likely to be moderate in the coming years, as long as the economic recovery began within the next two to three years, said the organisations.

Further, while food prices have declined from the record peak of early 2008, they remained high in many poor countries.

Over the coming decade, prices for all farm commodities except beef and pork, even when adjusted for inflation, were unlikely to fall back to their average levels before the 2007/8 peaks, notes the report.

Average crop prices for the next ten years, were projected to be between 10% and 20% higher than the average prices between 1997 and 2006, while the prices for vegetable oils would be more than 30% higher.

An expected economic recovery, renewed food demand growth from developing countries and the emerging biofuels markets were the key drivers underpinning agricultural commodity prices and markets over the medium term, the report highlights.

Meanwhile, the organisations noted that although agricultural production, consumption and trade were expected to increase in developing countries, food insecurity and hunger was a growing problem for the world’s poor.

The authors argue that the longer-term problem is access to food rather than food availability, with poverty reduction and economic growth a big part of the solution.

In addition to more effective international aid, governments could best support domestic agricultural development through targeted policies such as infrastructure investment, establishing effective research and development systems and providing incentives for sustainable use of soil and water, the report stated.

It also emphasised the need for a greater opening up of agricultural markets and for broadening the economic development beyond farming in poor rural regions.

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