The international prices of major crops have dropped significantly from their historical highs, largely in response to bumper crops in 2013/14. In contrast, meat and dairy product prices are at historically high levels, primarily because their supply fell short of expectations in 2013. World ethanol and biodiesel prices continued their declines from the historical peak levels they had reached in 2011 in a context of ample supply for both.

The recent fall in prices of major crops is expected to continue over the next two years before stabilising at levels above the pre-2008 period, but markedly below recent peaks, according to the latest Agricultural Outlook produced by the OECD and FAO.

Demand for agricultural products is expected to remain firm while expanding at lower rates than in the past decade. Cereals are still at the core of what people eat, but diets are becoming higher in protein, fats and sugar in many parts of the world, as incomes rise and urbanisation increases.

The OECD–FAO Agricultural Outlook 2014-2023  says such changes, combined with a growing global population, will require substantial expansion of production over the coming decade. Led by Asia and Latin America, developing regions will account for more than 75% of additional agricultural output over the next decade.

Presenting the report in Rome, OECD Secretary-General Angel Gurría said: “Agriculture markets are returning to more settled conditions after a period of unusually high prices. This has been helped by governments showing restraint in the use of trade measures. But we cannot be complacent. We must do more – on trade, on productivity, and to tackle poverty. Governments should provide social protection for the most vulnerable, and develop tools to help farmers manage risks and invest in agricultural productivity. Achieving gains in ways that are both inclusive and sustainable remains a formidable challenge.”

FAO Director-General José Graziano da Silva said: “This year’s Outlook is favourable, if we compare it with the turbulent past few years of high and volatile food prices. Farmers around the globe responded to high food prices with a strong supply, and as a result crop prices are expected to be comparatively flat this decade. Agriculture has to provide not just more food for human consumption, but also raw material for industrial purposes, such as biofuels and animal feed.”

In a special focus on India, the Outlook projects sustained food production and consumption growth, led by value-added sectors like dairy production and aquaculture. Investment in production technology and infrastructure together with  subsidies in a range of areas have contributed to strong output expansion over the past decade, the report says, and pressure on resources is expected to reduce production growth rates over the coming years. While remaining largely vegetarian, Indian diets will diversify. As consumption of cereals, milk and dairy products, pulses, fruit and vegetables grows, the intake of food nutrients will improve.  India is currently home to the largest number of food-insecure people in the world.