Production, Prices, Trade, Climate, and Structural Transformation

Why the Next Decade Will Redefine Agriculture

INTRODUCTION – A SYSTEM AT ITS LIMITS

The coming decade will not represent incremental change in agriculture. It will mark a structural inflection point.

The global agricultural and food system is approaching its operational limits under simultaneous pressure from:

• Rising global food demand
• Intensifying climate stress
• Persistently high and volatile input costs
• A shrinking and aging producer base
• Increasing food price volatility rather than stable price growth

As a result, the core question has fundamentally shifted.

It is no longer: “Will agriculture continue to produce?”

It is now: At what cost, under which risks, through whom, and with what social consequences will food be produced—and who will ultimately bear those costs?

1️⃣ Global Agricultural Production: Growth Without Expansion

Global agricultural output will continue to grow over the next decade. However, the nature of that growth has permanently changed.

Future production increases will not come from expanding farmland. Land, water, and ecological constraints make that model obsolete.

Instead, growth will be driven by productivity gains, enabled by:

• Improved irrigation efficiency
• Advanced seed and breeding technologies
• More precise fertilizer and feed use
• Digital and precision agriculture tools

This represents a decisive shift from extensive expansion to intensive efficiency.

Producers lacking access to capital, technology, data, or institutional support will not simply lag behind—they risk systematic exclusion.

Efficiency is becoming a selection mechanism.

2️⃣ Food Demand: Slower Growth, Higher Complexity

Global food demand is projected to increase by approximately 13% over the next decade, a slower pace than in previous periods.

The reasons are structural:

• Per capita consumption in high-income countries has largely plateaued
• Population growth in low- and middle-income regions now drives demand

Key demand shifts include:

• Moderate growth in cereals
• Continued expansion of animal-based products, particularly in middle-income economies
• Rapid growth in plant-based proteins driven by cost, health, and environmental considerations

This marks a transition: from quantity-driven demand to composition- and quality-driven demand.

Critically, rising consumption does not automatically translate into better nutrition. Nutritional outcomes will increasingly depend on

3️⃣ Food Prices: Volatility Becomes the Core Risk

Average real agricultural commodity prices are expected to remain under downward pressure in the long term.

However, price volatility will intensify.

This creates a new reality:

• Food may remain relatively affordable on average
• Yet sudden and severe price shocks will become more frequent

Climate-related yield losses, energy and fertilizer price swings, trade disruptions, and geopolitical tensions will increasingly trigger abrupt price spikes.

In this environment:

• Producers without risk-management tools will struggle to survive
• Storage capacity, contract farming, insurance, and hedging instruments will shift from optional to essential

Food security risks will be driven less by price levels and more by price instability.

4️⃣ Trade: From Convenience to Necessity

Over the next decade, international food trade will no longer function as a supplement to domestic production—it will be structural.

Currently, around 20% of global calorie consumption is supplied through cross-border trade, and this share is expected to remain high.

Trade plays a dual role:

• When well-governed, it stabilizes supply and enhances resilience
• When poorly managed, it amplifies vulnerability and systemic risk

As a result, countries are shifting:

• Away from attempting full self-sufficiency
• Toward specialization based on comparative advantage and risk diversification.

In a climate-volatile and geopolitically fragmented world,

5️⃣ Structural Shifts in Production Patterns

Clear and durable changes in production priorities are emerging:

Cereals

• Maize becomes increasingly strategic due to its links with feed and energy markets

Oilseeds

• Soybean, rapeseed, and sunflower drive growth, fueled by vegetable oils, feed demand, and bio-based uses

Animal Products

• Dairy shows the most stable growth trajectory
• Poultry remains the fastest-growing protein source
• Red meat faces structural constraints from cost, emissions, and resource intensity

Aquatic Products

• Capture fisheries stagnate
• Aquaculture becomes the primary engine of supply growth

These shifts reflect deeper pressures at the intersection of

6️⃣ Climate: The Binding Constraint

Climate change will be the single most decisive factor shaping agricultural outcomes in the next decade.

Expected impacts include:

• More frequent and severe droughts
• Irregular precipitation patterns
• Heat stress affecting crops and livestock
• Rising yield volatility

Climate change is no longer a future scenario. It is the operating environment.

While climate is a risk, it is also a management challenge. Productivity gains, soil health restoration, and integrated water management will determine which systems adapt—and which fail.

7️⃣ Data and Digitalization: A New Factor of Production

Alongside land, labor, and capital, agriculture has effectively acquired a fourth factor of production: data.

Over the next decade, the following will become standard practice:

• Precision agriculture
• Satellite and remote sensing
• Digital soil mapping
• Climate and pest early-warning systems

The key issue is no longer technological availability.

It is: Who controls the data, who can access it, and who captures the value it generates.

Data governance will increasingly define competitiveness, inclusion, and resilience across agricultural systems.

8️⃣ Smallholders: The System’s Most Fragile Link

Small-scale producers face escalating structural pressure:

• Low and unstable output prices
• High and volatile input costs
• Disproportionate exposure to climate shocks
• Limited access to finance, insurance, and technology

The next decade will determine whether smallholders:

• Remain viable through organization, cooperation, and value-chain integration
• Or are gradually pushed out of the system altogether

An efficient agricultural system that excludes smallholders may remain productive—but it will lack

9️⃣ New Agricultural Income Models

Future farm income will extend beyond crops and livestock.

Emerging revenue streams include:

• Carbon sequestration
• Ecosystem services
• Nature-based solutions

These mechanisms hold potential—but also risk.

Without inclusive policy design and transparent governance, environmental markets may:

• Reduce inequality for some
• While creating new barriers for others

Their impact will depend entirely on

CONCLUSION – A DECADE THAT WILL SELECT, NOT ACCOMMODATE

Agriculture over the next decade will be:

• More productive
• More exposed to risk
• More data-driven
• More selective

Those who succeed will:

• Manage risk effectively
• Improve productivity sustainably
• Organize collectively
• Integrate into data-enabled value chains

Those who cannot will lose ground—not gradually, but structurally.

The defining challenge ahead is no longer maximizing production at any cost.

It is building food systems that are resilient, inclusive, and governed with long-term societal objectives in mind.