Why Agricultural Commodities?

Commodities in the global economy

Agricultural commodities (food, feed, raw materials and biofuel) are the engine of economic growth in rural areas of emerging markets (where 70% of the world’s poor live). Agricultural commodities account for 10% of developing countries’ gross domestic products.

In the coming decades, the increasing world population, economic growth and changing diets are expected to cause a sharp increase in the demand for agricultural commodities. Food production will need to double by 2050, yet agriculture production is threatened by numerous factors such as climate change, water scarcity, soil degradation and competition for arable land.

Agriculture is also a major contributor of global carbon emissions (15 percent), and agricultural commodity production expansion constitutes one of the greatest threats to biodiversity—it is estimated that agriculture expansion causes an annual loss of 13 million hectares of forest cover.

The lack of environmental, social care and food safety protections pose significant environmental, development and business risks. Business risks include fewer and less predictable raw materials supplies, diminished quality, interruptions in processing, reduced speed to market, and loss of confidence by a large and growing group of concerned consumers.

It is broadly recognized that innovative strategies are needed in order to implement improved agricultural practices, increase supply chain efficiencies, combat poverty, maintain ecosystem services and biodiversity, strengthen rural economic development and ensure the long-term supply of commodities to global markets.