Supply of raw materials in the EU: an in depth outlook

Transcription

1 Supply of raw materials in the EU: an in depth outlook COCERAL / COPA-COGECA Event "Strategic supply of raw materials in the EU" Outlook, Competitiveness, Challenges European Parliament, 12 October 216 Tassos Haniotis Director Economic analysis, perspectives and evaluations; communication DG Agriculture and Rural Development European Commission

2 Outline 1. The shifting environment of agricultural markets 2. its impact on existing trends, drivers and challenges 3. and its relevance for EU's cereal sector 2

3 Prices Trends in real commodity prices (21 = 1) Agriculture Fertilizers Energy Metals & minerals Source: World Bank. (216 is average for first 9 months) 3

4 Prices Trends in real grain and oilseed prices (21 = 1) Agriculture Oils & Meals Grains Source: World Bank. (216 is average for first 9 months) 4

5 EUR/t Prices The likely wheat price path High price scenario 2 9 th percentile Low price scenario 1 th percentile 1

6 Costs Commodity price changes during specific periods Source: AGRI calculations on World Bank data. 6

7 Costs Developments in cereals: soft wheat 12 Common wheat determinants of gross margins, EU avg, /ha 12 Common wheat operating costs, EU avg, /ha Source: FADN grain and straw Operating costs direct payments Gross margin 7 Seed Fuels, energy, mainten. Other Crop protection Fertilizers

8 Costs Gross margin maize: comparison with US Grain maize determinants of gross margins, EU avg, /ha Grain maize determinants of gross margins, US avg, $/acre grain and straw Other est Fertilizers Fuels, energy, mainten. Crop protection Seed Source: FADN Source: ERS - USDA Seed Crop protection Fuels, energy, mainten. Fertilizers

9 18 In million metric tonnes Demand Changes in cereal demand, 25 to TOTAL WHEAT wheat for food wheat for feed wheat for industrial use TOTAL COARSE GRAINS United States European Union China India coarse grains for feed coarse grains for food and industrial use Source: DG Agriculture and Rural Development Outlook based on OECD-FAO Agricultural Outlook Note: 25 = 3-year average of (24-26) and 214 = 3-year average of ( ) 9

10 Million t Trade Soft wheat trade flows in 25 and Australia Brazil Canada China Russia Ukraine United States EU MENA Source: GTA 25 = avg (23, 24, 25) 215 = avg (213, 214, 215)

11 Million t Trade Maize trade flows in 25 and Australia Brazil Canada China Russia Ukraine United States EU MENA Source: GTA 25 = avg (23, 24, 25) 215 = avg (213, 214, 215)

12 Milk Mixed livestock Sheep and goats Mixed crops and livestock Other fieldcrops Wine Olives Fruit Cattle Horticulture Mixed crops Granivores Cereals-Oil seeds- Protein Permanent crops combined Income Challenges - Relevance for cereals At output and input side terms of trade have changed Income under pressure Share of farms where farm income (FNVA) losses exceed 3% by type of farming, avg % 26% 27% 28% 28% 28% 3% 31% 32% 32% 32% 32% 34% 34% 12

13 Addressing Challenges - Relevance for cereals At output and input side terms of trade have changed Income under pressure Challenge for EU COP farms: reverse margin squeeze by adding value to the product New breeds High quality inputs Cooperation along the food chain High quality standards Avoid UTPs or reducing costs of production precision farming, new breeds, big data, and better coping with risks 13

14 What types of risks and how to address? Price-related risks What? Price level, volatility and comovement How to address? Intervention, futures markets and contractualisation Production risks What? Catastrophic events, diseases, insecurity due to climate change How to address? Insurance schemes, mutual funds, natural disaster aid Income-related risks What? Increased income variability, farm cash-flow constraints, farm income squeeze due to costs or bottlenecks in the food chain How to address? Direct income support decoupled, direct income support coupled, Counter-cyclical / income stabilising support schemes 14

15 Reports and data available at: Thank you for your attention! 15