Christine Moeller European Commission DG AGRI Economic analysis of EU agriculture VLI Fruehjahrstagung, Duesseldorf, 23 April 2009

Transcription

1 Future availability and value of agricultural commodities in the EU Christine Moeller European Commission DG AGRI Economic analysis of EU agriculture VLI Fruehjahrstagung, Duesseldorf, 23 April 2009

2 Outline Introduction Medium-term perspectives for EU agricultural markets Cereals Meat and dairy sectors Main uncertainties Conclusions 2

3 Introduction 3

4 IMF: Successive world economic growth estimates for 2009 (% change 2009/2008) 4,5% 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% July 08 Oct 08 Nov 08 Jan 09 Source: International Monetary Fund (IMF). 4

5 US commodity price and exchange rate coherence (Indices, January 2003=100)) Commodity price index (Jan 2003=100) Exchange rate index (Jan 2003=100) Considerable «macro-fluctuations» and lines of coherence Oil price (Europe Brent FOB) Exchange rate (US$/ ) Wheat price (US all wheat, season average price)

6 Recent development of the value of the currencies of major third country trading partners of the EU vis-à-vis the value of the Euro ( exchange rate of Jan08=100) Appreciation of the Euro Depreciation of the Euro Jan 08 Feb 08 Mrz 08 Apr 08 Mai 08 Jun 08 Jul 08 Aug 08 Sep 08 Okt 08 Nov 08 Dez 08 Jan 09 Feb 09 Source: ECB. USD JPY AUD NZD CAD CNY RUB BRR 6

7 Recent development of the value of the currencies of selected EU New Member States and the British Pound vis-à-vis the value of the Euro ( exchange rate of Jan08=100) Appreciation of the Euro Depreciation of the Euro 85 Jan 08 Feb 08 Mrz 08 Apr 08 Mai 08 Jun 08 Jul 08 Aug 08 Sep 08 Okt 08 Nov 08 Dez 08 Jan 09 Feb 09 Source: ECB. PLN CZK RON HUF GBP 7

8 2007m Specific characteristics of the agricultural sector CPI energy CPI CPI food agricultural prices CPI non food, non energy m m m m m m m m m m m m m m m m m m m m m m m m m m m m m04 (2000=100)

9 have an impact on price formation 9

10 along the food supply chain 10

11 and downward supply chain developments are feeding back to the agricultural sector Margin extension through price increase in complementary goods and services P Dc S'c P'c Pc D'p Dp Sc Sp Pp P'p M M' Q' Q M = Spanne; D = Nachfrage; S = Angebot; P = Preis; Q = Menge Q c -> Verbraucherebene p -> Erzeugerebene 11

12 who seeks for structural adjustment Factor input and productivity in French agriculture: Input and output volumes over the last 35 years (1973=100) a a a00 Output (volume) Fixed capital consumption (volume) Intermediate consumption (volume) Land use (volume) Labour input (volume) 1974a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a00

13 Langfristig stagnierende bis negative Entwicklung der Faktoreinkommen in der österreichischen Landwirtschaft (kontinuierlicher Abwanderungsdruck) Nominale Entwicklung wichtiger Einkommensgrößen in der österreichischen Landwirtschaft (Mio, ) Landwirtschaftlicher Produktionswert Vorleistungen Abschreibungen Faktoreinkommen Fremdfaktorentlohnung Unternehmerisches Einkommen 1990a a a a a a a a a a a a a a a a a a00 13

14 Recent prevalent threat: Worsening agricultural terms of trade Agricultural input and output price index development in Germany (nominal terms), 2000= Fertiliser Total input Total output q q q q q q q q q q q q04 Source: Eurostat. 14

15 150 Total private consumption and retail food consumption values are driven rather by price than volume developments (despite an increasing market share of hard discounters in the food sector) Private consumption in Germany: Value and volume developments in total consumption and retail food consumption since 1991 (1991=100) 145 Value overall private consumption Volume overall private consumption Value retail food consumption Volume retail food consumption

16 while the share of food expenditure in total private consumption expenditure recently tends to stagnate Share of food consumption expenditure in total private consumption expenditure in Germany since 1991 (%) 18% 16% Share food consumption expenditure (retail and catering) in total private consumption expenditure 14% 12% 10% 8% Share retail food expenditure in total private consumption expenditure 6% 4% 2% Share catering expenditure in total private consumption expenditure 0%

17 Medium-term perspectives for EU agricultural markets 17

18 The market outlook over the medium-term should largely depend on The pace of recovery from the economic crisis The policy environment Structural factors that should sustain market prospects the increase in global food demand the emergence of the biofuel sector the long-term slow down in productivity growth in many sectors Higher input costs (energy and fertiliser prices) should lift commodity prices Low stock levels 18

19 Potential impact of the economic crisis Features of the economic crisis Severity undeniable will be deeper and last longer than all previous postwar Path of recovery still unknown especially on future consumption patterns Impact on agricultural markets Unclear yet if long-term trends have changed Small annual changes in GDP growth could have significant long-term effects Uncertainty not only affects output prices, but input prices as well Impact on EU agriculture Potential impact on asset values and financial situation of farms Asymmetric impact by MS (net budgetary position) 19

20 Economic growth revised sharply downwards compared to March 2008 $/euro exchange rate GDP growth 1,6 6,0 February 2009 $/euro exchange rate 1,4 March ,0 1,2 4,0 1,0 3,0 0,8 2,0 0,6 1,0 0,4 0,0 0,2 GDP growth - EU15/EU27-1,0 0, ,0 20

21 Prospects for EU cereal markets are relatively positive 1. Cereal prices are projected to be sustained (expanding biofuel demand and exports, moderate yield growth and low stocks) 2. Low risk of (regional) imbalance on EU cereal markets 3. Changing price relations in favour of coarse grains (maize and barley) 4. but greater risk of price fluctuations but more modest perspectives for the meat sector 1. Beef sector to continue its long-term decline with declining production (falling dairy herd, impact of sanitary crisis, impact of decoupling policy) 2. Pork sector to show moderate growth driven by domestic demand 3. Poultry sector to become increasing net importer as demand grows faster than production 4. Sheep sector to continue its declining trend 21

22 Projected world wheat prices over the medium-term FAPRI 2009 (preliminary) OECD 2008 AGRI 2009 (preliminary) (HRW US Fob Gulf, $/t) U.S. Dollars per Metric Ton /99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 22

23 Projected world maize prices over the medium-term (US Fob Gulf, $/t) FAPRI 2009 (prelim inary) OECD 2008 AGRI 2009 (preliminary) U.S. Dollars per Metric Ton /99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 23

24 EU milk production increases thanks to the gradual phasing-out of dairy quotas EU milk production, deliveries to dairies, dairy cows 180 EU-12 EU-15 EU-25 EU Milk production and deliveries (mio t) EU-12 Milk Production Dairy cow herd EU-15 EU-10 EU-12 Milk Deliveries Number of dairy cows (mio heads)

25 Conclusions 25

26 In summary, relatively favourable market and price trends over the medium-term but many uncertainties remain Potential implications of further trade liberalisation and a changing policy environment Future development of world commodity markets: will structural factors continue to support commodity prices? Economic environment: dependent on the depth and breadth of the economic crisis, pace of recovery and impact of higher energy prices Climate change, technological developments (GMO), biofuels, sanitary conditions, higher costs of production factors (e.g. water) 26