European sugar production is predicted to rise by 12% by 2030, while steady growth in EU cereals output should see volumes rise by 40 million tonnes to 341mt by the same date. These are just two of the predictions from the European Union agricultural outlook report published on 18 December 2017 by the European Commission.
The report presents predictions for the European agricultural markets for 2017 to 2030 for a wide range of agri-food products from meat and meat products to arable crops or milk and milk products to fruit and vegetables. The evolution of agricultural income and the environmental aspects of EU agriculture are also covered.
For the arable crop market, the report predicts a decline of the utilised arable area in the EU, from 107 million ha in 2017 to 104 million ha in 2030, limiting further expansion in production. The report gives particular attention to crops used for biofuels, a sector which is likely to be of major importance in the period to 2030 as the EU looks to reduce its fossil fuel consumption and meet its targets on reducing emissions. However, with the debate still ongoing over the effectiveness of biofuels in helping to meet these targets, the report predicts that the use of biofuels within the overall transport energy mix will remain stable at around 5.7% in 2030 (compared to 5.6% in 2017).
As for the sugar sector, 2017 marked the end of EU production quotas, reshaping the whole European sugar market. As a result, EU sugar production is expected to increase by 12% by 2030, although prices are projected to fall, resulting in a reduction in the gap between EU prices and world prices at around €40 per tonne. This should lead to a halving of imports and doubling of exports, the report predicts.
The report also predicts European cereal production will continue its growth, rising to 341 million tonnes by 2030 from the current level of around 301 mt. This growth is likely to be driven primarily by feed demand, good export opportunities and an increase in industrial uses of cereals. However it will be restricted by the limited potential for area expansion and slower yield growth in Europe compared to other regions of the world.
As for the European dairy market, although recent years have been difficult, growing global and EU demand is expected to support world dairy markets in the long term. The report however highlights that world market price variability will remain as well as market imbalances.
Demand for meat should remain stable in the EU and worldwide, according to the report, with EU meat production expected to reach 47.5 mt by 2030, compared to 47.3 mt in 2017. But the report warns livestock farmers might face lower prices in the next few years due to increased competition but also relatively low feed prices, even if prices are then expected to stabilise later in the outlook period due to ample supply covering growing global demand.
The predictions in the report are based on information available at the end of September 2017 and using an agro-economic model, the Aglink-Cosimo model developed by the Organisation for Economic Co-operation and Development and the Food and Agriculture Organisation of the United Nations. This model was applied with the assumptions that there will be a continuation of current agricultural and trade policies, normal agronomic and climatic conditions, and no market disruption.
However, three sectors - wine, olive oil and fruit and vegetables - were not covered by this agro-economic model. The predictions for these sectors, which together represent around 20% of European agricultural production, were based mostly on expert judgement. Only apples and tomatoes were assessed for the fruit and vegetables sector.
For the olive oil sector, further structural improvements are expected resulting in higher production. This will serve a growing world and EU demand, strengthening the EU's position as the biggest world producer and exporter of olive oil. As for the wine sector, EU consumption is expected to stabilise after a long period of decline. The report also projects a steady growth in wine exports, thanks to a strong demand for geographical indication and sparkling wines.
Regarding the apple sector, further modernisation of the apple sector is expected to achieve higher yields. This combined with a reduction in production area are projected to lead to a stabilisation of apple production, from 9,693kt in 2017 to 12,554kt in 2030. Consumption of fresh apples is estimated to stabilise, while that of processed is likely to fall slightly. Higher exports should however make up for the decline.
European production of fresh tomatoes should remain stable despite increasing yields due to longer production seasons, with 18,233kt in 2017 and 18,148kt in 2030. The report projects a slight fall in consumption of fresh tomatoes, while processed tomatoes should marginally grow due to higher demand as an ingredient and for food products.
The EU outlook report for 2017-2030 contains all relevant market data, accompanied by an explanation of assumptions, a description of the macroeconomic environment, and the general consequence of uncertainties. The predictions and perspectives highlighted in the report will be discussed at the annual EU agricultural conference taking place in Brussels on 18-19 December 2017.
The publication of the outlook report coincides with another, Scenar 2030, from the Commission’s Joint Research Centre with support from the agriculture and rural development department, which considers three different scenarios for the European common agricultural policy beyond 2020 and analyses the consequences of such scenarios on the European agricultural sector.
Science for an evolved common agricultural policy - news article on the Scenar 2030 report
Thinking CAP - recent World Bank report on how the CAP successfully supports agricultural jobs and income