Cereals: EU agricultural prospects update
MetadataShow full item record
CTA. 2003. Cereals: EU agricultural prospects update. Agritrade, January 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52526
On the basis of information available in September...
On the basis of information available in September 2002 this update seeks to incorporate the anticipated effects of the US Farm Bill on the development of agricultural markets in the EU, Eastern Europe and internationally for meat, cereals (including rice) and dairy products. The market situation for EU cereals is projected to continue to be favourable, with the exception of rye and barley. Severe drops in production levels - mainly driven by unfavourable climatic conditions in North America and Australia - have triggered a strong rally in market prices in the cereals sector. The impact of this however will be short term. An expansion of EU production of common wheat, durum wheat and maize is projected, with increased yields more than off-setting the decline in area under cereals. EU cereal production is expected to reach 224.7 million tonnes in 2009 (up from 213.3 million tonnes in 2000 and a peak of 180 million tonnes in the pre CAP reform period). EU cereal exports are expected to rise above 30 million tonnes by 2005, reaching 32.5 million tonnes in 2009. This export level will exceed the annual limit on subsidised exports largely as a result of unsubsidised exports of both durum wheat and common wheat. EU wheat exports in 2009 are expected to be around 33% higher than in 2000 (19.6 million tonnes compared to 14.3 million tonnes). A steady growth in domestic and international demand for both common wheat and durum wheat is anticipated over the next seven years, with the EU market situation therefore remaining tight. The EU's expansion of cereals production will largely be taken up by the domestic animal-feed industry. With reference to the impact of the US Farm Bill the potentially negative impact on wheat prices will, it is felt, be off-set in the medium term by more favourable market conditions than previously expected, although the price-depressing impact will be more marked for maize. A continued imbalance in the rice sector is anticipated, with the situation becoming critical after 2006. Comment: The figures contained in the report clearly show the extent to which CAP reform in the cereals sector is allowing an expansion of EU production and a resurgence in EU exports. It also shows the extent to which cereals-sector reform is enhancing the competitiveness of those meat-product exports which make extensive use of cereal-based animal feed. For example poultry exports are projected to peak and remain at around 1 million tonnes throughout the period from 2003 to 2009, a sharp increase from around 400,000 tonnes in the pre-cereal-sector reform period. This highlights how the move to 'less trade-distorting' forms of support is having some rather strange trade effects.