prospects for agricultural markets and income 2004-2011 for eu-25
TRANSCRIPT
Prospects for agricultural marketsand income 2004-2011 for EU-25
Prospects for agricultural markets and income 2004-2011, December 2004 2
Structure of the presentation
Introduction– Analytical approach
• Methodology• Main assumptions
Main results:– Medium-term prospects for the EU-25
• Projections for cereals, oilseeds, meat, eggs and dairy• Income projections
– Impact of enlargement
Prospects for agricultural markets and income 2004-2011, December 2004 3
Methodological approach Type of models: DG AGRI market projections carried out
using – a recursive dynamic partial equilibrium model and – a comparative static model (ESIM)
Results: model output consists of supply balance sheets for main commodities, market prices and income
Detailed results for:– Old Member States (EU-15)– New Member States (EU-N10)– EU-25For main commodities/variables
Prospects for agricultural markets and income 2004-2011, December 2004 4
Methodological approach Main assumptions:
– Uruguay Round Agreement on Agriculture maintained constant
– Favourable, though moderate world agricultural market outlook
– Return to modest economic and population growth– $/€ exchange rate to reach 1.15 over the medium-term– By 2011 direct payments are assumed to be 90%
decoupled (milk 100 %, arable crops 93 %, beef 78 %, sheep 73 %)
Prospects for agricultural markets and income 2004-2011:
Cereal and oilseed market
Prospects for agricultural markets and income 2004-2011, December 2004 6
Crops
medium term perspective appear moderately positive for crop markets thanks to the – CAP Reform and decoupling;– the return to higher set-aside levels in 2005/06; – favourable world market conditions and– the expected return to improved exchange rate
conditions.
Prospects for agricultural markets and income 2004-2011, December 2004 7
Slightly expanding cereal markets….
0
50
100
150
200
250
300
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Non-feed use
Feed use
ExportsImports
EU-25EU-15
Development of cereal markets in the EU, 1995-2011 (mio t)
Prospects for agricultural markets and income 2004-2011, December 2004 8
…balanced by higher levels of set aside…
0
1
2
3
4
5
6
7
8
9
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Obligatory set aside old MS
Obligatory set aside new MS
Voluntary set aside
EU-15 EU-25
Development of set aside in the European Union (mio ha)
Prospects for agricultural markets and income 2004-2011, December 2004 9
…with moderate levels of stocks over the medium term….
0
10
20
30
40
50
60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Private stocks
Public stocks
Exports
EU-15 EU-25
Development of stocks and cereal exports in the EU, 1995-2011 (mio t)
Prospects for agricultural markets and income 2004-2011, December 2004 10
…and accumulating public stocks of barley and moderate levels of soft wheat stocks.
0
2
4
6
8
10
12
14
16
18
20
22
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Wheat Barley Rye Maize
EU-15 EU-25
Composition of public stocks in the EU (mio t), 1995-2011
Prospects for agricultural markets and income 2004-2011, December 2004 11
Prospects remain conditional on exchange rate environment.
Development in cereal stocks in the EU under different exchange rate assumptions (mio t)
0
10
20
30
40
50
60
70
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total cereal stocks
Total cereal stocks (1.4 USD/EUR)
Total cereal stocks (1.0 USD/EUR)
Total cereal stocks (1.15 USD/EUR)
Prospects for agricultural markets and income 2004-2011, December 2004 12
Good perspectives on soft wheat markets – with regional appearance of public stocks…..
0
20
40
60
80
100
120
140
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
EU-15
Production
Non-feed use
Feed use ExportsImports
Public stocks
EU-25
Development of soft wheat markets in the EU (mio t), 1995-2011
Prospects for agricultural markets and income 2004-2011, December 2004 13
…are contrasted by the further loss of competitiveness of barley and accumulating public stocks…
Development of barley markets in the EU (mio t), 1995-2011
0
10
20
30
40
50
60
70
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Feed use
Non-feed use
Production
ExportsPublic stocks
EU-15 EU-25
Prospects for agricultural markets and income 2004-2011, December 2004 14
…growing competitiveness of maize in feed use but transport costs separated markets ……
Development of maize markets in the EU (mio t), 1995-2011
0
10
20
30
40
50
60
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Feed use
Non-feed use
ImportsExports
EU-15 EU-25
Prospects for agricultural markets and income 2004-2011, December 2004 15
….short term pressure on rye markets…….
0
2
4
6
8
10
12
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Non-feed use
Feed use
Public stocks
Exports
EU-15 EU-25
Development of rye markets in the EU (mio t), 1995-2011
Prospects for agricultural markets and income 2004-2011, December 2004 16
…and moderate perspectives on oilseed markets. stable area development; energy oilseeds production remains stable
with status quo policies; developments depend on the
implementation of the biofuel directive in the Member States in particular related to additional resources;
EU remains major net importer of oilseeds.
Prospects for agricultural markets and income 2004-2011:
Meat sector
Prospects for agricultural markets and income 2004-2011, December 2004 18
Meat Beef production lower than consumption in 2003 for the first time
in 20 years and expected to remain so throughout the projection period due to:– Declining cattle herd from dairy sector– Impact of decoupling of direct payments– Impact of market disruptions of 2001 BSE crisis
Pigmeat production expected to keep its slight growth thanks to:– Solid demand both in the EU15 and in the new Member States– Expected profitability with good pigmeat prices and relatively low
feed prices Poultry meat demand and production to remain strong
Limited recovery in sheep/goat meat production after 2001 FMD results in high market prices
Prospects for agricultural markets and income 2004-2011, December 2004 19
EU to remain net importer of beef meat over the medium-term
0
1
2
3
4
5
6
7
8
9
10
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0.0
0.5
1.0
1.5
2.0
2.5
Trad
e,
Sto
cks
Production
Exports
ImportsEnding stocks
EU-15 EU-25EU-12
Consumption
EU production, consumption, trade and intervention stocks (mio t c.w.e.)
Prospects for agricultural markets and income 2004-2011, December 2004 20
Pig meat remains preferred by EU consumers (50% of total meat consumption) ensuring a slight production growth
0
5
10
15
20
25
30
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0
1
2
3
4
5
6
Trad
e
Production
Consumption
Exports Imports
EU-15 EU-25EU-12
EU production, consumption and trade (mio t c.w.e.)
Prospects for agricultural markets and income 2004-2011, December 2004 21
EU poultry production to keep its growth over the medium term in line with growing consumption
0
3
6
9
12
15
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0
1
2
3
4
5
Trad
e
ProductionConsumption
Exports
Imports
EU-15 EU-25EU-12
EU production, consumption and trade (mio t c.w.e.)
Prospects for agricultural markets and income 2004-2011, December 2004 22
EU sheep/goat sector not to fully recover from the 2001 Foot and Mouth Disease
0.0
0.5
1.0
1.5
2.0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0.0
0.5
1.0
Tra
de
Production
Consumption
Imports
EU-15 EU-25EU-12
Exports
EU production, consumption and trade (mio t c.w.e.)
Prospects for agricultural markets and income 2004-2011, December 2004 23
Total EU meat consumption to resumeits long term growth
0
10
20
30
40
50
60
70
80
90
100
1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Beef Pork Poultry Sheep Total
EU-15 EU-25
EU per capita consumption (kg/head, in carcass weight equivalent)
Prospects for agricultural markets and income 2004-2011:
Milk and dairy sector
Prospects for agricultural markets and income 2004-2011, December 2004 25
Milk and dairy products Medium term perspective appear positive for EU
dairy markets thanks to the:– Increase in domestic demand for cheese and other
value-added dairy products– Decrease in production of residual bulk products like
butter and SMP facing lower support and market prices
Increasing use of milk for the production of cheeses and other high value-added dairy products for the domestic market limits availabilities for exports
Prospects for agricultural markets and income 2004-2011, December 2004 26
Milk quotas to constrain EU milk production while growing milk yields reduce dairy cow herd
EU milk production, deliveries to dairies, dairy cows
0
20
40
60
80
100
120
140
160
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Mil
k p
ro
du
cti
on
an
d d
eli
verie
s (
mio
t)
0
5
10
15
20
25
30
35
40
Nu
mb
er o
f d
air
y c
ow
s (
mio
head
s)
Milk Production
Dairy cow herd
Milk Deliveries
EU-12 EU-15 EU-25
Prospects for agricultural markets and income 2004-2011, December 2004 27
EU cheese market keeps its steady growth over the medium term but exports face limited availability
EU production, consumption and trade (mio t)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Tra
de
Consumption
Production
Exports
Imports
EU-15 EU-25EU-12
Prospects for agricultural markets and income 2004-2011, December 2004 28
EU butter balance to improve over the medium-termEU production, consumption, trade and intervention stocks (mio t)
0.0
0.5
1.0
1.5
2.0
2.5
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0.0
0.2
0.4
0.6
0.8
1.0
Tra
de
, S
tocks
Consumption
Production
Stocks
Exports
Imports
EU-15 EU-25EU-12
Prospects for agricultural markets and income 2004-2011, December 2004 29
EU Skimmed Milk Powder (SMP) market to shrink over the medium term leaving less SMP available for exports
EU production, consumption, trade and intervention stocks (mio t)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Pro
du
cti
on
, C
on
su
mp
tio
n
0.0
0.2
0.4
0.6
0.8
Tra
de
, S
toc
ks
Consumption
Production
Imports
Exports
Stocks
EU-15 EU-25EU-12
The development of agricultural income
Prospects for agricultural markets and income 2004-2011:
Prospects for agricultural markets and income 2004-2011, December 2004 31
A moderately positive market outlook, the CAP Reform and enlargement lead to stabilising real incomes in the old Member States….
-9%
-6%
-3%
0%
3%
6%
9%
12%
15%
18%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Annual growth
70
80
90
100
110
120
130
140
150
160
Annual growth Cumulative growth
Prospects for agricultural markets and income 2004-2011, December 2004 32
…and secures the high income gains in the new Member States.
2003 2005 2006 2007 2008 2009 2010 2011
Factor income in nominal terms
EU-25 100 106,7 106,6 106,1 105,6 105,9 106,1 106,9 EU-15 100 103,1 102,5 101,9 101,0 100,9 100,7 101,4 EU-N10 100 179,7 187,2 189,2 198,0 205,1 215,0 216,0
Labour input
EU-25 100 95,6 92,8 90,1 87,5 84,9 82,5 80,1 EU-15 100 96,0 93,8 91,7 89,6 87,5 85,5 83,5 EU-N10 100 94,8 91,0 87,4 83,9 80,5 77,3 74,2
Agricultural income in
real terms per labour unit
EU-25 100 107,0 108,0 108,7 109,4 110,9 112,3 114,2 EU-15 100 103,2 103,2 103,2 102,8 103,3 103,6 104,9 EU-N10 100 173,6 183,2 187,3 198,9 209,1 222,7 226,4
The impact of enlargement
Prospects for agricultural markets and income 2004-2011:
Prospects for agricultural markets and income 2004-2011, December 2004 34
Impact of enlargement I:
New Member States add about 38 mio ha or 30% to the agricultural area of the EU;
agricultural production of the EU increases by about 10% to 20%;
agricultural work force increases by 52% and agricultural value added by 6%. Economic growth is significantly higher than in the
old Member States.
Prospects for agricultural markets and income 2004-2011, December 2004 35
The impact of enlargement II:
positive market and income outlook for agriculture in the EU-10 in the medium term as compared to
• lower income, slightly lower market prices and higher volatility of prices under non-accession;
high transport costs in some regions constrain development of cereal export markets in the EU and in third countries;
the use of the agricultural potential will only gradually increase.
Prospects for agricultural markets and income 2004-2011, December 2004 36
The process of trade integration…..
started with the conclusion of the Europe Agreements at the beginning of the 1990s and accelerated with the double zero and double profit process and
has avoided destabilising market developments after enlargement.
Agricultural markets are expected to benefit from the complete lift of trade barriers, in particular trade between the new Member States.
Agricultural trade should further increase between old and new Member States.
Prospects for agricultural markets and income 2004-2011, December 2004 37
…has been successful.
EU-N10: Share of product export to EU-25
Beef
Pork Milk
Poultry
SMP
ButterCereals
Cheese
0
20
40
60
80
100
0 10Product (average 1999/2003)
EU-N
10 in
divi
dual
pro
duct
exp
ort
to w
orld
=100
EU-N10: Share of product import from EU-25
Pork
PoultryCereals
Butter
SMP
Milk
Beef
Cheese
0
20
40
60
80
100
0 10Product (average 1999/2003)
EU-N
10 in
divi
dual
pro
duct
impo
rt fro
m w
orld
=100
Integration of the EU-N10 in the EU-25 market (selected products)
Prospects for agricultural markets and income 2004-2011, December 2004 38
Membership has a positive effect on cereal markets.....
0
10
20
30
40
50
60
70
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Exports Imports
Production
Domestic use
Development of cereal markets in the EU-N10 with and without enlargement (mio t)
(dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 39
…and further opportunities to trade integration exist.
Trade integration of cereal markets in the new Member States
EU-N10: Share of cereals export to EU-25
Estonia
Latvia
Lithuania
PolandCyprus
MaltaHungary
Slovenia
Slovakia
Czech Republic
0
20
40
60
80
100
0 10Member State (average 1999/2003)
Indi
vidu
al E
U-N
10 c
erea
ls
expo
rt to
wor
ld=1
00
EU-N10: Share of cereals import from EU-25
Latvia
Lithuania
Malta
SlovakiaSlovenia
Poland
Cyprus
Estonia
HungaryCzech Republic
0
20
40
60
80
100
0 10Member State (average 1999/2003)
Indi
vidu
al E
U-N
10 c
erea
ls
impo
rt fro
m w
orld
=100
Prospects for agricultural markets and income 2004-2011, December 2004 40
A continuous positive outlook for soft wheat shows increasing external competitiveness….
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Exports
Imports
Development of soft wheat markets in the EU-N10 with and without enlargement (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 41
… and internal competitiveness as feed cereal, e.g. in Poland,…
0
2
4
6
8
10
12
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
ExportsImports
Development of the soft wheat market in Poland with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 42
…while high transport and marketing costs dampen further market expansion in Hungary.
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
ExportsImports
Development of the soft wheat market in Hungary with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 43
Barley loses competitiveness ….
0
2
4
6
8
10
12
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Domestic use
Production
Exports Imports
Development of barley markets in the EU-N10 with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 44
… relative to other feed cereals, e.g. in Poland,….
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Domestic use
Production
Imports
Development of the barley market in Poland with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 45
…while the comparative advantage of production remains in, e.g. Slovakia.Development of the barley market in Slovakia with and without accession (mio t) (dashed lines = non-accession)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Domestic use
Production
Exports
Imports
Prospects for agricultural markets and income 2004-2011, December 2004 46
Maize sees expanding markets in the new Member States…..
0
2
4
6
8
10
12
14
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Imports
Exports
Development of maize markets in the EU-N10 with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 47
…while Hungary’s maize faces high transport costs….
0
1
2
3
4
5
6
7
8
9
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Exports
Development of the maize market in Hungary with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 48
…but finds increasing regional markets.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
ImportsExports
Development of the maize market in the Czech Republic with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 49
The situation on rye markets remains stable and gives limited incentives to increase trade on the single market.
0
1
2
3
4
5
6
7
8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Exports
Imports
Development of rye markets in the EU-N10 with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 50
Changing consumer preferences stabilise beef markets….
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Exports
Imports
Development of beef markets in the EU-N10 with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 51
….and good export opportunities on the single market remain important, e.g. for Poland…..
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Imports
Exports Domestic use
Development of the beef market in Poland with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 52
…and lead to further stabilisationin, e.g., the Czech Republic.
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
0.20
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Exports
Imports
Development of the beef market in the Czech Republic with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 53
Strong investments and increasing competitiveness meet expanding consumption of pork meat….
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Imports
Exports
Development of pork markets in the EU-N10 with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 54
…combined with low feed costs in Poland.
0
0.5
1
1.5
2
2.5
3
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Exports
Imports
Development of the pork market in Poland with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 55
Poultry markets remain expansive….
0
0.5
1
1.5
2
2.5
3
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production
Domestic use
Imports
Exports
Development of the poultry market in Poland with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 56
…with strong prices, favourable production conditions and proximity to large markets like.
0
0.2
0.4
0.6
0.8
1
1.2
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Imports
Exports
Domestic use
Production
Development of the poultry market in Poland with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 57
Milk production remains stable in the new Member States but subsistence milk production remains important.
0
5
10
15
20
25
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total production
Market production
Development of milk production in the EU-N10 with and without accession (mio t) (dashed lines = non-accession)
Prospects for agricultural markets and income 2004-2011, December 2004 58
Membership leads to very favourable future developments of agricultural income.
0
50
100
150
200
250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Non-accession
Accession
Development in the agricultural income of the ten new Member States under the non-accession and the accession scenarios (2003=100)