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The medium-term outlook
and
The CAP towards 2020
MS notifications
Sophie Hélaine, DG AGRI
DG Agriculture and Rural Development
European Commission
Outline
1. Medium-term outlook
2. Member States decisions for CAP implementation
2
Summary
• Arable crops and biofuels
• Cereal prices below 2012 record prices but above historical averages
• Less biofuel demand than previously anticipated
• Abolition of the sugar quotas leading to EU sugar prices at world level
• Meat
• Good export prospects for pig meat and poultry, driven by world demand
• A small increase in meat production thanks to poultry
• Meat consumption oriented downwards, except for poultry
• Dairy
• The dairy sector remains the 'white gold' despite the current market difficulties
• An increase in the EU milk production driven by the steady increasing world demand and further increases in domestic use
• Most of the additional milk to be channelled in cheese, whey powder and SMP
3
Oil price, a very uncertain assumption
50
70
90
110
130
150
170
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Bre
nt,
USD
/barr
el
OECD-FAO Baseline 2013 EC outlook 2014 EC outlook
IHS, Jan. 2015 World Bank*, Jan 2015 2015 USDA
* Based on the development of the average Brent, WTI and Dubai oil price
4
EU cereal producer prices above historical averages
over the medium term
80
100
120
140
160
180
200
220
240
260
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
EU
R/t
Wheat Maize
Barley Intervention price
120
140
160
180
200
220
240
260
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
EU
R/t
10th percentile
90th percentile
WB-scenario
IHS-scenario
Baseline
Uncertainties surrounding EU maize price developments
Note: Uncertainty analysis prepared by JRC-IPTS, based on partial stochastic analysis
5
Real income per AWU
6
90
95
100
105
110
115
120
2012-2
014
2016
2018
2020
2022
2024
Index (
2012-2
014=
100
Baseline
WB-scenario
IHS-scenario
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
2014
2016
2018
2020
2022
2024
Mio
EU
R
Baseline IHS-scenario
WB-scenario
Energy and Fertilizer costs
The CAP towards 2020 MS notifications
New design of direct payments
8
Cro
ss c
om
plian
ce
Str
eam
lined
Basic Payment Scheme (C)
• Voluntary redistributive payment (+max.65% on max. 30 ha or AFS; max 30% DP envelope)
• Definition of 'active farmer'
• New BPS entitlements in 2015 • SAPS extended until 2020 (EU-10) • Internal convergence / derogation
with external convergence model
«Green» Payment (C)
• Crop diversification • Permanent grassland • Ecological focus area
• 30% of the DP envelope • Thresholds & exemptions • Equivalence
Young Farmer Scheme (C)
• Up to 2% of DP envelope • < 40 years commencing activity
• +25% (/payment entitlements) • For 5 years
OR
Small Farmer
Scheme (V)
• Simplification of claims and controls
• Lump sum payment to be determined by MS under conditions [500 to 1250 €]
• Entrance in 2015
Coupled support* (V)
• Wide range of sectors • Up to 8% (or to 13% depending on
past level) of DP envelope, +2% for protein crops
Natural constraint support (V)
• For areas with natural constraints – or part of them
• Up to 5% of the DP envelope
Capping voluntary for the MS Degressivity of 5% over 150 000 €
V = voluntary scheme C = compulsory scheme
* In some MS (BG, EL, ES, PT) the crop specific payment for cotton is compulsory; obligation derives from 1979 Act of Accession of EL
9
Main elements of the notifications due
by 1 August 2014
10
Disclaimer
The synthesis presented in the following slides reflects the content of Member States' notifications available to the Commission services on 23.01.2015. This presentation is made available
without prejudice to any finding in respect of their compliance with the regulatory framework
11
Procedure
• The Commission does not approve/disapprove the notifications and Member States remain the only responsible of the decisions they have taken in implementing the reform with two exceptions:
• VCS if more than 13 (+2)% • Greening equivalence
• DG AGRI services assessed completeness and consistency of
notifications received by 1 August 2014
• Numerous bilateral contacts were taken to request additional information and highlight possible risks of non compliance
12
Flexibility between pillars: all decisions
From DP to RD in % of national ceilings (max percentage 15%)
DP to RD MEUR 6.382,6 Financial year 2015 2016 2017 2018 2019 2020
Claim year 2014 2015 2016 2017 2018 2019
FR 3.0% 3.3% 3.3% 3.3% 3.3% 3.3%
LV 7.5% 7.5% 7.5% 7.5% 7.5% 7.5%
UK 10.8% 10.8% 10.8% 10.8% 10.8% 10.8%
BE 2.3% 3.5% 3.5% 4.6% 4.6%
CZ 3.4% 3.4% 3.4% 1.3% 1.3%
DK 5.0% 6.0% 7.0% 7.0% 7.0%
DE 4.5% 4.5% 4.5% 4.5% 4.5%
EE 6.1% 14.3% 15.0% 15.0% 15.0%
EL 5.0% 5.0% 5.0% 5.0% 5.0%
NL 4.0% 4.1% 4.2% 4.2% 4.3%
RO 1.8% 2.3% 2.2% 0.0% 0.0%
From RD to DP in % of national ceilings (max percentage 15% or 25% for some MS)
RD to DP MEUR 3.358,2 Financial year 2015 2016 2017 2018 2019 2020
Claim year 2014 2015 2016 2017 2018 2019
HR 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
MT 0.0% 0.8% 1.6% 2.4% 3.1% 3.8%
PL 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
SK 21.3% 21.3% 21.3% 21.3% 21.3% 21.3%
HU 15.0% 15.0% 15.0% 15.0% 15.0%
Net result of all transfers (possible review in 2017 for the years 2018 and 2019) = total transfer from pillar I to pillar II of EUR 3 billion over 6 years
Delegated act modifying the DP and RD financial annexes published on 23.12.2014 (Regulation 1378/2014)
13
Direct payments: summary of main decisions
BE-W
BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK
SAPS √ √ √ √ √ √ √ √ √ √ 10
Regionalised BPS (basic payment scheme)
√ √ √ √ √ √ 6
Redistributive payment √ √ √ √ √ √ √ √ 8
No capping √ √ √ √ √ √ 6
Area with natural constraints (ANC)
√ 1
Voluntary Coupled support (VCS)
√ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ 27
Small farmers scheme (SFS)
√ √ √ √ √ √ √ √ √ √ √ √ √ √ √ 15
14
Reduction of payments' mechanism (1)
Amounts above
Reduction %
BE/
FL
BE/
W
BG
CZ
DK
DE
EE
IE
EL
ES
FR
HR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
/E
UK
/N
I
UK
/S
C
UK
/W
150 000 5% √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √
150 000 15% √
150 000 50% √
150 000 100% √ √ √ √ √ √
176 000 100% √
200 000 30% √
250 000 55% √
300 000 100% √ √
500 000 100% √
600 000 100% √
Subtraction of salaries √ √ √ √ √ √ √ √ √
15
Direct payments: summary of main decisions
Share of DP envelope left for BPS at EU-28 level in 2015 = 55%
16
Basic Payment Scheme (BPS)
• 6 MS have decided to regionalise the BPS: DE, EL, ES, FR, FI, UK (except NI)
• 7 MS will reach a form of national/regional flat rate: DE, FR-Corsica, MT and UK-EN in 2015; NL, AT, FI, UK-SC & WA by 2019. SE will reach it in 2020
• Amongst the MS that have opted for a partial convergence to the flat rate, 8 opted for the possibility to limit decrease in the value of payment entitlements above average to 30% of their initial unit value (EL, ES, FR-except Corsica, HR, IT, PT, SI BE)
BPS - Regions MS implementing regionalisation:
DE: Länder until 2018
FR: Corsica / Hexagon
BE: Flanders / Wallonia
UK-Scotland:
1- Arable land and perm. grassland (86.87% of the envelop) – 220 EUR/ha
3- Rough grazing in LFA where Stocking Density <= 0.2 LU/ha (4.23%) – 10 EUR/ha
2- The rest (8.9%) – 35 EUR/ha
UK-England and UK-Wales
1- Moorland
2- Severely Disadvantaged Area
3- Lowland & Disadvantaged Area
Greece
1-Grazing Areas (pasture land and grasslands)
2- Arable land
3- Permanent crops (trees and vineyards)
Finland
AB (Northern)
C (Southern)
Spain
50 regions grouped by land type and productivity levels
18
Voluntary coupled support (VCS)
• VCS = 10% of total DP envelope for EU 28 in 2015
• 9 MS with less than 8% (CY, DK, EE, EL, IE, LU, NL, AT, UK)
• 11 MS will use the maximum percentage of 13% with 9 of them also using all or part of the additional 2% available in case a corresponding percentage is dedicated to supporting the protein crops sector
• 3 MS need approval from the Commission to allocate more than 13 (+2)% to the VCS: BE, FI, PT (2nd quarter 2015)
IE NL LU UK AT DK EE EL CY IT ES RO SK SE LV BG CZ FR HR LT HU PL SI BE FI PT MT
0.2% 0.5% 0.5% 1.7% 2.1% 2.8% 4.2% 7.4% 7.9% 11% 12% 12% 13% 13% 14% 15% 15% 15% 15% 15% 15% 15% 15% 17% 20% 21% 57%
19
VCS: sectors supported
Greening Ecological Focus Areas – sent by 1 August 2014 (I)
20
Main figures on EFA
• Number of activated EFA types
Between 2 and 4 EFA: 6 MS (AT, FI, LT, NL, SI, ES)
Between 5 and 9 EFA: 9 MS (CY, DK, EE, EL, LV, MT, PT, SV, UK)
Over 10 EFA: 13 MS (BE, BG, HR, CZ, FR, DE, HU, IE, IT, LU, PL, RO, SK)
• Category of EFA type
Nitrogen fixing crops: 27 MS
Land lying fallow: 26 MS
Landscape features (at least one): 23 MS
Short rotation coppice: 21 MS
Catch crops: 20 MS
Buffer strips: 19 MS
Afforested areas: 13 MS
Agroforestry: 12 MS
Strips along forest edges with production: 8MS; without production: 11 MS
Terraces: 8 MS
(UK and BE sent notifications on regional basis; in this PPT UK/BE are counted if at least one region activated a given element)
Greening Ecological Focus Areas – sent by 1 October 2014 (III)
Short Rotation Coppice (SRC):
Between 2 to 11 species per MS
Most popular: willow (20 MS), poplar (16 MS), alder (14 MS), birch (10 MS) and ash (11 MS)
Catch crops (CC)
Different approaches to the setting of the required list of crop mixtures; often long list of crop species
Period of sowing usually between July & September
Some MS developed criteria for the establishment of mixtures (max % for the main species) and on the minimum duration of CC on the field.
Nitrogen Fixing Crops (NFC)
Between 4 and 19 crops/MS
Most popular: faba bean (all MS), pea (26 MS), alfalfa (25 MS), lupin (23 MS) and clover (23 MS).
Biodiversity criteria (selection of NFC): some MS provided detailed while others generic ones
Geographic criteria: a number of MS decided to allow NFC on the whole territory in light of the Nitrates directive. Some MS did not specify this.
21
More info available at:
Medium-term outlook http://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htm
Short-term outlook (EU balances) and production figures by MS http://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook/index_en.htm
CAP implementation by MS http://ec.europa.eu/agriculture/direct-support/direct-payments/index_en.htm
22
The CAP towards 2020
Implementation of the new system of direct payments
Annexes
DG Agriculture and Rural Development
European Commission
24
The reform introduced a new system of direct payments …
Ensuring the long-term viability of farms
• Providing a basic layer of fixed income support
• Making them less vulnerable to fluctuations in prices and income
Enhancing the sustainable management of natural resources
• Reflecting the important role of agriculture in the joint delivery of
private and public goods
• Supporting agricultural practices beneficial for the environment and climate
Contributing to territorial development
• Allowing for structural and production diversity
• Supporting agriculture in specific areas with significant spillover effects on food supply chain and rural economies
… while enhancing their efficiency
25
More equitable distribution
Improved targeting
Active farmer Young farmers Green payment Specific support to territories, sectors and
size
Convergence of payments among MS Convergence of payments among farmers Redistributive payment
Greener direct payments
Mandatory practices beneficial for environment and climate
30% of direct payment budget Streamlined cross-compliance
26
The 'green payment' in the overall greening architecture
Agricultural area (eligible for direct payments)
Cross compliance
Green direct payments
Rural development
Cu
mu
lati
ve
en
vir
on
men
tal
ben
efi
ts
Regulatory (Statutory
Management Requirements and Good Agricultural
Environmental Conditions)
Mandatory with financial
support (decoupled “green”
payment per hectare)
Voluntary with compensation
for cost incurred and income forgone
Implementation mechanism
27
The green direct payment
• Maintaining permanent grassland
ban on ploughing in designated areas
national/regional ratio with 5% flexibility
• Crop diversification
at least 2 crops when the arable land of a holding exceeds 10 hectares
at least 3 crops when the arable land of a holding exceeds 30 hectares
the main crop may cover at most 75% of arable land, and the two main crops a maximum of 95% of the arable area
• Maintaining an “ecological focus area” of at least 5% of the arable area of the holding
only applicable for farms with more than 15 hectares arable land.
figure may rise to 7% after a Commission report in 2017 & a legislative proposal
EFAs may include: field margins, buffer strips, fallow land, landscape features, afforested area, terraces, areas with catch crops, green cover and nitrogen fixing crops, short rotation coppices, agro-forestry, strips of land along forest edges
Equivalence: MS can decide that, instead of applying these three practices, a farmer
can undertake practices which are considered equivalent (e.g. crop rotation instead of crop diversification).
30% of the direct payment envelope for applying three basic practices :
• Their main policy choices including the financial allocations
• For BPS, redistributive payment, ANC, VCS, SFS and greening, further detailed requirements specifying the content and the justifications of the decisions
• Their decisions on reduction of payments, minimum requirements for receiving direct payments and the active farmer clause
• Delayed decision regarding the flexibility between pillars [for those that had not yet transferred funds between pillars for 2014]
• [Additional information on EFA and environmentally sensitive permanent grassland by 1 October and 15 Dec respectively; information on definitions, young farmer payment, use of national/regional reserve(s) and transfer of BPS entitlements by 31 January 2015]
By 1 August 2014,
Member States had
to notify the Commission
of:
28
Direct payments: MS decisions 1.08.2014
29
• Net result = total transfer from pillar I to pillar II of EUR 3 billion over 6 years (possible review in 2017 for the years 2018 and 2019)
Flexibility between pillars
• 9 MS to cap (100% reduction) the amounts of basic payments at max amounts ranging from KEUR 150 to KEUR 600
• 15 MS to only apply the minimum reduction of 5% on amounts above KEUR 150
• 9 MS will subtract the salaries actually paid by farmers before applying the reduction of payments' mechanism
Reduction of payments
• Share of DP envelope for basic payment at EU-28 level estimated at 55%
• The 10 MS currently applying the SAPS will maintain it until 2020
• 6 MS to regionalise the BPS (EL, ES, FI, DE, UK, FR)
Basic Payment
•All MS but DE to implement VCS
•MS' plans for VCS = 10% of total DP envelope for EU 28 in 2015
•9 MS with less than 8% (IE, NL, LU, UK, AT, DK, EE, EL, CY)
•11 MS with the maximum percentage of 13% with 9 of them also using all or part of the additional 2% available in case of support to the protein crops sector
•3 MS (BE, FI, PT) to allocate more than 13 (+2)% to the VCS (subject to approval by Commission)
Voluntary Coupled support
•8 MS to implement the redistributive payment (6 of them will not apply the reduction of payments)
•Only 1 MS (DK) to implement the 1st pillar payment for ANC
•15 MS to implement the SFS but only 2 in the form of a lump-sum equal for all farmers (LV, PT)
Other voluntary schemes
Direct payments: summary of main decisions
SAPS Article 21 to 26 of Reg. 1307/2003
Envelop share: from 38% (LT) to 67% (EE)
Same amount per ha in the whole MS.
All ha eligible.
Estimated* payment per ha.
2015 2016 2017 2018 2019 BG 100 100 100 100 101 CZ 131 131 131 134 134 EE 81 81 88 96 103 CY 244 241 238 235 233 LV 60 69 77 86 95 LT 58 61 65 68 72 HU 147 147 147 147 147 PL 110 110 111 111 112 RO 91 88 89 92 92 SK 131 132 133 134 135
* Estimated by Sophie Hélaine
Access to BPS: farmers receiving DP in 2013 + new eligible farmers More precisely: farmers who were producing these products can receive entitlements in 2015
Seed potatoes
Ireland
Greece
Croatia
Italy
Netherlands
Austria
Belgium Flanders
Belgium Wallonia
United Kingdom Wales
United Kingdom Scotland
Vineyards Germany
Greece
Croatia
Italy
Malta
Netherlands
Austria
Slovenia
Belgium Flanders
Belgium Wallonia
United Kingdom Wales
United Kingdom Scotland
Ware potatoes
Ireland
Greece
Croatia
Italy
Malta
Netherlands
Austria
Belgium Flanders
Belgium Wallonia
United Kingdom Wales
United Kingdom Scotland
Vegetables Ireland
Greece
Croatia
Italy
Malta
Netherlands
Austria
Belgium Flanders
Belgium Wallonia
United Kingdom Wales
United Kingdom Scotland
Fruits Ireland
Greece
Croatia
Italy
Malta
Netherlands
Austria
Belgium Flanders
Belgium Wallonia
United Kingdom Wales
United Kingdom Scotland
E.g. in France farmers who had vineyards in 2014 can't receive entitlements for this area
In countries applying already a regional model, F&V and potato area were already eligible, that's why DE not listed e.g.
To be looked at: limitations in number of payment entitlements allocated, applied in certain MS
Ornamental plants Croatia
Italy
Netherlands
Austria
Belgium Flanders
Belgium Wallonia
United Kingdom Wales
United Kingdom Scotland
32
Reduction of payments' mechanism (2)
• 9 MS will cap (100% reduction) the amounts of basic payments at max amounts ranging from KEUR 150 to KEUR 600
• 15 MS will only apply the minimum reduction of 5% on amounts of
basic payments above KEUR 150 • 9 MS will subtract the salaries actually paid by farmers before
applying the reduction of payments' mechanism • Product of the reduction of payments' mechanism as estimated by
MS for the 5 years 2015-2019 = MEUR 558 (around MEUR 112/year)
Redistributive payment Article 41 of Reg. 1307/2003
Number of ha % top up BPS Estimated
payment per
ha (2015)
Belgium Wallonia 30 44% 115
Bulgaria 30 36% 77
Germany 30 (1-30) 18% 50
16 (31-46) 11% 30
France 52 9% 25
Croatia 20 10% 34
Lithuania 30 30% 50
Poland 0-3 0% 0
3,01-30 17% 41
Romania 0-5 0.81% 5
5-30 4.37% 45Provisional estimate notified by MS
34
VCS: sectors supported
Sectors mostly supported:
Beef and veal: 24 MS, 42% of total VCS envelope for 2015
Milk and dairy products: 19 MS, 20% of VCS envelope
Sheep and goatmeat: 22 MS, 12% of VCS envelope
Protein crops: 16 MS, 10% of VCS envelope
Fruit and vegetables: 19 MS, 5% of VCS envelope
Sugar beet: 10 MS, 4% of VCS envelope
Regional targeting in the UK (beef and veal and sheep), IT (olive oil, protein crops, grain legumes, durum wheat and soya) and PL (hops)
No support for cane and chicory, short rotation coppice, dried fodder
35
Active farmer clause
• 8 MS added activities/businesses to the negative list: BG, DE, EE, IT, MT, NL, RO, UK-Sc
• 6 MS have extended the active farmer clause to all claimants
above the threshold : BG, EL, ES, IT, MT, NL (cf Article 9(3) of R.1307/2013)
• Most MS set the exemption threshold at EUR 5 000, except
BE-Fl (0), NL (1), LU (100), FR (200), MT (250), LT (500), BE-Wa (350), AT, ES and IT-except mountains (1 250), SK (2 000), BG (3 000)
36
Greening: main choices overview – sent by 1 August 2014
MS Equivalent practices
Permanent grassland Ratio level
(National OR Regional)
Activation of EFA regional / collective approach
Activation of EFA forest exemption
AT Only RDP national No No
BE-FL No regional
No No
BE-WA No No No
BG No national No No
HR No national No No
CY No national No No
CZ No national No No
DK No national No No
EE No national No Yes
FI No national No Yes
FR Only Certification Schemes regional No No
DE No regional No No
EL No national No No
HU No national No No
IR Only RDP national No No
IT No national No No
LV No national No Yes
LI No national No No
LU No national No No
MT No N/A No No
NL Only Certification Schemes national Only collective No
PL Only RDP national Only collective No
PT No national No No
RO No national No No
SK No national No No
SI No national No No
ES No national No No
SE No national No Yes
UK-E No
regional
No No
UK-NI No No No
No No UK-SC No
UK-W No No No
MS opting for equivalence 5 Ratio at national level 23 MS applying collective 2 MS applying forest exemption
4
Equivalence through RDP 3 Ratio at regional level 4 MS applying regional 0
Equivalence through certification schemes
2 Ratio at sub-regional level 0
Without perm. grassland 1
Greening Equivalent practices – sent by 1 August 2014
37
Main figures • 5 MS notified equivalence
2 MS Certification schemes (NL, FR)
3 MS RDP commitments (AT, IE, PL)
• Crop diversification main greening practice
• EFA chosen by 2 MS
• Permanent grassland chosen by 1 MS
• Assessment on-going (due end February)
Member State Equivalent practice Detail
France Certification Schemes 1 national CS Crop diversification
Netherlands Certification Schemes 3 national CS Different practices
Austria RDP 1 practice Crop diversification - EFA
Ireland RDP 1 practice Crop diversification
Poland RDP 1 practice Crop diversification
Greening Environmentally Sensitive Permanent Grassland (ESPG)
Sent by 15 December 2014
• MS adopted different approaches to the designation of ESPG in Natura 2000 areas:
8 MS designated all grassland in Natura 2000
5 MS between 50% and 100%
6 MS less than half of the grassland
For some MS data provided remains to be checked
• 4 MS will designate ESPG outside Natura 2000 areas
38
39
MS choices on landscape features
MS which chose at least 1 LF: 23
Trees in groups: 17 MS
Field margins: 16 MS
Trees in line : 16 MS
Hedges: 13 MS
Isolated trees: 13 MS
Ponds: 11 MS
Ditches: 14 MS
Traditional stone walls: 6 MS
Other LF: 10 MS
Choice between LF defined under Art 45 (set in DA) & under Cross-compliance (CC) requirements
5 MS will allow only LF defined under Art 45
18 MS will allow both Art 45 and CC LF
Greening Ecological Focus Areas – sent by 1 October 2014 (II)
Conference: 2024 Prospects for
EU Agricultural Markets
Brussels,
5 December 2014
Pierluigi Londero
DG Agriculture and Rural Development
European Commission
Outline
• Policy assumptions
• Market outlook
• Arable crops
• Biofuels
• Meat
• Dairy
• Income developments
41
Policy assumptions
• CAP 2013 as far as possible
• Voluntary coupled support
• Greening:
- Permanent pasture kept constant,
- Limited effect of ecological focus area (EFA) & crop diversification at EU aggregated level
• Trade agreements only if ratified:
• Concessions to UKRAINE included
• FTA with CANADA not included
• Russian import ban assumed to remain 1 year
42
Prospects for cereals, oilseeds, sugar and biofuels
• Cereals and oilseeds
• Solid world demand leading to large EU exports of cereals
• EU demand driven by feed use and biofuel use
• Prices below 2012 record prices but above historical averages
• Sugar and isoglucose
• Abolition of the quotas end of 2017 leading to EU sugar prices at world level,
• more sugar produced domestically and lower imports,
• a higher share of isoglucose use in Europe.
• Biofuels
• Lower growth of first generation biofuels than previously expected
• Biofuels to contribute for 7% toward meeting the 10% target of renewables in transport fuel
43
EU cereal market developments
0
20
40
60
80
100
120
140
160
180
2010-14 2024 2010-14 2024 2010-14 2024 2010-14 2024
Total Wheat Maize Barley Other cereals
Million t
Food and industrial use Feed use Bioenergy use Exports
Annual changes in area and yields 2024 vs. 2010-14
Barley
17.4%
Maize
13.3%
Other cereals
6.3%
Oats
3.8%
Rapeseed 9.5%
Rye
3.5%
Sugar beet
2.3%
Durum wheat
3.6% Common wheat
33.3%
Soybeans, 0.7%
Sunflower seed
0.8% Rice
0.6%
0.0%
0.5%
1.0%
1.5%
-1.5% -0.5% 0.5% 1.5%
Annual change in y
ield
betw
een
2010-2
014 a
nd 2
024
Annual change in area harvested between 2010-2014 and 2024
Note: the bubble size refers to the average share in area in the years 2009-13
EU cereal producer prices above historical averages
over the medium term
80
100
120
140
160
180
200
220
240
260
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
EU
R/t
Wheat Maize
Barley Intervention price
46
80
100
120
140
160
180
200
220
240
260
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
EU
R/t
10th percentile
90th percentile
Possible price range as a result of yield and macroeconomic variability
Uncertainties surrounding EU maize price developments
Note: Uncertainty analysis prepared by JRC-IPTS, based on partial stochastic analysis
Biofuel use to expand in the EU but less dynamically than expected
• Assumptions:
- Renewable Energy Directive (RED) target of 10% of renewables in energy share by 2020
- Biofuels to contribute to 7% of liquid transport fuels by 2020
- Share of double counted 2nd-generation biofuels (including from waste oils) to grow
• A lower biofuel use expected because:
- Decreasing trend in transport fuel use
- In recent years, only slow increase in biofuel uptake
- Lack of strong policy incentives to invest
• Stable biodiesel production from domestic oilseeds
• Early increase in maize-based ethanol
-5
0
5
10
15
20
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
Million t
.o.e
.
Ethanol (1st gen) Ethanol (2nd gen)
Ethanol net imports Biodiesel (1st gen)
Biodiesel (waste) Biodiesel (2nd gen)
Biodiesel net imports
A changing sweeteners EU market environment
0
10
20
30
40
50
60
70
80
0
100
200
300
400
500
600
700
800
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
EU white sugar World white sugar
Sugar beet Out of quota sugar beet
Sugar, EUR/t
Sugar beet, EUR/t • EU sugar price getting closer to
world prices at around 400 EUR/t
• An increase in sugar beet production
- Channelled in sugar production
- Ethanol production from sugar beet to decrease
• Less sugar imports
• Isoglucose use to increase significantly to about 12% of sweetener use
Prospects for meat
• Good exports prospects
• for pig meat and poultry,
• driven by a steady growing world consumption,
• supporting firm or even increasing world and EU prices.
• An increase in EU meat production
• driven by a sustained increase in poultry meat production and lower feed costs,
• while, after a recovery in the short-run, beef production should decline at a slow pace
• and pig meat production should stabilise.
• An EU per capita meat consumption on a declining trend
• after a recovery in the short-run,
• back to declining consumption
• except for poultry benefitting from a lower price and a good image close to consumers
49
A slowly declining EU meat consumption
54
56
58
60
62
64
66
68
70
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
kg p
er
capita in r
eta
il w
eig
ht
Economic crises
BSE and FMD
Low meat supply (new welfare rules for pig meat, cow
herd dev.)
Highest ever beef imports from South
America
Recovery of pig meat prod.
and more beef from dairy herd
Change in EU meat production and consumption 2024 compared to 2014
-200
0
200
400
600
800
1,000
Beef Pig meat Poultry meat Sheep meat
1000 t
Production Consumption
EU pig meat export developments
0
500
1,000
1,500
2,000
2,500
3,000
2005 2010 2013 2014e 2024f
1000 t
Total Russia Ukraine China and Hong Kong Japan S. Korea Other
Prospects for milk and dairy products
• Milk remains the white gold for the next decade
• despite the difficult current market situation,
• because world demand is steadily growing,
• prices to stay firm around 350 EUR/t.
• EU deliveries to increase by 12 Mt in 10 years
• Further concentration of milk production in regions with lower production costs
• EU production expansion limited by increasing competition on the world market and by the small potential for higher EU consumption
• Environmental constraints to play a major role.
• More milk channelled into cheese and powders
• Cheese domestic use to continue growing and more exports
• More SMP for the export market thanks to additional drying capacities
• Whey powder exports getting always higher
53
Steady growth in world consumption
• +2.1% per year in world imports
• A slightly lower increase in traded volumes compared to the last decade
• But most of the extra demand to be supplied by the EU
- NZ production and exports limited by natural constraints
- US dom. consumption to grow faster
• China to contribute less to the extra demand
- Africa and other Asian countries to absorb more dairy products
EU
EU
NZ
NZ
US
US Arg.
Arg.
-2
0
2
4
6
8
10
12
14
16
2014 vs2004
2024 vs2014
Exports
Cumulative change in world trade of dairy products million tonnes of milk equivalent
China
China
MLE
MLE
O.
Asia
O.
Asia
Russia Russia
Africa
Africa
-2
0
2
4
6
8
10
12
14
16
2014 vs2004
2024 vs2014
Imports
Higher milk collection in the EU
100
120
140
160
180
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Million t
Milk deliveries Quota*
Milk production
Concentration of milk production in the Northern part of the EU
Increase in MS where lower prod.
costs and investments
DE, FR, PL, NL, UK, IE, DK
Environment
Stable or low quantity increase
elsewhere
Most of the extra milk channelled into cheese
0
1
2
3
4
5
6
7
Prod. Exp. Prod. Exp. Prod. Exp. Prod. Exp. Prod. Exp. Prod. Exp.
Cheese Butter Whey SMP WMP Fresh dairy p.
2024 v
s 2
014, in
million t
onnes o
f m
ilk e
q.
Expected increase in domestic use
A slight increase in real income/AWU in 2024 compared to 2012-14
Value of production
-10%
Total costs
-6%
Subsidies
-21%
Real factor income
-23%
Total labour
-28% Income / AWU
+9%
Summary
• Arable crops and biofuels
• Cereal prices below 2012 record prices but above historical averages
• Less biofuel demand than previously anticipated
• Abolition of the sugar quotas leading to EU sugar prices at world level
• Meat
• Good export prospects for pig meat and poultry, driven by world demand
• A small increase in meat production thanks to poultry
• Meat consumption oriented downwards, except for poultry
• Dairy
• The dairy sector remains the 'white gold' despite the current market difficulties
• An increase in the EU milk production driven by the steady increasing world demand and further increases in domestic use
• Most of the additional milk to be channelled in cheese, whey powder and SMP
59
Report and data available at: http://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/index_en.htm
DISCLAIMER: While all efforts are made to reach robust market and income prospects, uncertainties remain. This publication does not necessarily reflect the official opinion of the European Commission.
© European Union, 2014 - Reproduction authorized provided the source is acknowledged
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