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Prospects for Agricultural Markets and Income in the EU 2013-2023 14 January 2014

Prospects for Agricultural Markets and Income in the EU 2013-2023 14 January 2014 . Tassos Haniotis Director Economic analysis, perspectives and evaluations; communication DG Agriculture and Rural Development European Commission. Outline. Macroeconomic background Outlook Uncertainties.

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Prospects for Agricultural Markets and Income in the EU 2013-2023 14 January 2014

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  1. Prospects for Agricultural Markets and Income in the EU 2013-202314 January 2014 Tassos Haniotis Director Economic analysis, perspectives and evaluations; communication DG Agriculture and Rural Development European Commission

  2. Outline • Macroeconomic background • Outlook • Uncertainties

  3. Annual real commodity price indexes Source: World Bank

  4. Monthly nominal commodity price indexes Source: World Bank

  5. Annual GDP growth rate – major economies Source: World Bank.

  6. Annual GDP growth rate – BRICs Source: World Bank.

  7. Currency moves with respect to the Euro Source: Global Insight.

  8. US energy prices… Source: World Bank. 8

  9. …and their link to world natural gas prices ( $ per mmbtu ) Source: World Bank. 9

  10. Worldannualgrowth: consumption vs population (%) Sources: FAO, OECD, USDA Size of bubblesrepresentstotal averageconsumptionovertheperiod. * provisional/estimationfor2012-2013.

  11. Worldgraindemand: annualgrowthrates (%) Size of bubblesrepresentstotal averageconsumptionovertheperiod. * Data on 2013 nothomogeneous. Sources: FAO, OECD, USDA

  12. Worldmeatdemand: annualgrowthrates (%) Size of bubblesrepresentstotal averageconsumptionovertheperiod. * Data on 2013 nothomogeneous. Sources: FAO, OECD, USDA

  13. Main market developments • Arable crops • A relatively positive medium-term outlook • a solid world demand and an increasing use in biofuels • prices below 2012 record prices but above historic average • Meats • The 2013 EU per capita meat consumption reached its lowest level in a decade • Lower production, higher prices and income pressures behind consumption decline • Meat consumption is expected to recover, but not to exceed its 2011 level • Dairy • End of milk quotas will lead to production keeping pace with consumption increase • Quotas currently not binding for most MS; production growth would be moderate • Environmental constraints and cost pressures (energy and feed) will play a role

  14. Macroeconomic assumptions

  15. Macroeconomic assumptions

  16. Macroeconomic assumptions

  17. Prospects for cereals, oilseeds, sugar, biofuels

  18. Change in area and yields 1997-2001 vs. 2009-2013 * size of bubble refers to share in area harvest on average in the years 1997-2000 (values are given in percent)

  19. Change in area and yields 2023 vs. 2009-2013

  20. EU cereal price (EUR/tonne)

  21. Wheat price uncertainty (EUR/t) 90th percentile 10th percentile

  22. Prospects for meat

  23. Per capita meat consumption in retail weight (kg)

  24. EU meat consumption in 2023 compared to average 2010-12

  25. Prospects for milk and dairy products

  26. EU milk deliveries and dairy herd developments * In Romania, Bulgaria and Croatia for years prior to accession quota level is set at first accession year level

  27. Change in milk deliveries in 2023 compared to 2012 (%)projected with ESIM by JRC-IPTS

  28. EU exports of dairy commodities ('000 tonnes)

  29. EU milk producer price* developments and uncertainties * Farm gate milk price in real fat content, weighted EU average

  30. Prospects for income

  31. Development of agricultural income in the EU-28 (average 2003-07=100)

  32. Uncertainties

  33. Why is uncertainty analysis relevant? • A baselineprovides a reference outcome… • …derived from a single set of economic assumptions… • …under normal weather conditions… • …and assuming a fixed policy environment (to accommodate scenario analysis) • Stochastic analysis examines a range of possible outcomes… • with (600) different yield and macroeconomic assumptions… • …helps to detect uncertainties with stronger impact on the outlook… • …and to identify the most affected products • Caveats and limitations • the analysis is based on past observations (e.g. observed vs. modelled yield) • for some variables, past may have been more stable than the unknown future • not all potential uncertainties are covered; selection changes in every exercise

  34. Wheat price uncertainty (EUR/t) 90th percentile 10th percentile

  35. Analysed uncertainties by JRC-IPTS • Partial stochastic analysis • Arable crop yield variation in the EU and in the main producing regions • Uncertainties for the oil price and in the macroeconomic environment in the EU, US, Canada, Japan, Oceania and BRIC • Other analysed uncertainties • Impact of higher EU feed costs on the pig and poultry sectors at EU regional level • Impact of the milk quota abolition in the EU Member States • What if the technical progress in Africa would grow faster than expected?

  36. Thank you

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