Medium Term Prospects for EU Agriculture

The EU Commission has released its latest report on the medium-term outlook for the major EU agricultural commodity markets and agricultural income to 2024.  The full report ‘Prospects for Agricultural Markets and Income in the EU 2014 – 2024′ can be found at http://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/2014/fullrep_en.pdf

Prospects for the arable sector are relatively positive, with solid world demand and stable prices leading to increasing EU cereal exports. Cereal prices are expected to remain above historic averages in the EU but significantly below the 2010 and 2012 peaks. A further shift towards maize and wheat production is expected with fewer plantings of other cereals, mainly due to increasing demand from the livestock sector.  Moderate increases are also expected in oilseed production, limited by agronomic constraints and little surge in demand from the biofuels industry. Total vegetable oil use is expected to remain stable, although food use is set to decline slightly.

Although the general trend for meat consumption is downwards, EU meat production is expected to increase to 44.9 million tonnes Production and consumption of poultry meat are expected to increase by 7% by 2024.  The affordability, healthier image and lower investment requirement sees the poultry sector increase more than other meat sectors.  Despite price falls in the short term the longer term dairy prospects remain ‘favourable’ with increasing global demand pushing production. EU milk deliveries could reach 158 million tonnes by 2024, an increase of around 7.6%. World demand for milk powders will see an increase in exports whilst increased EU consumption of butter and cheese will absorb most of the additional production.

Turning to agricultural income, the medium-term prospect is expected to see significant falls in real terms (-22%) however income per worker is set to increase slightly. The EU agricultural workforce is expected to fall by 28% from 10.1 million in 2013 to 7.2 million in 2024. The total value of production is expected to increase by 10%, total costs also increase from 67% of total value to 71% of total value. The difference in income between the EU-15 and the new Member States is expected to remain substantial but is set to converge over the period.