Agriculture is expected to weather the economic storm better than most sectors and should then enjoy a period of sustained market and income growth.

That is the prediction in the latest EU Prospects for Agricultural Markets for the period 2008 to 2015, published by the commission in Brussels this week.

According to the report, “the world economy has entered the deepest crisis for more than 60 years”. Economic growth in the EU is forecast to shrink by 1.8% this year, with a modest recovery of 0.5% in 2010.

“While the agriculture sector is generally more resilient to economic crises than other sectors, it is expected to face great challenges, especially in demand growth and farm income,” it says.

The effect will be felt most directly by higher value added sectors. “The pronounced decline in the price of dairy products during recent months is expected to induce a substantial fall in the producer price of milk in 2009.”

Arable farmers will also feel some pain due to lower demand for animal feed and the effect of lower oil prices on the biofuels sector.

“But agricultural commodity markets are projected to recover over the medium term, supported by structural factors like the growth in global food demand, the development of the biofuel sector and the long-term decline in food crop productivity growth,” says the report.

As such, the medium-term prospects for EU agriculture remain positive, with farm incomes predicted to exceed the “very favourable” 2007 results by 7.5% in 2015. Most of this increase will be in the new member states of central and eastern Europe, it adds.

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