EU forecasts 10 years of firm prices for farmers

Agricultural prices will stay firm for the next 10 years due to strong global food demand and low productivity growth, the European Commission has forecast.

The Directorate-General for Agriculture and Rural Development publishes a medium-term outlook each year, using computer models to predict EU-wide trends used to make farming policy.

The projections are based on moderate economic growth from 2015, normal weather conditions, steady yield and no major disruptions from disease or food safety concerns – so should be seen as a rough guide not an accurate forecast.

Arable stays solid

Arable growers would see firm prices, with a slight increase in demand for food and feed in the EU, the report said.

The supply of cereals would increase steadily to 316 million tonnes by 2023, with yield growth of just 0.6% a year on average.

Maize and common wheat would further increase their share of a stable overall cereal area.

Oilseed markets would experience moderate supply growth, while sugar beet production would expand, stimulated by growing demand for ethanol and the abolition of quotas in 2017.

Winners and losers in meat

European meat consumption should recover over the next 10 years and help the sector to grow, the Commission predicted.

Last year people in EU countries each ate 64.7kg meat, the lowest amount in 11 years.

But that would increase to 66.1kg by 2023 as renewed economic growth gives people more money to spend on food.

Pork would cement its position as the continent’s favourite meat, with 23.4m tonnes being produced in 10 years time.

Poultry meat would benefit most, with production growing at 0.8% per year to hit 13.6m tonnes in 2023, due to its lower cost, convenience and healthy image.

The decline in sheep production over the past decade should slow, while beef production would fall around 7% by 2023 from its 2010-12 average.

Milk prices to firm

EU milk production was unlikely to expand dramatically, despite the lifting of quotas in 2015, the report said.

After a slight dip between 2013 and 2016, the average farm gate milk price (in real fat content) would stay firm, supported by robust world prices for cheese and skimmed milk powder.

Milk deliveries would hit 150m tonnes in 2023 and an expanding cheese sector, driven by global demand, would absorb most of the extra milk.

Harper Adams principal lecturer in land management, Charles Cowap, said that in a world of volatile prices, feed and fuel costs, these kinds of projections could be useful for businesses to plan for the future.

“Although it is good that prices are expected to stay firm, we are to remain at the mercy of market forces,” he said.

“It emphasises the importance of managing our inputs and continuing to pay great attention to detail.

“There is an increasing case for farmers to look at their accounts and the ‘what ifs?’”

Professor Richard Tiffin of Reading University said the projections were not intended as forecasts but were inevitably interpreted as such.

“The modelling staff like to make the point that these are baseline under reasonable sets of assumptions,” he said. “It is the basis of their policy simulations and a medium or a long term view of prospective trends.”

(Read more on livestock trade outlook for 2014 )

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