The EU agricultural sector’s resilience has been heavily tested in the last two years. On top of the trade disruptions and increased commodity prices caused by the post-Covid recovery, the Russian invasion of Ukraine led to even higher prices of inputs and energy. As a result, food inflation soared and trade was further disrupted. Moreover, climate change is resulting in more frequent adverse and extreme weather events, and animal disease outbreaks. In light of these disruptions, combined with changes in consumption trends, the analysis presented in the outlook report foresees a slowdown in the production growth of major EU agricultural sectors. In the given set of assumptions considered, production of some crops is expected to stagnate or even slightly decline, while milk and meat production would decline.
In his opening speech delivered today at the Outlook conference, Commissioner Wojciechowski said:
In order to achieve a truly resilient food system, we must tackle the issues that have continued to affect our farming communities – such as the decline in family farms and the increasing average age of farmers. These developments, identified in the latest agriculture census, provide a wake-up call. I am convinced that the CAP provides Member States with a strong set of tools to better support their farming communities and help them deliver sustainable food security for society. Over the past number of years, we have worked closely with Member States to devise strong strategic plans. Now it is time to start implementing them.
The medium-term outlook analysis looks at production, consumption, and trade in the arable crops, milk and dairy, and meat sectors, in addition to agricultural income. It also includes a special focus on food security and presents a scenario analysis on extreme weather events and another on lower EU livestock densities. The report covers the period until 2032 and reflects agricultural and trade policies in place in November 2022.
Total EU cereal area is projected to decrease marginally to 57.2 million hectares by 2032, driven by a decrease in barley and maize. The EU will remain a net exporter of wheat and barley and a net importer of maize and rice. Food consumption of cereals in the EU will slightly increase (+3.9%), but as feed use will decrease (-6.1%), the overall EU domestic use is expected to remain stable.
Regarding oilseeds, EU production is projected to be 33.0 million tonnes in 2032, an increase of 2.8 million tonnes from 2020-22 (+9.3%). This is mostly due to yields continuing to increase. However, the situation remains varied for each commodity. Net imports of oilseeds and protein crops into the EU will decline as the EU will produce 54.7% more pulses and 33.3% more soya beans.
Milk and dairy products
The adoption of more sustainable farming practices will impact future development in the EU dairy sector. Alternative production systems (opposite to intensive and conventional ones) are expected to grow their share. As extensive production is favoured to address environmental concerns, dairy herds are expected to decline and lead to a decrease of EU milk production by 0.2% per year by 2032. However, this will not jeopardise the EU’s position as the largest global dairy supplier.
EU consumption is already mature and could remain relatively stable in the future. Among dairy products, cheese consumption could still grow. Rising export demand could also support production. Production of skimmed milk powder will slow down, as trade will grow less due to stronger global competition. In the case of whole milk powder, production could decline due to losses in trade while domestic use could remain relatively stable.
Sustainability will play an increasingly prominent role in EU meat markets. Meat production will be more efficient and more environmentally friendly, with organic and extensive production systems on the rise. In spite of these developments, consumption of meat in the EU is expected to decline (-1.5 kg per capita per year), with beef particularly affected and pigmeat partly substituted by poultry. That latter sector is actually the only one to expand in terms of production and consumption. This stems from a healthier image of poultry compared to other meats, a greater convenience to prepare, the absence of religious constraints regarding its consumption and its relatively cheaper price.
The total EU cow herd is set to decrease by 2.8 million heads (9.1%), with varying situations across EU countries. After the high level in 2022, the price of beef is expected to come down again due to a more balanced supply and demand. Regarding pigmeat, EU production is projected to decrease by 1% per year in 2022-32, corresponding to 2.2 million tonnes over the whole period.
The shift to plant-based diet could lead to a growing importance of protein alternatives to meat, but they are assumed to still represent only a very small market share.
Environmental scenario on lower livestock density
This year’s report presents a scenario analysis of potential environmental and economic impacts of a lower livestock density in the EU.
Reduced livestock numbers would lead to lower production for all animal products. Crop production is also expected to decrease overall for many crops due to the lower feed demand (i.e. fodder crops, cereals and oilseeds) while pulses production increases. Expected results also include a general increase in producer and consumer prices. Producer prices would rise particularly for pigmeat, eggs and beef.
Livestock density reduction in the EU could decrease the EU average ammonia emissions from agriculture up to 11% and average nitrate pollution per hectare up to 12%. Greater reductions (50-60%) are expected in hotspot regions with currently very high density. Greenhouse-gas (GHG) emissions in the EU are expected to drop by 2-13.8%, but lower EU production would also make imports increase. As a result, lower emissions in the EU would be offset by increasing emissions in other areas of the world, what is known as emission leakage.
This year’s medium-term outlook provides an overview of food security in the EU using a selected set of indicators: self-sufficiency rates, net trade, diversification of imports and exports, and households’ expenditure on food.
The EU remains self-sufficient in most considered products in 2032 and is able to generate surpluses, which contribute to global food supply, in particular for wheat and dairy products. This reflects the results of successive CAP reforms over the years thanks to which the EU continues providing abundant, high quality, safe and nutritious food to its own population and globally. However, due to agro-climatic and market conditions, the EU will remain reliant on imports for products such as tropical fruit, rice and soya beans, although there will be some improvements done.
The current record-high food inflation rates are not expected to persistently impact the share of household expenditure on food over the medium term. This is because consumers are likely to adjust their spending habits to more basic products if prices remain high rather than reducing their overall food consumption. It will come as no surprise though that the recent economic crises can potentially contribute to increasing inequalities.
The European Commission publishes every year its medium-term outlook for the next ten years, presented at the EU Agricultural Outlook conference held every December. This year, projections take into account the 28 submitted CAP Strategic Plans. The level of ambition stemming from other policy initiatives under the European Green Deal, and in particular the targets of the Farm to Fork and Biodiversity strategies are taken into account only if the related legislation is in place. Only free trade agreements ratified at the end of September 2022 are considered. Global projections are based on the OECD-FAO Agricultural Outlook 2022-31 that has been updated with the most recent macroeconomic and market data.
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