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Performance of EU agriculture: productivity challenge
Pierluigi Londero
DG Agriculture and Rural Development
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Outline
• Focus on past and projected EU performance
• G20 boost to productivity
• AGRI analysis
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Farm income grew faster in the new MS than in the EU15, though the gap is still substantial…
2 2 3 .7
1 7 2 .6
1 8 9 .4
1 7 0
1 8 0
1 9 0
2 0 0
2 1 0
2 2 0
2 3 0
1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
0
1 0
2 0
3 0
4 0
5 0
6 0
E U 15 - le ft a x is
N M S 12 - r ig h t a x is
E U 27 in 200 0 = 10 0
1 6 .6
2 7 .7
Development of agricultural factor income per AWU in the EU-15 and EU-12, 1993-2009, EU-27 in 2000=100, in real terms
4Agricultural factor income per AWU by farm type in the EU‑25, avg 04-06
0
5 000
10 000
15 000
20 000
25 000
30 000
Pig & Poultry Milk Wine Horticulture Grazinglivestock
Field crops Otherpermanent
crops
Mixed
Income (per worker) depends on WHAT is produced …
5Agricultural factor income per AWU by economic size class in the EU-25, average 2004-2006
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
< 4.8 4.8 - 9.6 9.6 - 19.2 19.6 - 48 48 - 120 >120
Economic size (potential gross margin in 1000 € )
… and on HOW LARGE the farm is
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Development of agricultural output and input prices in the EU-27, 2000-2008, in real terms
80
85
90
95
100
105
110
115
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Agricultural input price
Agricultural output price
Poor profitability in recent years as a result of a deterioration in terms of trade…
7
Evolution of agricultural labour productivity in the EU-27, 2002-2009, 2002=100
90
95
100
105
110
115
120
125
130
2002 2003 2004 2005 2006 2007 2008 2009
… in spite of increasing labour productivity…
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Evolution of annual work units and farms in the EU-27, 2000-2009
annua l w o rk un its
fa rm s
11 000 000
11 500 000
12 000 000
12 500 000
13 000 000
13 500 000
14 000 000
14 500 000
15 000 000
15 500 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
… driven by structural adjustment
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Recent trends in commodity prices
Source: World Bank.
(World Bank nominal price indices, 2000=100)
0
75
150
225
300
375
450
525
600
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Fertilisers + 163 % Energy + 223 %
Agriculture + 50 %
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Cereals: (low) yield growth will keep the sector growing
EU-27 area, yield and production projections – 2020/21 vs. 2009/10 - %
-15%
-10%
-5%
0%
5%
10%
15%
20%
soft wheat durum wheat barley maize rye oats other cereals TOTALCEREALS
area yield supply
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Cereals: focus on yield growthEU-27 past and projected yield growth – average annual rate of
change
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Soft wheat Durum wheat Barley Maize Rye Oats Other cereals TOTALCEREALS
1990s 2000s 2010s
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Resulting in a slow down in farmers’ income
average 2005-2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Factor income in nominal terms
EU-27 100.0 108.6 109.1 107.9 107.4 107.1 108.5 110.7 110.6 113.7 114.5 EU-15 100.0 108.8 108.9 107.2 106.1 105.3 106.4 108.2 107.5 110.4 110.5 EU-12 100.0 107.2 109.8 111.7 114.6 117.1 120.3 124.4 127.4 132.2 136.3
Labour input
EU-27 100.0 91.9 89.9 87.9 85.9 84.0 82.2 80.4 78.6 76.9 75.2 EU-15 100.0 93.1 91.6 90.2 88.7 87.3 85.9 84.6 83.2 81.9 80.6 EU-12 100.0 90.9 88.3 85.8 83.4 81.1 78.8 76.6 74.4 72.3 70.3
Agricultural income in real terms per labour unit
EU-27 100.0 110.3 111.3 110.6 110.8 110.2 112.2 115.2 114.9 119.0 119.7 EU-15 100.0 109.9 110.0 108.1 106.8 105.6 106.4 108.0 107.1 109.6 109.6 EU-12 100.0 108.2 110.8 114.2 119.9 119.5 125.8 133.4 133.9 142.8 144.9
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Results of G20 Agricultural Ministerial
• The Action Plan on food price volatility and agriculture mentions productivity 13 times! It includes:– We stress the need to increase agricultural production and
productivity on a sustainable basis.
– It requires improvements in • land and water management, • improved agricultural technologies, • an appropriate and enabling environment which could lead to increased
investments notably from the private sector, • well-functioning markets and • means to mitigate and manage risks associated with excessive price
volatility of agricultural commodities.
– We recognize that agricultural policies have an important role to play with regard to all these challenges.
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Results of G20 Agricultural Ministerial
• The Action Plan on food price volatility and agriculture includes:– We recognize the importance of a significant increase in agricultural
production and productivity, considering the diversity of conditions world-wide and the need for a sustainable use of natural resources, in order to respond to the challenge of a growing demand.
– To feed a world population expected to reach more than 9 billion in 2050, it is estimated that agricultural production will have to increase by 70 percent over the same period, and more specifically by almost 100 percent in developing countries.
– … also requires significant advances to reduce pre and post-harvest losses and food waste along value chains.
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Results of G20 Agricultural Ministerial
• The Action Plan on food price volatility and agriculture includes:– We encourage the
• first G20 conference on agricultural research for development, involving our agricultural research centers, to be held in Montpellier on 12 and 13 September 2011 and
• the G20 seminar on Agricultural Productivity to be held I October 2011.
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Findings of in-house analysis: demand growth slowdown
Annual % rate of growth in period
0%
2%
4%
6%
8%
10%
12%
Wheat Maize Rice Total grains Totalfeedgrains
Soybeans Soybean meal
Palm oil Soybean oil
Total vegetable
oils
1961-72 1973-84 1985-96 1997-08
Source: USDA, FAO
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Findings of in-house analysis:demand still faster than yields
Annual % rate of growth in period
0%
1%
2%
3%
4%
5%
6%
7%
Wheat dmd Wheat yield Maize dmd Maize yield Rice dmd Rice yield Soybean dmd Soybean yield
1961-72 1973-84 1985-96 1997-08
Sources: FAO; Eurostat, DG Agriculture and USDA
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Thank you!
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