CLITRAVI 50th Annual General Assembly, Portoroz, Slovenia, 8 May 2008 Lars Hoelgaard, Deputy Director-General EU Agriculture in a globalised context

CLITRAVI 50th Annual General Assembly,Portoroz, Slovenia, 8 May 2008

Lars Hoelgaard, Deputy Director-General

EU Agriculture in a globalised context

Portoroz, Slovenia, 8 May 2008 2

Before Now Ahead?


Before – ”Good old days” Stable framework Intervention prices Tariffs Export refunds Intervention stocks Surplus – minimum/maximum prices Monetary compensatory amounts – green

rates/accession compensatory amounts


Disappearance of public stocksComposition of public stocks in the EU (mio t), 1995-2014

0

2

4

6

8

10

12

14

16

18

20

22

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

wheat barley rye maize

EU-15 EU-25 EU-27

Butter, SMP, beef – same picture


Now – ”volatility” - EU-related

CAP-reform – market orientation Real ”Filet de sécurité” Direct payments – income security – but

price volatility Exchange rate US-dollar/Euro


Volatility - global Energy crisis – 120$/barrel Global warming Bio energy - EU:

– Renewables – 20% - 2020– Bio fuels – 10% - 2020

Others Demand for raw materials Food/feed/energy/industrial Renewables - environment


Slightly expanding cereal markets and emerging bioethanol markets….

Development of cereal markets in the EU, 1995-2014 (mio t)

0

50

100

150

200

250

300

350

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Production

Non-feed use

Feed use ExportsImports

EU-15 EU-25 EU-27

Bioethanol


Food crisis? – or price adjustment to real cost of production

Energy cost of production Environment – water cost of production Global warming – renewables CO² - cost

of production


Demand driven Bio ethanol – maize – US – Iraq - war Odd man out – sugarcane and bio ethanol –

Brazil Emerging economies ”Chinda” (China/India)

etc. - Diet patterns Population growth – 9 billion in 2050 Hedge funds – Soros – add to speculation –

gold/oil


Opportunities/supply

Africa potential – high prices good or bad? GMO’s – productivity and environment US-dollar – reserve currency – imbalances Deficit in federal budget (Iraq war) Deficit in trade balance (China) Low interest rates house prices inflated

consumption subprime


WTO Lower tariffs No refunds 2013

Market outlook


EU to remain net importer of beefEU production, consumption, trade and intervention stocks (mio t c.w.e.)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Pro

du

cti

on

, C

on

su

mp

tio

n

0.0

0.5

1.0

1.5

2.0

2.5

Tra

de

, S

tock

sProduction

Exports ImportsEnding stocks

EU-15 EU-25EU-12

Consumption

EU-27


Growth rates for pig meat production and consumption are expected to be lower than in the 90sEU production, consumption and trade (mio t c.w.e.)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Pro

du

cti

on

, C

on

su

mp

tio

n

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Tra

de

Production

Consumption

Exports

Imports

EU-15 EU-25EU-12 EU-27


Meat Beef production to continue falling below consumption throughout

the projection period due to:– Declining cattle herd from dairy sector– Impact of decoupling of direct payments

Pig meat production expected to keep its slight growth thanks to:– Solid demand both in the EU-15 and in the EU-12– Exports to decline slightly due to greater competition from low cost

exporters, imports to remain at low level

Poultry meat demand to grow faster than production, leading to EU becoming net importer of poultry meat

EU sheep/goat meat production to continue its declining trend


Imports from developing countries (2005)Imports from developing countries (2005)

(billion US dollars / % of total)

68,6%

20,0%

45,7%

33,8%30,4%

24,9%

37,7%

0

10

20

30

40

50

60

70

EU25 Canada US Japan Australia New Zealand Sum on 5

Commodities Intermediate products Final Products Share of total (%)


Health check (HC) – how does this fit? Further decoupling Modulation Balance Pillar I and Pillar II More market orientation Article ”68” (old 69) LFA’s ”New challenges”


CAP expenditure and CAP reform path CAP expenditure and CAP reform path

0

10

20

30

40

50

60

70

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

billion €

0,0%

0,1%

0,2%

0,3%

0,4%

0,5%

0,6%

0,7%

Export subsidies Market support Direct aidsDecoupled payments Rural development % of EU GDP

EU-10 EU-12 EU-15 EU-25


Challenges

Demand is there Can Europe keep pace? RD + innovation Reinvent yourselves – value added Competition – more, not less


Conclusion - ahead More volatility More market Risk management Instruments – hedging – futures Locking in prices But public intervention still necessary –

market does not solve all Future CAP post 2013?

Documents

CLITRAVI 50th Annual General Assembly, Portoroz, Slovenia, 8 May 2008 Lars Hoelgaard, Deputy Director-General EU Agriculture in a globalised context