Troubled Times Ahead For European Agriculture Requires Strong Response

09 January 2012
A recent study by the European Commission on the future of European agriculture, and the potential risks to food security faced by both farmers and consumers, requires the maintenance of a strong Common Agricultural Policy and market safety net, declared Alyn Smith MEP, full Scottish member of the European Parliament's Agriculture and Rural Development Committee.
The report, entitled "Prospects for Agricultural Markets and Income in the EU 2011-2020", lays out a worrying and insecure future, both for the prospects of farmers trying to maintain an income and for broader society faced with the challenge of food security. For livestock producers, beef and sheep production levels are forecast to drop by 1.3% and 7.9% respectively, with export potential hit due to an unfavourable exchange rate. Input costs, which have risen since 2000 by 24.5% for fertilisers, 15.9% for feedstuffs, and 11.3% for energy, will continue to rise sharply, due to the increasingly coupled relationship of agricultural markets and the crude oil price. This will contribute to a reduction in agricultural income in the older Member States of 3.5% by 2020.

In the arable sector, growth of yields will continue to trail growth in demand, with a considerable reduction in EU stocks, creating a "tight market situation which could leave the cereal sector exposed to any crop failure." Much of the projected increase in cereal production will be taken up by growing production for ethanol and biodiesel, with increases in the production of crops largely used for animal feed, such as maize.  

The study is itself openly reliant on rather positive assumptions about market conditions, such as steady economic growth, growing demand in emerging markets, the absence of external shocks related to weather or disease, and does not take into account the impact of CAP reform or future free trade agreements, all of which could weaken the positive projections on high prices or increased income in certain sectors.

Alyn said:

"Farming, like the rest of the economy, is facing some tough and uncertain times ahead, with a volatile national and global economy, high energy costs and unfair supply chain relations, coupled to the usual uncertainties about weather and crop and animal diseases. But it's not just farmers who are affected: we are all reliant on the ability of our production systems to provide society with a secure, affordable, safe, diverse and nutritious supply of food. That's why, in the light of the upcoming CAP reform and other regulatory changes to agricultural markets, we must ensure that we get the legislative and financial support for the farming sector right.  

"The UK Government has often shown a naivety in their analysis of market trends, assuming that ostensibly high prices can justify a phasing out or elimination of direct payments. They ignore the equally high increases in input costs which wipe out farmers' margins, or the de facto difficulties of farmers to actually secure these high prices due to supply chain pressures. The decline in livestock numbers can also have a particularly marked impact in remote and fragile regions, where a loss in critical mass can destroy entire sectors - which is why it is critical to maintain the Less Favoured Area support scheme in CAP reform.

"Given the pressures which farmers face, it is also necessary to review the way we craft laws in Brussels, to reduce the administrative costs both in terms of money and time. Markets will continue to be volatile in nature, requiring an adequate public intervention safety net to compensate.  

"I hope the world of Scottish farming takes note of this valuable information, and uses it accordingly in making the case to the public for a continued agricultural policy."

The study can be found here: http://ec.europa.eu/agriculture/publi/caprep/prospects2011/fullrep_en.pdf