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Agriculture in the European Union - Statistical and economic information 2001

The 2001 Agricultural Year

Overview

1.

The 2001 agricultural year was mainly characterised by the following developments:

(a) the general downturn in the international economic situation over the course of the year, which was further exacerbated by the tragic events of 11th September;

(b) relatively high oil prices for most of the agricultural year (although markedly down on the very high prices in the latter part of 2000), leading to continued high costs for energy and fertilisers, but with prices dropping sharply in mid-September and remaining at much lower levels for the rest of the year;

(c) a sudden increase in food prices in the first half of 2001 which gave a boost to inflation and eroded private consumption;

(d) continued turmoil in the meat sector, following firstly the new BSE crisis which erupted towards the end of 2000 and which led to a large drop in beef consumption and prices, and secondly the outbreak of Foot and Mouth disease (FMD) in early 2001; and

(e) generally unfavourable weather conditions over the course of the agricultural year, with bad weather affecting most EU Member States and leading to a reduced cereals harvest.

Given the overall downturn in the domestic and international economic situation, exports faced an abrupt deceleration in global trade growth, mainly due to the marked US slowdown. Further, notwithstanding the favourable euro exchange rate, EU agricultural exports during 2001 were heavily affected by the crises in the meat sector and by increased competition from third countries in the cereals sector.

2.

Overall, initial estimates at the end of 2001 put farm incomes for the European Union as a whole on an upward trend by 2.7% in real terms (measured as real net value added at factor cost per annual work unit), following the rise already recorded in 2000 (+ 3.7%, according to the most recent figures). Despite the sanitary crises observed in the animal sector, linked to BSE and Foot and Mouth disease, favourable price developments, notably in the animal sector (but with the clear exception of the beef sector), together with a renewed, though moderate, decline in the agricultural labour force (down 1.6% in 2001), should result in average agricultural income per labour unit rising to record levels in 2001. giving a renewed sign of recovery after the falls recorded in 1998 and 1999. However, as usual some caution is necessary with these first estimates. In addition, underlying the expected overall increase in the average income are quite large variations in the evolution of farm incomes according to the type of farming.

3.

In terms of weather, the 2001 agricultural year got off to a generally poor start with adverse conditions during the autumn sowing period. This period was characterised by excessive rain, which hindered or made impossible winter cereals sowing operations in the UK, Ireland, France and the Benelux countries, and which reduced the crop area through flooding and crop damage. Excessive rains were also recorded in Spain and Northern Italy, allowing replenishment of water reserves but in some cases causing localised saturation and flooding.

Nevertheless, unseasonably high temperatures during winter, especially in the central and northern regions of Europe, helped advance the growth of winter crops, but while conditions were drier than normal in the southern EU countries, the other countries received higher than average rainfall, in some cases excessive. In the spring the rainfall was still excessive in the central and northern areas, further hindering operations, while in the southern regions of Italy, Spain and Portugal rain was inadequate and temperatures higher than normal, enhancing a drought effect on winter cereals. In particular, June was very dry and hot in these three countries, with a negative impact on straw cereals, especially barley and wheat.

During the summer, excess moisture in some central and northern countries hampered or delayed harvests, while several weeks of peak temperatures and dryness had negative effects on maturing winter and spring cereals crops in the southern countries, generally resulting in reduced yields for the year. Concerning summer crops, both beet yields and potato yields were below the levels for 200. with these two crops suffering from the excessive autumn rainfall in the north which delayed the harvests in most areas.

4.

Domestic consumption for cereals is estimated to have risen only very slightly in 2001 (by just under 1%) after having risen some 4% the previous year (when cereal use for animal feed rose noticeably). For beef and veal the widespread loss of consumer confidence in the wake of the discovery of fresh cases of "mad cow disease" late last year resulted in a 5% reduction in total EU consumption in 2000 compared to 1999. This large drop in consumption continued into 2001. with consumption dropping most in Germany, Greece and Spain, but was followed by a recovery in the latter half of the year, leading to an expected overall reduction averaged out over the year of around 5.7% compared to 2000.

As in the past, the slump in beef and veal consumption had a positive impact on poultry and pigmeat consumption, which (on a per capita basis) should increase by 6.5% and close to 2% respectively compared to the 2000 levels. In contrast, per capita sheep and goat meat consumption should decrease by 5.8%, largely due to the impact of FMD-related export restrictions which led to scarcity of these meats in continental EU countries that traditionally rely on UK exports.

Overall consumption of dairy products (i.e. covering all uses of milk) has been increasing in the EU since 1997 and in 2001 consumption should reach 115.2 million tonnes (in milk equivalent), a 0.3% increase over last year. While butter consumption remained unchanged from 200. consumption of cheese is expected to continue its upward trend, growing by some 0.5% in 2001. although this increase is noticeably below the trend over recent years.

5.

The general economic scene was characterised by a weakening of the world economy during 2001 (world GDP growth for 2001 is expected to be only 2.1%), led by the economic slowdown in the USA during the course of the year and made worse by the general sense of insecurity and uncertainty following the tragic events of 11th September. The EU was not able to escape this severe and synchronised slowdown in the world economy, with economic growth in the EU decelerating in 2001 (the euro area economy is likely to grow at only 1.6%, down from 3.4% last year), and with exports facing an abrupt deceleration in global trade growth which is likely to be below 1% (in volume) for 2001. a restricted level not seen since the early eighties.

Following the 1999-2000 oil price rise, a surge in food prices in the first half of 2001 gave a boost to inflation that eroded the purchasing power of households and private consumption, with the inflation rate for the year expected to reach 2.8% on average in the euro area (compared to 2.4% in 2000). Oil prices remained generally high at the start of 2001. although somewhat lower than the very high prices observed in the latter part of 200. and remained fairly stable until mid-September at which point prices dropped sharply to reach levels last seen in mid-1999. On the currency front, the euro remained historically fairly weak against the US dollar during 2001. helping Community exports to remain generally competitive in world export markets.

6.

In line with the general downturn in the global economy, international agricultural markets were relatively depressed for much of 2001. International prices for most cereals initially showed some recovery at the beginning of the second half of the year, having fallen over the first half, but economic uncertainty following the events on 11 September put prices under pressure again leading to little change over the remaining months.

International wheat prices remained relatively high throughout the year and well above last year’s levels up until September, helped by the fall in production in key exporting countries and the expected increased world demand. However, from October onwards price levels, although still remaining quite high, were slightly below the high levels of the corresponding period at the end of 200. due to reduced demand and evidence emerging of significant surpluses available for export in several countries not traditionally known as exporters. In the world maize market prices experienced a fall of the order of 10% between January and June before recovering somewhat until August, from which point they also came under renewed downward pressure as prospects became uncertain. Prices fell heavily between August and October, due to the availability of large supplies and uninspiring demand, but recovered slightly towards the end of the year on expectation of reduced US production.

In the meat markets, international prices strengthened in the first part of 2001. mainly driven by a strong increase in poultry prices. However, the deterioration of global economic conditions and the emergence in September of the first reported cases of BSE in Asia restricted further gains in meat prices by limiting the growth in global meat consumption. Further, beef prices, which had shown some gradual recovery over the first part of the year, came under downward pressure towards the end of the year following the renewed animal disease concerns, but also reflecting a global move away from beef to other meats. International prices for dairy products fell noticeably during the second half of the year, in line with the general deceleration in global economic growth and in particular the contraction in demand in those regions which had been the principal expanding markets over recent years, so that by December prices for all dairy products other than cheddar cheese were well down on those twelve months earlier.

7.

The performance of the European Union on world agricultural markets in 2001 has been somewhat mixed. While the weak euro aided the competitiveness of Community exports, the downturn in the global economy together with this year’s low cereals harvest, the increased competition from third countries in the cereals sector and the recent crises in the meat sector all had a significant restraining effect on EU exports.

In the first ten months of 2001 the overall value of Community agricultural exports was slightly up (around 2.3%) on the same period in 2000. However, underlying this figure are wide variations across product sectors. Cereal exports fell heavily, by some 30% in volume and 15% in value (in euro terms), partly due to the impact of increased competition from exports by the Central and Eastern European Countries and the republics of the Former Soviet Union, where 2001 cereal crops had recovered from the drought affected levels of the previous year. Similarly, large falls in the value of exports were recorded for animal feedstuffs (down 19%) and olive oil (down 9.5%). In contrast, significant rises occurred for sugar (up 36%), fruit (up 16%) and vegetables (up 17%).

Concerning meat exports, the volume of exports in the first ten months of the year, compared with the same period the previous year, decreased due to the impact of the BSE and FMD crises, which virtually halted for a certain period EU exports of meat products. Exports of beef and veal dropped over 20% in both volume and value, while those for pigmeat fell heavily in volume (down around 34%) but less so in value (down 13%). Exports of poultrymeat dropped in volume (down around 4%) but actually rose in value (by 13%). Although the volume of milk product exports decreased noticeably, the value of certain exports increased, especially cheese (up 8%) and concentrated milk (up 35%), but skimmed milk powder exports fell heavily (by close to 50% in value) as a result both of limited availability in the EU and reduced export refund levels.

8.

On the whole, intervention stocks for most of the main agricultural products covered by the intervention scheme increased during 2001. For cereals, intervention stocks increased from around 6.6 million tonnes at the end of 2000 to around 7.0 million tonnes by the end of 2001. Underlying this, however, are quite wide variations in changes in the stock levels for individual cereals. While wheat stocks were run down appreciably during 2001 (down to around 0.66 million tonnes by the end of the year from a level of 1.8 million tonnes in December 2000), stocks of barley increased during the same period from 1.2 to 1.7 million tonnes, and stocks of rye rose from 3.6 to 4.7 million tonnes and remain a cause for concern. Intervention stocks of milk powder had already been completely run down by October 2000 and remained so during 2001. while butter stocks reduced from close to 64.000 tonnes at the start of 2001 to end the year at around 54.000 tonnes. Following the recent crises in the meat sector, beef intervention stocks, which were almost completely run down during 200. increased substantially in 2001 to reach around 25.000 tonnes by the end of the year.

Production levels

9.

Overall, latest estimates (available at the end of December) indicate cereal production to be low in 2001 at just above 201 million tonnes and about 12.7 million tonnes (or some 6%) down from last year’s record crop, although still slightly higher than that of 1999. The overall reduction compared to 2000 is mainly due to the bad weather conditions which affected most EU Member States during the year. The biggest production falls occurred in France (down 6 million tonnes, or 9%), Spain (down 6.9 million tonnes, or 29%), and the UK (down 4.4 million tonnes, or 18%), although production in Germany increased significantly (up 4.8 million tonnes, or 11%) following a bumper crop there and making it for the first time the largest EU straw cereal producer, ahead of France. Most of the overall fall in production is due to a reduction in common wheat (down about 11.4 million tonnes, or 12%, compared to last year). Barley production is also expected to be down some 3.3 million tonnes (or 6.4%) compared to 200. and durum wheat down by 1.1 million tonnes (or 12.4%), but maize production should increase by around 2.4 million tonnes (some 6%) to just under 41 million tonnes, and rye by 0.8 million tonnes (or 15%), driven by a 1 million tonne increase in production in Germany.

10.

The overall decrease in cereals production reflects a general reduction in both area under cereals and in the yields for 2001. The total area under cereals decreased by 2.8% (around 1.1 million ha) compared to last year, due almost exclusively to the reduction in the area grown with common wheat (down around 8%). The only significant increase in area compared to last year was that grown with maize (up around 5%, or about 0.2 million ha, over last year), while barley and durum wheat areas remained more or less constant.

11.

Latest estimates show average cereal yields down just over 3% compared to last year, at 5.5 tonnes/ha, some 4% lower than the trend and with barley (down 6%) and durum wheat (down 12%) yields showing the largest declines. Average soft wheat yields were also down (by 4%), but yields for maize rose slightly (by 1%) and those for rye markedly (by 19%). However, the pattern of crop yield variation differs greatly from one Member State to another. For example, while soft wheat yields reduced significantly in Spain (down by around one-third), and to a lesser extent in France (down 6%), Italy (down 4%) and the United Kingdom (down 10%), they rose appreciably (around 8%) in Ireland and Germany and leapt in Austria (around 16%). Similarly, yields for rye rose markedly in Germany (by 25%) and Austria (by 20%), but fell heavily in Spain (by 44%) and Portugal (by 30%). For maize, however, the variation across Member States was less dramatic, with nearly all recording increased yields.

12.

Total oilseed production (rape, sunflower and soya) of 13.4 million tonnes, covering both food and non-food production, is much the same as that of last year, and remains significantly below the record harvest of 1999. Both the overall area cultivated and overall oilseed yields have remained more or less the same as in 2000. Concerning the individual crop situations, soya production was up just over 6%, driven by a 50% increase in cultivated area in France, while sunflower and rapeseed production was very marginally down on last year (due to slightly lower average yields), although much more significant changes did occur at the national level

13.

While protein crop area increased marginally (by 3%) compared to last year overall yields were reduced, so that total output was some 3% lower than in 2000 at 3.7 million tonnes, the lowest level since 1995. Linseed area reduced dramatically from 227.000 ha in 2000 to 105.000 ha in 2001. resulting from modifications to the Common Market Organisation in this area. However, better yields led to overall production decreasing less markedly from 26.000 tonnes in 2000 to 15.000 tonnes in 2001.

14.

Latest estimates indicate that EU sugar production fell by around 15% relative to last year’s level, mainly due to lower production in France, Germany and Italy. While the overall area under beet declined only slightly (but following on from last year’s steep decline), yields fell heavily due to the poor climatic conditions and in particular the unfavourable period in September, when excessive rain in the main areas of production such as Germany and France disrupted harvests.

15.

Early estimates put olive oil production noticeably higher in 2001 at some 2.1 million tonnes.

16.

Early estimates have production of both fruit (-2.5% on 2000) and fresh vegetables (- 1.1%) down in 2001. Potato output is estimated to have fallen by 8% compared with the previous year, with dry spells and hot temperatures having affected the non-irrigated varieties in southern regions, and excessive rain having hindered north European production.

17.

Following on from the exceptional harvest in 1999. when production was at the highest level for several years, and the slightly lower production in 200. latest estimates show wine must production having fallen in 2001 by approximately 7.6% compared to last year to around 169.5 million hectolitres. Big falls were seen in Spain (over 20%), while both France and Italy saw declines of between 2.2 and 4.7%. By contrast, wine production in Austria and Portugal was estimated to have risen by more than 15% following large declines the year before.

18.

Following the collapse in consumption at the end of 200. and which continued into 2001. beef and veal production during 2001 was subject to a number of short-term disturbances. First of all the carry over of a large number of animals retained on farms at the end of 200. due to the fall in prices and the strong reduction in demand, created a backlog of around 1 million animals for slaughter. While a large part of these were for slaughter in 2001 many were kept to the following year due to low prices. Secondly, production was strongly affected by the various measures taken to counter the recent BSE and FMD crises and to support the market. In this regard, it is estimated that over 80.000 tonnes of meat were taken off the market. Taking all these factors into account, latest estimates put the level of production of beef and veal meat destined for human consumption at around 7.4 million tonnes in 2001. more or less unchanged from last year but still some 4% down on levels in 1999.

19.

As in 1996. the recent BSE crisis increased the demand for pigmeat and led to a sustained high price level in 2001. However, the outbreak of FMD, mainly in the UK and the Netherlands, and later on the outbreaks of Classical Swine Fever in Spain and to a lesser extent in Germany, heavily disturbed the pigmeat sector, both due to the effect of the animals destroyed for sanitary reasons and due to the limitations on movement of livestock together with the large number of export bans imposed by third countries. Nevertheless, the situation recovered somewhat in the latter part of the year and the overall level of production for 2001 is expected to increase slightly (about 0.5%) relative to last year, although that year saw a 2.4% drop in production compared to 1999.

20.

In contrast to the stagnation in production levels experienced in 1999 and 200. which arose from lower export growth at the time and partly from the impact on consumption of the dioxin crisis that hit Belgium in 1999. poultrymeat production in 2001 saw an increase of around 4% compared to 2000. This is mainly due to the latest BSE scare, which led to a switch in demand away from beef to other kinds of meat, and which mostly benefited the poultry sector due to its ability to respond relatively quickly to the increased demand for alternatives to beef.

21.

In contrast to the more or less stable situation in 1999 and 200. 2001 has been a difficult year for the sheepmeat and goatmeat sector. The outbreak of FMD in the UK and in some other European countries severely disrupted the sector, with large losses through culling (almost entirely in the UK), and limitations on trade. Largely due to this, along with the difficulties in throughput due to movement restrictions implemented in order to restrict the spread of the disease, overall EU production for 2001 is expected to drop by 8% compared to 200. to levels well down on the highs of the early 1990s.

22.

The Community dairy herd is expected to be about 20.5 million head at the end of 2001. a small reduction of 0.6% from the previous year. By contrast, milk yields should increase by 2%, so that total milk production for 2001 is expected to be just above 122 million tonnes, more or less unchanged from the levels in 1999 and 2000. Deliveries to dairies were very slightly up (0.5%) compared to 200. due to increases in several Member States and despite the decreases expected in France and Finland.

23.

Butter production in 2001 is estimated to have decreased by around 1.8% compared to 200. following on from a similar slight fall already seen last year. Cheese production, however, rose by 4%, boosted by rising consumption and following on from the 2.4% production increase already seen in 2000. Production of skimmed milk powder fell off again in 2001 (down 6.4% compared to 2000), continuing the heavy fall already seen last year (down 5.7%).

Producer prices and market prices

24.

According to the figures available at the end of December 2001. the index of farm-gate prices is estimated to have grown in 2001 by an average of 5% in the EU in nominal terms compared with the previous year, fuelled by a 5.8% increase in the price of animal products and a 4.1% increase in crop prices. The steepest increases in crop prices were recorded by potatoes (up 27.1%), oilseeds (up 15%), durum wheat (up 14.7%) and fruit (up 11.5%). The upward trend was mainly bucked only by olive and olive oil prices, which decreased by 4%. As regards animal products, pigmeat prices leapt by 20%, continuing on from their strong rise the previous year. Significant rises were also recorded for mutton and lamb (up 10.6%), poultry (up 6.4%) and milk (up 7.8%). In contrast beef and veal prices fell heavily (by 11.3% and 7.7% respectively), and egg prices by 2.1%.

25.

After accounting for inflation, the producer price index for the European Union as a whole was estimated to have risen by 2.6% on the previous year. The biggest rises were in Austria (up 4.4%), Denmark (up 4.8%), Germany (up 6.8%), Portugal (up 5.3%) and the United Kingdom (up 6.5%). Farm-gate prices also rose in most other Member States: in Belgium (up 3.2%), Greece (up 3.2%), France (up 2.3%), Ireland (up 1.8%), Italy (up 2.5%), the Netherlands (up 1.0%), Finland (up 1.6%) and Sweden (up 2.9%). However, real producer prices held more or less steady in Spain and actually fell in Luxembourg (by 3.0%).

26.

During 2001 the intervention price for cereals was reduced in application of Agenda 2000 from 110.25 to 101.31 euro per tonne and aids were increased to 63 euros per tonne of reference yield instead of 58.76 euros previously. The level of compulsory set-aside was kept at 10%. Against this background, together with the generally reduced cereals harvest compared to 200. average EU cereal market prices mostly remained quite stable over the year, with only durum wheat showing any major change (up from around 150 euros per tonne at the start of the year to just below 200 euro per tonne by mid-December, due to the large drop in production and the lack of intervention stocks).

Average bread-making wheat prices were particularly stable over the year, remaining close to the 140 euro per tonne level throughout. EU maize prices also remained quite stable and close to the 140 euro per tonne level from January through to mid-August, but then fell to around the 130 euro per tonne level as prospects firmed for a strong maize harvest, and remained around this level for the rest of the year.

Average EU market prices for barley showed little fluctuation over the year, except those for brewing barley which fell from the 140 euro per tonne level over the middle part of the year before recovering back to this level from August onwards. For rye, average EU prices generally rose over the first half of the year but fell back in the latter half on prospects for a large harvest in Germany. This was especially the case for average bread rye prices which rose from 123 euro per tonne in January to 135 euro per tonne in July, but then fell through to August to the 115 euro per tonne level and remained around this level for the rest of the year.

27.

Olive oil prices generally improved over 2001 from the depressed levels of the year before, but fell somewhat towards the end of the year in Spain and Italy following information on the importance of the coming crop there. For Italian extra virgin and lampante, figures for late December 2001 show olive oil prices more or less unchanged from a year earlier, and remaining above the trigger level for private storage. More significantly, prices for Spanish olive oil increased noticeably in the second half of 2001 compared to the same period in 200. for both extra virgin and lampante, and with prices for extra-virgin being mostly above the trigger price for private storage from September 2001 onwards. In contrast to the general improvement in olive oil markets during 2001. prices and sales of olive-residue oils collapsed following a food scare concerning the presence of polycyclic aromatic hydrocarbons.

28.

In general, wine prices during 2001 have continued to fall even further than the levels of the previous year. By early December 2001. market rates for red wine relative to the same period in the previous year were down 15% in France and 24% in Spain, having been at even lower relative levels earlier in the year, while prices in Italy remained more or less unchanged. White wine prices showed less dramatic overall changes, falling by around 5% in Spain, 7% in Italy and 10% in France over the same period. However, while white wine prices have been quite stable in Spain and Italy, prices in France fluctuated widely during the year.

29.

Average EU butter prices began the year at 97.5% of the intervention price, but then fell until mid-March towards the 93.5% level before rising again to just below the intervention price at the end of July. Prices then fell again slowly over the rest of the year, to reach a level of around 91% of the intervention price by mid-December. Given the fall in production and the low stocks, average prices for skimmed milk powder remained at levels above the intervention price for most of the year. Beginning the year at 131% of the intervention price, they fell during the first four months to around 112%, climbed in May back to around 127% and finally fell again to end the year at around 5% below the intervention price. The average price paid to milk producers increased 6.5% in 2001.

30.

Prices for beef and veal in 2001 remained substantially below those of much of the previous year (before the BSE crisis broke). In addition, the latter half of the year saw a considerable fall in cow carcass prices, especially in the Netherlands and Germany. Whereas this was partially a seasonal trend, it also reflected the substantial backlog of animals that were held back on farms earlier in the year, mainly due to a drop in exports following the recent BSE and FMD crises, and which were gradually presented for slaughter later on.

The Special Purchase Scheme and other measures taken played an important role in supporting the market in 2001 and, together with a recovery in beef consumption, allowed for a continuation of the gradual recovery of the beef market in the EU. By early December, carcass prices for young bulls and for steers had recovered to 86.2% and 83.6% of the intervention price respectively, although cow carcass prices continued lower. However, the first recorded BSE cases in Austria and Finland put renewed downward pressure on prices in mid-December.

31.

As an indication of the level of impact of the latest crises on the beef and veal market, comparing beef prices in October 2001 with those around a year earlier (at the start of the BSE crisis), initially reveals apparently large price drops (e.g. prices for young bulls had fallen by 18.5%, heifers by 15% and cows by just over 30%). However, it should be borne in mind that 2000 was generally considered as an exceptionally good year in terms of market price levels and that comparison with prices in the same period in 1999 is more relevant. On this basis prices had fallen less dramatically (e.g. prices for young bulls had fallen by 15.5%, heifers by 9.4% and cows by just over 22% compared to 1999 price levels). These price reductions should also be seen in light of the 13.4% reduction of intervention prices decided under Agenda 2000 for which farmers were compensated through increased direct payments, offsetting a part of the losses incurred by farmers and helping to alleviate the market situation further.

32.

Following on from the strong recovery in the poultry market during 200. the positive impact on the poultry sector of the latest BSE crisis raised poultry prices to an all time record in February 2001 of almost 170 euro per 100kg, well above prices for the corresponding period of recent years. Average prices subsequently decreased over the rest of 2001. but remained higher than the prices of recent years up until the end of August, at which point they fell to levels close to the average of the last few years. In November the average price began to rise again, mainly driven by large price rises in Spain, before falling off again in December to end the year close to 133 euro per 100kg and around the average price for the last few years, although considerably down (about 15%) on prices twelve months earlier.

33.

Due to the switch in demand away from beef following the recent BSE scare and which partially benefited the pigmeat sector, the marked increase in pigmeat prices seen in 2000 continued through into the first quarter of 2001. with prices rising steeply to reach a peak in March of around 200 euro per 100kg. Although market prices in the EU remained historically generally high they subsequently decreased from the March peak, mainly due to export difficulties and the recovery in beef consumption. By October prices had fallen back to levels seen at the start of the year and continued lower to reach just above 136 euro per 100kg towards the end of the year and some 15% down on price levels at the beginning of 2001.

34.

Other than in the UK, the markets for sheepmeat and goatmeat products remained buoyant throughout 2001. with prices generally well in excess of the levels seen in recent years. During the first half of the year average EU prices peaked around the end of April, some 12% higher than at the start of the year, but then fell to reach a low in July of about 8% below the start-of-year price. The outbreak of FMD in the UK in late February threw the market into turmoil, with lamb prices in the UK falling by over a quarter immediately following news of the outbreak and continuing to fall thereafter, and led to the closure of export markets. After the summer, however, average prices improved again back to around the peak prices seen in spring, and by December, led by a price recovery in the UK and resumption of its exports, surpassed even those earlier levels to reach a historically high level of close to 470 euro per 100 kg and some 21% higher than twelve months earlier.

Input prices

35.

In 2001. the index of purchase prices for goods and services currently consumed in agriculture was up by an average of 4.5% in nominal terms on the previous year. The biggest rises were in fertilisers (up 13%) and feedingstuffs (up 6%).

36.

When account is taken of inflation, the real increase in the index of purchase prices for goods and services currently consumed in agriculture since 2000 was 2.2% for the European Union as a whole. Above-average rises were recorded in Denmark (up 5.7%), Germany (up 3.3%), France (up 2.3%), the Netherlands (up 2.7%), Portugal (up 4.1%) and Sweden (up 5.4%). The input price index was also up in Belgium (by 1.3%), Ireland (by 1.0%) and Italy (by 2.1%), and more or less stable in Austria, Greece, Luxembourg, Spain and the United Kingdom. By contrast, the input price index in Finland fell by 1.5%.

Farm income

37.

Eurostat's initial estimates, based on information received by Member States up until early December 2001 put average farm income (measured as the real net value added at factor cost per annual work unit) across the European Union as a whole 2.7% up on the previous year, with incomes up in the clear majority of Member States and only two experiencing a fall. The strongest rises were for Denmark (up 12.5 %), Portugal (up 9.5 %), Austria (up 8.5 %), Ireland (up 7.3 %), Belgium (up 6.2 %) and Germany (up 5.7 %). The surge in pig prices constitutes the common factor in the rise of agricultural income in most of these countries, although for Ireland the large fall in agricultural labour is the main driving factor behind the increase. Additional key factors underlying the overall rise in average income per labour unit are the increase in the level of subsidies granted to the agricultural sector in the framework of the implementation of the Agenda 2000 CAP reform and of the measures adopted in the wake of the sanitary crises in the animal sector, together with a renewed, though moderate, decline in the EU agricultural labour force (down 1.6% in 2001). For the remaining Member States, incomes were up in the Netherlands (by 4.3%), the United Kingdom (by 4.3%), Finland (by 3%), Sweden (by 2.8%), Spain (by 2.7%) and Greece (by 1.4%), and little changed in France. The only countries where incomes fell below the level of 2000 were Italy (down 0.8%) and Luxembourg (down 2.4%).

38.

Underlying the overall increase in average farm income are quite wide variations according to the type of farming. Average income should increase compared to 2000 levels in those farms specialising in pork and poultry production (up 30%), mixed (crops and livestock) production (by 10.1%), milk production (up 5.8%), and horticulture (up 3.2%), while incomes are expected to remain more or less static in farms specialising in the production of field crops. In contrast, farms specialising in grazing livestock saw a drop in income of 1.7%, while those specialised in wine production experienced a large drop in income of around 12.6%.


Changes in nominal farm-gate prices in 2001 and 2000

(%)  
Member state 2001/2000 2000/1999
Crop
products

Livestock products

TOTAL

Crop
products

Livestock products

TOTAL

EU-15

4.1 5.8 5.0 -0.4 7.8 3.5
Belgique/België 7.4 3.8 5.1 -0.5 14.5 8.3
Danmark 1.0 8.4 7.0 4.9 11.8 9.2
Deutschland

17.4 4.8 8.9 -1.9 10.9 6.5
Elláda 4.6 8.4 5.9 2.7 6.4 3.7
Espańa -0.2 9.3 3.4 -1.1 10.2 2.8
France

4.2 -1.6 3.7 -1.7 4.9 1.5
Ireland

-5.2 7.6 5.8 -2.2 8.2 6.8
Italia

5.1 4.3 4.8 1.0 6.0 2.9
Luxembourg

0.7 -1.1 -0.8 -0.7 1.1 0.7
Nederland

6.9 3.6 5.3 4.1 16.2 9.9
Österreich 1.9 7.8 6.1 2.7 7.6 6.5
Portugal

8.3 9.9 9.0 -5.1 13.6 3.0
Suomi/Finland -3.2 7.8 4.0 -6.9 10.8 5.6
Sverige 6.8 3.5 4.6 -9.8 1.8 -1.7
United Kingdom

12.1 5.5 8.0 -6.2 0.1 -2.3

Source : Eurostat


Changes in nominal purchase prices for agricultural inputs in 2001 and 2000

(%)  
Member state Intermediate
consumption

Investment

Total

2001/2000 2000/1999 2001/2000 2000/1999 2001/2000 2000/1999
EU-15

4.5 6.1 2.2 1.8 4.0 4.9
Belgique/België 3.2 8.4 2.6 -0.7 3.2 7.1
Danmark 7.9 3.3 2.4 1.3 6.8 2.8
Deutschland

5.4 10.4 1.3 0.9 4.4 7.9
Elláda 3.5 8.2 3.7 1.9 3.5 6.7
España 2.4 5.8 7.7 4.8 3.1 5.6
France

3.6 5.8 1.8 1.5 3.2 4.9
Ireland

5.0 5.8 3.8 4.6 5.0 5.4
Italia

4.3 2.6 1.6 1.9 3.2 2.2
Luxembourg

2.6 6.4 7.2 1.9 4.4 4.3
Nederland

7.1 7.4 2.4 -0.6 6.4 5.2
Österreich 1.4 7.6 2.0 1.3 1.6 4.7
Portugal

7.7 3.4 2.2 4.8 6.9 3.7
Suomi/Finland 0.9 7.2 2.8 4.1 1.3 6.1
Sverige 6.9 6.1 2.7 1.7 6.0 5.0
United Kingdom

0.9 2.9 5.3 1.4 11.0 2.7

Source : Eurostat


Real producer price indices

(1990=100)  
  1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000 2001
EU-15

100

97.2

89.1

84.6

84.8

85.2

83.0

8.0

76.6

72.8

74.0 75.9
Belgique/België 100 98.1

92.3

83.8

84.8

79.4

79.2

79.2

74.6

68.3

72.0 74.3
Danmark 100

96.2

92.8

8.0

79.5

77.8

77.3

76.0

66.7

62.6

67.0 70.2
Deutschland

100

95.2

91.2

8.6

79.5

78.7

76.8

76.1

71.1

67.3

70.6 75.4
Elláda 100

10.6

9.5

84.3

87.5

87.8

86.5

84.7

8.9

79.3

80.3 82.9
España 100

94.9

83.5

84.1

88.8

94.1

9.5

84.8

81.7

78.9

78.5 78.7
France

100

97.6

88.2

81.8

8.7

8.2

78.6

78.0

77.6

74.5

74.2 75.9
Ireland

100

93.4

91.9

96.7

95.8

95.6

89.3

82.5

79.9

74.6

76.0 77.4
Italia

100

102.8

89.8

87.8

87.5

9.9

89.2

87.4

85.3

81.1

81.4 83.4
Luxembourg

100

89.6

82.3

78.0

75.9

73.6

71.0

71.4

69.6

67.8

67.1 65.1
Nederland

100

10.8

92.1

83.4

84.2

84.9

84.8

87.1

81.8

74.1

80.1 80.9
Österreich 100

97.1

92.5

87.3

85.5

63.2

62.7

63.4

58.5

56.6

59.3 61.9
Portugal

100

87.3

74.3

71.3

73.8

72.2

69.8

64.4

66.9

62.2

62.5 65.8
Suomi/Finland 100

92.5

89.6

87.7

86.6

63.9

54.4

53.0

51.8

5.2

51.4 52.2
Sverige 100

91.5

86.4

79.3

81.6

79.8

76.2

73.5

74.7

72.2

68.3 70.3
United Kingdom

100

93.7

91.9

95.2

93.3

98.2

94.4

79.1

69.6

66.1

65.9 70.2

Source : Eurostat


Indices of real purchase prices for staple goods and services currently consumed in agriculture

(1990=100)  
  1990 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000 2001
EU-15

100

97.4

95.0

93.4

91.3

9.9

92.2

9.9

86.4

84.1

87.7 89.6
Belgique/België 100 97.1

94.5

91.0

88.5

87.4

89.4

89.7

84.4

82.4

87.1 88.2
Danmark 100

96.7

94.1

92.7

89.0

87.6

88.6

88.7

85.5

82.8

83.6 88.4
Deutschland

100

98.3

96.0

91.9

9.0

88.5

89.8

89.9

85.0

83.7

91.2 94.2
Elláda 100

101.7

99.2

96.5

97.4

94.2

94.6

92.0

87.8

86.4

91.2 91.9
España 100

96.1

92.0

91.1

89.5

88.4

88.7

89.0

86.4

83.4

85.3 84.7
France

100

97.9

96.2

94.2

92.6

92.6

94.4

94.9

91.6

89.5

92.9 95.0
Ireland

100

97.3

94.3

93.0

91.7

9.8

92.7

9.0

86.1

84.6

85.3 86.2
Italia

100

95.9

92.8

95.6

93.1

97.9

97.0

93.2

89.1

86.1

86.3 88.1
Luxembourg

100

98.7

96.0

91.4

89.5

89.0

91.1

9.4

87.4

85.8

87.9 88.3
Nederland

100

96.9

95.2

9.9

87.5

88.7

91.0

89.3

84.8

81.3

85.9 88.2
Österreich 100

98.8

96.3

93.7

88.8

84.8

87.5

89.7

86.0

83.5

88.4 88.2
Portugal

100

94.5

89.3

79.7

79.1

76.0

73.4

69.0

65.4

63.4

64.0 66.6
Suomi/Finland 100

102.8

102.4

102.0

96.6

74.7

75.9

77.0

73.9

71.6

74.5

73.4
Sverige 100

95.4

92.9

88.4

88.1

9.8

96.6

98.2

96.5

95.3

97.3 102.6
United Kingdom

100

97.5

97.2

99.9

97.0

97.0

101.0

93.4

83.9

81.1

81.1 85.1

Source : Eurostat




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