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Statistical and economic information 2002

Overview

1.

The 2002 agricultural year was mainly characterised by the following developments:

 

(a) a generally disappointing level of global economic recovery, with the international situation suffering from an atmosphere of uncertainty brought about by the combined effect of geopolitical tensions, negative developments in the equity markets and uncertainty about the true state of the economy and the corporate sector;

 

(b) a sharp rebound in oil prices over the course of 2002, back to around the relatively high levels of the first half of 2001;

 

(c) a deterioration in investor confidence which, combined with rising oil prices, eroded purchasing power and led to private consumption in the EU increasing only marginally in 2002;

 

(d) a noticeable recovery in the cattle sector from the recent BSE and foot and mouth disease crises, with a significant improvement in beef and veal consumption, and with prices in the sector increasing by more than 6 % on average. The recovery in the beef sector resulted in prices for pigmeat during 2002 being well down on the exceptionally high prices of 2001 and those for poultrymeat also being well down on corresponding 2001 prices for most of the year;

 

(e) generally favourable weather conditions over the course of the agricultural year, except for the severe floods during the summer in some Member States, leading to the second largest cereals harvest ever apart from that of 2000.

 

A limited recovery in global trade growth in 2002 helped overall EU exports improve slightly on 2001 levels. However the situation was less positive for EU agricultural exports, which faced increased competition from third countries especially in the cereals sector, where non-traditional exporters in the Black Sea area had a large impact on the markets in 2002, although meat sector exports improved considerably from the previous year’s levels when trade restrictions due to animal disease scares hit exports. The strengthening of the euro during 2002 also acted to restrain the level of EU agricultural exports.

2.

According to initial estimates at the end of 2002, farm incomes (measured as real net value added at factor cost per annual work unit) for the European Union as a whole fell by 3.0 % in real terms in 2002, in contrast to the large increases of 2000 and 2001 (when real incomes rose 4.4 % and 6.1 % respectively, according to the most recent figures) and against a background of a significant further decline in overall agricultural labour (down 2.9 % on 2001). Despite this fall in income, the average farm income in 2002 still remains some 25 % higher than that of the early 1990s. Underlying the drop in income for 2002 was a sharp fall in the prices of many crop and animal products, which more than offset the increase in the volume of production. This was especially true for animals and animal products such as pigmeat, poultry and milk, which all exhibited a sharp drop in real average prices, but was also the case for cereals, oilseeds and potatoes. However, as usual, these first estimates should be treated with some degree of caution.

3.

In terms of weather, the 2002 agricultural year got off to a good start with autumn 2001 field preparation and sowing of winter cereals and rapeseed occurring under conditions which were almost optimal and generally much more favourable than for the previous year, particularly so in France and the UK. While the autumn period ended with unseasonably cold weeks across Europe in December and in January 2002, raising some concern for frost damage, the subsequent conditions during the winter season were generally favourable, with mainly higher than average temperatures and a favourable spell for spring crop sowing preparations.

During spring 2002 the climatic conditions were as a whole satisfactory for crop growth and farming operations. The Iberian Peninsula, the South of Italy (with the exception of Sicily) and Greece received good levels of rainfall, allowing partial replenishment of water reserves and with a resulting potential impact on durum wheat production. Higher than seasonal temperatures at the end of April and May boosted crop development especially in central and northern countries, while in the Mediterranean areas a wave of peak temperatures in June boosted summer crop growth.

The situation generally worsened in July and August with excessive rain in many central European Member States, especially in Germany and Austria. This resulted in saturated soils and flooding, hampering straw cereals harvesting operations or causing local damage in many areas and leading to loss of harvest and grazing land. For England, France and Spain, July harvesting operations were on the whole more favourable than in 2001, and in contrast to the situation in Germany and Austria, favourable conditions for summer crop development were experienced in many parts of France, Italy and Spain. Late summer was generally favourable for summer crops, with drier and warmer conditions in northern areas and cooler, wet conditions in the Mediterranean regions, but this was followed by abundant rain and cooler than normal temperatures in October which partially affected field operations such as late potato harvesting and initial sugar beet harvesting in northern countries.

4.

Domestic consumption for cereals is estimated to have risen to close to 192 million tonnes in 2002/2003 (up some 2 million tonnes on 2001/2002), driven by an increase in human consumption (up 1.2 million tonnes) and a rise of around 1 million tonnes in the use of cereals for animal feed, mainly due to relatively low cereals prices compared to oilseeds in 2002. For beef and veal, consumption is expected to have recovered strongly in 2002. Following the strong falls recorded at the end of 2000 and the start of 2001, beef consumption recovered gradually over the subsequent period, and current estimates put total consumption for 2002 at 7.5 million tonnes, an increase of 11.3 % on the 2001 level. Pigmeat consumption in 2002 remained at more-or-less the same level as in 2001 (around 16.5 million tonnes), following on from the slight increase seen last year, while poultry meat consumption, which had benefited most from the last BSE scare and increased by over 3 % in 2001, is expected to have decreased slightly in 2002 (down 1.7 % on last year) due to the recovery in beef consumption. Lastly, while butter consumption remained more-or-less unchanged from 2001, consumption of cheese continued its upward trend, growing by 1.4 % in 2002, although this rise is slightly below the trend of recent years.

5.

Concerning the general economic scene, global recovery was somewhat disappointing during 2002. At the beginning of the year vigorous global growth had been expected, following significant policy stimulus after the events of 11 September 2001 and a widespread loosening of monetary policy. However, an atmosphere of uncertainty brought about by the combined effect of geopolitical tensions especially in the Middle East, which led to higher oil prices over the course of the year, the negative developments in equity markets and uncertainty about the true state of the economy and the corporate sector undermined confidence and led to subsequent weakness in the recovery, with the result that world GDP growth is expected to be only 2.6 % for 2002. Following its contraction in 2001, the first in 20 years, global trade growth is expected to have recovered to around 2% in 2002.

In line with global developments, recovery in the EU began in the first quarter of 2002 but failed to pick up over the rest of the year. Consequently, the overall recovery was much slower than foreseen, with the average growth rate in the euro area expected to have attained a level of only 0.8% in 2002. At the same time increases in food and oil prices eroded purchasing power, with a shortage of demand as a consequence. This, combined with a deterioration in investor confidence and an increase in the household savings rate, resulted in overall private consumption in the euro area increasing by only about 0.6 % in 2002. Concerning inflation, this declined only slowly during 2002, with the inflation rate for the year expected to be 2.3 % on average in the euro area (slightly down from last year’s rate of 2.5 %).

Compared to the level of recent years oil prices were fairly low at the start of 2002 (around $20/bl for Brent oil), but generally increased over the course of the year back to around the levels of the first half of 2001. Brent oil prices initially peaked at above $29/bl at the end of September, reflecting fears of an oil supply disruption in the event of war with Iraq, then fell to around $23/bl by mid-November before rising again, driven by a disruption in supplies from Venezuela, to break through the $30/bl level by late December. On the currency front,

following on from last year’s historically weak levels against the US dollar, the euro strengthened somewhat over the course of the year and by November had regained parity with the dollar.

6.

Developments in international agricultural markets were somewhat mixed in 2002, with international prices for most cereals recovering noticeably during the year, mainly due to low output levels in some key producer countries and in light of the smallest expected global cereal crop since 1995, while on the whole international prices for meat fell. However, international prices for most cereals weakened towards the end of the year, as several countries not traditionally known as exporters took advantage of their recent good harvests and the drop in exportable supplies from traditional exporting countries to make more of their production surpluses available for export.

International wheat and coarse grain prices (based on US prices) increased noticeably from the middle of the year onwards to exceed the price levels of the previous year, driven by mounting evidence of lower exportable grain supplies in traditional grain exporting countries. The steepest price rises were observed for North American and Australian cereals, where drought caused noticeable declines in output in 2002. By September prices for good quality US milling wheat were up nearly 50 % on prices one year earlier, and with price rises for US soft wheat not far behind. However, although remaining noticeably higher than one year earlier, wheat prices fell back over the latter part of the year due to the large surpluses available for export at relatively cheap prices in non-traditional exporting countries such as the Russian Federation, Kazakhstan and the Ukraine. Maize prices showed similar behaviour over the course of 2002, with prices rising initially mainly due to worsening crop conditions in the United States and with September export prices for US maize up some 28 % on those one year earlier. Nevertheless, in the latter part of the year lower world import demand together with large supplies of feed wheat and of maize in several non-traditional exporting countries acted to alleviate to a certain extent the upward pressure on maize prices. In contrast to the cereals markets, large supplies in the major exporting countries acted to keep prices for rice under downward pressure.

In the meat markets, overall international prices fell in 2002. This development in prices was mainly a result of rising levels of supply, especially in those countries previously subject to meat export restrictions in 2001, the reduced effects on markets of animal diseases and the effect of exchange rate movements in 2002 on South American meat exports. Concerning the specific meat markets, abundant supplies of poultry and pigmeat led to prices for these falling noticeably from 2001 levels, while beef prices and especially sheepmeat prices increased somewhat, the latter due to strong demand and reduced output in developed countries, especially Australia. International prices for dairy products fell for most of the year but recovered somewhat in the latter part of 2002 as a result of a decline in supplies in Australia and South America. By November prices of all dairy products had shown some recovery, with milk powder prices showing the greatest rise and with butter and cheese prices rising less noticeably. Nevertheless, prices of all dairy products remained well below those twelve months earlier.

7.

The performance of the European Union on world agricultural markets has again been somewhat mixed in 2002. The disappointing level of global recovery in 2002, the strengthening of the euro and the continued strong competition from third countries especially in the cereals sector all had a restraining effect on EU agricultural exports. However, a very positive development was the strong recovery in meat exports from the crisis-hit levels of the year before.

In the first nine months of 2002 the overall value of Community agricultural exports was marginally down (by around 0.8 %) on the same period in 2001. Cereal exports fell heavily in 2002, by some 16 % in volume and 15 % in value (in euro terms), mainly due to the continuing impact of increased competition from exports by third countries and especially the republics of the Former Soviet Union. (The latter was so pronounced that while EU cereals exports fell, EU imports of cereals almost doubled in value compared to the same period in 2001). Large falls in the value of exports were also recorded for animal feedstuffs (down 13 %), sugar (down 42 %) and skimmed milk powder (down 37 %), although for the latter developments over the last quarter of 2002 may result in final figures for 2002 showing a much smaller reduction. In contrast, significant rises in the value of exports occurred for rice (up 42 %), vegetables (up 18%), potatoes (up 37 %) and olive oil (up 21%). Although less pronounced, increases were also recorded for fruit (up 7 %) and wine (up 6%).

Concerning meat exports, the volume of exports in the first nine months of 2002 showed a marked improvement compared with the same period the previous year, when the impact of the BSE and foot and mouth disease crises virtually halted for a certain period EU exports of meat products. Over the period mentioned, exports of beef and veal rose by around 8 % in both volume and value, while those for pigmeat and poultry meat rose markedly in volume (by 23 % and 21 % respectively) although much less so in terms of value (by 4 % and 7 % respectively). Concerning dairy products, while skimmed milk powder exports for the first nine months fell as mentioned previously, the value of butter and cheese exports rose (up 8 % and 1.4 % respectively) for the same period, reflecting the rise in export volumes for these products (of 20 % for butter and 4 % for cheese).

8.

On the whole, intervention stocks for most of the main agricultural products covered by the intervention scheme increased in 2002. For cereals, intervention stocks increased from around 7.0 million tonnes at the start of 2002 to around 8.0 million tonnes in early January 2003. Underlying this, however, were quite wide variations in changes in the stock levels for individual cereals. While wheat stocks were further run down during 2002, down to around 0.41 million tonnes by January 2003 from a level of 0.61 million tonnes in January 2002, over the same period stocks of barley increased from 1.8 to 2.3 million tonnes, and stocks of rye continued the rise of previous years, increasing from 4.6 to 5.3 million tonnes and remain a cause for concern. However, the situation for rye is expected to improve since production fell in 2002 and is foreseen to decline further in 2003.

Important increases in stocks also occurred for dairy products during 2002. Intervention stocks of milk powder, which had been completely run down by October 2000 and remained so during 2001, started up again in March 2002 and increased sharply from then onwards to reach a level of just under 147 thousand tonnes by the end of September. However, by January 2003 stocks had been reduced back down to around 109 thousand tonnes, thanks to a surge in exports in the latter part of the year. Butter stocks also increased substantially in 2002, rising from just under 86 thousand tonnes at the start of the year to reach a level of 186 thousand tonnes by early January 2003. Further developments worthy of note were the increase in wine alcohol stocks from 2.2 million hectolitres in December 2001 to 3.6 million hectolitres twelve months later, and the reduction in beef intervention stocks by around 65,000 tonnes during 2002. Finally, in accordance with policy developments in the sector, public stocks of olive oil were phased out to become non-existent during 2002.

Production

Crop Production

9.

Latest estimates indicate overall cereal production in 2002 at around 210 million tonnes, more than 10 million tonnes (or about 5 %) higher than last year’s crop, and the second highest crop ever after that of 2000. The biggest production increases are expected in France (up some 9 million tonnes), Spain (up 4 million tonnes), and the UK (up 4 million tonnes), although production in Germany is expected to have fallen (down 6.5 million tonnes from last year’s bumper crop level), so that in contrast to 2001 France once again became, as usual, the largest EU straw cereal producer. Most of the overall rise in production is due to an increase in the common wheat harvest (up about 10.9 million tonnes, or 13 %, compared to last year). Durum wheat and oats production are also expected to be up on last year, rising to 9.8 million tonnes (up around 21 %) and 7.2 million tonnes (up 15 %) respectively. In contrast, barley production is expected to remain more-or-less at last year’s levels, while maize production declined slightly (down 2.7 % on 2001) and rye production should decrease significantly (by 24 %) to around 4.7 million tonnes, driven by a 1.5 million tonne decrease in production in Germany. For rice, a small decrease in production was more than compensated for by higher milling yields, so that production in milled equivalent (about 1.6 million tonnes) rose by 5 % compared to the previous year.

10.

The overall rise in cereals production reflects an increase in both area under cereals and in the yields for 2002. The total area under cereals increased by 2.4 % (almost 1 million ha) compared to the previous year, due for the most part to the rise in area allocated to common wheat production (up around 8 % to 14.1 million ha). Areas allocated to growing durum wheat and oats also rose slightly (between 4 and 6 %), while, in contrast, barley, maize and rye areas all fell.

11.

Latest estimates show average cereal yields up 2.9 % compared to last year, at 5.6 tonnes/ha, with average yields for common wheat (up 4.3 %), durum wheat (up 16.1 %) and oats (up around 10 %) showing the largest increases. In contrast, average yields for barley and maize were only slightly up on 2001 (up around 2 % and 1 % respectively), while those for rye fell markedly (by around 15 %). However, the pattern of crop yield variation differs greatly from one Member State to another. For example, while soft wheat yields rose appreciably in Spain (up 32 %), and to a lesser extent in France (up 12 %) and the United Kingdom (up 13 %), following last year’s poor results, they fell significantly in Germany (by around 13 %) and Ireland (by 5 %) as a result of less favourable weather there than in 2001. The return to a more favourable climatic situation in Greece, Spain, France and Italy compared to the previous year largely accounts for the marked rise in average yields for durum wheat.

12.

Following an overall decrease in area (down 5 % on 2001) total oilseed production (rape, sunflower and soya) should be slightly down on last year (by around 2 % at 12.9 million tonnes), despite a rise in yields (up 3 % to 2.6 t/ha). The overall fall in production is also despite an increase in rapeseed production (up 3 %), itself a result of a larger cultivated area (up 2 % overall, mainly due to a 14 % increase in rapeseed area in Germany) and marginally higher average yields (up 1 %). In contrast, sunflower production fell by around 6 %, resulting from an 11 % drop in total area (driven mainly by a 12 % decrease in area in both France and Spain) and despite a 6 % improvement in yields compared to last year. Soya production for 2002 was heavily down on 2001 (by 26 %) as a result of a sharp 27 % drop in cultivated area.

13.

The dramatic decline in linseed area observed over recent years continued in 2002, with total EU area falling a further 43 % to around 62,000 ha, driven by significant falls in area in Germany and the United Kingdom. With yields more-or-less the same as in 2001, overall production decreased in line with the decline in area, falling from 136,000 tonnes in 2001 to 79,000 tonnes in 2002. While protein crop area remained unchanged from last year, a significant improvement in the average yield (up 6 % on 2001) led to a rise in total output to 4.1 million tonnes (up 5 %).

14.

EU sugar production in 2002 is estimated to have increased by around 9 % relative to 2001’s exceptionally low level. This was mainly the result of a recovery in average yields from the poor levels of the year before, driven by large expected yield increases in France, Ireland, Italy, and the UK. The good amounts of rain received in summer, especially in southern areas, and the good climatic conditions in September boosted 2002 yield levels, although the main producing areas in Germany were later affected by excessive rain in October which disrupted harvest operations there.

15.

Olive oil production is expected to be significantly higher in 2002, up some 0.5 million tonnes compared to the previous year (an increase of around 25 % on 2001) and continuing the rising trend in production seen over recent years.

16.

Early estimates indicate only a very marginal increase in fruit production for 2002 (up 0.6 % on 2001), while production of fresh vegetables remained essentially unchanged from the levels of the previous year. In contrast to last year’s marked fall in production, which was mainly due to poor weather conditions in 2001 affecting yields, potato output is estimated to have recovered slightly in 2002, rising by 1.8 % compared to 2001.

17.

Preliminary estimates show wine and must production in 2002 having fallen slightly to around 158-160 million hectolitres, approximately 3 % below the previous year’s level, and remaining well down on the exceptional harvest of 1999 (of 186.5 million hectolitres). 2002 production in both France and Italy (down around 5 % and 12 % respectively on 2001) was affected by adverse weather conditions, in particular heavy rains in southern France, which destroyed some vineyards. Significant production falls are also expected in Greece and Portugal. By contrast, wine production is estimated to have risen markedly in Germany (by 19 %) and Spain (by 7-10%) in 2002 following the large declines the year before.

Animal Production

18.

Beef and veal production in 2002 remained strongly influenced by the disturbances of recent years. The low prices which became a feature of the market from autumn 2000 onwards and which persisted for most of 2001, together with an atmosphere of uncertainty linked to weak and volatile demand, seems to have led to a subsequent reduction in production capacity. On top of this, the special measures decided on in June 2001 to stabilise the market are expected to have further reduced incentives for production. As a consequence, recovery in beef and veal production in 2002 is expected to have been somewhat limited, with net production in 2002 estimated to reach 7.5 million tonnes, an increase of only 2.9 % on last year’s level and still some 3 % down on levels in 1999.

19.

Following the stabilisation in production in 2001, current estimates indicate a marginal increase in pigmeat production for 2002 to around 17.7 million tonnes, just 1 % higher than that for 2001. The overall development of EU production has been strongly influenced by the reduction in capacity which took place over recent years in three Member States (due to the build-up of environmental pressures in Belgium and the Netherlands, and to the 2001 foot and mouth epidemic in the UK), where the size of the pig herd is now about 10 % lower than in 2000, and which were unable to respond to the positive price situation observed in 2000 and part of 2001. As a result, overall production for 2002 remained down by about 1.5 % on the peak levels of 1999.

20.

Following the increase in poultrymeat production in 2001 (up 1.9 % on 2000), which mainly resulted from the switch in demand away from beef following the last BSE scare and which mostly benefited the poultry sector, production of poultrymeat decreased slightly in 2002 (down 0.5 % compared to 2001). The downturn in growth was partly due to increased competition in the sector from countries such as Brazil and Thailand as well as the recovery in demand for beef.

21.

Production of sheepmeat and goatmeat in 2002 is expected to have only partially recovered from the dramatic fall seen last year (when production fell 9.4 % compared to 2000), to reach around 1.03 million tonnes (up just 1 % on 2001). This follows on from the severe disruptions experienced in the sector in 2001, when the outbreak of foot and mouth disease in the United Kingdom and in some other European countries led to large losses through culling as well as limitations on trade. The limited extent of the subsequent recovery in production in 2002 was mainly due to re-stocking of the sheep herd in the UK, which led to retention of female lambs for breeding. While the situation in the sector did improve slightly in 2002, overall EU production levels remain well down on the highs of the early 1990s.

Milk and Dairy Production

22.

Continuing the downward trend in dairy cow numbers, although at a much lower rate than the trend of recent years, the Community dairy herd is expected to fall to about 20.1 million head at the end of 2002, a small reduction of 0.4 % from the previous year. Milk yields should increase by around 1.2 %, well down on the previous year’s increase of 3.3 %, so that total milk production for 2002 is expected to be close to 121.6 million tonnes, more-or-less unchanged from 2001 levels and continuing the stability in production seen over recent years. Overall deliveries to dairies were also flat compared to 2001, with no major changes within Member States.

23.

In contrast to the fall of the previous two years, butter production is estimated to have increased in 2002 by around 3.5 % compared to 2001, driven by large production increases in Belgium, Ireland and especially Spain, and in parallel with a strong rise in exports. Cheese production continued to rise in 2002 (up by 0.8 % on 2001), although at a much lower rate than in 2000 and 2001, helped by a continued increase in consumption and a slight rise in exports. Production of skimmed milk powder is expected to have recovered noticeably in 2002, rising by around 8 % compared to 2001.

Producer prices and market prices

Producer Prices

24.

According to the figures available at the end of December 2002, compared with the previous year the index of farm-gate prices is estimated to have fallen slightly in 2002, by an average of 1.4 % in the EU in nominal terms. This slight decrease is mainly the result of a 5.6 % drop in the price of animals and animal products, and is despite a 2.8 % increase in overall crop prices. The steepest decreases in prices for animal products occurred for pigmeat (down 17.7 %, in sharp contrast to the large price increases of recent years), sheepmeat (down 7.9 %), and poultry (down 7.7 %), while milk prices also decreased noticeably (down 4.5 %). In contrast, beef and veal prices rose significantly (by 8.5 % and 10.1 % respectively), marking a partial recovery following the market disturbances of recent years and the very low prices of 2001. As regards crop prices, the steepest increases were recorded for vegetables (fresh vegetables up 8.5 %, dried up 9.6 %), olives and olive oil (up 8.3 %) and fruit (up 7.0 %). Average overall prices for cereals and rice fell 6.7 %, driven by significant decreases in prices of soft wheat and barley of around 8 to 10 %. Potato prices also fell heavily, down 14 % on those of the previous year.

25.

After accounting for inflation, the producer price index for the European Union as a whole is estimated to have fallen by around 4 % on the previous year. The biggest decreases were in Austria (down 5.7 %), Belgium (down 7.8 %), Denmark (down 10.4 %), Ireland (down 8.6 %), Portugal (down 7.4 %), Spain (down 5.1 %) and Sweden (down 5.4 %). Farm-gate prices also declined in most other Member States: in Finland (by 3.7 %), Germany (by 4.3 %), France (by 4.7 %), Luxembourg (by 4.9 %), the Netherlands (by 3.8 %) and the United Kingdom (by 4.6 %). Only two Member States experienced a rise in the real producer price index, namely Greece (up 3.0 %) and Italy (up 0.8 %).

Market Prices

26.

Following the decreases of recent years in application of Agenda 2000, for marketing year 2002/2003 the intervention price for cereals stayed at the same level as the previous campaign 2001/2002 (101.31 euro per tonne). Similarly, aids for cereals, which had increased in recent years, remained at 63 euro per tonne of reference yield for 2002/2003. The level of compulsory set-aside was kept at 10%, although derogation to this was allowed in September 2002 in those Member States that had been heavily affected by the August floods. Against this policy background the good prospects for an improved EU cereals harvest for marketing year 2002/2003 compared to 2001/2002, together with the impact of highly competitive exports from certain third countries, especially the republics of the Former Soviet Union, resulted in average EU cereal market prices generally declining over the first eight months of the year, the main exception being maize prices. However, prices for many cereals recovered somewhat over the latter part of 2002 in light of downward adjustments in initial EU harvest estimates for these crops and in anticipation of modifications to the EU cereals import regime for 2003.

 

Given the prospects for a large 2002 wheat harvest in the EU, average market prices for bread-making wheat declined over the first part of the year, falling from around 141 euro per tonne at the start of the year to close to 120 euro per tonne by August, before recovering to around 127 euro per tonne from the end of September onwards, some 10 % down on prices at the start of the year. Prices for durum wheat showed similar behaviour, with these peaking in March and then falling sharply through to the end of June to reach a low of 153 euro per tonne before stabilising in July and August. Prices then recovered to around 180 euro per tonne by December, some 7 % down on prices at the start of the year. In contrast, average maize prices remained fairly stable (at between 131 – 136 euro per tonne) over the first half of the year, with expected EU production for 2002 little changed from that of 2001, before rising sharply from July to mid-August, when prices rose to around 154 euro per tonne (some 13% up on prices at the start of the year). However, maize prices fell sharply over the rest of August back to the 130 euro per tonne level and remained close to this level for the rest of the year. Concerning barley prices, average EU market prices for brewing barley declined from 141 euro per tonne at the start of 2002 to around 110 euro per tonne in August, but recovered strongly over the following months so that by November prices had regained the levels of the

start of the year. For rye, average bread rye prices generally fluctuated in a range from 117 – 125 euro per tonne until late July, at which point prices fell sharply to around 106 euro per tonne before gradually recovering with the start of the new marketing year to around the 120 euro per tonne level by the end of November onwards, in response to the much reduced rye harvest in Germany.

27.

Olive oil prices remained fairly stable over 2002, although generally slightly up on the prices of the year before. Figures for late November 2002 show prices for Italian extra virgin and lampante olive oil somewhat higher (by around 9 % and 3 % respectively) than twelve months earlier, and remaining well above the trigger level for private storage. Those for Spanish olive oil show lampante prices up by some 3.5 % on the corresponding point in 2001, but with extra virgin prices more-or-less unchanged and remaining only just above the trigger level for private storage.

28.

In general, wine prices improved over the course of 2002 from the low levels of the year before, although this was mainly due to a sharp rise in prices in the latter part of the year in France and Italy in expectation of the reduced 2002 harvests in those countries. By early December 2002, market rates for red wine relative to the same period in the previous year were up 24 % in France, 14 % in Italy and 12 % in Spain. Similarly, white wine prices showed improvement on those of 2001, with early December prices up 8 % in France, 27 % in Italy and 8 % in Spain on those twelve months earlier. However, while prices developed quite smoothly over the course of 2002 in Spain and Italy, prices in France fluctuated widely during the year.

29.

The improved overall situation in the beef sector was reflected in prices for beef and veal in 2002. The strong recovery in demand over 2002 led to a substantial improvement in beef prices, especially for cow meat, which by September had improved to around 190 euro per 100 kg compared to 160 euro one year earlier. Although cow meat prices then trailed off over the latter part of the year, they still remained significantly above corresponding 2001 levels. Prices for young bull carcasses also generally improved during 2002, recovering to close to 1999 levels and remaining well above corresponding 2001 prices throughout the year. Only steer carcass prices fared worse in 2002 compared to 2001, with these generally falling over the course of the year and remaining below corresponding 2001 prices.

30.

Following the strong decline in prices which occurred over the course of 2001 (a fall of some 20 % from the record prices of February/March 2001 (of almost 170 euro per 100 kg) to those in December 2001), which mainly resulted from the ending of the positive impact on the poultry sector of the last BSE crisis, prices for poultry meat developed in a more traditional manner over the course of 2002, closely following the pattern set by the average of the last few years. Beginning the year at around 134 euro per 100 kg, prices followed a rising trend through to the start of October to peak at around 145 euro per 100 kg, before dropping over the remaining months of 2002 back to around the price levels at the start of the year.

31.

During 2002 average EU prices for pigmeat kept broadly stable in comparison to the variability of recent years, in general remaining in a range between 127 and 147 euro per 100 kg. Prices remained throughout the year at levels well below the exceptionally high prices of 2001, reflecting the impact of the recovery in beef consumption also on pigmeat prices. Starting the year at around 136 euro per 100 kg, prices peaked at the end of March at close to 147 euro per 100 kg and then fluctuated around a generally declining trend which saw prices fall to around 127 euro per 100 kg by the end of November. In light of developments and in order to support the pigmeat market, aid for private storage was introduced from 9 December 2002.

32.

Given the very limited recovery in production in 2002 market prices for sheepmeat and goatmeat products generally remained at historically high levels similar to those of the previous year. Over the first half of 2002 prices generally fell from their start of year level, of around 450 euro per 100 kg, to bottom out over the middle part of the year at around 380 euro per 100 kg. From July onwards average prices picked up again and were back to around the 430 euro per 100 kg level by the beginning of September, with prices generally remaining in a range between 415 and 435 euro per 100 kg for the rest of the year. While at the start of December prices were down in most Member States compared to twelve months earlier, they were significantly higher in Italy, Sweden and the United Kingdom.

33.

Following the noticeable drop in prices over the second half of 2001, average EU butter prices stayed relatively depressed throughout 2002, remaining at levels close to 90-92 % of the intervention price throughout the year and well below the price levels of recent years. Average EU prices for skimmed milk powder began the year at just above the intervention price. However, the fall in prices experienced at the end of 2001 continued into 2002 in view of the significant rise in production, with average prices only bottoming out at the end of May at around 2.4 % below the intervention price. Prices only showed a sustained improvement from September onwards, with average prices generally moving above the intervention price over the latter part of the year as external demand for EU milk powder increased in reaction to the low, drought-affected production in Australia.

Input Prices

34.

In 2002, the index of purchase prices in nominal terms for goods and services currently consumed in agriculture remained more-or-less unchanged (up only by an average of 0.1 %) from the previous year. The biggest rises were for maintenance and repair of materiel (up 4.4 %) and buildings (up 2.1 %), seeds and plants (up 2.2 %) and general costs (up 2.3 %), but these rises were heavily offset by decreases for fertilisers and energy (down 3.3 % and 3.0 % respectively), while feeding-stuffs remained more-or-less stable compared to the previous year.

35.

When account is taken of inflation, the real change since 2001 in the index of purchase prices for goods and services currently consumed in agriculture was a decrease of just over 2 % for the European Union as a whole, mainly due to the significant drop in prices for fertilisers and energy (both down over 5 % in real terms). Above-average decreases were recorded in Austria (down 3.0 %), Finland (down 2.5 %), Ireland (down 3.3 %), the Netherlands (down 2.9 %), Portugal (down 8.3 %) and Spain (down 2.7 %). Real input prices were also down in Belgium (by 1.3 %), France (by 1.9 %), Germany (by 1.5 %), Greece (by 1.6 %), Italy (by 2.2 %), Luxembourg (by 1.6 %) and the United Kingdom (by 1.5 %), and more-or-less stable in Denmark and Sweden.

Farm income

36.

Eurostat's initial estimates, based on information received from Member States up until early December 2002, indicate average farm income (measured as the real net value added at factor cost per annual work unit) across the European Union as a whole 3.0 % down on the previous year. Declines in income are expected in a clear majority of Member States, with only five foreseen to record any increase. The strongest falls are expected in Denmark (down 26.3 %), Germany (down 18.0 %), Ireland (down 11.4 %), Belgium (down 7.7 %) and the Netherlands (down 7.5 %), with the sharp drop in pig and milk prices being the main common factor in the decline in agricultural income in most of these countries. The other Member States where income declined, although to a much lower extent, were Austria (down 2.8 %), France (down 0.9 %), Italy (down 1.6 %), Portugal (down 2.2 %) and Sweden (down 1.5%). In contrast, incomes were up in Greece (by 5.7 %), Luxembourg (by 1.0 %), Finland (by 7.3 %), Spain (by 1.2 %) and the United Kingdom (by 3.9 %), with most of these countries also recording a strong decrease in agricultural labour.

37.

Underlying the overall decrease in average farm income are quite wide variations according to the type of farming. According to first estimates from the Farm Accountancy Data Network, average income should decrease most significantly compared to 2001 levels in those farms specialising in pork and poultry production (down 38.7 %), while decreases are also expected for mixed (crops and livestock) production (down 15.9 %) and milk production (down 7.3 %). While farms specialised in wine production also saw a decline in average income (down 7.5 %), those specialising in the production of other permanent crops experienced a large rise in income of around 18.6 %. Similarly, farms specialising in grazing livestock also experienced a rise in average income (up 10.5 %), and those specialised in horticulture a rise of around 11.7 %. Finally, incomes are once again expected to remain more-or-less static in farms specialising in the production of field crops.

 

Changes in nominal farm-gate prices in 2002 and 2001

(%)  
Member state 2002/2001 2001/2000
Crop
products
Livestock products
TOTAL Crop
products
Livestock products TOTAL
EU-15 2.8 -5.6 -1.4 5.1 5.2 5.1
Belgique/België -2.8 -8.3 -6.2 -0.1 3.7 2.3
Danmark -4.3 -12.0 -8.3 2.3 9.9 7.5
Deutschland 4.9 -6.7 -2.8 6.5 5.6 5.9
Elláda 10.8 -1.5 7.0 5.9 7.5 6.4
Espańa 4.3 -8.7 -1.7 0.3 10.0 4.6
France -2.0 -3.6 -2.8 4.9 2.0 3.5
Ireland -1.8 -4.7 -4.3 11.0 3.7 4.6
Italia 7.9 -4.6 3.4 5.7 3.6 5.0
Luxembourg 7.2 -5.5 -3.1 6.4 1.1 2.1
Nederland 3.1 -3.6 -0.1 7.3 4.3 5.9
Österreich 2.5 -6.7 -4.0 2.9 8.0 6.4
Portugal -2.8 -5.7 -4.2 6.6 6.3 6.5
Suomi/Finland 1.0 -3.3 -2.0 -1.9 7.9 4.7
Sverige -4.5 -2.8 -3.4 10.1 2.9 5.2
United Kingdom -4.7 -3.6 -3.5 10.9 5.7 7.7

Source : Eurostat


Changes in nominal purchase prices for agricultural inputs in 2002 and 2001

(%)  
Member state Intermediate
consumption
Investment Total
2002/2001 2001/2000 2002/2001 2001/2000 2002/2001 2001/2000
EU-15 0.1 4.1 2.5 2.2 0.6 3.7
Belgique/België 0.3 0.9 2.1 2.6 0.5 1.1
Danmark 1.6 8.0 2.0 2.2 1.7 6.8
Deutschland 0.0 3.6 1.5 1.2 0.4 3.1
Elláda 2.2 2.1 4.0 3.7 2.5 2.4
Espańa 0.7 1.4 3.7 5.7 1.8 1.9
France 0.0 3.0 2.0 2.1 0.5 2.8
Ireland 1.3 5.2 3.0 4.3 1.7 5.0
Italia 0.3 5.3 2.7 1.9 1.2 4.0
Luxembourg 0.3 3.7 1.8 3.5 0.9 3.6
Nederland 1.0 7.8 3.5 4.3 1.4 7.2
Österreich -1.2 2.4 1.5 1.6 -0.2 2.1
Portugal -5.0 8.3 3.1 1.3 -3.9 7.3
Suomi/Finland -0.6 0.6 2.9 2.9 0.2 1.1
Sverige 1.8 6.5 3.2 3.0 2.1 5.8
United Kingdom -0.3 5.1 0.9 0.3 -0.1 4.3

Source : Eurostat


Real output price indices for agricultural products

(1995=100)  
  1995 1996 1997 1998 1999 2000 2001 2002*        
EU-15 100 98.9 96.3 91.5 86.4 87.6 89.6 85.8        
Belgique/België 100 101.4 101.2 94.2 85.4 91.8 95.4 88.0        
Danmark 100 101.7 99.8 86.6 81.7 87.7 92.2 82.6        
Deutschland 100 98.3 97.8 92.5 86.3 89.8 93.0 89.0        
Elláda 100 99.0 96.0 91.1 89..6 90.6 92.9 95.7        
Espańa 100 98.8 93.9 89.8 85.0 85.9 87.5 83.0        
France 100 97.7 96.7 96.0 92.3 92.2 93.7 89.3        
Ireland 100 93.5 86.6 84.1 78.6 79.5 80.0 73.1        
Italia 100 100.4 99.0 93.9 88.1 87.9 90.2 90.9        
Luxembourg 100 94.3 95.2 94.2 91.2 88.7 88.4 84.1        
Nederland 100 101.5 105.9 98.7 91.2 96.0 96.6 92.9        
Österreich 100 99.9 101.2 93.3 87.1 91.4 95.1 89.7        
Portugal 100 99.1 97.9 96.9 90.4 92.2 94.0 87.0        
Suomi/Finland 100 95.8 93.7 91.6 88.8 89.9 91.7 88.3        
Sverige 100 94.7 91.3 89.2 87.3 85.1 87.2 82.5        
United Kingdom 100 97.4 83.0 73.7 69.7 67.9 73.4 70.0        

Source : Eurostat


Indices of real purchase prices for goods and services currently

consumed in agriculture

(1995=100)  
  1995 1996 1997 1998 1999 2000 2001 2002*        
EU-15 100 102.1 101.0 95.3 92.1 95.0 96.3 94.2        
Belgique/België 100 102.6 103.2 97.4 95.0 100.1 100.7 99.4        
Danmark 100 101.2 102.4 98.6 94.0 94.6 99.9 99.2        
Deutschland 100 102.2 102.4 97.9 96.3 101.4 102.7 101.2        
Elláda 100 99.8 96.8 93.4 93.1 96.1 94.7 93.2        
Espańa 100 100.9 101.5 98.6 95.0 96.9 96.3 93.7        
France 100 101.7 101.9 98.3 96.3 99.4 100.9 99.0        
Ireland 100 101.9 98.7 94.3 93.0 94.0 95.0 91.9        
Italia 100 106.1 105.7 94.0 85.6 87.6 90.2 88.2        
Luxembourg 100 101.0 100.7 98.4 102.9 105.4 106.8 105.1        
Nederland 100 104.3 102.6 97.4 94.4 98.6 101.1 98.2        
Österreich 100 101.1 101.4 96.5 95.1 97.1 97.2 94.3        
Portugal 100 100.2 96.4 91.0 88.9 89.5 92.9 85.2        
Suomi/Finland 100 100.7 101.4 98.1 95.8 99.4 97.5 95.1        
Sverige 100 105.2 104.4 100.9 100.1 103.1 106.8 106.5        
United Kingdom 100 98.7 92.2 83.9 80.9 82.8 91.7 90.3        

Source : Eurostat


Development of agricultural income in the EU over the 1980-2002 period, in terms of annual

change (%) and cumulative growth (1980 = 100)

Source: Eurostat – DG AGRI calculation

 

Development of agricultural income in the EU Member States in 2002

(% change versus 2001)

 

Source: Eurostat – DG AGRI calculation

 

Development of agricultural income in the EU Member States over the 1990 - 2002 period (1995=100)

  1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
EU-15 : : : 85.8 94.0 100.0 103.5 103.8 100.7 100.2 104.7 111.0 107.2
Belgique/België 116.1 116.6 113.6 109.6 111.1 100.0 109.7 114.0 107.7 99.7 108.1 116.8 107.8
Danmark 86.0 83.8 73.4 72.8 84.0 100.0 102.3 97.9 77..3 74.8 91.2 109.9 81.1
Deutschland : 90.0 94.4 90.5 93.6 100.0 113.1 114.4 100.9 94.6 114.0 135.2 110.9
Elláda : : : 95.4 95.9 100.0 95.2 95.6 95.0 96.5 100.3 105.8 111.8
Espańa 102.1 100.6 87.3 90.0 100.4 100.0 112.3 113.5 110.9 107.8 120.1 123.6 125.1
France 87.2 76.8 83.5 83.0 94.2 100.0 100.5 104.0 108.6 106.4 106.2 109.9 108.9
Ireland 76.0 77.3 87.4 89.6 93.5 100.0 102.3 99.8 97.3 92.5 98.5 104.5 92.6
Italia 78.1 83.6 83.0 85.3 91.1 100.0 105.7 108.3 108.2 116.6 112.5 112.6 110.7
Luxembourg 99.1 91.9 92.8 91.0 88.6 100.0 103.8 95.4 104.8 94.3 95.1 90.1 91.1
Nederland 115.8 114.3 104.8 86.4 97.3 100.0 95.9 103.5 93.0 86.4 83.7 87.8 81.2
Österreich 90.4 91.7 86.3 81.8 88.1 100.0 92.1 83.9 82.0 78.1 84.1 98.0 95.3
Portugal 94.6 93.8 70.1 67.9 91.1 100.0 109.8 104.6 104.9 125.8 112.1 139.9 136.8
Suomi/Finland 100.7 94.1 81.7 84.1 88.2 100.0 80.6 82.2 72.5 82.3 103.8 99.4 106.6
Sverige 106.5 89.3 79.4 83.4 84.0 100.0 98.1 104.0 106.5 94.0 105.7 116.5 114.8
United Kingdom 67.5 66.5 72.5 85.5 90.6 100.0 93.7 72.5 62.5 61.1 57.9 61.6 64.0

Source : Eurostat - Economic Accounts for Agriculture (EAA), Agricultural Income Index

 


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