Director Kitahara, members of the IGC secretariat, esteemed guests,
on behalf of the European Commission, I would like to warmly welcome you to Brussels for the 46th session of the IGC.
Let me start by underlining the crucial importance of the international grain trade for the EU: we are a major player on global markets, both as an exporter and as an importer.
Our agri-food sector delivers the highest agronomic wheat yields in the world, exceeding 6 tonnes per hectare on average, and a total production of around 145 million tonnes per annum. This competitive advantage makes the EU the No1 producer of wheat in the world.
The EU is also a major player on the global wheat market with exports of approx. 28 million tonnes per year, which places us in the global top 3 for exports together with Russia and the USA.
This strongly highlights the EU's position as a key player on global agricultural markets: in 2016, the EU was the world largest exporter of agri-food products, with €131 billion in value, as well as being the world largest importer with a value of €112 billion.
The EU's trade balance in agri-food products has been positive now for 7 years in a row. This has brought benefits to our sector and there is huge potential to build even more on this success. Trade agreements can help EU farmers and food producers to make full use of these opportunities.
Another important element of our trade policy is to make sure that all opportunities from bilateral agreements can be fully exploited by our exporters. We will pursue our strong common efforts to improve SPS market access, for instance.
I am personally investing in economic diplomacy and high-level business visits around the globe to drive this agenda. In 2016 I lead three high-level missions to Colombia and Mexico, China and Japan; and Vietnam and Indonesia. In 2017, I visited Canada in the framework of the CETA agreement, and just now in November, Saudi Arabia and Iran. On each of these trips I have been accompanied by a strong delegation of EU agri-food businesses. These missions form strong business and political relationships which smooth the path to further trade and investment.
The EU is also a major importer of grains, particularly soya, for which the EU is No2 importer in the world after China. The EU imports approx. 14 million tonnes of soya beans plus approx. 18 million tonnes of soya meal every year.
These figures highlight the EU’s plant protein deficit, an essential feedstock for our livestock sector and a key component of our competiveness. While the EU does not strive for self-sufficiency of plant proteins, we acknowledge that the potential for European protein production is not fully utilised, economically or environmentally.
Therefore, I have asked my services to develop and publish, by the end of 2018, a European Protein Plan. This plan will look thoroughly at the supply and demand situation for plant proteins in the EU and the possibilities to increase domestic production. In this context, I welcome the IGC’s initiative to increase market transparency for pulses at international level.
The European Commission believes strongly that market transparency benefits producers and consumers alike. For this reason I took the initiative to open a European Crops Market Observatory in July of this year.
The observatory functions as a dynamic market instrument providing detailed analysis, by the relevant actors themselves, of the market situation in the short term.
The Observatory will allow for an increased gathering and assessment of market data and statistics, producing high-quality reports and providing market information accessible to all via a dedicated web-page.
Let me now speak about the future market outlook for grains trade.
Yesterday many of you attended an "outlook seminar" and you heard from the IGC and the European Commission that the outlook for grains is positive, both at global and EU level.
High levels of global production - indeed they are close to record levels - for the four IGC commodity crops [maize, wheat, soya and rice] are anticipated, ensuring ample supply on global markets for the coming years.
Regarding the outlook for grains in the EU, I will not repeat what you have heard already but I would simply confirm that EU cereals production is expected to continue its growth to more than 340 million tonnes by 2030, driven by good export prospects, in particular for wheat, high feed demand, and industrial uses which gain importance for cereals in general.
The prospects for EU cereal exports are also positive, with a further 35 % increase expected over the 2012-2017 average, with particular export opportunities for EU wheat in the Mediterranean, sub-Saharan Africa and the Gulf.
In any discussion about the future market prospects of the EU, we obviously need to consider the impact of Brexit.
As negotiations are ongoing, it is premature to speculate on any possible outcome for the long term bilateral trade relationship. What we know is that once the United Kingdom leaves the European Union, they will become a third country in trade relations.
In any case, agri-food trade between the EU and the UK will not cease. The UK is dependent on trade and is unlikely to embark on a food self-sufficiency policy.
For the grains sector specifically, the impact of Brexit may be less severe than in other agricultural sectors.
First, because cereal and oilseed markets are relatively free trading commodities worldwide, including in the EU. Market access is more about price competitiveness, being able to supply the required specification and technical requirements. The import duty protection for grains, including in the EU, tends to be lower than in other sectors.
Second, because bilateral trade between the UK and the EU-27 in grains is relatively modest. Over the last 2 years the EU-27 turned into a net cereal importer from the UK (mainly wheat and barley). The EU-27 imports around 3 million tonnes of cereals from the UK including 1.5 million tonnes of wheat and 1 million tonnes of barley – for both cereals, supply is also available in the EU-27, in case trade with the UK would be affected.
This being said, it will also be important to keep an eye on regulatory issues that might affect the cereal trade. If UK legislation post-Brexit diverges from EU regulation, trade disruptions could occur.
And let me add that the UK's withdrawal will not stop or slow down the EU's commitment to any of the on-going trade negotiations with third countries, which are essential to the future of EU agriculture.
The last point I would like to address today is the Communication on the "Future of Food and Farming”, which was published by the European Commission last week and sets out a vision for the Common Agricultural Policy post-2020.
The CAP is playing a key role in relation to trade and the CAP will continue to be supportive of a competitive and sustainable agriculture in the EU.
Therefore the CAP will continue to strongly promote the competiveness of EU agricultural products, including grains, on the world market.
Successive CAP reforms have increased the policy's market-orientation, and as a direct result, our farmers have the freedom to respond to consumer tastes – within a legal framework that guarantees key standards.
This has helped to make our sustainably produced, safe, high-quality and innovative food the EU's calling card worldwide. I often say that Europe is the best address for food in the world.
The CAP must continue providing instruments to further enhance the quality of EU agri-food products and promote them on third country markets to allow the sector make full use of trade agreements.
The reformed CAP also allows the EU to retain its leading role in international bodies such as the World Trade Organisation (WTO), working towards a further levelling of trading conditions, for example in the area of eliminating trade-distorting domestic support. This would lead to an improved situation for EU agri-food exporters.
At the same time, it cannot be ignored that specific agricultural sectors cannot withstand full trade liberalisation and unfettered competition with imports. We therefore need to continue to recognise and reflect the sensitivity of the products in question in trade negotiations, making sure that sufficient safeguards for these more sensitive sectors are provided.
But this is not enough. There is an important need for the CAP to remain a strong policy which enables the more sensitive sectors to cope with and to adjust to greater international competition.
In addition to these specific remarks about the CAP, international competiveness and trade, I would like to conclude with a few more general remarks about EU agriculture and the future CAP.
EU agriculture provides a variety of benefits to EU citizens:
- Safe and high quality food to guarantee food security for over 500 million consumers;
- Key inputs for Europe's highly competitive agri-food sector;
- Large numbers of jobs depend on farming, either within the sector itself (which provides regular work for 22 million persons) or within the wider food sector (farming, food processing and related retail and services together provide around 44 million jobs);
- And the EU's farmers are also the first stewards of the natural environment, as they care for the natural resources of soil, water, air and biodiversity, providing essential carbon sinks and renewable energy supply.
In the Communication, which outlines my vision for the CAP post-2020, we are aiming to simplify and modernise the policy for the benefit of our 22 million farmers and our 500 million citizens.
Before closing today and letting you continue with the agenda of the Council, I want to make one last important point.
Today is a special session of the International Grains Council. It is the last session of the Executive Director, Mr Kitahara, who has served the organisation faithfully for 12 years.
And it is a privilege for the EU to hold the chair of the IGC and to host a session here in Brussels. It is the first time in 12 years that we hold the chair and it was also under European chairmanship that Mr Kitahara started his position as IGC Executive Director 12 years ago.
Therefore, it is an honour for me to thank you, Mr Kitahara, in the name of all IGC members for 12 successful years and for your professional dedication to enhance the organisation’s reputation and place in the world of international grain trading. I wish you all the best for the future.