News19 December 2017BrusselsAgriculture and Rural Development
EU agricultural outlook: Arable land area to continue its decline
The amount of land used for agricultural purposes in the EU will continue to fall between now and 2030, as a result of increasing urbanisation in Europe. But this decline will not stop increased output of certain arable crops over the same period, according to the EU agricultural outlook report published on 18 December 2017.
The report notes that the utilised agricultural area in the EU has continued to decline over the past few years, and this trend will continue to 2030. The amount of land used for agricultural purposes will fall to 172 million ha from the current level of 176 million ha, with a corresponding decline in the level of EU arable land, from 106.5 million ha in 2017 to 104 million ha in 2030. This continues the long-term trend of the past, and is due in no small part to the increasing urbanisation of Europe, as well as to other ‘artificial’ uses of land. Some 78% of EU land was used for these non-agricultural activities in 2016.
Agricultural land-use developments in the EU (million ha)
The report also looks at a wide range of crops grown in Europe. For sugar, the report notes that European sugar consumption is changing as more natural, environmentally-friendly and healthier foods become more attractive to consumers. This means that EU sugar consumption is declining, and will continue to do so until 2030, despite overall growth in global sugar consumption expected for the same period. The decline in EU sugar consumption is likely to be around 5%, from 18.5mt in 2017 to 17.5mt in 2030. This shift will favour isoglucose and other sweeteners, sales of which should increase from 0.8mt in 2017 to 1.8mt in 2030.
Caloric sweetener consumption in the EU (million t w.s.e)
However, the recent end of sugar quotas in the EU is likely to lead to an increase in overall European sugar production of around 12% by 2030, compared to the average production of the last five years, with EU producers finding new markets elsewhere in the world for their products. EU sugar prices are also expected to decline, resulting in a lower gap between EU prices and world prices at around €40/t. This should lead to the halving of imports and doubling of exports by 2030.
Cereals set to grow
EU cereal production is expected to continue its growth, from 301mt in 2017 to 341mt in 2030, mainly driven by feed demand, especially for maize. EU cereal demand is expected to increase by 10% by 2030, compared to the 2012-2017 average, from 283.5mt in 2017 to 308.5mt in 2030.
As for end markets, the biggest share of EU cereals are still used in the feed market in volume terms, and this is expected to grow further due to predicted increases in dairy and meat production. However, prices are predicted to remain low until 2030.
Demand for EU cereals (million t)
The report also predicts good performances for EU cereals on export markets, with sales likely to rise 35% compared to the average of the last five years from 38mt in 2017 to 52.8mt in 2030. EU cereal prices are expected to remain low for the next few years, driven by ample supplies and low energy and input costs. However, adverse weather conditions could affect prices in the future.
EU cereal prices (€/t)
Protein crops revival continues
Protein crops recently experienced a strong revival, with record production in 2017/18, helped by favourable policies (EU rules on greening for example) and a strong protein demand from livestock production for both more intensive and organic production. Consumer demand for products derived from animals that are not fed with genetically modified feed continues to grow, and this should benefit the EU protein crop sector in the future. The report nonetheless expects a slowdown in the growth of land planted with protein crops, mainly as a result of lower feed prices and higher input costs.
EU protein crop area (1 000 ha)
EU protein crop yield (t/ha)
Oilseeds affected by biofuel downturn
A considerable share of EU-grown oilseed crops (in particular rapeseed) is used in the biofuel market, and lower demand for vegetable oils for use in biofuels is expected to impact the overall market. The report notes that production remains closely linked to overall EU policy on biofuels and the wider environmental impact. Since this policy is currently being updated, it is difficult to predict with any certainty how the market will develop, and so any forecasts are made on the basis of no change in the current policy post-2020. The current driver of biofuels in the EU is their use in road transport, and the outlook report envisages a decline in biofuel use in line with drops in use of both petrol and diesel as transport fuels. Biofuel sales are therefore expected to drop from 15.1mt in 2017 to 13.5mt in 2030, in turn pushing biofuel production down from 14.3mt in 2017 to 13.1mt in 2030 after years of relative stability. As a result, rapeseed production is likely to drop from 22.3mt in 2017 to 20.7mt in 2030).
EU-28 fuel use and world oil price
EU biofuel consumption by source (million t.o.e.)
This is not the only change likely to affect EU rapeseed production, however. The report also forecasts a shift away from rapeseed towards soya beans. EU soya bean production is expected to rise from 2.7mt in 2017 to 3mt in 2030. However, this increase is not expected to be enough to help the overall oilseed market grow by 2030, due to the decline in rapeseed production. Consumption is expected to stabilise, with a projected slight increase from 51.3mt in 2017 to 51.8mt in 2030.
EU oilseed area (million ha)
Further information and data can be found in the EU agricultural report for 2017-2030, as well as predictions for other EU agricultural markets such as meat and dairy or olive oil. The prospect for this and other markets to 2030 is also discussed during the EU agricultural outlook conference in Brussels on 19 December.