A series of factors are expected to reduce EU cereal production to its lowest level since 2007, setting off alarm bells in the sector.
Europe is grappling with a severe cereal production crisis, exacerbated by adverse weather conditions, high production costs with stable prices, low quality of the output, and stiff competition from Ukraine.
These factors combined have created a perfect storm for the agricultural sector.
In a meeting with MEPs earlier this week (18 November), EU Commission official Pierre Bascou raised concerns about cereal output, which is projected to reach only 255.6 million tonnes this year—9% below the historical average.
“This season was particularly challenging due to a series of adverse weather events for harvest,” he added, highlighting how droughts in Southeastern Europe and excessive autumn rainfall have negatively impacted both quantity and quality of harvests.
The EU official noted that the decline in production is due to both a reduction in land allocated for cereals and falling yields in key regions. France, a major producer, has been hit especially hard, with production drops only partially offset by increases in other areas.
“This year in France, we are losing money. We simply cannot sustain this situation much longer,” explained to Euronews Cédric Benoist, a French cereal farmer who is also chair at the cereals working party of EU’s farming association Copa-Cogeca.
Concerns over quality
The decline is particularly pronounced in maize production, estimated at 58 million tonnes—12% below the historical average.
Meanwhile, the common wheat harvest is forecasted at 112.6 million tonnes, 11% below average.
Barley only is expected to see a slight increase compared to last year but remains 5% below the historical norm.
However, the issue is not just about quantity; quality is also a major concern. Many harvests are showing lower protein levels or contamination with alkaloids, a toxin that can severely impact market value.
According to another expert from Copa Cogeca, this contamination has caused many cereal batches to be downgraded from food to feed or even biomass, significantly lowering prices for farmers.
Prices remains low
The cereal market has faced volatile prices over the past two years, driven by geopolitical factors and fluctuating supplies. Despite low EU production levels, global competitors in the Southern and Northern Hemispheres are seeing bumper harvests, keeping prices suppressed.
“The situation is not dramatic, but clearly, we could have expected better prices in line with the decline in production,” pointed out Commission’s Bascou.
Adding to the pressure, Europe is being flooded with cheaper cereals from Ukraine, according to Copa Cogeca’s Benois, which drives prices even lower while production costs have skyrocketed.
Although fertilizer and animal feed prices fell by 8% in the third quarter of 2024, overall input costs remain significantly higher than in 2020. Fertilizer prices are still comparable to levels seen in the early 2020s, and production costs in key regions have soared.
ADVERTISEMENTFor instance, in France, average production costs rose from €1,512 per hectare in 2021 to €2,065 per hectare in 2023. Similarly, in Ireland, costs increased from €1,330 per hectare to €2,199 per hectare during the same period.
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