English 
搜索
Hebei Lansheng Biotech Co., Ltd. ShangHai Yuelian Biotech Co., Ltd.

The changing face of agriculture in the European marketplaceqrcode

Feb. 26, 2020

Favorites Print
Forward
Feb. 26, 2020
By Amii McKeever, Editor of Irish Country Living

Agriculture in the European Union (EU) is at a crossroads, with many drivers at play that will shape agricultural production and markets over the next decade. Political uncertainty through Brexit, climate change issues, and changing consumer preferences give rise to concerns for farmers and agribusinesses.

EU agriculture is increasingly challenged by its consumers and citizens as they become ever more demanding regarding food production, its provenance, and its impact on the environment. The lack of attractiveness to young people, due to farming’s low profitability, is a further serious challenge.

This lack of profitability in farming is a deterrent to Europe’s potential next generation of farmers. Farming in the EU is dominated by an older population with relatively few women officially involved at farm level. While the number of women in farming has been slowly increasing, the most recent data shows that only around 30 percent of EU farms are managed by a woman.

This data masks considerable differences between countries. In Lithuania and Latvia nearly half of all farms are managed by a woman. However, in Germany, Denmark, and the Netherlands, the proportion of female farm managers does not exceed 10 percent.

There are approximately 11 million farms in the EU with 22 million people working regularly in the sector. These people provide a variety of abundant, affordable, safe, and good quality products. However, the EU has a trade deficit in several areas, including proteins. The balance of trade between the EU and the U.S. is a serious source of contention. The recent imposition of tariffs on EU products imported into the U.S. is a major blow to agricultural companies. This came about as a result of a World Trade Organization ruling which found that the EU had provided illegal support to plane maker Airbus. While the EU has a positive trade balance for meat, this would not be possible without imported proteins. Aside from animal feed, the trade deficit for fruit and vegetables has become more significant in recent years.

The EU is traditionally the largest importer of agri-food globally. In recent years it has also become the most important exporter. In 2018 EU agri-food trade was worth €253 billion (US$327.9 billion) with a surplus of approximately €21 billion (US$27.2 billion). Overall prospects for agri-food trade are positive in that global demand for food continues to increase and Europe can benefit from this. Global trade and trade tensions however are a concern, particularly between the U.S. and China. The recently agreed Mercosur trade deal is also a very sensitive issue. Twenty years in the making, the deal has caused considerable tension between the EU Commission and its farmers. The Commission is adamant that access to the EU market for Mercosur beef will only be granted in a limited and strictly controlled way, taking into account the concerns of farmers and consumers. However, despite a promised €1billion (US$1.29 billion) support package to counter any market disturbances, EU farmers are not assuaged that this is a fair deal, and feel sold out as the Amazon burns.

The Future of the Common Agricultural Policy (CAP)

A large proportion of the overall EU budget (Multi-annual Financial Framework (MFF)) goes to the CAP. The level of support for EU farmers reflects the many variables involved in ensuring continued access to high quality food. The CAP includes functions to support farm incomes, climate change, and initiatives to maintain vibrant rural communities.

Launched in 1962, the EU’s common agricultural policy (CAP) is a partnership between agriculture and society, and between Europe and its farmers. It aims to:

(1) Support farmers and improve agricultural productivity, ensuring a stable supply of affordable food;

(2) Safeguard EU farmers to make a reasonable living;Help tackle climate change and the sustainable management of natural resources;

(3) Maintain rural areas and landscapes across the EU;

(4) Keep the rural economy alive by promoting jobs in farming, agri-food industries, and associated sectors.

For producers however, evolving demands mean higher production costs. EU producers have evolved alongside changes in the CAP, although this has resulted in consolidation in many sectors. However, this has also provided an opportunity for the industry to differentiate its products. It is projected that global demand and supply will grow further, creating opportunities and pressures for EU imports and exports.

The Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI) and the Commission have now officially recognized that, in view of the present state of play in both the Parliament and the Council, the basic acts governing the CAP post-2020 and the ensuing delegated and implementing acts will not be formally adopted by January 2020. This means that a transitional period is required before the new legal framework commences on 1 January 2022. The current CAP Regulations continue in force until they are repealed but they need amendment to ensure that there is a legal basis for making payments to farmers in 2021.

There could be further pressure on farmer subsidies if discussions on the future of the CAP opt to reduce the CAP budget following the imminent exit of the UK from the EU with competing demands for border security. Any reduction in the CAP budget could reduce farm income and profitability, leading to further consolidation of EU farms.

Climate Change: A Game Changer

The EU has made ambitious commitments under the Paris Agreement to reduce greenhouse gas emissions and all sectors are expected to contribute, including agriculture. Climate change is a game changer for EU agriculture.

Climate change, biodiversity loss, and land degradation come together and impact initially on farmers who are the custodians of the environment and play a pivotal role in its protection. In this year’s European elections, voters made it clear that they want action on climate change. Our youth, many too young to vote, have also been on the streets in their millions demanding changes from EU Governments on climate change. While action is necessary, EU Commission President-elect Ursula von der Leyen’s proposals for the ‘European Green Deal’ will impact heavily on agriculture. The plan will include the first European Climate Law to enshrine her 2050 climate neutrality target into law.

If von der Leyen’s ambition to become the world’s first climate-neutral continent is to come to fruition, decisive policy and innovative research will be required. New regulations to promote biodiversity will interact with trade, industry, agriculture, and economic policy and they will change the way we produce, consume, and trade. But how will such measures be seen in world trade terms?

The Consumer Challenge

The supply of safe, affordable food is an objective of the CAP. However, while EU consumers have benefited from this, food producers are being increasingly challenged.

In 2019 the EU Commission introduced rules to strengthen the position of farmers in the food supply chain and tackle unfair trading practices (UTPs). It is accepted that smaller operators in the food supply chain, particularly farmers, are vulnerable to UTPs operated by bigger and stronger links in the chain. The Commission has already banned unfair trading practices and acted to improve producer cooperation.

The third element of enhancing market transparency aims to allow greater clarity about price information for those who operate between farmers and consumers, i.e. the food processing and the retail level.

A major conundrum for the sector is the gap between the demands of EU consumers for safe, cheap food and their rejection of biotechnology and the removal of crop protection actives.

Elsewhere GMO technologies have allowed plant breeders to improve crops in a more precise and targeted way while also speeding up the breeding process, but this is being rejected by consumers in the EU. Plant varieties with resistance to plant pests, fungal diseases, and improved weather tolerance and nutrient use efficiency would be a positive development to meet increased food demand. However, EU Member States have not embraced this technology with many, including Ireland, banning cultivation entirely. The combination of these and other factors have meant that businesses (both farmers and agrichemical companies) do not have confidence to invest and innovate.

The debate is polarized and consumer fear is being put ahead of science. Research and innovation are high on the agenda of the future CAP with €10 billion (US$11 billion) under Horizon Europe funding dedicated to the support of specific research and innovation in food, agriculture, rural development, and the bio-economy. It is envisaged by the EU Commission that with research and its translation into agricultural practice, the solution to competitiveness and sustainable production will be faced down. However, EU farmers fear that with a reduction of EU payments through the CAP and without access to use modern technologies, their capability to compete in international markets will continue to diminish.

Highlights for EU Agriculture

Over the last five years there have been some positive developments in support of EU agriculture. We have seen:

– Support packages put in place to back primary production following difficulties arising from Russian trade issues, the voluntary milk reduction scheme and, most recently, a Brexit support fund for Irish beef farmers.

– New trade agreements with Canada, Japan, and Mexico have opened business opportunities, although this is a double-sided coin, particularly in relation to the proposed Mercosur deal.

– The EU has introduced binding rules to strengthen the position of the farmer in the food supply chain.

– An increase in support for innovation and technology.

However, several serious challenges remain for the EU agricultural sector. The CAP, Brexit, climate change, and consumer sentiment will continue to drive the direction of our food production systems for the foreseeable future.


0/1200

More from AgroNewsChange

Hot Topic More

Subscribe Comment

Subscribe 

Subscribe Email: *
Name:
Mobile Number:  

Comment  

0/1200

 

NEWSLETTER

Subscribe AgroNews Daily Alert to send news related to your mailbox