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France Agribusiness Report Q2 2010
Business Monitor International, Jan 2010, Pages: 62
The France Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Poland's agribusiness service.
In BMI's latest France Agribusiness Report, the author forecasts mixed fortunes for French grain, livestock and dairy production over the short and medium term. Production of poultry, beef and pork have all been in decline for some time, and the author sees nothing to suggest the rot will stop. Wheat and barley production, which is tethered to livestock rearing in their role as feed, will suffer too. Meanwhile, the dairy industry, despite its recent troubles, should perform fairly well in an EU market which looks unlikely to see significant reform to the Common Agricultural Policy.
The author expects a decline in poultry production of just over 1% in both 2009 and 2010, as sluggish exports both within and out of the EU force cuts. Over the forecast period, we expect a decline in output of 5.43% over the forecast period to 2014. Avian flu, which has provoked bans on French chicken exports in both Sri Lanka and the Philippines in recent weeks, remains a key risk to the forecasts. To 2014 we expect pork production to fall by 3.8% and beef production to fall 10.3%.
Over the short term, wheat production is set to rise. French farmers are expected to switch to wheat from barley, prices for which have reached intervention levels. We expect 2009/10 wheat production to rise 3.2% y-o-y. Over the forecast period we expect production to fall by 10.1%, as the travails of France's livestock industry hit demand for feed.
Over 2009/10, wheat's gain will be barley's loss. Barley production came in unexpectedly high last year, causing stocks to rise and prices to tank. Over 2008/09, 12.9mn tonnes of barley were harvested, according to Eurostat, up 1.1mn tonnes on the previous report. The author has now revised down the production forecast for 2009/10 to 11.5mn tonnes. Over the five-year forecast period from 2008/09, the author now expects barley production to fall by 14.5% to 2013/14. New Eurostat figures show the 2008/09 corn harvest was healthier than previously thought, with production coming in at 15.0mn tonnes. Corn will show healthy growth over the forecast period, increasing by 15.35%.
This quarter the author has revised the historical milk production figures in line with those supplied by Eurostat. This will ensure consistency with the reports on other EU markets. Towards the end of 2009, following months of decline, milk prices began to climb in most parts of France. The author cautiously forecasts an increase in production for 2010 to 23.6mn tonnes, as the reintroduction of export subsidies starts to have an effect on output. Over the forecast period, the author expects to see a slight increase in milk production of 3.6% to 2014, as larger producers take advantage of 1% quota increases year by year.
Cheese production is expected to fare even better. The author is pencilling in another slight fall in production for 2009 as a whole, to 1.85mn tonnes, as a result of the economic slowdown in France and most export markets. But as the global economy recovers, the author expects cheese production to increase. The author is forecasting a 6.9% increase in French cheese production over the forecast period.
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