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Germany Agribusiness Report Q2 2010
Business Monitor International, March 2010, Pages: 73
Germany 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 Germany's agribusiness service.
In BMI's Germany Agribusiness Report for Q2 2010, we take a closer look at the country's pork subsector. Pork is by far Germany's most significant meat product. Production in 2009 of 5.25mn tonnes was more than double the combined total production of poultry, beef and lamb that year. Pork production saw rapid growth in the second half of the last decade expanding 22.0% from 2004 to 2009. As production has risen, there has been rapid changes in the structure of the sector. In 2000, Germany had a total of 141,450 holdings with pigs according to the Eurostat Farm Structure Survey. By 2007 this total had fallen by almost half to 79,420 and in 2008 dropped further to an estimated 66,000 holdings. Despite the large drop in the number of pig farms, Germany's national pig herd actually rose slightly over the period climbing 3.2% from 2000 to 2008 to reach 26.60mn head. This obviously points to rapid consolidation.
In 2009, we expect the trend towards bigger average farm size to have picked up pace as the tough economic conditions saw more smaller producers leave the industry. The rise in pork production over the past couple of years was driven in large part by liquidation of herds as farmers went out of business - in 2008, Germany's national pig herd fell 1.5% y-o-y and in 2009 fell again by 0.4%. We expect this to see pork production fall in 2010. Over our forecast period, we expect the number of pigs on German farms to start to climb once again as the economy improves. This underpins our forecast for a 12.7% increase in pork production over our forecast period to 2014.
Grain production in Germany now looks set for a poor year in 2010. Cold, wet weather over the winter will likely see yields of both wheat and barley fall. Low prices in 2009 also contributed to a fall in area. Barley production will be the worst hit. Bumper crops in 2007/08 and 2008/09 have seen stocks rise. Demand for German barley on the export market is weak owing to bumper crops in other major producers. This will see intervention purchases rise owing to the low market price.
Sugar production is a different story. In 2009/10, expected near-record yields as well as an increase in the area planted to beet will see sugar production shoot up, putting Germany's production again well over its EU quota. Over-quota sugar cannot be used for food consumption in the EU and industrial demand is slack. To take advantage of the high world sugar prices and help deal with the surplus, the EU in January announced it would increase its sugar exports by half a million tonnes above the 1.37mn tonnes agreed with the WTO. Even with this controversial move, however, Germany will still have a large surplus on its hands as other major EU producers such as France are also expecting bumper crops.
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