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France Agribusiness Report Q1 2012
Business Monitor International, Nov 2011, Pages: 58
Business Monitor International's Greece Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Greece's food and drink industry.
BMI View: Fears for the French grains harvest, which was hit by drought in spring, have been partially relieved by rains later in the summer. BMI expects to see a drop in production on the previous year, though BMI has revised its forecasts up from the previous quarter. The dairy sector is also on the mend, with prices rising impressively in the middle of year. A lack of industrial action by farmers is also a reliable indicator of a brightening outlook. Prospects are less bright for pork farmers, with new EU Directives expected to result in industry exits as 2013 approaches.
Key forecasts
In 2011/12, BMI is now forecasting wheat production of 36.14mn tonnes, down 5.4% year-on-year but up around 2mn tonnes on its previous forecast.
With barley prices remaining low compared to wheat and intervention buying ending, production is likely to fall. Over its five-year forecast period, BMI predicts barley production will fall 26.1% to 9.52mn tonnes in 2014/15.
This year, the corn harvest has disappointed somewhat, with production coming in under forecast at 13.7mn tonnes, 1.6% down year-on-year. The figure should rise to 17.7mn tonnes by 2014/15, a rise of 3.5% over the level in 2009/10.
In 2010, milk production is expected at 24.4mn tonnes, up 3.0% year-on-year (y-o-y) as farmers benefited from a 2% increase in dairy quota, including 1% not used in 2009. In 2011 BMI is forecasting production to rise to 24.6mn tonnes, up another 1% y-o-y.
For 2011, BMI is forecasting a decline in pork production of 2.6% to 1.96mn tonnes. In 2012, it expects the rate of decline to increase, with production set to fall 3.8% to 1.89mn tonnes.
Poultry's perception as a healthy alternative to red meat, as well as its affordability in a sluggish economic environment, will encourage expansion. BMI estimates consumption increased to 1.60mn tonnes in 2010 and will rise to 1.62mn tonnes in 2011.
Industry developments
In September 2011, the European Court of Justice (ECJ) ruled that although France did have the right to impose a ban on Monsanto's MON810 genetically modified corn, it had based its decision to do so on the wrong legislation. 'To impose such a ban, member states must demonstrate a potentially serious risk to human or animal health or the environment, and notify EU authorities of the need to take emergency measures,' ruled the court. The case is now back in the hands of the Conseil d'Etat, which must decide how to proceed. Regardless, the French government has pledged to continue its ban on the crop.
In January 2011, the European Parliament's Agricultural Committee accepted a draft report containing 40 amendments to the EC's proposals on reform of the dairy industry, the USDA reports. The amendments would limit the amount of milk negotiated by any one producer organisation to 20% of total production, rather than 33%. In certain countries where production levels are considered 'insignificant', the limitation would be 75%.
Two EU Directives are likely to force more exits from France's stricken swine sector, which is already under pressure due to steep energy and feed prices and competition from Germany. Farms will have to comply with the regulations - one environmental, one on animal welfare - by January 1, 2013. BMI expects this to have an effect on the pork sectors of most EU members, but French producers are especially vulnerable, given the precarious position many already find themselves in. BMI therefore expects to see the decline in pork production already visible in France to accelerate through 2012.
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