Where will European agriculture move in the next 10 years? Will it depend on import from other countries or it is heading to the self-sufficiency and therefore is attractive for investments? The dairy sector of EU agriculture today is boasting with high quality products and therefore with a high demand for them in the other markets, will it change due to the commercialization? With the growth being a thirsty business and agriculture being the champion in water consumption how will the problem of this sector growth be solved. Also with the forecasts of decline in beef consumption in Europe should it be considered as a looming crisis in Europe? Will Chinese growing food market continue to import European products while it is becoming more and more self-sufficient? And are there other growing markets looking for EU agriculture export? Answers to these and other questions were the major focus in the 10 years Outlook for EU Agriculture 2016-2026 published by the EC and available to the wide public and all players involved in agriculture.
To discuss this Outlook EC organized a highly representative “The 2016 EU Agricultural Outlook Conference” which was held in Brussels on December 6 and 7, 2016. Top leaders of EU participated in it: President of European Commission Jean-Claude Juncker, EU Commissioner for Agriculture and Rural Development Phil Hogan, EU Commissioner for Climate Action and Energy, Miguel Arias Cañete, EU Commissioner for Environment, Maritime Affairs and Fisheries Karmenu Vella and Heads of DGs and officials from other countries – China, USA and Brazil. Just the list of participants of this conference once more cogently proves that EU agriculture plays one of the key roles in the whole EU Policy. So, no wonder that the CAP (Common Agricultural Policy), this cornerstone of EU Policy composes about 40% of the total EU budget. Today major political concerns of the conference participants were directed at the Climate change issues which directly challenging the future agricultural resources availability. In this article we cannot unfortunately cover all the topics which were discussed at the Conference due to their multiplicity. Therefore we have randomly picked just three of them which are very close to our niche not speaking that other topics deliberated there are foreign for us or have less importance per se. So below except the extracts from the speeches of EU leaders and Chinese guest which focused more on strategic questions of EU agriculture development, one can find the major points on the outlooks of development and challenges of EU Dairy and Meat markets as well as the critically important for EU and world agriculture outlook of Water consumption by agriculture.
European Policy Direction in Agriculture
Jean-Claude Juncker, President of the European Commission, indicated that 44 million jobs in Europe are directly or indirectly connected to agriculture, thanks to the CAP and hard work of 22 million of European farmers, Europe enjoys the highest in the world standards of food. Speaking of the CAP, President Junker stated that it has been playing a very important role during the entire EU history and currently this Policy requires development and enhancement steps for its further improvements. Now, Junker pointed out, we have to work at its further simplification. The first stage of initiating this process is to conduct the Public consultations to learn public opinions on what and how is needed to be done to simplify CAP and to build its effective future.
Further in his speech President Junker stressed that the opening of the new markets, which happened recently as the results of the efforts of EU Commission for Agriculture and Rural Development with big capacity such as Indonesia and Vietnam, is a very important step for EU agriculture, as for example for EU dairy farmers. He also focused on challenges which EU agriculture faces and which should be solved by joint forces of all EU members such as food safety, food security, and environmental problems, especially those set in Paris agreement on climate. The world of the 21 century is a rapidly changing world, globalization becomes a component of our daily life and we have to accept this, – with these words President Junker addressed the audience in the end of his speech.
Chinese Agriculture: China produces enough food to feed its population, but still has to import. Is China about to stop the import?
Jiangnan Huang, Honorary Chairman of China Overseas Agriculture Development Alliance in his speech pointed a problem which aroused recently in Chinese agriculture as a result of reforms which in turn have successfully solved the major national problem – hunger of China’s population. From 1949 to 1979 the country tried to solve the problem on the collective ownership agriculture basis, but on that basis the best result they achieved appeared to be only as much as 300 kg food production per capita which of course was not sufficient enough to combat the hunger. Then the deeper reforms were launched back in 1980. It was a very decisive and unexpected in China for that time move when the small parcels of land (about 2 acres) were distributed among country’s farmers. It worked and since that time production has been increasing steadily and the issues of hunger have been finally solved.
Enjoying the status of self-sufficient food producer by stats China de facto still depends heavily on agricultural import – this is a paradox which the country is facing now and which should be solved that or another way. The small farms’ size anyway results in high prices of their production and also does not address quality’ requirements of the population whose buying capacity is growing. Chinese consumers who have sufficient income have already developed the taste to the high quality food products – for example from Europe – do not agree, – noted Mr. Jiangnan Huang, – to spend their money on low quality domestic food products. There is only one way for farmers to resolve the issue of the quality of their production – to innovate. But the small scale of production accompanied by their low income prevents farmers from taking these necessary steps for their survival. As a result many of them leave the farms for the cities. To stop rapid exodus from the villages and bring Chinese agriculture to the success one can unite farmers in cooperatives still leaving them the tenants/owners of the land status. These enlarged organizations would be in a position to acquire all the necessary equipment and technologies for the application on the united farms. But still due to both the exclusive quality and national insufficiency of such food supply the demand for importing food from Europe will be in place.
A new and very controversial point in his speech was about the so-called Idea Economics and Idea Agriculture. On his opinion this economics has been very gradually replacing in practice the traditional economics as well as the Idea Agriculture will do the same with the traditional agriculture. The pillars of the Idea Economics are coexistence, sharing and mutual benefit and according to this concept they will replace the competition of the traditional economics. In turn it will be resulted in new premises and standards democracy, equity and justice. The Idea Agriculture based on the applied science, technologies and other methods will transform agriculture into “a health industry, an energy industry, tourism and leisure industry, an industrial material industry, a hobby industry, etc.”
How EU Agriculture is adapting to climate change
Phil Hogan, Commissioner for Agriculture and Rural Development concentrated on the growing role that European agriculture playing in the economy of the Union. In this connection he stressed that currently EU faces “the most pressing challenge – ensuring food security and a fair income for farmers while the sector adapts to climate change and a more conscious use of natural resources”.
Commissioner pointed out that the major directions of CAP development are as following: “1. greater market resilience; 2. more sustainable agricultural production; and 3. progress on generational renewal.”
Sophie Hélaine, Deputy Head of Unit, Agricultural modelling and outlook, DG Agriculture and Rural Development presented a very detailed analysis of EU Dairy market outlook. The DG research indicated that 87% of milk produced within EU by 2026 (which is by 8 million ton more than now) is expected to be consumed domestically, with only 13% of it to be exported. Taking into account the growing population in Asian markets, which have become partners with EU last year the export of this amount of milk, should not be a problem. Within an overall milk production it is expected that consumption of liquid milk will decline while the consumption of cheese and cream will grow. Generally the outlook for the EU agriculture, including dairy sector, development looks very optimistic. With the expansion of the world demand for dairy products, especially in Asia and Africa in 10 years EU with the 26% of share of the world milk export can become the first world exporter ahead of New Zealand (25%). At the same time environmental constraints will limit to some extent the expansion of the dairy production.
Water and agriculture: the immediate demand for Cleantech
David Wilkinson, Director, Sustainable resources, Joint Research Centre presented the results of the Centre research on agricultural consumption of water. His major point – Economic Growth is a thirsty business – was strengthened by the mere fact that an overall water withdrawal for the past century has outpaced the growth of the world population. Should the temperature on the planet rise only by 2C, the water exploitation index (WEI) will increase significantly while the availability of water will vastly drop.
He showed that the water-energy-food nexus requires the cross sectoral approach for solving an effective water management problem. For agriculture as a main consumer of the water the package of immediate measures that should improve the current situation include the following:
- Improvement of water farm management strategies mainly by tailoring them to the local context through maximizing yields of crops per water unit and unit of land,
- Significant increase of wastewater reuse for irrigation, estimation shows that it could be increased by 6 times with good examples of Malta and Cyprus,
- Nitrogen management – to prevent high concentration of nitrates in the soils in fact meaning that the transfer from the regular technologies of soils fertilization to manure based technologies should take place.
These measures along with the comprehensive development of circular economy in agriculture, – by Director Wilkinson opinion, – can stabilize food security in our challenging times and not only in Europe but in Africa too.
Meat sector: beef consumption decline – a sign of economic decline in Europe or a sign of sustainable consumption?
Benjamin Van Doorslaer, Agricultural modeling and outlook unit, DG Agriculture and Rural Development, EU outlook for meat. By 2016 it is expected that with a steadily increasing world meat consumption by 1, 3% annually, share of EU in world import of meat will grow by 2%. The structure of EU meat consumption by 2026 should be changed in favor of poultry followed by pork; lamb and goat meet, while the demand for beef is expected to decline significantly. Most importantly that the lion share of meat produced in EU will be consumed in EU and only minor share of meat should be exported to the growing markets of Asia and other countries. Environmental aspects of meat production are causing serious concerns as by 2025 in comparison to 2008 the total emission of GHG on average will not decrease, but in poultry production it is even going to increase.
In the concluding remarks of the Conference Joost Korte, Deputy Director-General, DG Agriculture and Rural Development noted few very important points which one should focus on after the conference. First of all, he pointed out that two days of debates and discussions showed that the whole Outlook of EU agriculture for the next 10 years is definitely positive. The participants raised very important questions on challenges which EU agriculture faces as on the side of economics and resilience of farmers, sustainability issues, climate change issues, soles, trades, etc. But the Conference also made it clear that agriculture is and always will be a strategic point of EU.
In 2017 EC is going to launch two very important initiatives. The first is Public consultation on modernization and simplification of the whole CAP. The second initiative – elaboration of the programs on how to improve and strengthen farmers’ positions in the whole supply chain. Commissioner Phil Hogan is very determined to do it- stressed J.Korte.
He also remarked on the nature of Outlook, quoting his words – to clarify “What Outlook is and what it is not”. Outlook for 2026 is definitely not a forecast there are many uncertainties, macroeconomic uncertainty – Brexit, energy, exchange rates, environmental aspects around the future. Outlook is a base line for the possible Outlook scenario. We need to put it in the broad international context.
Outlook for 2026 being a definitely positive by it, in fact should be viewed as a call to actions for various agricultural sectors – to use the opportunities, improve the competitiveness of EU agriculture, exploration of outside markets. It is fair to mention that Commissioner Phil Hogan is actively promoting EU agriculture in the world. Also the Outlook discussions showed us, noted Deputy Commissioner, that it is very important to implement innovations in EU agriculture – technologies, organic conservation of the farm – hay dairy farm in Austria as an example, precision agriculture, etc. And of course we need to help talents, young farmers to work in the agricultural sector. One of the urgent tasks of EU especially now is to use its various possibilities, tools and instruments in assisting farmers to stay and work in the sector in times of crisis and high volatility.