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JRC contribution to the EU Agricultural Outlook

21 December 2017, JRC

The EU Agricultural Outlook, published on Monday 18 December, presents the EU's annual projections of agricultural commodity markets to 2030 and stresses the importance of environmental and climate change constraints.

The EU Agricultural Outlook for the EU Agricultural Markets and Income 2017-2030. ©EU

Compiled by the Directorate-General for Agriculture and Rural Development (DG AGRI), the EU Agricultural Outlook is based on assumptions regarding the future economic, market and policy environment. The JRC contributes with an uncertainty analysis, quantifying the upside and downside risks linked to the market projections. In particular, this analysis takes into account the macroeconomic environment and yield variability for the main crops within a novel methodological framework developed by the JRC.

The modelling work for the EU Agricultural Outlook was carried out by the Economics of Agriculture Unit at the JRC, in close collaboration with the Analysis and Outlook Unit of DG AGRI. This year, the JRC also contributed with selected scenarios, such as the effects of climate extremes on European cereal markets, the potential for India to become a relevant skimmed milk powder exporter to world markets, and the effects of a pandemic avian flu on EU meat markets.

The EU Outlook describes the trends for major EU agricultural commodity markets such as arable crops, sugar, biofuels, dairy and meat markets until 2030. This year’s edition includes an outlook for olive oil, wine and fruit and vegetables, and an overview of environmental regulations affecting agricultural markets. As in previous years, the JRC evaluated environmental indicators such as greenhouse gas and ammonia emissions.

The findings constitute the main reference scenario for impact assessments of agricultural policies. EU cereal prices are expected to progressively gain momentum, given restricted land availability, recovering energy prices and sustained demand. However, the possibility of price spikes cannot be ruled out, particularly in response to extreme climate events.

An important event this year was the end of the EU sugar quota regime of last September. As a result of this, the outlook foresees that the EU will turn from a net importer into a net exporter of sugar in the medium-term.

The livestock sector should benefit from steadily growing global demand and affordable feed prices, what could pave the way for expansion of the EU dairy sector, despite the difficulties linked to high price volatility. Poultry consumption and exports should continue to increase, while the marginal increase in pigmeat production will be exclusively driven by export demand. By contrast, beef production and consumption are expected to fall.

Finally, environmental and climate change constraints are found to increasingly drive the evolution of agricultural markets. During the 2017 EU Agricultural Outlook conference (18-19 December, Brussels) it was stressed that agricultural market developments will be further affected by the entry into force of the Paris Agreement on climate change (COP21), and that agriculture will need to adapt to concurrent and recurrent adverse climate extremes.

The 2017 EU Agricultural Outlook conference was opened by the Director General Jerzy Plewa (Agriculture and Rural Development) and attended by Commissioners Phil Hogan (Agriculture and Rural Development) and Günther Oettinger (Budget and Human Resources). From the JRC the Deputy Director General Charlina Vitcheva participated. During the conference the proceedings of the preparatory EU Outlook Workshop (October 19-20) were published by the JRC. This workshop is an integral part of the intensive validation procedure of the EU Outlook results and provides a forum for discussion for relevant stakeholders.

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