Brussels, 6thFebruary 2019 As the Brexit date of 29thMarch is fast approaching without a clear prospect of an orderly exit deal, the worst case scenario of a no-deal Brexit is becoming ever more likely. Although an agreement is still possible and highly desirable, the political stalemate around the apparently intractable issue of the “backstop”, […]
This policy briefing looks at the EU’s agri-food markets, their performances, trends, and their future trajectories. It also raises key relevant questions and discussion points with regards to these markets.
In 2010 the European Union (EU) become a net exporter, but this development covers contrasting situations.
Despite the global economic situation, and while imports have stagnated, the EU has continued to increase its exports of agri-food products over recent years. By 2013, their value had risen to €120 billion, making the EU the world’s biggest exporter.
Agri-food products today account for 7% of the EU’s total exports of goods, which places them in 4th position behind engineering, chemicals and pharmaceuticals. Europe’s balance of trade in agri-food hit a peak in 2013 at €18.5 billion, part of an overall trade balance of €56.4 billion.
Since 2000, on average, 27% of EU agri-food exports have been made up of drinks and spirits – market segments that have a very specific nature. Moreover, 38% of the remainder have been made up of 14% of dairy products.
The analysis of European markets must therefore go deeper than the policy discourse of high-value added and beyond the customs classification of raw or processed products to take the degree of product processing or transformation into account: marketing strategies, risks and opportunities are not the same for well-known cheeses as they are for milk powder.
The strong performance in financial terms hides a loss of market share for the EU in the world: our exports have grown at a lower rate than the increase in value of world markets.
EU domestic markets mirror growth trends in demographics and the rise in living standards in Member States (MS), although despite this the share of household income spent on food should continue its consolidating trend. The main wellsprings of growth for the European agri-food sector will therefore come from product innovation and an effective marketing strategy that showcases the quality of European production.
While most economic studies estimate that Europe’s agri-food sector has all the potential to become an engine for growth in the years up to 2020, the question of barriers to such growth and how in concrete terms these can be overcome calls for a swift response by policymakers.
Behind the performance statistics of European agricultural and agri-food industries lies the question of their competitiveness.
The productivity of European agriculture as a whole has been stagnating or even declining for two decades; equally, the specific sectors of crops and animals have also experienced a stagnation and decline. The situation varies between the West, South and East of the EU. Average European productivity is stagnating, and the increase in productivity in, for example, the milk industry over recent years has been significantly lower than that obtained in the United States. Today, EU productivity is on average 66% of the US level.
Various questions and discussion points arise here.