For the third edition this year, the short-term outlook faces the challenge of factoring in the consequences of the Covid-19 crisis, where many uncertainties remain. Compared to other sectors though, the impact of the crisis on the agri-food sector is expected to remain limited. The emerging patterns seem to mostly reinforce existing trends, such as an increase in demand for local food, short supply chains and online food sales.
In this context, the situation in 2020 remains relatively positive, with: dairy and meat prices recovering; milk collection growth remains strong; the positive trade balance in meat is increasing; oilseed and protein crop production is estimated to increase; EU olive oil exports will reach a new record level. Notable exceptions are cereals (in particular wheat) and sugar, which both have suffered from adverse weather or plant health conditions.
The latest short-term outlook report for EU agricultural markets, published on 5 October 2020 by the European Commission, presents a more detailed overview of the latest trends and further prospects for each agri-food sector.
Arable crops
In 2020/21, due to dry conditions over the summer influencing negatively plant development, total EU cereal production is expected to reach 274.3 million tonnes, 7% lower than in 2019/20. Soft wheat production is estimated at 115.5 million tonnes for 2020/21, with area hitting a 13-year low. As for maize, production is expected to drop and reach 63.1 million tonnes, 10% lower than last year. This decline comes mainly from lower yields across the EU.
Regarding oilseeds and protein crops, EU total oilseed production is expected to reach 28.4 million tonnes, a slight increase of 1% compared to 2019/20. This increase is supported by rapeseed production, expected to reach 15.8 million tonnes, up 3% compared to last year, but still low in historical terms (15% below the 5-year average). Protein crop production should increase significantly, at 4.5 million tonnes for 2020/21, a 10% rise compared to 2019/20. Consumption of protein crops is also expected to grow by 5%, thanks to a greater use in feed and a rise in food demand.
EU+UK production of sugar is estimated at 17.4 million tonnes for 2019/20, slightly lower than last year. With lower production, lower global demand and a drop in world prices, exports remained low, forecast at 0.8 million tonnes. For 2020/21, EU (excluding UK) production is expected to decline further, from 16.2 to 15.9 million tonnes. However, consumption is expected to recover, following a drop during Covid-19 confinement measures.
Specialised crops
Exports for olive oil are to reach new records for 2019/20, around 820,000 tonnes. In the EU, an increased production in Italy and Greece, as well as a record harvest in Portugal, accompanied by strong retail sales during lockdown, should support an overall consumption growth of 3%. These elements should contribute to a 17% stock reduction. In addition, total EU olive oil production for 2020/21 is estimated to increase and reach more than 2 million tonnes, up 17% compared to 2019/20.
Regarding the fruit and vegetable sector, EU production of apples is forecast at 11.5 million tonnes for 2020/21, 2% below the 5-year average. The apple market seems well balanced, with stocks from 2019/20 almost cleared. EU consumption of fresh apples is due to decline to 14.7 kg per capita, an 8% drop compared to 2019/20 when consumption reached record high levels.
EU production of oranges is estimated at slightly above 6.2 million tonnes for 2019/20, 5% less than the previous year. Overall consumption is declining, 2% lower than the previous year. However, the consumption of fresh oranges is increasing at the detriment of processed ones. In 2020/21, the production is forecast to increase and reach 6.55 million tonnes.
Milk and dairy
The overall EU milk collection should grow by 1.4% in 2020, thanks to an increase in milk yield, favourable pasture conditions until July and affordable feed. The dairy herd is expected to decrease, mainly due to increased slaughtering in the second half of the year. In 2021, EU milk production could grow at 0.8%, driven by yield growth on one side and further dairy herd reduction on the other. Following the Covid-19 outbreak, direct sales are expected to continue growing with higher demand for local food and short supply chains.
Competitive EU prices of SMP, WMP and butter continue supporting EU exports. For all three of these dairy products, export demand is growing in 2020, reaching particular high levels for SMP (850,000 tonnes) and butter (320,000 tonnes), supporting production growth.
EU consumption of cheese continues to be negatively impacted by foodservice closures, which could result in a slight decline of 0.2% in 2020. Still, EU exports are expected to grow by 5% with a positive global demand, resulting in a production increase of 0.7%. Further adjustments in foodservice and retail should help consumption to grow by 0.5% in 2021. This increase, combined with increasing EU exports, should lead to a 0.5% production growth.
Meat
EU beef production first decreased by 2.4% in the first half of 2020 due to Covid-19 lockdown measures and lower demand from foodservice. Demand has been recovering with the reopening of restaurants and tourism catching up, leading to an overall estimated decline in beef production of 1.4%. In 2021, a further decline of 1.5% is estimated due to a reduction of herd size in some EU countries. Consumption of beef is also projected to decline by 2.1%, to 10.4 kg per capita in 2020.
As for pigmeat, while production was down in the first half of the year, favourable prices, a return of consumer demand and recent investments contributed to an increase in production in the last few months. Nonetheless, the recent discovery of African Swine fever (ASF) in Germany, which led to export bans, will impact the German, and therefore the EU, pigmeat market. The production of pigmeat is set to decline in 2020 and 2021, respectively by 0.5% and 1%. Consumption is projected to decline by 1.1%, to 32.8 kg per capita in 2020.
EU poultry production is expected to increase in 2020 by 1%, supported by a shift in demand from other meats to poultry during lockdown. The reopening of foodservices and strong demand at retail level further contributed to this increase. Similarly, a modest growth of 1% is forecast for 2021. Consumption should also increase in 2020, up 1.5% reaching 23.7 kg per capita.
Regarding sheep and goat meat, EU production declined significantly in the first half of 2020 due to lower demand from food service and home consumption during festive periods, and strong supply shortages. Overall, production in 2020 and 2021 will respectively drop by 3% and 2%, assuming smaller herds, fewer ewes and a stagnating domestic demand. Consumption should decline in 2020 by 4%, down to 1.3 kg per capita.
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