Prospects for the EU agricultural sector are “favourable” after showing resilience against the Covid-19 pandemic in 2020, according to the European Commission.
In the first 2021 edition of the short-term outlook for EU agricultural markets – published yesterday (Tuesday, March 30) – the commission highlighted that the sector did relatively well due to increased retail sales and home consumption.
According to the commission, global demand and the reopening of food services – once Covid-19 vaccination is sufficiently advanced – is expected to boost prospects further.
Meat
EU beef production decreased by 1.2% in 2020, and is expected to continue decreasing in 2021 by 0.9%, despite the assumed recovery of demand in the second half of 2021.
EU sheep and goat meat production increased by 2% in 2020. However, production is projected to decrease by 1% in 2021, due to a decline in flock size and less on-farm slaughterings in Romania.
The lower availability of sheepmeat on the domestic market could lead to an increase in EU prices.
As for the pigmeat sector, production increased by 1.2% in 2020, driven by exports. However, after two years of spectacular growth, exports will decrease due to the Chinese pigmeat sector slowly recovering from African swine fever (ASF).
This will lead to a slightly lower production of pigmeat in 2021 (–0.7%).
In 2020, EU poultry production grew by 1% and is expected to sustain a similar growth in 2021 (+1%). The sector was affected by avian influenza detected in 18 EU countries, on top of the closure of food services also weighing on the market.
However, 2021 should see a slight recovery in terms of exports, with export bans (related to the avian influenza) being gradually lifted.
Milk and Dairy
EU milk production in 2021 is expected to grow by 1%, thanks to an increase in yields, while the overall European dairy herd is expected to further decline.
EU cheese and butter consumption could particularly benefit from a reopening of food services and retail sales should stay at a higher level compared to the pre-Covid-19 period.
In terms of production, EU cheese is expected to take 21% of the extra milk produced in 2021.
Consumption of fresh dairy products is expected to decline after a peak in 2020 but it should remain above pre-Covid-19 levels.
Arable crops
Prices for all main cereals have increased, in line with global prices. Global consumption is also estimated to grow, mainly driven by animal feed demand.
EU cereals production could reach 295.2 million tonnes for 2020/2021, an increase of 5.3% compared to last year.
Total EU production of oilseeds is expected to increase by 3.4% compared to last year and reach 16.7 million tonnes in 2021/2022, despite difficult weather conditions. As for protein crops, production grew by 7.9% in 2020/2021.
It could further increase by 5.2% in 2021/2022, driven mainly by domestic food demand.
EU sugar production is estimated at a five-year low, at 14.4 million tonnes for 2020/2021. This drop is mainly due to a widespread yellowing disease in France.
However, consumption should remain stable, leading to a reduction in stocks.