The prices of Europe’s agricultural commodities, such as wheat, sugar and meat, are expected to remain "favourable" over the next seven years, according to a report by the European Commission.
The rise in global food demand and the development of the biofuel sector are expected to factor in keeping commodity prices stable.
The low growth in productivity resulting in less farming surplus is also expected to play a role in keeping prices from falling, according to the report, ‘Medium-term prospects for agricultural markets and income’, published by the European Commission, yesterday (14 January).
“The medium-term forecast for arable crops is relatively positive, thanks to solid world demand and firm prices,” Commission agriculture spokesperson Roger Waite said in a statement.
Growth of the sector will depend on more yields as there will be limited land available for expansion in the European Union.
Biofuels are expected to prop up demand for arable crops and remain “the most dynamic demand factor” keeping prices at a stable level, the report says.
To come up with the estimates, the authors factored in the target in the EU Renewable Energy Directive of a 10% share of renewables in the EU’s energy mix by 2020, a large amount of which will be made up by crop-based fuels. The EU executive expects that these so-called ‘first generation’ biofuels will make up 8.5% of liquid transport fuels by that time.
Chicken consumption up, beef down
Meat should also remain stable overall, “supported by strong demand on the world market”, the report says.
Europe’s expected economic recovery may also lead to stable meat price levels as levels of disposable income improve.
Consumption of chicken expected to remain stable, and even increase thanks to its “healthy image”, while Europeans are projected to eat less beef.
The report also expects that income in the agricultural sector will rise, though “more as a result of the continuing decline in labour input rather than due to overall income growth”, Waite said.