Due to the confinement measures implemented in the EU and across the world, food demand has rapidly changed since the beginning of the crisis. Stockpiling behaviour as well as the closure of restaurants, bars and hotels is having a direct impact on agri-food producers. On the one hand, staple food such as pasta, rice, flour, canned fruit and vegetables have been in higher demand, benefiting from the switch to home consumption. On the other hand, high-value products, such as quality meat cuts, wine and specialty cheeses – usually consumed outside – are seeing a significant decrease in consumption.
The latest short-term outlook report for EU agricultural markets, published on 20 April 2020 by the European Commission, presents a more detailed overview of the latest tendencies and further prospects for each agri-food sector.
Arable crops
EU cereal production in the current period (2019/2020)is expected to reach 294 million tonnes, 4.5% more than a 5-year average and it is then expected to slightly decline, with 287.8 million tonnes expected to be produced over the 2020/2021 period.
Regarding the EU oilseed sector, rapeseed production for 2019/2020 is expected to reach a 12-year low at 14.9 million tonnes. This is due to a reduction in production area. Oilseed plantings are then expected to recover to reach 10.5 million ha in 2020/2021. Production of protein crops should increase to 4.5 million tonnes, 4% more compared to last year, driven by good market prospects for food and feed purposes.
The 2019/2020 EU sugar production is expected to slightly decline to 17.4 million tonnes due to a reduction in area. Consumption is expected to slightly drop due to lockdowns across the EU and closure of food services, despite some increase in home consumption. Next year is expected to bring about further 3% decrease of sugar beet area related to difficult market conditions in the last two years.
Specialised crops
The 2019/2020 EU olive oil production came close to 2 million tonnes, registering a 15% decrease compared to last year. Due to significant stocks, overall availability remains however high. Following the implementation of confinement measures, retail sales of olive oil increased, especially in producing EU countries. This, together with low prices, should lead to a consumption recovery in those countries (with 13% consumption increase).
The EU overall wine consumption is strongly affected by the measures taken to fight the pandemic. While retail sales are increasing, consumption in restaurants and bars has stopped. This change in consumption is negatively affecting mostly sparkling and high-value wines. The EU wine consumption is expected to fall to 108 million hectolitres, 8% below the last 5-year average. EU wine exports are also affected, expecting to fall by 14% in 2019/2020.
Regarding the fruit and vegetable sector, EU demand for fresh apples is expected to be above average thanks to an increased domestic consumption. EU production of apples in 2019/2020 is however estimated to go down to 10.8 million tonnes. The impact of the crisis on oranges will be limited, as the harvesting season is coming to an end, with a production of 6.2 million tonnes for 2019/2020. Demand for fresh oranges and orange juice has lately increased.
Milk and dairy
In 2019, EU milk collection grew by 0.4%, the lowest growth since 2012. The 2020 production growth is expected to be similar. The yearly spring peak for milk collection coincides with the current pandemic. Restrictive measures could challenge collection logistics as well as feed deliveries. In addition, labour force availability considerations may lead to favouring less labour-intensive dairy products.
The 2020 EU cheese consumption might slightly grow (0.3%) and exports could continue increasing, thanks to demand in Asian markets, leading to an overall cheese production increase. However, the closure of restaurants has impacted high-value cheeses, mostly consumed outside of home.
Meat
EU beef production declined in 2019 due to lower prices and herd reductions. It should decline further in 2020 due to similar factors. The coronavirus outbreak is affecting the sector mainly because of high-value cuts not being sold to restaurants or in butchery departments in supermarkets. Lower demand and lower meat availability will result in a further reduction in EU apparent consumption.
Poultry production continued to grow in 2019 thanks to increasing demand. An increase in production is expected to continue in 2020 due to consumers replacing expensive meats with poultry. However, the sector will still be impacted by the closure of restaurants for certain varieties such as ducks or pigeons.
Pigmeat production should grow slightly this year with sustained demand from Asia (due to the impacts of the African Swine Fever, especially in China). EU exports are expected to grow by 12%, after an increase of 17% in 2019. The sector should not be significantly affected by the ongoing pandemic. However, EU consumption is expected to fall due to high prices, leading to favouring other meats.
The EU sheep and goat meat sector has been affected by the coronavirus crisis with seasonal demand for Easter and Ramadan not materialising. The EU production should however remain stable in 2020.
