EU agricultural markets remain stable despite the Russian invasion of Ukraine

The report shows that EU agricultural production continues to be impacted by the consequences of the unjustified Russian war in Ukraine, on surging energy prices, increasing input costs and food inflation throughout the EU.

In addition to geopolitical instability, the EU recorded one of the hottest summers in history, which significantly affected summer crops, such as maize, soybeans and sunflower. Meteorological conditions have also been difficult for livestock producers and animals who suffered from heat stress and less feed. Despite obvious challenging conditions, the EU agricultural sector is standing strong. Food availability is not at risk in the EU. Moreover, EU exports of cereals are expected to reach 51 million tonnes, which is 6.5% above last season and 20.9% above the five-year average. The EU will continue to play its part to contribute to global food security. This geopolitical situation will lead to significant uncertainty in relation to the outlook.

The signature in July of the ‘Black Sea Grain Initiative' that led to the resumption of Ukrainian grain exports via the Black Sea brought some relief on the international markets with a sharp decrease in wheat and oilseeds prices, but its renewal cannot be taken for granted. The Solidarity Lanes established by the EU further contributed to the export over 12 million tonnes of cereals (grains and oilseeds) out of Ukraine by train, trucks or ships since May 2022. While commodity prices declined this summer, production costs and consumer prices remain historically high. This is due to the high prices of the logistical supply chain, for example electricity, processing, packaging, transport, cooling and heating. Increased cost of living may reduce consumer demand for food service (e.g. restaurants or catering), and result in more retail shopping of private labels.

The availability of fertilisers for the upcoming season is another concern for the agricultural sector. As fertiliser industries need natural gas to produce ammonia and other nitrogen products, they reduce or halt production when gas prices are too high. A reduced production and use of fertilisers could impact crop production in 2023, as well as impacting on the beverage and meat processing sectors who use by-products of fertilisers' production process.

This is the context for the European Commission's autumn 2022 edition of the short-term outlook report for EU agricultural markets. Published by the European Commission on 5 October 2022, the report presents a detailed overview of the latest trends and prospects for a range of agri-food sectors.

Arable crops

The total EU cereal production is now forecast to reach 270.9 million tonnes, which represents 7.8% less than last year.  The sharpest decrease concerns maize at 55.5 million tonnes, a 23.7% decrease year-on-year. This is mainly due to summer drought. Soft wheat production will only experience a 2.4% decrease with a forecast production of 127 million tonnes.  Trade of cereals keeps increasing with EU soft wheat exports expected to reach 36 million tonnes, an increase of 23% year-on-year.

Thanks to higher expected yields of protein crops, the EU production is estimated to grow by 1.4% and reach 4.32 million. Regarding oilseeds, the area under these crops in the EU reached an all-time high in marketing year 2022/23 of 12.2 million hectares, an increase of 14.6% year-on-year. Drivers for this development were soaring prices of oilseeds and especially vegetable oils and the temporary derogation to allow cultivation of certain crops on set-aside land. This significant expansion has led to an increase in harvest of 7.5%, thus cushioning the impact of drought on yields.

Specialised crops

EU olive oil production is expected to decline in 2022/23 by 25%, with a drop observed in almost all main EU producing countries, except Greece. Indeed, heat during the flowering period combined with water deficit during the olives' growth phase negatively impacted the production of olives and quality of oil which was observed during the milling phase. To some extent, the lower production could be covered by beginning stocks, and likely also by increased imports.  

EU wine production is steady with a 2022/23 production expected to be 2.5% above the five-year average. This is mainly due to a larger production expected in France. The quality of wine could also be greater thanks to a significant reduction of fungal infections of grapes. EU wine exports remain at the same levels as in the last marketing year with the main destinations being the US and the UK, followed by Switzerland, Canada and China.

We observe a general reduction in fresh fruit consumption mainly due to rising prices. The 2022/23 EU consumption of fresh apples and oranges is expected to go slightly down to 12 kg per capita.

Milk and dairy products

This summer's hot and dry weather not only caused heat stress for cows, but also led to lower availability and quality of grass. To cope with this, farmers adjusted feed availability by either already using their feed which was planned to be stored for winter months, or reducing the size of their herd further. As a result, the annual EU milk collection is expected to decline by 0.5%. The start of 2023 could be challenging for dairy farmers, who face higher input costs and lower feed availability in addition to potentially lower consumer demand because of food inflation.

Meat products

Livestock producers are among those being the most impacted by the record energy and input costs. Despite high prices for beef, pigmeat and poultry, these difficult conditions limit the production in these three sectors. In 2022, EU beef production will decrease by 0.6%, EU pigmeat production by 5% and EU poultry production by 0.9%. High prices also weigh down on EU exports of these products, with expected decreases by 1%, 17% and 2.2% in 2022 for beef, pigmeat and poultry respectively.

More detailed information about production, consumption, and prices in these sectors and others can be found in the full autumn 2022 short-term outlook report.