Agriculture in Europe: Business climate, trends in machinery and management - DLG-Agrifuture Insights Dr. Reinhard Grandke, Chief Executive ...
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Agriculture in Europe: Business climate, trends in machinery and management DLG-Agrifuture Insights Dr. Reinhard Grandke, Chief Executive Officer of DLG (German Agricultural Society), Frankfurt am Main
Economic Environment
Economic framework
Global National
Trade conflict
•China increases imports of soybean from Brazil and
decreases imports from the US
National • Fertilizer regulations: Farmers feel constraints as EU requirements
on fertilizer use strengthen to mitigate water pollution
USA - China •China increases imports of pork from Brazil and the legislation • Increased regulation and prohibition of use of some pesticides and
crop protection products in insect protected areas
EU and decreases imports from the US
Germany • Introduce of governmental 3-level label of animal welfare (by choice)
Environmental
African Swine •China: Decreasing pig inventory boosts pork imports + climate
• Debate on animal-welfare requirements creates uncertain climate for
livestock farmers with regards to regulatory and investment
fever •ASF reduces pork production in Eastern Europe
impacts, animal
conditions
• German “climate ministry” propose price for carbon dioxide (CO2)
pollution
welfare
•Shift in pork imports from EU to North America in • National CAP strategic plans as frame for CAP
case of new trade agreements and change in
implementation
Brexit requirements on animal welfare regulations
•Higher international competition on deliveries to the
CAP-reform • Eco Schemes as new tool to strengthen ecological
United Kingdom for German, French, Irish, Dutch and
Danish exporters
2020 orientation of CAP
• Debate about adjustment of direct payments in
Western and Eastern Europe
Mercosur – •Trade agreement reduced tariffs on agricultural
products
EU Trade •Ratification of agreement, however, is open to
agreement disagreement due to Amazon politicsWorld wheat markets
Production is expected to be higher than consumption
in Mio. t in Mio. t
800 300
• Huge world wheat harvest
750 250 • 5-year average EU-wheat harvest
• Record harvest in France of good
700 200 quality wheat
• Below average harvest of mixed
650 150 quality in Germany
• Stocks in major export nations
600 100
thought to be stable
550 50
500 0
Carryover stocks Stocks major exporters
Production Consumption Source: IGC Market Report 29.08.2019Development of wheat prices
Price pressure due to high global harvest
Matif Wheat contract September 2019 in €/t Cash prices for B-wheat in the Rhineland in €/t
Source: Agrarticker 06.09.2019Pig production
World pig prices:
• African Swine Fever and US-Chinese trade
conflict determines pig market
• In 2019, exports to China increased: Germany
+11%, Netherlands +29%
Source: EU-KOM, 04.0.2019
Feed prices:
• Price for feed grain declined due to high grain
harvest in EU
• Decline in soybean prices lowered overall feed costs
Source: Agrarticker, 21.08.2019Milk market
EU-milk deliveries nearly similar to previous year’s level
Quelle: EU-KOM DG Agri 29.08.2019
• Milk price remains nearly unchanged due to milk market
stability
• Average milk price: 33,43 euro cent/liter = 0,41 euro cent/liter
higher compared to previous year
• Feed & energy costs lower by 0.6% and 3.2% in week 33
compared to the previous 4 weeks
Source: LTO Nederland, International Milk price Review, June 2019; Data base: Farm gate prices of 16 dairies in 9 European CountriesMarket conditions for farmers EU-grain production on 5-year average level; French arable farmers expect record high harvest of high- quality wheat; German arable farmers expect below 5-year average harvest Regional incidents of drought and heat in June could negatively impact yield and quality Internationally, an oversupply of wheat leads to lower prices; world wheat stocks expected to stabilize at around 68 Mio.t Export market is marked by high competition between main exporters. Exports from Russia decrease due to high domestic demand, and prices lead to higher export opportunities for European exporters. African Svine Fever in China boost EU-pig exports and pork prices; continuing risks of African Svine Fever outbreak for pig producer in Germany, France due to epidemic in Poland and Belgium. Market for Dairy products widely stable, due to nearly constant deliveries in EU compared to previous year
Business climate and investment conditions – core questions
1. What impact do markets have on the business climate and expectations of arable farmers?
2. Do farmers want to invest under current market conditions?
3. How can arable farmers address these challenges, and what kind of innovations are important
to them?Assessment of business situation and development
Current business situation in arable farming
French, Russian and Dutch farmers more satisfied with actual business situation
2,0
2,5
3,0
3,5
4,0
4,5
France Germany Poland Great Britain The Netherlands Russia
Average; N=valid cases; supported; only one answer possible. DLG-Trendmonitor Europe autumn 2005 – Spring 2017 N= D+F 750, UK 350, PL 500; Agrifuture Insights, autumn 2017 – autumn 2018 N=150 every countryExpectations on business development in arable farming
Expectations averaged in most countries, German arable farmer less optimistic
Very good
2,00
2,50
3,00
3,50
4,00
4,50
Very bad
France Germany Poland United Kingdom Netherlands
Average; N=valid cases; supported; only one answer possible. DLG-Trendmonitor Europe autumn 2005 – Spring 2017 N= D+F 750, UK 350, PL 500; Agrifuture Insights, autumn 2017 – autumn 2019 N=150 every countryInvestment decisions and areas of investment
Readiness to invest – arable farmers
Increasing investment plans in arable farming, only Polish farmers limit investments
Are you planning to make any investments on your farm in the next 12 months?
Share of “yes” answers
80%
70%
60%
50%
40%
30%
20%
10%
0%
France Germany Poland United Kingdom Russia
DLG-Trendmonitor Autumn 2010 – Autumn 2016, DLG-Agrifuture Insights autumn 2010 to autumn 2019, data in %; supportedInvestment areas of arable farmers
Tractors and tillage equipment is focus of farmers investments
70%
60%
50%
40%
30%
20%
10%
0%
Tractors Combine Tillage Automatic Precision Fertilizers Plant Arable land
harvester equipment guide systems Farming protection
equipment
Germany France Netherlands Russia Poland United Kingdom
15
DLG-Agrifuture Insights autumn 2019, data in %; supported; several answers possibleChallenges in arable farming and approaches to address them
Business conditions for arable farmers
Growing challenges with herbicide-resistant weeds
Rising difficulties for rapeseed cultivation due to chemical ban and
unfavorable seeding conditions due to dryness of soils
Need to increase nutrient efficiency in fertilizing
Sharp decrease of sugar beet prices after end of EU’s market
regulation
There is a need to rethink arable production systems and expand crop rotations,
use more mechanical weed control, use different seeds, take later sowing timeConcepts of arable farmers to address challenges
Farmers in Europe use different approaches to develop cropping systems
80%
70%
60%
50%
40%
30%
20%
10%
0%
Germany France Poland United Kingdom Netherlands Russia
Increase power of impact of mechanization Mechanical weed control
Under feed manuring Improve field hygiene to reduce disease occurence
Intensifying stubble processiong Later seed
Increasing organic soil components Expansion crop rotation
Change to organic farming
DLG-Agrifuture Insights autumn 2019, data in %; supported; several answers possibleImportance of technology trends
High demand on innovations in technology to meet farmers’ needs
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Germany France Poland Netherlands United Kingdom
Strip tillage Sensor technology for crop management
Automatic guide systems Equipment mechanical weed control
Boost efficiency in fertilizing Sensors for measuring nutrients in manure
Telemetrics for machine control Mobile data access for in-time crop management
Drones for crop management
DLG-Agrifuture Insights autumn 2019, data in %; supported; several answers possibleDigitization
Digitization: Areas of use
Documentation, efficiency and farm management systems in interest of farmers
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Germany France Poland United Kingdom Netherlands Russia
Documentation of production Boost efficiency Input use Telemetric equipment service
Management of machine use / logistics Cloud Computing Farm Management systems
"Internet of things" - networking of machines Web-platforms for trading
DLG-Agrifuture Insights autumn 2019, data in %; supported; several answers possibleDigitization: What kind of tools arable farmers are using already
and what kind of tool they plan to use
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
In use Use In use Use In use Use In use Use In use Use In use Use
schedueled schedueled schedueled schedueled schedueled schedueled
France Germany Poland United Kingdom Netherlands Russia
Farm Management Systems Platform for data transfer Cloudsoftware Telemetrix for machine control Electronic field book
DLG-Agrifuture Insights autumn 2019, data in %; supported; several answers possibleConclusions – Business climate and investments
Business climate
• High global wheat harvest leads to lower price for wheat
• Higher competition on export markets; European producers have more opportunity to export due to decreased exports from
Russia
• Expectations on business development averaged in most countries. German arable farmer less optimistic
Investment intentions
• Despite low price level and difficult outlook on wheat market, investment intentions of farmers in Germany, France, the United
Kingdom, Russia and the Netherlands increased
• French farmers tend increase power of impact; German farmers catch up investments, implement new farm practices
Concepts of arable farmers that address challenges
• German farmers see field sanitation and mechanical weed control as the most important measures
• French farmers look to intensify chemical weed control and invest in farm equipment to increase in power of work force
• Farmers in UK are interested in ecological farming
To address challenges, arable farmers need to develop solutions suited to their location. Manufacturers
need to better understand the needs of farmers in order to offer the right approach to develop farming systems.British arable farmers view on Brexit
Assessment of impacts on Brexit for British Farmers
British arable farmers mostly expect negative consequences due to Brexit
Entire sample
Brexit leads to significant decline in agricultural investment
The structural change in British agriculture will increase
Investment goods (machinery, equipment) will become more expensive
Profits of UK farmers decrease due to the lack of EU direct payments
Exports decrease due to difficult access to the EU market
UK self-negotiated trade agreements increase export opportunities
Domestic market opportunities for British farmers increase due to import tariffs
0 10 20 30 40 50 60 70
Disagree Partially agree Fully agree
DLG-Agrifuture Insights autumn 2019, data in %; supported; several answers possibleMethodology of survey and farm structure of surveyed farmer
Methodology of survey
• Countries • Germany, France, Poland, United Kingdom, Netherlands, Russia
•Time of questioning •July + August 2019
• methodology of • CATI (computer aided telephone interviews)
questioning • Trendmonitor: survey twice/year autumn 2003 – spring 2017
• DLG-Agrifuture Insights: survey once/year since autumn 2017
• Sample • Total N = 900 Interviews (150 each country, 50 each arable, dairy and pig
farming)
Realization of questioning:Farm structure of interviewed farmers
Ø share of leased land
Ø utilisable Ø number of dairy Ø number of finishing
(Percentage of farmed
agricultural area (ha) cows/farm pigs/farm
land)
Germany 307 49 155 1.149
France 201 70 135 1.378
United Kingdom 353 34
Poland 442 34 84 1.165
Netherlands 142 30 238 4.146
Russia 21.532 47 789 61.495Website: DLG e.V. - DLG-Agrifuture Insights
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