Brussels, 11 December 2024
The European Commission’s latest EU agricultural outlook report reveals a resilient agricultural sector adapting to the triple challenges of climate change, sustainability concerns, and shifting consumer demand.
While the EU continues to be a net exporter of agri-food, remaining self-sufficient for most commodities, noticeable sectoral changes include a decline in total meat production, a stabilisation of cereals production, milk production reaching a plateau, and an increase in poultry and pulses production. While uncertainties surrounding macroeconomic, trade and climate change developments persist, the report also shows improvements for several environmental and climate indicators, highlighting the transition towards a more environmentally sustainable agricultural sector.
The European Commission has released its latest EU agricultural outlook report, which presents the market projections for EU agriculture until 2035. According to the report, the EU agricultural sector is expected to continue to be a net exporter of agri-food products and contribute to global food security, while adapting to challenges such as climate change and changing consumer demand.
The macroeconomic environment is assumed to be stable, with real GDP growth in the EU projected to stabilise in the medium term and inflation to return to the 2% target level. On this basis, market projections for EU agriculture are developed with agro-economic modelling methods.
The report projects a change in EU consumption patterns: meat consumption is expected to marginally decline, mainly for beef and pigmeat, while plant protein consumption is expected to grow. Dairy products consumption is expected to remain stable, with changing habits and expanding novel uses.
The market projections are built on the 2024-33 OECD-FAO Agricultural Outlook, which projects a slight fall in real world prices for the main agricultural commodities, and a growing demand from low- and middle-income countries.
Arable crops
The use of EU arable land is expected to partially change towards 2035. Land-use shifts from cereals and rapeseed to soya beans, other oilseeds, and pulses are projected, driven by lower demand for cereals for feed and biofuel. The area of agricultural land under permanent crops is expected to increase, while permanent grassland and fallow land could remain stable.
Yields of cereals and oilseeds are projected to marginally increase by 2035, thanks to positive developments in precision farming, digitalisation, and improved soil health, compensating for climate change, reduced availability, and affordability of agricultural inputs. Cereal production is expected to be driven by maize and barley, while wheat production is expected to pick up after a decline in 2024. Finally, sugar production is expected to slowly decline by 2035, driven by a decrease in sugar beet yield and consumers shifting to diets with a lower sugar intake.
Milk and dairy products
The EU dairy sector will reach a turning point, where the decline in the dairy cow herd will no longer be counterbalanced by growth in milk yields in the medium term. EU milk production is expected to decline. However, the sector will increasingly contribute to the environmental sustainability of food systems, while generating more added value in the sector.
The EU production of cheese and whey products would continue to grow, albeit at a slower pace than in the past. EU consumption of dairy products is expected to remain stable, with changes in its composition. For example, lifestyle changes and growing health requirements may increase demand for fortified and functional dairy products.
Meat products
Total EU meat production is expected to decline. Beef production is projected to decrease driven by sustainability concerns, low profitability, and a stricter regulatory framework. Similarly, beef consumption is expected to decline driven by tight supply and high prices.
Pigmeat consumption is projected to decrease due to sustainability concerns, while poultry consumption is expected to increase, driven by a healthier image and relatively cheaper price. Sheep and goat meat consumption is expected to remain stable, due to sustained consumption patterns related to cultural traditions.
Specialised crops
The EU production of olive oil is expected to grow slightly by 2035, driven by yield increases. However, the declining trend in olive oil consumption in the main producing countries is expected to continue, while it is projected to increase in other EU countries. EU wine production and exports are likely to decrease, driven by reduced alcohol intake by younger generations and shifting habits on drinking occasions.
Fruit and vegetable production will face challenges related to extreme weather events, increasing energy costs, limitations on the use of pesticides, and pest outbreaks. Nevertheless, EU consumption of fresh produce is expected to expand, driven by increasing consumer awareness of the benefits of a healthy diet. Apple production could remain stable, while peach and nectarine production is expected to decline.
Simulation on stress-testing the EU feed supply chain
A modelling exercise assesses how improvements in crop yields and feed efficiency in the EU can mitigate the effects of a yield shock in the global feed market. It models the impact of a hypothetical extreme weather event, affecting global feed suppliers in 2035, on EU feed supply chains and consequently on the EU meat sector, as the EU is a net importer of protein feed. The simulation shows that EU meat production and consumption would be only marginally affected, while improvements to EU feed efficiency and protein-rich crop yields could mitigate the negative impacts on the EU meat sector to a limited extent.
Environmental aspects
This report also looks at the climate and environmental implications for EU agriculture, derived from the market projections for 2035. Results show an improvement across all environmental and climate indicators included in the analysis, with a projected reduction in greenhouse gas emissions, ammonia emissions and nitrogen surplus.
Background
The European Commission publishes its outlook report at the end of every year, presenting a set of projections for the main EU agricultural sectors at the EU Agri-Food Days. The analyses of agricultural markets rely on data available until mid-September 2024 for agricultural production and trade, based on a set of macroeconomic assumptions deemed the most plausible at the time of the analysis.
The projections reflect the current CAP, as well as policy actions and free trade agreements in place or ratified until the end of September 2024. This report serves as a baseline for future analytical work by the European Commission, but it should not be interpreted as a forecast, due to the inevitable uncertainties surrounding macroeconomic developments, geopolitical and trade relations, and climate change impacts. This Commission report is a joint effort between the Directorate-General for Agriculture and Rural Development (DG AGRI) and the Joint Research Centre (JRC).
Source – EU Commission