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03. January 2021

EU agricultural outlook

What are future scenarios for the European agricultural industry between 2020 and 2030?

On December 16, the European Commission published the “European Union agricultural outlook for 2020-30”, in which it sets out various future scenarios for agriculture. This article summarizes the highlights of the forecasts for the coming years and provides an overview of the trends that have emerged, particularly in the last year.

By Laura von Ketteler

Over the next decade, digitization will be central to the arable sector, supporting yield increases, improved labor conditions, and higher environmental standards. The milk, dairy and meat sectors will be characterized by greater sustainability, with changes expected along the food chain. Increasing consumer health awareness will benefit the fruit and vegetable sector and lead to increased demand.

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In 2020, the agricultural sector faced numerous challenges due to the Covid 19 crisis and its consequences. However, from logistical problems to a shortage of labor and radical changes in demand, the sector proved its resilience by quickly adapting to the challenges with the support of the EU. In particular, the crisis has led to the reinforcement of some existing trends, with an increase in demand for locally produced food, short supply chains and e-commerce sales. In addition, the report found that health concerns, the source of the food, the environment and climate change were among the most important drivers of consumer decisions.

The EU agricultural outlook describes several scenarios, including a slow recovery and a green recovery from 2020. In both scenarios, changes in supply and demand lead to lower meat and grain prices, while butter, cheese and poultry prices are less affected. In general, the market impact is mainly driven by the macroeconomic shock, especially the GDP contraction in 2020. In general, Covid-19 is likely to have long-lasting effects on agricultural markets, but the magnitude of the impact will depend on the economic recovery paths and the specific market.

For example, this year’s EU agricultural outlook includes a scenario in which insect farming would be used to reduce food waste by feeding it to insects. Their larvae would be used as aquaculture feed and the extracted insect oil would be used in biodiesel production. In the scenario presented, global insect farming would increase from 15% in 2020 to 50% in 2030. By 2030, the insect industry is expected to produce 23 million tons of protein meal and 2.5% of global oil consumption. After considering the impact on grain markets, the scenario concludes that insect farming could make an important contribution to the circular economy by reintroducing nutrients from food waste into the food chain. However, by reducing feed costs and supporting livestock production, it would lead to a slight increase in greenhouse gas emissions.

The report also includes projections of farm income and labor for 2020-2030, with farm income in the EU expected to increase as production and prices grow. However, the increase in income will be limited to 1% per year. The agricultural labor force is expected to decrease at a slower rate, 1% per year, due to technological advances in machinery and equipment.

Regarding environmental and climate aspects, the report provides projections on environmental and climate indicators, focusing on greenhouse gas (GHG) emissions and CO2 removal from the atmosphere. However, projections for 2030 show that GHG emissions will remain largely unchanged under the current policy framework. The report concludes that with the right agricultural practices and technologies, emissions from livestock and crops can be further reduced, as can further carbon sequestration and carbon loss prevention. The Commission is promoting the latter with its CAP reform and Green Deal initiatives.

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