We see the most growth potential for Poland's livestock sector owing to increased export potential to the EU and Asia. The livestock industry in the country is relatively price-competitive compared with industry majors such as Brazil and the US, but it does not necessarily have the right export networks and infrastructure to rival these countries. We believe a law prohibiting kosher beef production, the horsemeat scandal and recent quality concerns in the beef industry will limit growth potential in that segment, but poultry and pork are likely to continue to perform strongly. For grains, we are turning more positive on corn production prospects in the long term, as the country is investing in area expansion for the crop. For sugar, we see growth potential limited by the recent U-turn in the EU's biofuels policy, which restricts the amount of food crops to be used in the production of ethanol.
- Corn production growth to 2017/18: 71.8% to 4.2mn tonnes. This extremely high number is due to base effects but also to recent investment in expansion in the crop on the back of high global prices and tight regional markets. Now that global prices have moderated, we expect production growth to be more limited; expansion will come mainly from yield improvements rather than increases in area planted.
- Beef consumption growth to 2017: 8.2% to 187,800 tonnes. Over the past decade, beef consumption has declined rapidly in the wake of bovine spongiform encephalopathy and with consumers believing that poultry is a healthier choice. The horsemeat scandal, as well as recent quality concerns, could affect consumption growth over the long term.
- 2014 real GDP growth: 2.8% (up from an estimated 1.6% in 2013; predicted to average 3.1% over the period 2013-2018).
- Consumer price inflation: 1.3% year-on-year (y-o-y) on average for 2014 (up from the 1.0% y-o-y estimated for 2013).
- BMI universe agribusiness market value: 5.7% y-o-y decrease to US$26.7bn in 2013/14, forecast to increase on average by 3.5% annually between 2012/13 and 2017/18.
We have revised up our EU dairy production forecasts for 2012/13 and 2013/14, as the outlook for the industry improved significantly over the second half of 2013. Moderating grain prices globally and in the EU have helped dairy producers' margins and encouraged a recovery in milk deliveries in the union. The long-term contraction trend of the EU-28 dairy herd appears to have stopped thanks to favourable farm-gate prices for milk. For 2013, the US Department of Agriculture estimates dairy cow inventories remained stable. As a result, we do not forecast milk production declines in the coming years but expect production to stabilise around 144.7mn tonnes in 2013 and 2014.
We have turned more positive regarding poultry production in the EU-28 in 2013 and 2014, as the sector has benefited from strong regional and export demand growth. Poultry is less affected by periods of economic weakness, as it is cheaper and more convenient to cook. EU-28 production in 2013 is estimated to have increased thanks to higher broiler meat production in all major EU producing countries, including the UK, Benelux, Spain, Poland, Germany, Italy and France. In France, poultry production decreased in France in 2012 on the back of the demise of Doux, the largest French broiler producer. However, French output was expected to rebound in 2013 as competitors replaced the company's lost market share.
We forecast overall wheat production in the 28 countries of the EU to stagnate at around 141.0mn tonnes in 2014/15. Farmers have continued to favour wheat over barley and corn, as wheat prices have remained more competitive, and weather conditions during plantings have been quite favourable, supporting yields. Local industry sources have indicated that of the 141mn tonnes of wheat expected to be produced in the coming season, 137.5mn tonnes will be soft wheat and the rest will be durum wheat. As a result, soft wheat stocks are forecast to increase from 13.1mn tonnes to 15.8mn tonnes in 2014/15, according to Strategie Grains.