Prospects for Agricultural Markets and Income in the EU 2013-2023

The medium - term outlook for arable crops is relatively positive thanks to solid world demand and firm prices. In the EU, feed and food demand are expected to increase only marginally , with the biofuel market remaining the most dynamic demand factor. On the supply side, growth depends on better yields, as arable area is expected to decline slightly (in line with the long - term trend). Overall, the projected growth in domestic consumption of cereals, oilseeds and sugar is largely dependent on the assumptions for bioenergy use. It is assumed that progress towards meeting the Renewable Energy Directive (RED) target of 10% of renewables in energy share will continue and as of 2020 biofuels will contribute to 8.5% of liquid transport fuels; the remainder will be met from other renewable energy sources , e.g. electric cars.

The medium - term prospects for the EU cereals markets are characterised by relatively tight market conditions, low stocks and prices which are expected to remain above their historical averages. These developments are driven by moderate supply growth reaching 316 million tonnes by 2023, mainly the result of low annual yield growth rates (0.6% on average) and an increase in the domestic use of cereals in the EU, most notably due to growing demand for ethanol in the framework of the RED. Some reallocation between crops in the context of a stable overall cereal area is expected, with maize and common wheat further increasing their share (up to 18% and 41% respectively) at the expense of other cereals. The growing demand for rice will be satisfied by increasing imports, reducing the EU self - sufficiency slightly to 64%.

Similar drivers impact upon the medium - term prospects for the EU oilseed markets. Supply growth is driven by moderate yield growth and to a lesser extent by a slightly expanding oilseed area. The expected increase in domestic use of oilseeds in the EU would also be driven by additional demand for vegetable oil as biodiesel feedstock , while food consumption of vegetable oil stays constant at best. The medium - term outlook for sugar beet and sugar is mixed. Driven by expectations on world prices, growing demand for ethanol and the abolition of the quota scheme in 2017, EU sugar beet production is projected to expand in the coming decade; additional volumes will be used mainly to produce sugar rather than ethanol. With no more quotas, out - of - quota and in - quota prices will progressively merge and the production of ethanol from sugar beet will be less competitive. In addition, isoglucose is expected to increasingly replace sugar in selected food consumption uses, following the expiry of isoglucose production quotas in 2017