EU Says Agriculture Prices Will Be Firm Through 2022

Agriculture prices may be firm through 2022 as demand increases for food and biofuels while productivity growth slows, the European Commission said.

Grain supplies may be tight with “prices remaining above historical levels,” the commission, the EU’s executive arm, said today in a report on its website outlining the agricultural industry’s prospects by 2022. Production in the 27-country bloc may become more concentrated in wheat and corn at the expense of other grains including barley.

“The cereal outlook points to high prices, albeit lower than present levels, and the EU is expected to be able to maintain its position as a net exporter,” the commission said. “Markets are expected to remain tight, and thus price rallies could occur in the event of production shortfalls.”

Total grain production in the EU may rise to 309 million metric tons by 2022, compared with output of 279.3 million tons in 2012, the commission said. Consumption may be 299.1 million tons by 2022, up from 276.2 million tons a decade earlier.

EU meat production may contract by 2 percent during the next two years as the economic downturn crimps demand while new animal welfare regulations may limit supplies, the commission said. Output may rebound by 2022, reaching almost 45 million tons, similar to the amount produced in 2011, according to the report.

Before it's here, it's on the Bloomberg Terminal.