Ref. Ares(2021)7938574 - 22/12/2021
COV(21)2290:2 -
Art. 4.1(b) Privacy
Brussels, 19th April 2021
IMPACT OF COVID-19 ON THE AGRICULTURAL, FORESTRY
AND FISHERIES SECTORS
COPA AND COGECA ASSESSMENT
February 2021 - April 2021
This note provides an update to the Copa and Cogeca assessment COV(21)770. For additional
information, please consult Copa and Cogeca’s previous assessments. This document is a non-
exhaustive compilation of contributions received from Copa and Cogeca national member
organisations.
Introduction
In general, while the market situation is stable, it is highly fragile and uncertain. The closure of
many sales channels continues to put enormous pressure on various sectors (see report below).
In addition, the agri-food sector is still adapting to the increase in export costs due to Brexit.
In spite of the uncertainties, several economists have predicted some positive developments for
the second and third quarter with the vaccine rollout across the EU and with the potential
relaxation of some restrictions. Nonetheless, Mother Nature has reminded us all that agriculture
is very exposed to external factors that lie out of farmers’ control. The recent spate of frost has
inflicted considerable damage on many farms across Europe. While it is too early to quantify the
damage, many farmers expect a historically low harvest. While not all regions or sectors in
Europe have been affected to the same extent, this dynamic situation is evolving at the time of
writing. The Copa-Cogeca Praesidium on 22nd and 23rd April will analyse the situation.
Furthermore, the suspension of tariffs related to trade disputes provided some relief to some
agri-food products (mainly wine, dairy, etc.). For Copa and Cogeca, this move is of particular
importance for the EU and US farming sectors. European farmers and agri-cooperatives
encourage both partners to use these four months to find a permanent solution all the while
preventing agriculture from paying a high price for a conflict that they are not involved in. The
Airbus/Boeing case is not the only source of trade friction in the agricultural sector between
both partners. There is a risk that a similar development could arise in the framework of the
digital tax. In addition, Spanish black olive producers still have to face a 35% import tax because
of a decision made by the US Administration in 2018.
Moreover, the latest trade statistics confirmed that in 2020 the value of EU agri-food exports
increased to €184.3 billion (up by 1.4% on 2019). Once again, the agri-food sector is proving its
resilience. EU agri-food products are recognised for their quality, sustainability and our high
standards in terms of food safety, the environment, plant health, animal health and welfare. The
EU agri-food sector not only guarantees food security in the EU but it also drives the EU
economy, contributing a surplus of €62 billion to the EU trade balance. How many sectors can
help to protect the environment and at the same time create jobs and growth in rural areas?
Sectoral analysis:
Wine
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The recent wave of frost from 6th-8th April has inflicted considerable damage on vines, with
France and Italy being hit the hardest. In certain regions, the situation is dire, as everything has
been destroyed including the new buds. While it is too early to quantify the damage,
winegrowers in France expect a historically low harvest and winegrowers in Tuscany fear losses
could reach up to 50% of the new plantations. According to current estimates, 30% of the
harvest has been lost in France, which is equal to a loss of €2 bn at the production stage alone;
that is to say without counting the value added by bottling, designations or exports (this means
that the real loss could be three times as high). While other EU countries have not yet been
affected by the frost, draughts (e.g. in Spain) are expected to result in lower production.
The closure of the HoReCa sector and the collapse of agrotourism have further aggravated the
situation, stifling demand for higher segment EU wines and boosting demand for cheaper
imported wines. Furthermore, wine consumption has significantly decreased, and exports have
dropped, both in value and volume. This has led to an exponential rise in stocks, which is
negatively impacting the market. In this precarious context, winegrowers have lost a substantial
share of their direct sales at wine cellars. Off-trade sales and the recent suspension of US tariffs
have yet to offset the losses.
The European wine sector needs an extraordinary budget, equivalent to an annual budget of the
National Support Programmes for the wine sector and that comes from outside the CAP, as well
as crisis management tools for one more year. Additionally, in order for winegrowers to cope
with the plethora of challenges and to be able to plan ahead, it is critical that the validity of
planting and replanting authorisations for vines expiring in the year 2021 be extended.
Rice
Although the recent container shortages might have reduced imports slightly, the market
situation remains fragile. The Commission report has recognised the cumulative impact of trade
agreements (for both the conservative and ambitious scenario, it presents an increase in imports
of between 2.7% and 3.9% by 2030). Therefore, Copa-Cogeca asked the Commission to extend
the safeguard measures on rice from Cambodia and Myanmar beyond the expiry date and to also
apply these to Japonica. Furthermore, we support the EU action to reassess the status of
Myanmar as our close trading partner, given the unfortunate recent political developments in
the country. Copa-Cogeca believes that the Commission can go further and that the trade
preferences on rice should be withdrawn until the situation improves.
Honey
The cold weather has affected the development of bee colonies (the laying of larvae will be
delayed by at least three weeks). In Italy, Hungary, Romania and France, the production of
acacia honey is expected to be very low/almost non-existent.
Pigmeat
African swine fever continues to spread internationally in wild boar and domestic pigs, which is
putting pressure on the EU market. While some regions in Europe are ramping up the
management of wild boar populations, a lot of work remains to be done. The common market
situation in Europe is recovering thanks to developments in international trade and especially
the very high demand from China. Prices outside Europe (China, USA) are very high and the
outlook looks very positive. The prices are now finally covering the costs, but due to the
increased input prices they are still not sustainable in the long term.
Poultry and Eggs
The sector is slowly recovering from avian influenza. However, this week, veterinary authorities
have reported some major outbreaks. Overall, the number of cases seems to be decreasing and
countries are already lifting the housing orders. Several months ago, the egg sector in some MS
faced more serious issues. These were mainly due to the closure of the food services sector and
the lack of tourism. While the situation has improved a little due to the high demand over
Easter, the problems may reappear in the coming weeks.
Flowers and ornamental plants
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In the flowers and ornamental plants sector, the situation varies considerably from one country
to another. In some MS, sales of all products are increasing, in others, income at the beginning
of the year was below the level of that of last year – mainly due to the closures, frost and cold
weather. The wind, hail and frost in early April have also caused considerable damage to
summer flowers in some MS. While growers were trying to prevent frost damage by irrigating
their crops, they very often lack equipment appropriate to the specifics needs of their plants. It is
important to ensure that the garden centres remain open over the course of the next few weeks
as spring is the most important time of the year. The importance of the sector for the well-being
of the population needs to be underlined.
Dairy
EU cow milk collection slightly dropped in January 2021 compared to 2020. The decrease in
milk collection in the first month of 2021 translates into a production decline for most dairy
products: SMP (-5.6%), butter (-3.9%), fermented milk (-3.7%) and cheese (-1%), except for
WMP (+5%) and drinking milk (+0.1%). The average EU farm gate milk price was reported to be
0.9% lower than a year ago but 2.9% above the last five-year average. Average EU dairy prices,
especially SMP, WMP, butter and whey powder prices (highest level since 2017), have
continuously increased since the beginning of the year. Among the main drivers that will
influence the market are oil and feed prices increasing, the uncertainty regarding COVID-19 and
the negotiations between the EU and the UK.
Beef
COVID-19 has clearly had an impact on veal and high value cuts, as the closure of the HoReCa
channel has affected cuts and products that are mostly consumed in restaurants. Production on
average in the EU has decreased since 2020, especially the rearing of calves. Prices for all
products, except once again for calves and veal, have increased year-on-year. That said, the
latter have seen a positive development over the past few weeks (probably due to the
aforementioned decreased production). With regard to trade, the EU imported more beef in
2020 than in the previous year (308,000 t in 2020 vs 248,000 t in 2019).
Sheepmeat
Light and heavy lamb prices are increasing, both year-on-year and over the past few weeks.
Production dropped by 1.8% between 2019 and 2020. While EU exports have decreased by 1%,
imports are down by one third due to the temporary reduction in the flows from NZ and AU.
This exceptional situation is expected to be temporary.
Olive and Olive Oil
The market situation for the olive and olive oil sector has been quite stable, and there are already
clear signs of recovery. Olive oil production in 2020-21 is expected to increase by 10% compared
to the previous year. EU prices are steadily moving upwards, despite still being below the five-
year average. According to the Commission’s short-term outlook for agricultural markets, EU
consumption is growing, exports remain stable, and imports and EU stocks could decrease. The
recent suspension of the US tariffs and a significant drop in production in third countries, most
notably in Tunisia and Turkey, have contributed to this.
Spirits
The spirits sector market situation varies significantly from one country to the next. In some
Member States, the market is quite stable with consumption at home on the rise. However, in
others, COVID-19 has caused a significant drop in production and sales for both premium and
standard products. Exports and imports have also dropped. Small and medium producers have
been affected the most by the closure of the HoReCa sector.
Organic Farming
No market disturbances have been reported, except for an overall organic feed shortage due to
trade developments. On 25th March 2021, the Commission presented its Organic Action Plan, in
which it outlined 23 actions to achieve the target of at least 25% of EU farmland under organic
farming. Copa-Cogeca has welcomed the market orientation of the Action Plan and the
Secretariat is preparing a detailed reaction with the Working Party on Organic Farming.
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Fruit and vegetables
Consumers in the EU have increased their consumption, especially of citrus fruits, grapes,
apples, tomatoes, and prepared tomatoes as a result of COVID-19 and the health situation.
Imports, mainly of citrus fruits and fresh tomatoes, have increased more than exports, which
remain stable. The price of apples is at a record high except in Poland. During the winter season,
the tomato prices decreased. Fresh vegetables such as asparagus, artichokes and lettuce are
suffering due to the closure of the HoReCa sector. Access to labour mainly from non-EU
countries, rising costs for exports (access to containers), and higher production costs remain an
issue in certain regions. Jams, juices, cherries and citrus fruits are benefiting the most from the
suspension of the EU-US retaliatory tariffs. The postponement of the phytosanitary certification
obligation from April 2021 to January 2022 and of physical checks from July 2021 to March
2022 for most fresh produce entering the UK is a welcome move. At this stage, it is difficult to
gauge the exact impact of the wave of frost on orchards at EU level. After weeks of mild weather,
several regions in Europe have experienced an exceptionally severe cold spell, which has halted
flowering and seriously threatened fruit production. While other regions have experienced
normal weather conditions thus far, there is a risk of frost until mid-May in Belgium, the
Netherlands, Northern Germany, Sweden and Poland, etc. Several tens of thousands of hectares
of orchards of peaches and nectarines, apricots, almonds, nuts, plums, cherries, kiwis, pears and
apples have been damaged by frost in France, Italy, Spain, Southern Germany, Austria, Slovenia,
the Czech Republic and Greece. Early vegetable seedlings (beetroot, carrots, peas) have not
sustained as much damage as fruit trees. The cold weather is having a negative impact on fruit
and vegetable consumption. The entire supply chain is suffering from the exceptional weather
conditions. In some regions and market segments, in addition to extreme weather conditions,
the sector is suffering from the consequences of new pests and the COVID-19 pandemic.
Potatoes
The closure of the HoReCa channel has resulted in lower demand for certain market segments.
Processing industry activity has not picked up. The spot market prices remain stable at around
€50-60/t depending on the variety. Growers will have to manage surpluses including for organic
potatoes. Seed potatoes are not covered by an EU-UK equivalence agreement.
Cereals
European cereals are competitive on the world markets given the export taxes imposed by
Russia on wheat, corn and barley. However, the prices have fallen since the beginning of March,
more sharply for wheat than for corn. The EU ending stocks for this marketing year are expected
to be lower. The initial forecasts for cereal production are expected to be above the trimmed five-
year average for MY2021/2022 as the weather conditions are favourable. Greater price volatility
is expected if the weather conditions are extreme or they delay the upcoming harvests. The
recent cases of frost damage are localised in some regions. At this stage, it is difficult, if
impossible to gauge the exact impact of the cases of frost at EU level. Durum wheat and winter
barley are assumed to be more susceptible than winter wheat. There has been an upward trend
in the price of fertilisers, mainly UAN, AN, CAN, Urea, since May 2020. The dried fodder sector
is experiencing difficulties with exporting dried fodder on the international markets due to the
lack of containers and higher freight costs. Planting of spring crops is delayed in a number of
regions.
Oilseeds
The sector is majorly affected by the rise in oil prices, dynamic demand for palm oil, labour
shortages and the introduction of an export tax in Malaysia, the lowering of import taxes in
India to protect the domestic market from rising prices, uncertainty regarding soya bean
shipments from Argentina, and the fact that oilseed prices have been on an upward trend.
However, the recent move in the €/$ exchange rate weakens the competitiveness of European
oilseeds. The EU ending stocks for this marketing year are expected to be lower. Attractive
producer prices are leading to an expansion in cultivation area and therefore safeguarding
feedstock supply to EU oil mills. At this stage, it is difficult, if impossible to gauge the exact
impact of the recent frost at EU level. The flowering of rapeseed lasts several weeks.
Sugar - ethanol
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There are great uncertainties. The lower demand for liquid fuels and the BRL/$ exchange rate
do not stimulate the recovery of the world sugar market. However, the world ending stock in
September 21 is expected to be at the lowest level since 2017. Sugar prices on the European
markets are lagging behind. The current sugar stocks are below the 2019/2020 level. Several
tens of thousands of hectares need to be resown mainly in France (35,000 hectares), Southern
Germany (5,000 hectares), the Czech Republic, Hungary and Slovakia due to the April frosts.
Aquaculture and Fisheries
Although the market is stable, the sector is still suffering from the closure of the HoReCa sector.
An increase in the cost of inputs (mainly feed) and in imports has been reported.
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