The European Union is a significant producer of grains, accounting for over 300 million of the world’s 1,988 million tonnes (Mt) in 2014. The bloc continues to account for increased production, but this is largely a consequence of its expanding political footprint (new members).

But while it is a significant producer, it still operates a level of internal protection by controlling import quantity from some destinations and using levy protection where products are imported at prices below threshold levels.

That said, Europe now has an open and virtually global market for grain, and internal prices are heavily influenced by global prices. But in a controlled agricultural environment like the EU, policy can have a direct impact on land use and agricultural production. So, as we face into the next five years of the new Common Agricultural Policy (CAP), it is at least possible that the new greening requirements will have an impact on internal grain production and this could impact on all markets.

The structure of EU production

In recent years, the EU has produced between 280Mt and 320Mt of cereals, depending on the season. The fluctuation in production is mainly influenced by weather, which can impact on autumn versus spring plantings, or impact positively or negatively on the growing season.

That said, the production trend is rather flat, with new member states being the major reason for the higher total production over time.

Gone are the days when the EU led the way in the technological development of yield enhancement. Governments and the EU itself have almost completely withdrawn from production-based research and plant breeders have directed their investment into the more lucrative crops and markets that permit GM crop production. The net consequence is a flat, if not decreasing, crop yield trend over time. But this is within the EU – the global yield trend remains upwards, but off a lower yield base.

Total production has followed a similar trend and Figure 1 shows that cereal production has oscillated around the same production level from 2002 to 2012. Sugar beet production is broadly similar or declining, but EU potato production is showing a definite downward trend over time, as is also the case in Ireland.

The only crop category to show a definite increase in production over this period was oilseeds. This was heavily driven by the demand for rapeseed oil for biofuel production in Germany, in particular.

But demand was also helped by the increased demand for oilseed cake as a protein source in response to increasing problems accessing non-GM soya.

Cereals

Cereals are produced in virtually every country in the EU, but to greater or lesser degrees. It is the major producers that tend to be the exporting countries and so these are the ones that matter most to trade and markets. The average cereal production in EU member states between 2002 and 2013 is shown in Figure 2.

By far the major producer is France, with over 65Mt, on average, over this period. But in individual years, this has been as low as 64Mt and as high as 70Mt. Then comes Germany with over 45Mt, which has varied from 39Mt to 51Mt during this same period. Poland is next biggest with about 27Mt, ranging from almost 22Mt to almost 30Mt.

Next is the United Kingdom with an average of 21Mt, ranging from 19Mt to 23Mt. After these, come Spain with 20Mt (13 to 24Mt), Italy 18.5Mt (15 to 22Mt), Romania 16.5Mt (8 to 24Mt) and Hungary 13Mt (9 to 17Mt). The variation in production shown is largely a consequence of climatic impact, with drought being one of the major influences.

Many other countries also produce significant quantities of grain, but this tends to be under 10Mt. So, if there are significant alterations to production practices in places like France, Germany and the UK, these are likely to have the biggest impact on us in Ireland. The area within the EU devoted to cereals tends to be between 55 and 58 million hectares annually.

Land can move in and out of crop production and this may explain a portion of the fluctuating area.

But much of the area movement is likely to be between crops, with oilseeds and protein crops accounting for a big part of the area movement. This could be significant as we move into a greening era, as some of the main countries have a significant portion of their crop area in monoculture, especially to maize.

Oilseeds

Over the period shown in Figure 1, oilseed production has trended upwards, especially in latter years. This is driven by demand, but ultimately by prices, which improved profitability at farm level.

Oilseeds, like cereals, are an amalgam of a number of crops, with oilseed rape being the most important, but sunflowers have also become increasingly important with the advent of new member states to the east.

Between 2009 and 2012, the average production of oilseed rape has been between 19Mt and just over 21Mt. And in the same period, sunflower seed production has ranged from 6.8 to 8.4Mt.

Within the EU, the main oilseed rape producer between 2009 and 2012 was France with 5.3Mt and it is closely followed by Germany at 5.2Mt.

But the production in Germany has been decreasing in response to evolving internal renewable energy policy. The next biggest producers are the UK with 2.37Mt, Poland 2.1Mt and Czech Republic with 1.1Mt.

It is worth noting in these numbers that both France and Germany appear to have decreased production in recent years, despite having increased considerably since 2000. Both Poland and the UK have steadily increased rape production since 2000. And Italy and Spain were relatively big producers of rape back in the early 2000s, but production has fallen substantially since then.

Protein crops

Protein crops make up another portion of the variable acres, as sugar beet and potato areas tend to be relatively stable from year to year. The three major protein crops are peas, beans and lupins.

France is by far the biggest producer of peas in the EU at 556,000t in 2014, but this is down from nearly 2Mt back in 2000. The current production level has been relatively stable for a number of years, but the annual statistics show that production can occasionally be increased considerably.

Germany produced 150,000t in 2014 and this too is back from over 400,000t in the early 2000s. Next biggest is Spain with 136,700t in 2014 and this is now higher than was produced at the beginning of this millennium.

France is also the biggest producer of beans in the EU, with almost 300,000t in 2014. This production level is higher than it was in 2000, but lower than it was in the mid 2000s. Bean production has also increased in Italy where around 100,000t was produced in recent years, up considerably since the early 2000s.

Spain can be another big bean producer, but it does have large annual production variability. Other countries, such as Finland, Lithuania, Latvia, Poland and Romania, produce significant quantities of beans, but production can vary considerably from year to year.

Lupins are the other main protein crop, but production levels are much lower. Poland is the big producer, but annual production has varied from 6,500t to 126,200t in recent years. Germany is the other main producer with around 30,000t in recent years.

Soyabean production is quite big in a few countries, with Italy producing over 500,000t in recent years, followed by Spain on about 130,000t, France and Romania at about 120,000t (the latter is quite variable) and Austria at about 95,000t and increasing.

These areas comprise the bulk of arable land use in the EU and it seems likely that any enforced alterations of land use due to crop diversification requirements will still involve a mix of these crops. Cropping decisions will always move to select the next best crop option.

Global conditions

In the crop market, global conditions and prices are likely to be more influential than the make-up of the EU market. So, despite the fact that there will be some crop substitution within the EU, global market forces will continue to dictate prices which, in turn, will influence farm practices.

As is the case in 2014, area and production levels in regions outside of the EU – such as the US, Russia, Ukraine, Brazil, Argentina and Australia – will remain the major forces within crop markets.

Availability of exports from these major regions, or the lack of them, will continue to impact heavily on annual market prospects and prices.