January 15, 2008

EU efforts to up grain production unsuccessful

Recent efforts of the EU to significantly augment its agricultural produce have failed despite the suspension of limits to the grain crops and the escalating prices.

The EU has scrapped last year the requirement for farmers to set aside 10 percent of their land. Yet, this did not do much to increase the overall production in the region. In fact, France and Germany, which contribute to half of the EU-15's total grain production, only increased the sowing of winter crops by less than 2 per cent.

The failure to boost production points to a longer trend of high grain prices, threatening a second wave of food inflation.

France agriculture statistics office reported a modest rise of 1.2 per cent in winter crops, although it expressed probability of farmers raising their spring crops. France is currently the largest agricultural producer in Europe.

Germany reported a meager 1.9-percent increase.

German and French farmers were observed to switch between corps instead of taking advantage of the waived set-aside rule. 

Official data show that German and French farmers, instead of taking advantage of the suspension of the set-aside rule and expanding their arable land, have mostly switched between crops, with an increase in the sowing of wheat offset by declines in rapeseed.

EU's failure  has been compared to a similar pattern in the US, where farmers barely increased their sowing of winter wheat in spite of surging prices and the lowest wheat inventories since 1947.