December 15, 2009

French cereal output rises in 2009, prices tumble

France's agricultural production in 2009 was marked by strong cereal and oilseed harvests and a sharp decline in prices that slashed farm revenue, data released Monday (December 14) by state statistics office Insee show.

The value of all French agricultural production in 2009 excluding subsidies fell 8.2% or EUR5.5 billion (US$8.05 billion) on- year due to the strong price declines.

Cereal production in 2009 went up 0.4% from the record-high levels in 2008. A decrease in land under cultivation this year, mainly for soft wheat, was compensated for by improved yields due to favourable weather, the report says.

However, cereal prices fell for the second year in a row in 2009, after rising sharply in 2006 and 2007. They were down 23.9%, in part due to competition from the Ukraine.

Prices for soft wheat, the principal French cash crop, fell 25%. France is Europe's largest grower of wheat.

French agricultural prices in general, including livestock, were off 8.8% on the year, while the volume of production rose 0.7%. Total production was valued at EUR61.5 billion, an 8.2% decline on the year.

With prices falling, the value of French cereal harvests last year fell 23.7% on the year to EUR8.1 billion.

However, the fall in corn prices was more moderate at 7%. Global corn consumption is expected to rise strongly, reflecting the effects of ethanol demand in the US as production decreases worldwide.

Net revenues of French farmers plunged 35.3% this year, after falling 20.4% in 2008, the report shows.