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Germany Agribusiness Report Q2 2009Published by: Business Monitor International Published: Apr. 24, 2009 - 44 Pages Table of Contents
AbstractAs a reflection of the size of the German economy - the largest in Europe - and the nation's prowess intechnological development and efficient production, the agricultural sector can stand up among theworld's best in regards to productivity and total supply chain integration. Furthermore, advantageousproximity to nine bordering nations, as well as a host of regional neighbours, makes for competitiveexport activities. BMI's latest Germany Agribusiness Report analyses the industry amid a backdrop ofuncertainty and volatility as recession sweeps through the global economy, impacting on both supply anddemand fundamentals.Grains are grown extensively in the lowland plains of northern Germany, particularly wheat and barleywhere the Central European nation is positioned respectively as the second and fourth largest producer inthe EU. However we expect production to decline in both the aforementioned grains throughout theoutlook window. We feel that the planted area is going to diminish significantly, as a large global surplusand relatively weak demand growth contribute in holding prices down. Corn, on the other hand, is foreseen to post a large upswing, as producers increasingly eschew theaforementioned crops in favour of one which is growing in popularity, as an animal fodder; as a good forhuman consumption; as an input for biofuel manufacture, thus a crop which is likely to bring healthierprofit margins. We see demand growth increasing by just over 3% to 865,000 tonnes in 2013, whereasmassive output growth of 58% to 5.8mn tonnes shows that production will be heavily predicated towardsexport; similarly so with sugar, which is another biofuel crop that is expected to achieve positive growththrough to 2013. Pork is the only livestock sub-sector with a notably bullish outlook projection. We feel that thefundamentals exist to facilitate strong production growth of 17.96% although consumption is unlikely toclimb so robustly in light of the highly mature nature of the market. The industry is highly efficient,although the methods of production have been criticised in some quarters of the EU for the seeminglyinhumane way in which sows are maintained and continually bred. Despite this, the domestic surplus willexpand between 2009 and 2013, thus enabling exporters to grow revenues. Over the course of the outlook the targeting of food safety will become more pronounced as aconsequence of the various incidences that have arisen of late in the global meat and dairy industries. As aresult, the entire supply chain is predicted to exhibit greater levels of traceability, which can only serve toenhance consumer confidence and strengthen domestic and foreign sentiment towards German produce.On a similar note, Germany is well recognised as one of the foremost advocates of environmentallysustainable farming in Europe, if not the world, and is keen to adopt practices that will promote suchethics for generations to come. We see this trend continuing, with bioufuels, natural electricity generationand organic farming becoming more prevalent as the outlook progresses. Finally, the EU Common Agricultural Policy (CAP) reforms are bound to have an effect on supply anddemand fundamentals through the price dynamic. While the majority of German producers are staunchlyopposed to the phasing out of direct farm payments, subsidies and quotas, in the belief that they will beunable to produce sufficiently to earn a decent living, it should be noted that for over half of domesticfarms, agriculture is a source of secondary income, separate from the main breadwinning activities. Webelieve that it is the majority of these non-commercial farms that are likely to exit the industry in theabsence of copious support measures, while those with more serious trade ambitions may be able toconsolidate their position in the industry by expanding holdings and becoming more productive. Get Full Details About This Report >> |
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