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Greece Agribusiness Report Q4 2009Published by: Business Monitor International Published: Sep. 25, 2009 - 65 Pages Table of Contents
AbstractThis report focuses on Greek grain and rice production, the livestock industry for poultry, beef and porkand the outlook for the dairy industry. It considers recent developments in these sectors and looks at howproduction levels and consumption trends are likely to play out to the end of our forecast period in 2013.The olive, fruit, goat and sheep farming sectors have not been considered in depth in this particular report,but it is worth noting that these are some of the country's most successful agricultural products andcontribute to Greece's important food and drink industry and export market (they are considered in theBusiness Environment Overview). Agricultural development has been largely dictated by Greece'smountainous terrain, fragmented island geography and southern Mediterranean climate, hence olives,fruit, goats and sheep generally thrive. However, while olive production rose to 1.79mn tonnes in 2008from 1.75mn tonnes the year before this was well below production figures for 2004 and 2005, due to thedevastating fires in July 2007 that swept across the south of the country. Reuters reported fires in centralGreece in August 2009. According to Trade With Greece, published by the Athens Chamber of Commerce and Industry, in linewith EU policy the Greek government has called for environmental issues to take centre stage. Minister ofRural Development and Food Alexander Kondos is quoted as saying that 'quality, ecology anddevelopment' will make the country's agricultural sector more competitive and better adapted to thedemands of the domestic and international markets, and also ensure protection for consumers, farmersand the environment. Organic production began in Greece in the early 1980s in response to the ecological movement. Inresponse to the demand for specific organic foods from countries such as Germany and the Netherlandsfarmers began to produce organic crops such as olives. Following the introduction of hectare subsidies in1996 another wave of farmers went organic. Throughout the late 1990s it was estimated that the numberof organic farms in Greece grew by 50-120% a year. The international reputation for the quality of Greekolive oil has made it a lucrative product for farmers. According to Trade With Greece, the country isranked 16th in the world on the basis of certified organically cultivated areas. However, according toEurostat figures, the percentage of utilised agricultural land dedicated to organic production and the fullyconverted crop area fell in 2007 compared to two years before. Conditions are often difficult for wheat and corn growers and there could be problems in the future. Thereare concerns that the climate is getting drier and there is also evidence that traditional irrigation methodsmight need to change. According to Eurostat Greece's irrigable area (the maximum area which could beirrigated using the equipment and quantity of water normally available), was 1.56mn hectares (ha) in2007, down from 1.59mn ha in 2005. The preponderance of small-sized, family-owned dispersed plots;concerns about changes in EU subsidy levels and the country's negative stance on genetically modified(GM) products complicate matters. The government is hoping that the construction of biofuel facilities will help boost crop production.Hellenic Sugar hopes to convert two of its production sites into bio-ethanol plants, to help restructure theindustry in line with the EU sugar reforms and meet Greece's obligations under the EU RenewableEnergy Directive. According to an article in Athens News in February 2008, 13 companies were alreadygenerating up to 114,000 tonnes of biodiesel, 10-30% of which was derived from locally sourced rawmaterials, mainly sunflower oil. Production of sunflowers has increased in recent years as a result. However, it is unclear how this crop production for fuel policy will play out. An article atBalkananalysis.com speculates that large investors looking for entry to the market may be more interestedin investing in established biofuel businesses than in constructing new plants in the current economicclimate. However, the EU's approval of temporary anti-dumping and anti-subsidy duties on imports ofbiodiesel from the US could help boost local production. Production figures for pork, beef and veal are forecast to fall, however growth is expected in the poultryindustry, with production forecast to increase by 19% between 2009 and 2013. Recent improvements inGreek poultry farming methods and increased consumption suggest continued growth. The dairy industry is the third most important sector in Greek food and drink production representingover 17% of total production value. Cheese is a popular product and demand is expected to keep rising,although because of recession should steady this year. Feta cheese is a traditional Greek product and hasfound a role in changing dietary trends. There are further opportunities for other dairy products.Rice production and consumption is also anticipated to rise, thanks to improved yields, furthermechanisation and its rising popularity with consumers. The EC Monitoring Agricultural Resources Unit(MARS) noted that Greece is likely to have a good season with a high yield this year. Tobacco and cotton have traditionally been important crops, but production has declined in recent years,mainly in response to EU decisions to reduce subsidies. Greece has one of the highest per capita EUCommon Agricultural Policy (CAP) funding levels and some of the farmers have become subsidydependent.Kathimerini reported in June the health minister saying that restrictions on smoking in publicplaces due to start on July 1 would be enforced. Smoking was banned in offices. Food and drink exports and imports have been rising, imports at a quicker rate. However, BMI forecaststhat due to increased investment in the processed foods sector the food and drink trade balance shouldapproach equilibrium by 2012. According to Invest in Greece (the official investment promotion agency)food and drink account for 18.3% of the country's exports by value and as such exports increased by11.2% during the first half of 2008 compared to 2007. Also, food and beverage is the most dynamicsector in Greek manufacturing, accounting for 25% of turnover, 24% of employment and 25% of totalinvested capital. The biggest overriding problem for countries around the world has been the global economy. Fallingcommodity prices have angered Greek farmers who, in January 2009, came out onto the streets to protestand demand extra subsidies. There were also reports of stock-piling cotton, wheat and corn as farmersrefused to sell at the lower rates. We reported in August 2009 that while we expect the worst of thedeclines in grain prices are behind us, we foresee further volatile trading in the short term. We expect thatgrain prices will adopt modest uptrends over the latter half of the year, following the broad-basedcorrection in grains over June and July. However, various markets are at different stages of recovery andthere are some contrasting short-term prospects. September wheat looks weak and could be heading lowerin the short term. Prices in general have become a sensitive issue. An article by Reuters notes that the lack of competition,especially in the wholesale market, is partly to blame for some food prices in Greece exceeding theeurozone average. Part of the government's answer is to strengthen the authority of the CompetitionCommission to fight cartels, however, a commission official was recently found guilty of attempting toextort money from a dairy. In 2007 the Commission fined seven dairies for forming a cartel to fix milkprices. Vivartia, the leader in the fresh milk market, has recently announced a 25% cut in the retail priceof its Delta brand fresh milk, while in the same month dairy farmers handed out free bottles of milk in themiddle of Athens, protesting against the prices they receive. Reuters, citing economic journal Imerisia,reported that Vivartia's fresh milk sales in supermarkets rose from April to mid-June, increasing marketshare to over 32% after cutting prices. The Greek economy has been doing well in recent years, evidenced by a solid rise in GDP and real GDPgrowth. However, the global recession is taking its toll. BMI is predicting GDP growth dragging down to-3.5% in 2009 from 2.9% in 2008 and 4.0% in 2007. The recession has affected food consumptionpatterns. Unemployment is forecast to rise to 11.0%, from an estimated 7.7% in 2008. Get Full Details About This Report >> |
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