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Market Report, "Germany Agribusiness Report Q2 2014", Published

Fast Market Research recommends "Germany Agribusiness Report Q2 2014" from Business Monitor International, now available

 
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Boston, MA -- (SBWIRE) -- 05/05/2014 -- Pork producers will face rising costs due to the staggered implementation of minimum wage legislation beginning later this year, while beef production is expected to show weak growth as dairy herds recover. Dairy farmers are still faced with a difficult climate, with many smaller producers expected to be faced with a choice of ceasing operations or joining cooperatives after the removal of quotas in 2015. Even for the big players, milk prices remain perilously low, and it is only the strength of exports that provides a silver lining. Wheat prices are expected to lead farmers to favour increasing acreage of the crop at the expense of corn, barley and sugar.

Key Forecasts

- Milk production growth to 2018: 5.8% to 31.9mn tonnes. Modest growth will be supported by export demand and higher prices and held back by sluggish domestic consumption and the demise of smaller producers.
- Pork consumption growth to 2018: down 1.2% to 4.3mn tonnes. Demand for pork has been on a downward trajectory since 2007 and we see no let up in this trend as consumers turn to healthier options.
- Wheat production growth to 2017/18: 15.2% to 25.8mn tonnes. Wheat will gain some ground at the expense of other grains and sugar beet.
- 2014 real GDP growth: 1.9%; up from 0.4% in 2013 and forecast to average 1.5% from 2014 until 2018.
- Consumer price inflation: 1.7% y-o-y in 2014, up from 1.6% in 2013.
- BMI Universe Agribusiness Market Value to shrink by 2.9% to US$34.1bn in 2014. Expected to grow by 7.1% to US$37.6bn from 2013 to 2018.

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Industry Developments

The controversial low-wage employment policies of German meat producers have been one of the first casualties of the Grand Coalition formed between the CDU and SPD in October. The SPD made their entry into the agreement conditional upon the introduction of a minimum wage, and under pressure from the unions the meat industry has been forced to accept a basic hourly rate of pay of EUR7.75 from July 2014 that will gradually increase to EUR8.75 by December 2016. With the industry's competitive advantage soon to become a thing of the past we have revised down our forecasts for pork production out to 2018.

Dairy cooperative Arla announced in February 2014 its plans to boost exports across its European member groups. Included in the US$400mn package is a US$23mn funding package for its Pronsfield site in Germany which exports UHT milk and milk powder to the growing markets of Africa and Asia.

As many as a third of Germany's 15,000 pig farms were still not compliant with EU legislation on housing of pregnant sows and waste processing by February 2014. According to Der Spiegel, the EU is considering taking Germany to court over these continuing infringements.

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