Focus on France

by Chris Lyddon
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France has the Europe Union’s biggest grains sector and is among the world’s biggest exporters of cereals, playing an important role in supplying North Africa in particular.

The International Grains Council (IGC) puts total French grain production for 2012-13 at 67.8 million tonnes, compared with the previous year’s crop of 63.7 million tonnes. The French wheat crop in 2012-13 is put at 37.7 million tonnes, up from 36.1 million, with the maize crop put at 15.7 million tonnes, down from 15.9 million. The IGC put France’s barley production in 2012-13 at 11.4 million tonnes, up from 8.9 million.

According to the producer organization AGPB (Association Générale des Producteurs de Blé et autres cereals), in 2012 France produced 24% of the European Union’s harvest. In total cereals production globally, it ranks France sixth behind the U.S., China, India, Brazil and Russia. In wheat, France is fifth behind China, India, Russia and the U.S.

The oilseeds industry body Prolea puts total oilseed production in France at 7.162 million tonnes in 2012, down from 7.373 million in 2011. The total includes 5.483 million tonnes of rapeseed, compared with 5.369 million the year before. Sunflower seed production was 1.575 million tonnes, down from 1.881 and soybean production was 104,000 tonnes, down from 123,000.

MAJOR EXPORTER

According to the cereals export promotion body, France Export Céréales, exports of common wheat from France fell by 19% in 2011-12 to reach 15.92 million tonnes. In its annual report, France Export Céréales said that exports to countries outside the E.U. were 8.4 million tonnes in 2011-12, compared with 12.9 million the year before. Exports to other E.U. countries rose to 7.52 million tonnes, from 6.69 million. The value of French wheat exports was €3.4 billion in 2011-12, down 21% on the year.

“Third countries remain the principle customers for French wheat,” France Export Céréales said, “although to a lesser extent than in previous years.”

The main destinations outside the European Union remain the Maghreb countries of northwest Africa, which have historic links with France, mainly Algeria and Morocco. They account for 59% of export volume. The countries of sub-Saharan Africa in the west and center of the continent, notably Senegal, Ivory Coast and Cameroon, account for 24% of exports. France Export Céréales notes that they are “countries which are geographically close to us and which have the habit of eating bread close to French bread. After the records reached in 2010-11 following the absence of the countries of the Black Sea, exports to Egypt have fallen,”

French durum exports fell by 20% in volume and 7% in value in 2011-12, reaching 1.55 million tonnes worth €490 million.

“Deliveries of durum wheat to the European Union were stable at 700,000 tonnes in 2011-12,” the export body said.

Even though exports to non-E.U. countries at 850,000 tonnes had fallen, they were still higher than in preceding years.

“Although Algeria is still the main customer for our durum wheat outside the European Union, Morocco has confirmed its interest in French durum wheat in 2011-12,” France Export Céréales said.

French barley exports were 4.28 million tonnes in 2011-12, representing a value of €900 million. “Deliveries of barley to the countries of the European Union and to third countries represent 3.5 and 0.79 million tonnes, respectively,” the body said. “The big customers for French barley outside the European Union are Saudi Arabia and the Maghreb countries for feed barley and China for malting barley.

France Export Céréales put French maize exports at 6.72 million tonnes in 2011-12, an increase of 23%. The exports were all to other E.U. countries, it said. The value of French maize exports was €1.91 billion.

STRUCTURAL CHANGE

According to the French government’s agricultural statistics body, Agreste, the number of farms has fallen by more than half over the last two decades, affecting mostly small and medium enterprises, while the number of large businesses remains higher than in 1988 and now represents over a third of farms by number. Medium and large farms represented 96.2% of cereals land usage in 2010, up from 90.3% in 1988. Job diversification is now routine for farmers in SMEs.

According to the European statistics agency, Eurostat, France has lost a quarter of its farms since 2000, as has Spain, Italy and Portugal, while Germany has seen a drop of 35%, and Denmark and the Netherlands 30%. France, like Germany, has seen its agricultural area fall by 3% in contrast with a small increase in U.K.

In its annual report, the cereals producers’ umbrella body, ORAMA, explains that 2012 was a record year for income in French farming as most regions experienced higher yields and high prices. But revenue volatility also rose from a factor of 1 to 7 from 2009-12 as a result of the dismantling of market management tools under the CAP. However, this masks a 17% hike in costs of €140-180 per hectare over two years, according to CER France-Arvalis-Unigrains. Fertilizers and fuel account for 90% of this increase, although structural charges have also gone up 25% over 15 years. The “wheat production cost indicator” put in place by Arvalis three years ago is thus enabling tracking of the worrying trend in costs for the 2012 harvest.

ETHANOL

According to the French maize industry body, Association Générale des Producteurs de Maïs, (AGPM), which cites a report from PricewaterhouseCoopers on the biofuels sector, the French ethanol sector employed 8,900 people, producing added value worth €815 million in 2010. The jobs consist of 4,500 directly employed, 1,500 jobs created in other sectors by the ethanol sector’s spending and 2,900 jobs created by the spending by the employees of the sector and its suppliers.

The ethanol sector operates on 15 production sites of which 13 are distilleries including five new large capacity factories. Production of ethanol in France totaled 12.5 million hectoliters in 2011-12, up from 11.6 million hectoliters in 2010-11. AGPM estimates that less than 0.7% of French arable land was used for ethanol production in 2011, a figure it arrived at using an adjustment for byproducts destined for the animal feed industry.

The French industry is fighting a European proposal to cut the amount of ethanol required in vehicle fuel in 2020 to 5%. So far it has succeeded in getting a counter proposal for 7% agreed in France.

MILLING INDUSTRY

According to the French millers organization ANMF, (Association Nationale de la Meunerie Française), the French milling industry used 5.58 million tonnes of wheat to produce 4.37 million tonnes of flour in 2010, of which 637,051 tonnes were exported. The industry’s sales were worth €1.88 billion. The association represents 299 production units which produce 95% of French flour production. The association quotes statistics from the French government body France AgriMer, which put the number of mills in total at 380 businesses with 454 production units.

Flour milling organizations vary in size, but there are four big milling companies with a production capacity greater than 300,000 tonnes: Nutrixo, Moulins Soufflet, ARIANE Meunerie and Grands Moulins de Strasbourg. These four account for 57.9% of total flour milling.

There is a group of 11 multi-regional enterprises which account for 18.4% of production: Dijon Céréales Meunerie, Terrena-Evelia, Groupe Nicot, Gers farines, Hebert SA, Minoterie Girardeau, Groupe Maurey, Moulins Dumée, Minoterie Forest. There are 60 regional millers with a capacity of over 5,000 tonnes which account for 17.5% of total production, while 284 small local mills account for 6.2% of production.

OPPOSITION TO GMOS

France has maintained a determined opposition to the use of genetically modified crops. After a ban on Monsanto’s MON810 maize, the only GM crop allowed in Europe, was overturned by a French court, the government reimposed a temporary ban. “The government is keeping its moratorium on the cultivation of GMO seeds currently authorized in the European Union,” the Reuters news agency cited Prime Minister Jean-Marc Ayrault as telling an environmental conference in Paris.

Key Facts

Capital: Paris

Population: 65,951,611 (July 2013 est.)

Religions: Roman Catholic 83%-88%, Protestant 2%, Jewish 1%, Muslim 5%-10%, unaffiliated 4%.

Location: Western Europe, bordering the Bay of Biscay and English Channel, between Belgium and Spain, southeast of the U.K.; bordering the Mediterranean Sea, between Italy and Spain.

Government: Republic. Chief of state: President Francois Hollande (since May 15, 2012); head of government: Prime Minister Jean-Marc Ayrault (since May 16, 2012).

Economy: The French economy is diversified across all sectors. The government has partially or fully privatized many large companies, including Air France, France Telecom, Renault, and Thales. However, the government maintains a strong presence in some sectors, particularly power, public transport, and defense industries. With at least 79 million foreign tourists per year, France is the most visited country in the world and maintains the third largest income in the world from tourism. France’s leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that reduce income disparity and the impact of free markets on public health and welfare. France’s real GDP contracted 2.6% in 2009, but recovered somewhat in 2010 and 2011, before stagnating in 2012. The unemployment rate increased from 7.4% in 2008 to 10.3% in 2012. Youth unemployment shot up to 24.2% during the third quarter of 2012 in metropolitan France. Lower-than-expected growth and high unemployment costs have strained France’s public finances. The budget deficit rose sharply from 3.4% of GDP in 2008 to 7.5% of GDP in 2009 before improving to 4.5% of GDP in 2012, while France’s public debt rose from 68% of GDP to 89% over the same period. Under President Sarkozy, Paris implemented some austerity measures to bring the budget deficit under the 3% euro-zone ceiling by 2013 and to highlight France’s commitment to fiscal discipline at a time of intense financial market scrutiny of euro-zone debt. Socialist Party candidate Francois Hollande won the May 2012 presidential election, after advocating pro-growth economic policies, the separation of banks’ traditional deposit taking and lending activities from more speculative businesses, increasing the top corporate and personal tax rates, and hiring an additional 60,000 teachers during his five-year term. The government’s attempt to introduce a 75% wealth tax on income over 1 million euros for two years was struck down by the French Constitutional Council in December 2012 because it applied to individuals rather than households. France ratified the E.U. fiscal stability treaty in October 2012 and Hollande’s government has maintained France’s commitment to meeting the budget deficit target of 3% of GDP during 2013 even amid signs that economic growth will be lower than the government’s forecast of 0.8%. Despite stagnant growth and fiscal challenges, France’s borrowing costs declined during the second half of 2012 to euro-era lows.

GDP per capita: $35,500 (2012 est.); inflation: 1.3% (2012 est.); unemployment: 10.3% (2012 est.).

Currency: Euro (EUR): 0.77 euro equals 1 U.S. dollar (May 22, 2013).

Exports: $567.5 billion (2012 est.): machinery and transportation equipment, aircraft, plastics, chemicals, pharmaceutical products, iron and steel, beverages.

Imports: $658.9 billion (2012 est.): machinery and equipment, vehicles, crude oil, aircraft, plastics, chemicals.

Major crops/agricultural products: Wheat, cereals, sugar beets, potatoes, wine grapes; beef, dairy products, fish.

Agriculture: 1.9% of GDP and 3.8% of the labor force.

Internet: Code: .fr; 17.266 million (2012) hosts and 45.262 million users.

Source: CIA World Factbook

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.

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