Soufflet focused the discussion on three factors that affected France’s cereal harvest this year:
- extremely low prices
- sharp drop in yields
- the disappointing quality of cereals
“The French (soft) wheat crop turned out a lot smaller than expected and, with all the rain they had, the expectation was the quality of the crop was not going to be up to par,” said Paul Meyers, vice-president, commodity analysis, at Foresight Commodity Services, Naperville, Illinois, U.S.
“Because of the poor quality of some of the wheat in France and Germany, more wheat will move into feed channels, because some of that wheat has been downgraded and that is where it has to go,” he said, noting that an influx of feed wheat is likely to reduce demand for corn.
As for milling wheat in Europe, customers seeking high-quality soft wheat likely will be able to find supplies on the continent, although the search might be a little harder than usual and premiums may be “a little above average,” Meyers said.
The 30% to 40% fall in revenue in France’s cereal sector is bound to affect the entire farming ecosystem from 2016, Soufflet said. In 2015, France exported nearly 20 million tonnes of wheat, according to InVivo, a group of 216 French cooperatives. The exported French volume for 2016 will be the lowest since 2001 — 11.1 million tonnes.
The International Grains Council’s (IGC) August forecast of total 2016-17 France wheat production was 30.5 million tonnes compared to the 2015-16 wheat production estimates of 42.5 million tonnes.
To address the scale of the crisis, Soufflet said it is necessary both to support farmers’ cash position and economic environment and to boost investment in the sector’s competitiveness. He then suggested the following measures in a support plan:
- Authorize an exceptional exemption to payment deadlines (set by the Law on Modernizing the Economy) in the cereal sector in order to ease the cash position of both farmers and their suppliers,
- Discuss a cash-flow plan with banks enabling farmers to agree to short-term loans of €500 to €700 a hectare at 0%, guaranteed by the Banque Publique d’Investissement, and to defer loan installments to the end of the repayment schedule,
- Totally cancel their C3S (a supplementary social security tax) in 2017.
In parallel, Soufflet also suggested that Le Foll include structural measures to ultimately increase the competitiveness of the French cereal sector, especially in the following areas:
- the technological transformation of French farming
- storage capacity and improving the transport system for French cereals
- boosting the quality (protein in particular) of French cereals
The Soufflet Group is one of the largest private buyers of cereals in Europe with 4 million tonnes purchased in France and more than a million in other countries. In wheat, it is one of Europe’s largest millers with 10 mills in France and Belgium. The company employs more than 7,500 staff in 18 countries. In 2014-15 the company said its sales were over €4.91 billion.