France, the largest country in Western Europe in terms of geographical area, is also its biggest grain producer. Food is taken seriously in France, and food producers are possibly more valued than in many other western countries. However, volatile cereal prices and the continuing reform of the European Union’s (E.U.) Common Agricultural Policy (CAP) mean that the cereals industry is facing an unaccustomed and, for many, unwelcome level of uncertainty.
France is by far the E.U.’s biggest grain producer. According to the International Grains Council’s (IGC) most recent estimates, France produced a total of 60.1 million tonnes of grain in 2007, compared with 61.3 million in 2006.
According to the producer organization AGPB (Association Générale des Producteurs de Blé et autres cereals), which represents 350,000 cereal producers, 18% of the total area of France is taken up with cereal production.
France produced 33 million tonnes of wheat in 2007, compared with 35.4 million the year before. France’s maize crop was 15.3 million tonnes in 2007, compared with 12.9 million tonnes in 2006. It produced 9.5 million tonnes of barley in 2007, down from 10.4 million in 2006.
The IGC predicts a rise in French wheat production of 18% to 39 million tonnes in 2008, a figure which includes 2.3 million tonnes of durum.
The French agricultural statistics body Agreste estimaates 2007 soft wheat production at 30.7 million tonnes (33.3 million in 2006) with a further 19.8 million tonnes of durum (21 million in 2006).
France is also Eur ope’s second largest producer of biotech maize, according to an attaché report published last summer, with almost 20,000 hectares (ha) planted in 2007 despite often vocal public opposition. Largely grown in the south, most of it is exported to Spain for use in animal feed.
SECOND LARGEST GRAIN EXPORTER
Most of it goes to the other European countries. According to the cereals export promotion body, France Export Céréales, French soft wheat exports average 6 million tonnes a year. Outside of Europe, the big customers are the North African countries Morocco, Algeria, Tunisia and Egypt. China, Yemen, India, Iran and Libya are also occasional buyers of French wheat.
According to Agreste, total French cereal exports in calendar 2007 were 24.667 million tonnes, of which 17.598 million went to other E.U. countries. This compares with 27.554 million of exports worldwide in 2006, of which 19.946 million were shipped to other E.U. countries. Wheat exports were 13.187 million tonnes in 2007, 8.114 million of which were sent to the E.U.
France is also a major oilseeds producer. In 2007, it produced 46.8 million tonnes of rapeseed, according to Agreste, compared with 41.4 million in 2006. It produced 13.1 million tonnes of sunflower seed (14.4 million) and 842,672 tonnes of soybeans (1.2 million). Total French oilseeds exports in calendar 2007 were 1.817 million tonnes with 1.749 million going to the rest of the E.U. In 2006, France exported 2.126 million tonnes of oilseeds, with 2.074 million going to the E.U. Included in that figure are rapeseed exports. Rapeseed exports were 1.344 million tonnes in 2007, 1.288 million of which were shipped to the rest of the E.U. In 2006, rapeseed exports were 1.555 million tonnes, with 1.524 million going to other E.U. countries.
The growth of biofuels has increased demand for rapeseed. "For the first time, in 2007, industrial rapeseed acreage (870,000 ha) has surpassed food/feed rapeseed acreage (700,000 ha), boosted by the growing demand for biodiesel processing," according to an U.S. Department of Agriculture attaché report published late last year. However, the increased profitability of wheat and the removal of the E.U.’s set-aside requirement have put rapeseed under pressure.
Even so, the oilseeds industry is expecting a big increase in the area grown for biodiesel. According to the oils and proteins industry group PROLEA, 2.5 million hectares of rapeseed and sunflower will be grown in France in 2010 for the production of biodiesel.
Hervé Le Stum, who is director of the producers body AGPB (L’Association Générale des Producteurs de Blé et autres cereals) and director of the umbrella body of the industry, Intercéréales, told World Grain that the biggest problem facing the industry was that prices turned lower just as harvests looked set to expand.
FEARS OVER E.U. POLICY
Stum said that he didn’t think prices would cover the cost of production. "The intervention price is a form of security," he said.
Producers and traders were facing the same problem. "The grain trade is having a problem with the high levels of price volatility that we’re seeing," he said "They haven’t got a culture of management of volatility." He feared that the proposals would mean that it would no longer be possible to see how the Commission was managing the market.
One big issue between producers of grain and millers and maltsters was the idea of producing grain under contract rather than for the open market. "When prices were low, we, the producers, proposed contracts and they didn’t want to know," he said. "Now we want to profit from the high level of prices, and they are keen on contracts. It’s an eternal debate."
The volatility in the market had already created problems with contracts. "Some maltsters have already been in contact with the producers or co-ops who supply them," he said. "For some people it’s better to break the contract, pay the penalty and get a better price somewhere else."
"Nobody could have imagined such big price moves," he said, wondering if the moves in the market were justified by the actual supply position. "You can’t say that there’s any more famine in the world than there was last year."
However, he did believe that the market could get tighter. "If the Americans are going to continue to increase their use of maize for ethanol, there could be a problem," he said. "The world has not suffered from U.S. ethanol production. Their exports so far have been normal. If they export less, that could slow down the fall in the price of wheat."
Valérie Mousquès-Cami, spokeswoman for the French millers association ANMF (Association Nationale de la Meunerie Française) expressed the same concern about the effect of the market’s recent volatility. "The industry is having to adapt to the economic situation, above all because it has happened quite suddenly," she told World Grain. "For many years the market was highly regulated. It has become a financial market, like the oil market, which has meant an enormous change in the way in which enterprises are managed."
French milling companies have always tended to work together, and the economic situation has increased the tendency. Although French milling is dominated by four big groups, the level of consolidation has been less than in some countries. "We have in our sector four big enterprises (Groupe Nutrixo, Soufflet, Grandes Moulins de Strasbourg and Dijon Meunerie) which account for 50% of the market," she said. "We have 470 mills, some of them belonging to big national groups, some in big regional groups and some which are entirely independent. There are three categories."
In 2006, French millers processed 5.5 million tonnes of wheat, producing 4.41 million tonnes of flour, she said. Flour exports came to 655,000 tonnes.
Chris Lyddon is World Grain’s European editor. He may be contacted at:firstname.lastname@example.org.