With a small population in a relatively large area, Sweden has traditionally been able to feed itself. Although a significant part of the country is north of the Arctic Circle, there is enough fertile agricultural land to sustain a significant grain-producing sector.
Sweden joined the European Union (E.U.) in 1995, and its government has pushed for reform of E.U. farm policy. Although the cereals sector has experienced long-term stability, helped by the high level of farmer ownership in the food industry, changes to the E.U.’s Common Agricultural Policy and the sharp rise in prices around the world has forced the sector to face new challenges.
Sweden’s grains sector is dominated by the farmer-owned giant Lantmännen. Owned by 44,000 Swedish farmers, it has 13,000 employees and sales of $5 billion. Its activities cover the entire food chain. It buys and sells grain, sells inputs to farmers and is involved with plant breeding. It processes grain and produces bread.
"Lantmännen makes around 65 percent of the total purchases from farmers," said Mikael Jeppsson, head of cereals at Lantmännen’s agricultural division, Lantmännen Lantbruuk. "We also have about 65 percent of the domestic market. Sweden produces about a million hectares of cereals. The crop in 2007 was 5.2 million tonnes."
He put the average Swedish cereals crop at 4.2 million to 4.3 mi lli on t onnes. The International Grains Council’s (IGC) figure for 2006 was 4.5 million. According to the IGC, the 2007 crop included 2.4 million tonnes of wheat in 2007, along with 800,000 tonnes of oats and 1.4 million tonnes of barley. The
2006 crop included 2 million tonnes of wheat, 1.1 million tonnes of barley and 800,000 tonnes of oats.
"This year the yield was better than normal," said Jeppsson. "We were maybe the only country in Europe where that happened.
"We started our harvest at the beginning of August, 14 days to three weeks later than the rest of western Europe," he said. "That meant that by the time we started the rain had finished."
The price situation means that farmers have increased acreage by 75,000 to 100,000 hectares (ha) this year. They normally plant about 350,000 ha during the autumn.
Of the total grain, Jeppsson put the total used on farm as animal feed at about 1.7 to 1.8 million tonnes. "880,000 tonnes or so goes to the animal feed industry," he said. "The (flour) mills use about 830,000 tonnes."
He put grain usage by Sweden’s big distiller, Absolut Vodka, and other smaller distillers at 150,000 to 160,000 tonnes. Ethanol production takes up around 170,000 tonnes, but ethanolmaking capacity is being added and that number is expected to jump to 500,000 tonnes in 2008. Sweden’s big malt producer, Viking Malt, uses around 220,000 tonnes of grain.
"It makes us exporters of about 700,000 to 1.1 million tonnes (of grain)," he said. "This year it’s 1.1 million. The average would be about one million. We export about 50 percent wheat. We’re also big exporters of malting barley."
With improved prices for oilseed rape, Sweden’s level of self-sufficiency has increased year on year. "We had around 95,000 hectares of oilseed rape," he said. "It’s split about 50/50 between spring and winter. There is a big crusher, AarhusKarlshamn (AAK), which uses about 300,000 tonnes, which is a bit more than production of 250,000 to 275,000 tonnes." The difference is made up by imports.
LANTMÄNNEN REDUCES COSTS
"In 2001, we collected 1.8 million to 1.9 million tonnes at harvest," he said. "It’s down to 1.3 million this year. We have reduced our 92 silos down to 25 in two years to balance out the needs according to the capacity."
Lantmännen’s members supported the changes. "It’s always difficult to close facilities for farmers," he said. "It went smoothly. The main reason that we were doing it was to be able to pay better prices."
He identified four main production areas: the most southern part of the country; the plain to the west of Lidköping; the east around Norrköping; and the areas to the west of Stockholm.
GRAIN TRADING CHANGES
"We had been quite isolated," he said. "We had a big surplus and exported 25 to 30 percent of production or sold it into intervention." Sweden’s location in northern Europe makes life hard for exporters. "We are far from our export markets," he said. "It’s difficult to compete with France and the other big exporters on the world market. This year with the world market the big issue has been risk management. This is a totally new situation."
Higher prices have meant increased risk. "It’s the biggest question for both farmers and grain dealers," he said. "Several of my members had never used the MATIF (Marche A Terme International de France) for hedging before this year."
He identified a political consensus about the future of farm policy, which meant that much of his organization’s lobbying of the Swedish government was limited to detail work. "We know what the government is coming for in the CAP," he said. "It isn’t affected by the change of government. Both the left and the Conservatives are quite focused on deregulation. When it comes to lobbying in the grain sector, it’s about the details."
MILLERS UNDER PRESSURE
"We also have to keep up new product development to stay ahead of consumer trends. There’s an increasing move towards healthier products, as well premium and niche products and greater convenience. The industry has also been affected by demand for low-carb diets."
After a period of consolidation, the industry has achieved a stable structure, particularly when compared with the milling industry in some other E.U. countries, Crona said. "The last time a mill closed in Sweden was in 2001. There are ten milling companies in operation. Although there are some strong regional players, the only two companies with full national coverage are Lantmännen, which is by far the biggest, and Valsemöllan/Finax.
"Lantmännen’s share of the bakery flour market is still growing. We currently account for 50 percent of sales, 10 percentage points more than in 2000." WG
Chris Lyddon is World Grain’s European editor. He may be contacted at:email@example.com.