BMI View: T he German agricultural system benefits from high levels of competitiveness, strong infrastructure and a very good farming industry knowhow. Grains, dairy and sugar will all stand to benefit this year and beyond. In the livestock sector, pork producers will be under pressure due to strained relations with Russia. Sugar and milk production will expand due to the removal of quotas . Over the short - term, the unexpected decline in milk prices due to the removal of the quota and lower demand from export markets is hurting smaller dairy farmers, a situation that Berlin has vowed to address promptly by offering subsidies and considering a temporary dairy production quota to help stabili s e national milk prices.
Corn consumption will grow by a healthy 3.5% in 2015/16 to reach 1.07mn tonnes.
Poultry production will grow by 2.2% in 2015/16 to reach 1.64mn tonnes.
We are estimating wheat production to decline by 3.7% in 2015/16 to reach 25.57mn tonnes, whereas sugar will grow by 5.0% to reach 27.52mn tonnes.
Corn production will grow by 11.6% in 2015/16 as the crop recovers from two consecutive years of negative growth.
|German Agribusiness Industry Values|
|e/f = BMI estimate/forecast. Source: FAO|
In March 2015, the EU put an end to its 30-year old milk quota. Milk quotas were introduced to ensure that oversupply of milk did not emerge from the EU. With the abolition, strong milk producers such as Germany are free to produce high amounts of milk with strong levels of efficiency and agricultural effectiveness to capitalise on global demand for milk. We suspect that German milk farmers will welcome this opportunity in the long run to produce high amounts of milk and exploit their comparative advantage while looking to find international markets for their dairy produce. Over the short term, the unexpected decline in milk prices in Germany is beginning to threaten some smaller dairy farmers. As the country has an overproduction of milk, prices have plummeted from a high of EUR0.42/kg half a decade ago to around EUR0.20/kg. Farmers have said that they require a minimum of EUR0.35/kg to remain competitive. Berlin has vowed to immediately address the situation and has established a EUR100mn relief plan for dairy farmers with financial difficulties. Furthermore, Berlin is considering a temporary domestic production quota to curb supply to maintain prices. We believe that milk prices move in cycles and will eventually return to a stable equilibrium. The trade embargo with Russia and lower demand from China are temporarily hurting the milk industry. We believe that Germany's dairy sector is one of the most competitive and efficient in the world and will recover in the next few years.
In June 2016, German pharmaceutical giant Bayer was in talks with Monsanto to buy the world's largest genetically modified (GM) seed maker for an all-cash bid of USD62bn. Germany is overwhelmingly against GM foods, and we believe that Bayer has a strategic rethink ahead if it indeed goes through with the deal. Bayer has been looking to rebrand itself as a 'life sciences' company, but such a deal would be one of the largest in agricultural history. Furthermore, it faces a significant uphill regulatory process including scrutiny from the US government, as it would raise concerns about food security.
The Germany Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.
BMI's Germany Agribusiness Report includes independent commodity price forecasting and analysis for key agricultural outputs, an overview of the agribusiness competitive landscape and a discussion of the downstream context of agricultural production in relation to country food consumption forecasts and composite food and beverage trade forecasts.
- Use BMI's independent industry forecasts to test other views - a key input for successful planning in dynamic agribusiness markets.
- Apply BMI's medium-term commodity price analysis to assist with budgetary planning and the identification of investment opportunities and potential risks.
- Assess the activities and market position of your competitors, partners and clients.
BMI Industry View
Summary of BMI’s key industry forecasts and views, highlighting recent changes and key risks to the industry outlook.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the wider agricultural industry.
BMI Supply & Demand Forecasts
Divided into sections based on various diverse sectors in the agriculture market, the chapter provides insight into each market’s agricultural industry, centred on sector forecasts to end-2019 for the consumption, production and trade of key commodities.
- Consumption Forecasts: Accompanied by a discussion of the main drivers of consumption growth: macroeconomic factors, food processing trends, price movements and increasingly, demand from the non-food sector.
- Production Forecasts: Examine the trends influencing BMI’s production outlook: global demand, price increases, public and private sector investment and agricultural efficiency improvements.
- Trade Forecasts: Accompanied by a discussion of the factors influencing a country’s trade in agricultural goods, including domestic demand, global prices and government trade policies.
- BMI’s Forecasts: Accompanied by a risks-to-outlook assessment, which examines potential factors that could affect our existing forecast picture and the likelihood of their occurrence.
BMI’s Commodity Price Analysis
Fundamental and technical analysis of the short- and medium-term price outlook for eight agricultural commodities based on globally recognised benchmarks.
Analysis of headline food and drink forecasts, including total food consumption, per capita food consumption and total sector trade, which provide important downstream intelligence for primary agricultural producers.
Includes relevant articles from BMI’s daily analysis service. These can include: long-term projections on agricultural imports and exports; our perceptions of the impacts of economic slowdown on key companies and subsectors within the Agribusiness industry in a given country; our analysis of fertilizer production; as well as other relevant analysis of recent news and events.
The reports contain information on prominent companies operating in each market.
Key Commodities Covered By The Agribusiness Market
Reports Include: Grains, Dairy, Livestock, Rice, Sugar, Palm Oil, Edible Oils, Coffee, Cocoa, Cotton, Soybean
Please note – not all reports cover all commodities.
The Agribusiness reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.