Development in terms of trade for EU-farms in the agri benchmark networks 'Beef and Sheep' as well as 'Cash Crop' compared to key third countries
Do prices follow costs?
In recent years a significant increase in global agricultural commodity as well as input prices has been experienced – together with an increase in volatility. Against this background, the study aims to shed some light on the evolution of revenues, cost and margins in crop and beef production. More specifically, it will explore to what degree the increase in prices can be attributed to respective increases in cost and whether there is evidence that EU farms were affected differently than non-EU farms.
Analysis focused on the two product areas cash crop and beef. The reasons are a) the importance of crop production for European agriculture, b) the extent of border protection which is devoted to beef and c) both commodity areas are well developed within the agri benchmark Network.
In the cash crop analysis, the cost structures for typical agri benchmark farms are being used to generate a reference scenario for cost of production according to the prices for inputs which were in place in the period 2000 to 2003. For beef production, the time series of identical typical agri benchmark beef finishing farms were used to address the research questions.
Data used are production and price statistics and data from typical farms of the agri benchmark Network for farm level.
For crop production, analysis of the evolution of output prices and input prices fertiliser and energy during the period of 2000/2003 until 2010/2011 has led to the finding that all major input prices increased substantially more than output prices. The calculations yielded the following results:
In beef production, in all farms and countries considered, prices and costs went up in the period 2005 to 2010 considered. The following results were obtained:
Cost developments in non-European countries were more pronounced than in Europe. Cost increases were highest in Argentina, Brazil and China. The same applies to beef price increases in Argentina and Brazil. The historic cost gap between high cost and low cost countries is closing continuously. Reasons were a mix of exchange rates and local price increases resulting from overall demand due to positive economic development, rising grain, land and energy prices.
5.2011 - 4.2012
Project status: finished