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Hard Figures Show Weak Outlook

  • July 7th, 2012
  • Posted by EUEditor

img_0756.JPGNot all is sweet for the agricultural sector or Greece’s global economic prospects, and the statistics, given some study, shows just how bad it has been.

Writer – Laura Ludwig.

WORSENING PERFORMANCES

The outlook for Greek industry, including its agricultural sector, continues to worsen.

The ‘Greece Agribusiness Report Q2 2012’ has been released by Business Monitor International’s Greece Agribusiness service.

It is an in-depth analysis of latest industry developments and gives the essential industry context on Greece’s agribusiness activity.

DIFFICULT CREDIT CONDITIONS – TAKING A TOLL

The report states:

“We maintain our view for dairy and grains production to slow in 2012 as difficult credit conditions take some producers out of business. We expect livestock production to stagnate.

“Sugar output will be the only crop to register an increase, which is likely owing to base effects and the recent decision by the European Commission to abolish EU production quotas by 2015.

“We will monitor closely the development of the ongoing debt crisis to see the effect on the agricultural industry”.

Key Forecasts Summary from report:

•    Wheat production growth 2010-11 to 2015-16: 4.2% to 1.8mn tonnes. Grains farmers are likely to remain frustrated with the austerity measures implemented in the country; it will take some time for a resolution to the economic crisis to impact credit availability for farmers.
•    Poultry consumption growth to 2015-16: 5.9% to 178,300 tonnes. Poultry is more widely consumed meat than beef. It is perceived to be healthier and more affordable than red meat.
•    Milk production growth to 2015-16: 2.9% to 2.1mn tonnes. Greece currently does not produce more milk than is permitted under EU laws, and improvements in yields will most likely be moderate in the coming years.
•    2012 real GDP growth: -4.5%, an improvement from -7.1% in 2011. GDP growth is predicted to average -0.8% from 2011 to 2016.
•    2012 consumer price inflation: -3.9% year-on-year, down from 3.5% in 2011. Forecast to average 0.3% from 2011 to 2016.

MAKING PROTESTS FELT

In past times Greek farmers, especially grain farmers were among the first to take action against austerity measures by blocking main roads and border crossings, and demanding a freeze on debt repayments, fuel subsidies and minimum crop prices for their produce in 2010.

Early this year farmers gathered again in the south of Greece to protest the soaring cost of insuring agricultural products.

Another element of tension is that Greece’s agricultural sector depends heavily on demand in Germany, where most of Greece’s national debt is owned. Its dairy products go heavily to Germany, 81% overall, and almost 35% of cheese exports.

At home, lack of access to credit, or restrictions on transport, are making it very hard for farmers to get products to market, and as a result some have started to innovatively disrupt market conditions.

STRUGGLING TO INNOVATE

One main plan in that department is the system called The Gineagrotis (meaning ‘become a farmer’). It’s straightforward: city dwellers rent a patch of land from a farmer, tell them what they would like grown on it, and get their own fresh vegetables delivered weekly. It also can cost t70% less than at the supermarket. This process has many advantages for the farmer, by knowing in advance what’s best to plant, being able to minimise waste at each level of  production, and obtaining a stable income.

Innovation is a watch-word for EU agriculture generally at this time.,

In the United Kingdom, the chairman of the upper house committee on Agriculture, Lord Carter (Labour), in May tendered a statement urging an overhaul and modernisation on many fronts.

“Our agricultural sector is facing enormous challenges, from an ever-increasing population to the demand for nutritionally-better but affordable food,” he said; and there, what looks to be true for all, would apply in Greece, twice-over.

TAKING ANOTHER HIT

At any point when a sector of the Greek economy, like agriculture, is reported to be slowing, it is just another hit for the nation’s greater global economic prospects.

The Organisation for Economic Cooperation and Development (OECD) has published its 2012  economic outlook, setting country projections for Greece over four years.

That shows negative growth for Greece over every year; in the OECD, a set of the stronger economies, it is the only country to do so badly, by a long chalk.  Annual Gross Domestic Product over the last four years has been down by -3.5 percent (2010), -6.9 (2011), -5.3 percent (2012) and -1.3 percent (2013).

The May report stated: “The crisis in the euro area has become more serious recently, and it remains the most important source of risk to the global economy. Confidence remains weak or is even declining, financial markets are again volatile, and deleveraging has barely begun. Fiscal drag on growth from consolidation may be significant, especially in some countries.”

Again, what applies to all, seems certain to apply in Greece, over and again; with the trend to deep fiscal retrenchment and internal devaluation likely to continue.

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