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EU cereal farms report 2012 based on FADN data

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EUROPEAN COMMISSION DIRECTORATE-GENERAL FOR AGRICULTURE AND RURAL DEVELOPMENT Directorate L. Economic analysis, perspectives and evaluations L.3. Microeconomic analysis of EU agricultural holdings

Brussels, March 2013

EU CEREAL FARMS REPORT - 2012 -

The report estimates margins in cereal production and provides indicators of the income of farms specialised in cereal production in the EU Member States (MS).

The year 2009 was rather difficult for cereal producers in the European Union. Grain prices declined from high levels, yields fell and production costs remained high. The gross margins obtained per hectare of cereals or per tonne of grain consequently shrank by half in comparison with the preceding year. By contrast, estimates for 2010 and 2011 suggest a radical improvement in the profitability of cereal crops, led by rising grain prices.

Although all sectors experienced depressed margins, the situation varied widely. Grain maize offered the best margins and suffered a relatively small reduction in profitability. It lost on average less than 30 % of gross margin in comparison with 2008, while the gross margin for barley, the worst hit, was cut by 80 %. With an average gross margin of about 50 €/ha across the EU, barley production was six times less profitable than grain maize, for which the margin was close to 300 €/ha. Wheat margins were situated in between, at around 150 €/ha, with durum wheat a little higher than soft wheat. The years 2010-11 brought a great improvement in margins for all cereals, bringing them back to the good levels of 2007-08.

Incomes of cereal producers, like margins, shrank significantly in 2009 as a result of the price/cost squeeze. They were the lowest in years, comparable only to those in 2005. With all costs included, average income was even significantly negative in a few MS. In some MS losses were avoided only thanks to farm subsidies. The rise in margins suggests that the difficulties of 2009 could be compensated by developments favourable to cereal producers in the years 2010-11.

While lower in absolute terms than in most other types of farming, cereal farms’ incomes offered roughly average remuneration when expressed per person (AWU), as cereal production requires relatively less labour.

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EU cereal farms report 2012

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The analysis covers the accounting years from 2002 to 2009, and additional estimates of gross margins have been made for 2010 and 2011. When considering development over time, it should be borne in mind that there were significant policy changes during this period. The main change was the decoupling of direct payments during 2004-06, which removed subsidies from the value of cereal output. Also in some new MS the decoupling of Complementary National Direct Payments in 2007 adversely affected the level of gross margins, though not necessarily farm incomes, as the subsidies were received by the producers in the form of area payments.

The analysis is based on data in the EU Farm Accountancy Data Network (FADN) database. The FADN is a system of sample surveys held each year and focuses on accountancy data from farms. The data are fairly comprehensive in terms of covering farming activities, but production costs are recorded only as an aggregate per farm. For the calculation of margins, it was thus necessary to allocate costs to particular crops.

The next edition of this report, using FADN data till 2010, is scheduled for later this year.


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Contents

1. INTRODUCTION....................................................................................................... 4

2. COMMON WHEAT MARGINS................................................................................ 5

3. DURUM WHEAT MARGINS ................................................................................... 7

4. BARLEY MARGINS ................................................................................................. 9

5. GRAIN MAIZE MARGINS ..................................................................................... 11

6. INCOME OF FARMS SPECIALISED IN CEREAL PRODUCTION.................... 13

7. VARIABILITY OF INCOME .................................................................................. 17

8. CONCLUSIONS....................................................................................................... 18

9. ANNEX..................................................................................................................... 20

Details of methodology ............................................................................................. 20

Tables with detailed results....................................................................................... 23

Box 1: The Farm Accountancy Data Network (FADN)

The FADN1 is a European system of sample surveys held each year to collect structural and accountancy data on farms. The aim is to monitor the income and business activities of agricultural holdings and to evaluate the impacts of the Common Agricultural Policy (CAP).

The FADN surveys include only farms exceeding a minimum economic size (threshold) so as to cover the most relevant part of the agricultural activity of each EU Member State, i.e. at least 90 % of the Standard Gross Margin and 90 % of the Utilised Agricultural Area covered in the Farm Structure Survey (FSS, Eurostat). For 2007, the sample consisted of over 78 000 holdings in the EU-27, representing 5.4 million farms (39 %) out of a total of some 14 million farms included in the FSS.

The survey is intended to provide representative data in three dimensions: by region, economic size and type of farming. The FADN is the only harmonised source of micro-economic data, which means that the accounting principles are the same for all EU Member States.

The most recent FADN data available for this report are for the 2009 accounting year; this is because of the time needed to collect, check and correct the data on all EU Member States.

Analysis of FADN data gives a unique insight into the economics of large populations of farms in all EU MS and thereby makes it possible to focus the analysis on selected issues and go beyond average results.

1 For more information on the FADN, see http://ec.europa.eu/agriculture/rica/index.cfm.


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1. INTRODUCTION The report estimates margins in cereal production and provides indicators of the income of farms specialised in cereal production in EU Member States. Gross, net, and net economic margins are calculated and presented in the tables. The text mainly discusses gross margins. As indicators of income, farm net value added, farm net income and remuneration of family labour are presented. The analysis covers data from the accounting years from 2002 to 2009. Gross margins have been additionally estimated for 2010 and 2011. The calculations are based on data collected in the EU FADN database.

Cereal market situation in the period analysed

In the first half of the period analysed, European cereal producers experienced relatively stable grain prices. In nominal terms, cereal prices in 2006 were 11 % higher than in 2002, according to Eurostat. In real terms (deflated) they saw only a 2 % increase. However, the average EU prices of durum wheat and barley fell in real terms between 2002 and 2006. There were then major price fluctuations on the cereal market during 2007-11. First, in 2007-08, prices shot up by more than half, as demonstrated by Eurostat’s market price indices (see Figures 1-4 below). Shortly after, prices fell rapidly again but in 2010 they recovered to levels well above those noted before 2007 and in 2011 they grew further to levels almost doubling those in 2006 and earlier. The prices received by the farms analysed in this report followed quite closely the general trends for cereal prices. The occasional differences could be explained by the fact that only a sample of specialised farms is analysed and by differences in the methods of obtaining price data in Eurostat and in FADN.

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Box 2: Summary of the method used to estimate production costs

The FADN database contains information about output and subsidies per product, but as far as costs are concerned, it only provides information for the farm as a whole. Hence, the direct contribution of each enterprise to farm income is not available, which means that the production costs by product have to be estimated. The EU FADN unit has built several models to estimate costs and margins for the different products: arable crops, milk and beef, and permanent crops. These models allocate farm costs to a particular product using different ratios. The Annex gives details of the model used in this analysis to estimate cereal production costs and margins.

From 2008, imputed costs for unpaid family factors are estimated (e.g. own capital costs). The aim is to enable a comparison to be made between Member States with different structures in terms of main production factors. The methodology for estimating the opportunity costs of those factors is explained in the Annex.

The output, operating costs and gross margins (over operating costs) for 2010 and 2011 are estimated on the basis of cereal price, yield and input price indices. Structures and subsidies in cereal production are assumed to remain unchanged. These and the increased volatility of prices observed on cereals markets in recent years mean that the resulting estimates are approximate. The sources of the indices used are the following: for cereal prices and yields — Eurostat and Directorate-General for Agriculture (DG AGRI), for inputs — Eurostat databases (agricultural prices and price indices).

2. COMMON WHEAT MARGINS In volatile market conditions, producers with high yields were able to maintain profitability even in a difficult year such as 2009.

Common wheat margins were calculated with data from annual samples of between 1 300 and 3 800 farms, representing between 68 000 and 200 000 farms (depending on the year) specialised in common wheat production throughout the EU. About half of these farms were in the EU-15. In the year 2009, these common wheat specialists represented farms that accounted for 26 % of the area under common wheat in the EU.

The farms providing data for analysis had on average 70 to 100 ha of utilised agricultural area (UAA), of which around half was under common wheat. In general, the acreage of farms in the EU-15 was bigger by half than in the rest of the EU. In some MS, such as Italy, Greece or Denmark, specialist farms were more dependent on the crop — the average share of common wheat in UAA exceeded 60 %.

The workforce on farms was on average 1.3 AWU in 2009, but there were wide differences among MS. In a few, the average was 0.6 AWU or less (Denmark, Finland), but it could also exceed 3 AWU (in Bulgaria). Generally, the workforce engaged in farms in the EU-15 was smaller than in the other Member States.

The yield in the farms analysed also varied widely. In Greece and Estonia it was usually around 3 t/ha, while farms in the UK regularly reported over 8 t/ha. Denmark, France and Germany were other high-yield producers. The average yield in 2009 was 5.7 t/ha for our sample of specialised producers, 4 % lower than in the preceding year. A further decrease in yields occurred in 2010, but yields are estimated to have picked up to 5.2 t/ha in 2011.


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Figure 5 Figure 6

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Source: EU FADN — DG AGRI, arable cost allocation model. Note: 2010(e), 2011(e) — estimates based on 2009 data.

The average price received by specialist common wheat farmers fell in 2009 by 21 % to 119 €/t, the lowest level since 2005. By contrast, the subsequent years 2010 and 2011 brought wheat prices back close to the record 2007 levels of around 200 €/t. The volatility of prices was much higher from 2007 onwards than at the beginning of the decade.

After a sharp rise in operating expenses to above 600 €/ha in 2006-08, the costs of producing common wheat fell in most MS in 2009, to around 560 €/ha for the EU as a whole. Costs declined for most categories, in particular for motor fuels. The year 2010 brought relative stability of expenditure, but costs picked up again in 2011. The biggest item in operating costs was expenditure on fertilisers. It continued increasing in 2009 to reach 156 €/ha, fell the year after but climbed again in 2011. Together with pesticides, fertilisers accounted for 45 % of operating expenditure in the cost structure, and together with fuels and energy, they topped 57 % in 2009.

The margins between receipts and operating costs (i.e. gross margins) for common wheat production exceeded 500 €/ha annually before 2004, but decreased thereafter to less than half that level in 2005-06. Decoupling direct payments for wheat was the main influencing factor, but the inclusion of lower-margin producers from new MS also reduced the EU average. Soaring prices in 2007 then raised margins to pre-2004 levels, with the EU average at 455 €/ha and that for the EU-15 topping 600 €/ha. But prices eased the following year and fell even further in 2009. Since costs of production contracted only a little, the EU margin fell to as low as 146 €/ha in 2009. That result was the lowest in recent years, with many producers recording actual losses. However, a major improvement in profitability is estimated for the years 2010-11, when wheat prices shot up again.

German producers appeared most resistant to the adverse market developments in 2009. Their average gross margin of 280 €/t, although a third lower than the previous year, was the highest in the EU. That resulted mainly from very good yields as prices and costs in Germany stood at about the EU average. Favourable price developments in 2010-11 lifted German common wheat margins up to 700 €/ha and perhaps more. Three other MS — Spain, Italy and the UK — had gross margins above 200 €/ha in 2009. The first two had relatively good prices for grain, and the UK excelled in yield. All the high-margin producers mentioned, along with France, are estimated to be leaders in that respect also in 2010-11 although at a much higher level of profitability of production.


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Worsening profitability in 2009 resulted in negative gross margins in some Member States. Finnish results, already in the red the year before, fell to a new floor at below –300 €/ha. Producers in Sweden lost 100 €/ha, more than those in Estonia and Greece. There were several reasons for this. Producers in the northern EU suffered very low grain prices of 100 €/t or less, and those in Finland and Sweden additionally faced high costs. Problems in Estonia and Greece resulted primarily from very low yields, and a relatively good price situation in Greece only partly compensated for the low production. Except for Finland, which continued to incur losses in wheat production, gross margins in these MS are estimated to have bounced back to well above zero in 2010-11, although they would still be among the lowest in the EU.

3. DURUM WHEAT MARGINS Operating costs continued their upward trend and only farmers who could keep their costs in check while receiving coupled subsidies were able to survive the problematic years easily.

A group of 900-1 400 sample farms were selected to calculate these margins. They represented 65 000-86 000 farms in the EU-27 specialised in durum wheat production. In 2009, the sample farms represented 49 % of the area under durum wheat production in the EU.

The farms devoted on average 18 ha to durum wheat in their 29 ha holdings in 2009. The average was dominated by Italian and Greek farms with, respectively, 18 ha and 12 ha per holding. French and Spanish farms had about 40 ha of durum wheat in their 86 ha farms but they were fewer in our sample and influenced the EU average less. Durum wheat specialists obtained two thirds of their farm output from that crop, except in France, where specialist durum wheat farms derived almost half of their output from other sources. For other MS there were not enough specialist durum wheat producers in the FADN database to distinguish them in the analysis.

The average yield for durum wheat was 3.3 t/ha in 2008, slightly less (-5 %) than the year before. Italy was very close to the average, with Spain and Greece at around 3 t/ha in 2009. French durum wheat yields were significantly higher, at almost 5 t/ha, but in the last decade they had been seemingly on a slightly downward trend with further decreases towards 2011. By contrast, those in the other three MS were on their way up, although at a level still much lower than in France.


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The price of durum wheat was relatively stable at around 150 €/t up to 2006 for the farms analysed before nearly doubling in 2007-08. The year 2009 brought prices back to below 200 €/t, a level which continued to be relatively good. Prices recovered thereafter to reach again in 2011 the high levels recorded at their previous peak.

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The estimated operating costs for producing durum wheat peaked in 2008 and then fell by 12 % to 520 €/ha in 2009. After a year of stability at that level, production costs went up again in 2011. While the costs displayed similar dynamics in various Member States, they were at different levels among them. French producers spent almost twice as much per hectare, nearly 900 €/ha, than elsewhere. They paid particularly large amounts for crop protection and fertilisers, and also for seeds, which helped them secure outstanding yields. By contrast, Spanish farms apparently produced durum wheat at a cost not exceeding 400 €/ha in 2009, paying the least among MS for seeds and fertilisers. Accordingly, their yields were low and they varied greatly in relative terms from one year to another.

Margins decreased further in 2009 after peaking in 2007. The average gross margin of 162 €/ha for durum wheat in the EU was less than half that of the year before and less than a third of the record level two years earlier. Durum wheat margins were set to improve significantly in 2010-11 for all MS except Greece.

Producers in Spain appeared the least vulnerable to adverse economic conditions and secured almost 300 €/ha in 2009. This was the highest of the four MS analysed and ‘only’ a third lower than a year earlier. Several factors contributed to that result. Spain enjoyed a low level of costs with an average level of prices, which provided a good mark-up from the start, and an increase in yields. The latter was exceptional because durum yields were generally lower in 2009. The remaining direct payments to durum wheat in Spain provided an additional cushion in that difficult season. The level of margin changed little the following year but in that period French and Italian margins exceeded those of Spain. However, with another twist in yield levels Spain is estimated to be again among the leaders in durum wheat profitability in 2011.

French producers suffered an outstanding reduction in their operating margins in 2009, by over 400 €/ha in a year. Such a low level of less than 60 €/ha was unseen earlier or later in French durum wheat production. It resulted from a combination of much lower prices and smaller yields, with costs running very high. Had it not been for the remaining coupled subsidies, French durum wheat producers would have operated at a loss. A significant


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recovery of prices in 2010 and 2011, however, apparently restored very good profitability in their operations.

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Production of durum wheat in Greece provided quite a different picture of profitability. The 2006 dip in gross margin, which actually turned negative in Greece, resulted from the reduction of subsidies to durum wheat production. While in 2007 high prices raised margins back to pre-2006 levels in other MS, in Greece they recovered only partly. A rise in costs, unchanged yields and a relatively mild improvement in prices were to blame. Greek producers managed to improve the yield by over a quarter compared to 2008, but their costs rose even faster. Fertilisers, seeds, energy and fuels contributed most to that increase. Although farmers still managed to secure positive gross margins in 2008, they became negative in 2009 as prices dropped. The subsequent years brought no significant change to profitability in Greece due to the continuation of relatively weak prices in 2010 and a combination of lower yields and higher operating costs in 2011. The lack of a significant recovery in Greece contrasted with the situation in other MS analysed, which were able to benefit better from a rise in prices, mainly thanks to higher yields.

4. BARLEY MARGINS Against a background of depressed prices, control of yields and costs provided much help during market volatility. Italy stood out thanks to better prices, while countries such as the UK and Ireland were able to increase their already high yields.

Samples of 800-1 500 farms specialised in barley production were used to calculate margins for particular years. Most barley specialists were in Spain, which also has the EU’s largest barley growing area. For 2009, the sample farms represented 21 % of the barley production area in the EU.

The specialised farms selected for calculating margins had on average 42 ha of barley in 2009. That figure varied widely among MS — from about 10 ha in Italy, Greece and Poland to 60 ha and more in the UK, Estonia and the Czech Republic. This was principally a reflection of farm structures and sizes in the various MS. The share of barley area in these farms’ UAA was between 50 % and 70 %. Irish and Danish farms had the highest proportions of barley area, and Germany, Lithuania and Estonia the lowest.

The workforce averaged 1 AWU on those farms, with more than 1.5 AWU on farms in Estonia and the Czech Republic, and about 0.5 AWU on Danish and Finnish farms.


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The average yield for the EU sample fell below 3 t/ha in 2009, mainly because of a significant yield reduction in Spain. In the rest of the EU the picture was mixed. Yields tended to rise where they were high already (even above 6 t/ha), such as in Ireland, UK and Germany. In Spain, Greece and the Baltic States they trailed at around 3 t/ha.

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After two years at exceptionally high levels, prices returned to normal and averaged 120 €/t in 2009, falling by about 30 % in a year. In a few MS they fell below 100 €/t (e.g. Lithuania, Poland), but in some — Greece, Italy — they declined relatively less and stayed closer to 150 €/t. EU barley prices quickly rose again and in 2010-11 were back at the levels observed in 2007-08.

After a record high in 2008, operating costs calculated per hectare fell on average in the EU by 13 % to 342 €/ha. Generally, the higher the initial level of costs the steeper the fall. As a result, the differences between average cost levels in groups of MS (EU-15, EU-10, EU-2) narrowed. The most significant reductions were on motor fuels, seeds and fertilisers. However, when calculated per tonne of grain, production costs increased at EU level because the drop in barley yields (-22 %) in 2009 was steeper than the fall in production costs. The level of costs in 2010 was estimated to remain largely unchanged, but it picked up again the following year, with fuel and fertiliser expenditure rising particularly quickly.

Average EU gross margins in barley production were around 300 €/ha up to 2004. In 2005-06 they fell sharply to below 200 €/ha. In the two years that followed, they were significantly higher, at 400 €/ha in 2007 and around 300 €/ha in 2008. The increases in those two years stemmed from very good prices for barley, but falling prices and growing costs restricted the margins in 2008. The 2009 margins were particularly low, at 50 €/ha on average in the EU, because of the ongoing price decline. Costs receded, too, but only a little. The 2010 margins, driven by prices rising again, recovered more than expected and approached 300 €/ha. A further increase in prices, faster than the rise in costs, is estimated to have raised the average EU margin to the level of 400 €/ha or above in 2011.

There was a wide variation in margins among MS. In 2009, Italy had the highest average, at 335 €/ha. That was quite high, given a bad year, and double the second highest margin, achieved by producers in Ireland. The result was obtained mainly on the receipts side, thanks to the highest prices. Solid yields contributed to the Italian result, too. These advantages were reinforced by lower than typical costs, with fertiliser and crop protection expenditure well below the EU average. Italy’s top position was also due to the deterioration in Irish margins,


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usually the highest. But the slump in prices combined with a high level of costs reduced Ireland’s gross margins to 154 €/ha. UK farms’ results followed, with 126 €/ha, propped up by excellent yields (above 6 t/ha) and relatively good prices but, like in Ireland, constrained by massive expenses per hectare. The only other MS with operating margins above 120 €/ha in 2009 was Lithuania. Interestingly, that result was obtained in a quite different way — with low levels of both prices and costs. Yet the yields of 3.4 t/ha allowed Lithuanian producers to obtain the second highest, after Italy’s, margin per tonne of barley produced.

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In four MS the operating margins became negative in 2009. The preceding year’s pair of Finland and Greece was joined by Denmark and Poland. Losses sustained by Finnish and Danish farmers were particularly severe, at more than -200 €/ha. They had very high costs, and they were the only two MS where the cost level per hectare rose in 2009. Relatively good yields were not sufficient to compensate for that and for the price level dropping to 100 €/t and less.

Estimates for 2011-12 suggest significant growth of operating margins, driven by rising prices and, in fewer cases, by improving yields. Only in Finland are they projected to remain negative as production costs there, especially fertilisers, fuels and energy, are rising particularly fast.

5. GRAIN MAIZE MARGINS Income and margins per hectare of maize were better than for any other grains. Costs and yields varied widely among the Member States but prices stayed quite uniform. This gave positive margins in all MS but huge differences in their levels — from 20 to 700 €/ha.

To calculate the margins, data were taken from a selected group of specialised farms. For grain maize, up to about 2 000 sample farms were used, representing up to 180 000 farms in the EU. In 2009, they represented 27 % of the grain maize area in the EU. There were enough farms with the required minimum specialisation level in 10 maize-growing Member States.

The average acreage for grain maize was 14-18 ha in the sample analysed. In a group of MS composed of Germany, France, Poland and Hungary maize was grown on areas 2-3 times larger than that, and on large Slovak farms the crop could be grown on 80-100 hectares. At the other end of the spectrum were farms in Greece, Portugal and Romania with less than 10 ha. In the Mediterranean MS, maize production was mostly irrigated. Grain maize took up about half of the UAA in the farms analysed.


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The workforce on specialist grain maize farms was about 1 AWU on average. In 2009 it ranged from 0.7 in Greece to 1.4 in Poland and Romania, with the exception of Slovak farms, which required over 4 AWU per holding. Yields of grain maize varied in 2009 from below 5 t/ha in Romania to above 12 t/ha in Greece. Generally, producers in the EU-15 had higher yields than those from other MS. Yields grew significantly in most MS in 2011.

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In 2009, the prices received by the sample farms for grain maize were 10 % lower than recorded a year earlier, and some 40 % below the record 2007 levels. Averaging 125 €/t, they were the lowest since 2005. Grain maize prices picked up strongly in 2010-11, nearly to the level observed in 2007.

Operating costs for producing grain maize were on the increase up to 2008, but reached a high plateau during the two years that followed. At 853 €/ha, the level of costs in 2009 was 5 % below that of the preceding year. Yet for EU-15 or EU-10 producers the costs in 2009 were 30 % higher than five years earlier, but the inclusion of lower-cost producers in the EU-2 halted the rise in EU average costs after 2007. The costs appear to have increased sharply again in 2011.

Unlike grain maize prices, which varied greatly between years but little between MS, the costs of production changed slowly over time but were quite different between MS. The high-cost producers in Greece and France spent over 1 200 €/ha in 2009. At the other end of the scale were grain maize specialists in Romania, who spent 400 €/ha. The variation of yields was larger than that of prices but smaller than that of costs of production.

Before 2004, the average EU gross margin (with coupled payments) in grain maize production exceeded 800 €/ha. In the period 2004-06 it was markedly lower, for two reasons. First, the EU enlargement encompassed markets with lower margin levels. For the producers in the EU-15, a parallel process of decoupling of subsidies occurred, which disconnected most aid from the production of maize, thus depressing margins. The 2007 rally of prices more than compensated for these factors, lifting maize margins to unprecedented levels. Yet when prices dropped to their lows soon afterwards while increased costs crept in, margins quickly subsided. In 2009 the EU average was 290 €/ha, the lowest in a decade. In general, producers in the EU-15 recorded margins above that average, and those in other MS below. Unlike for the other grains discussed earlier, no MS average fell below zero in 2009. In the two years that followed the price level changed dramatically, again, and margins climbed very quickly, probably to the level previously enjoyed in 2007.


13

Figure 19 Figure 20

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The diversity of results was wide in 2009, from below 20 €/ha in Slovakia to 700 €/ha in Spain. Slovak producers repeatedly had low margins for maize, because of below-average prices and yields, coupled with relatively significant cost levels, especially for seeds, crop protection and fuels. On the one hand, such low profitability per hectare was compensated by very large growing areas, but on the other, their farms engaged a large workforce, which diminished profitability calculated per person. Margins in France (70 €/ha) were the second lowest in 2009, due to the second-highest costs there (esp. fertilisers, crop protection and overheads).

Spain is where grain maize margins are consistently the best in the EU. Such was the situation in 2009, too, when the gross margin at 704 €/ha exceeded by half the second-highest result, in Italy. Spanish producers enjoyed high receipts from maize thanks to good prices and yields together with the remaining coupled subsidies. At the same time their production costs were around the average level. With lower overheads, their expenditure was relatively higher on specific production costs, such as seeds and water. As a result, Spanish production costs calculated per tonne of grain were among the lowest in the EU.

Estimates for 2010-11 suggest that, at a much higher level of values, Spain continued having the best margins, France’s results improved rapidly on price and joined the top bracket, and those in Slovakia remained at the bottom of the scale as yields declined there and costs per tonne stayed high.


14

6. INCOME OF FARMS SPECIALISED IN CEREAL PRODUCTION Despite low unit margins in comparison with other sectors, large growing areas and efficient operation allowed cereals producers to obtain an income per person comparable with other agricultural sectors. Only in a very favourable year, such as 2007, are cereals farmers able to cover all their costs. In most years, they are dependent on public support.

EU farms specialising in the production of cereals in 2009 had 18 ESU2 in terms of economic size. However, there were large differences between MS in this respect. British cereal farms were the biggest, with about 100 ESU. German and French farms followed closely, with about 70 ESU. Also, Slovak and Czech cereal farms were well above the average size, with about 50 ESU/farm. At the other end of the spectrum were Romanian cereal farms (5 ESU), with those in Greece and Cyprus not much bigger (8-10 ESU). In general, cereal farms in the new MS (EU-12) were smaller in economic terms than those in the EU-15.

Figure 21 Figure 22 Source: EU FADN — DG AGRI

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In terms of farm area, there was no split between old and new MS. While the average cereal farm had about 50 ha UAA in 2009, farms twice this size or more were predominant in Bulgaria, the Czech Republic, Germany, the Baltic states, Sweden, Slovakia and the UK. Farms in Cyprus, Greece, Italy, Poland and Romania were among the smallest. About 50 % of the UAA on cereal farms was rented by farmers, but practices varied widely among MS. Farms in Bulgaria or Slovakia relied almost entirely (over 90 % of the area) on rented land. By contrast, those in Denmark rented less than a quarter of the farmed area. In between, there was wide variation, with the farms in new MS tending to rent a larger proportion of the farmed area.

The average workforce on cereal farms was about 1 AWU — slightly less in the EU-15 and somewhat more in the EU-12. Farms in the EU-12 also relied more on hired labour. Swedish, British and Estonian cereal farms had over 100 ha UAA for each AWU. In Romania and Greece, the ratio was less than 25 ha/AWU.

2 The economic size of farms is expressed in terms of European Size Units (ESU). ESU, in addition to the

area or the number of animals, takes into account the potential profitability of production, influenced for instance by the yield level. Please note that the FADN survey, by definition, does not cover the smallest farms in the MS. Also, a large proportion of cereal production is on mixed production farms, which can be very large in MS with former state farm structures.


15

Specialist cereal farms obtained 96 % of their output from crop production. The average number of livestock units (LU) was about 1 per farm. Cereal farms had varying degrees of intensity as measured by the ratio of total inputs to UAA. Denmark used the most inputs, followed by France. The lowest input use was seen in Spain and Portugal. The value of inputs per farm peaked in 2008 and decreased the following year. Overall, EU-15 farms produced more intensively than those in the new MS.

The Farm Net Value Added indicator (FNVA)3 for an average EU specialist cereal farm fell in 2009 to € 10 800 from € 20 100 the year before and from a peak of € 28 000 in 2007. Calculated by AWU, the estimate was € 10 000 for the EU average (see Fig. 23), 46 % lower than in 2008. Such a level of income was the lowest since 2005. Farmers in all MS experienced a reduction in income. The lowest level of FNVA was in Denmark, where the indicator actually turned negative, and for farms in Finland and Sweden it was below € 5 000. A few MS, nevertheless, such as the Czech Republic, Austria and the UK, were able to maintain the income above FNVA € 30 000 per farm. In the Czech Republic, however, the indicator expressed by AWU was much lower than in the other two MS since Czech farms

employed more people. The indicator in the EU-15 was about half as much higher per farm than in the EU-10 and twice the level in the EU-2.

In 2009, like in many previous years, the highest incomes were enjoyed by cereal producers in the UK. With an FNVA of 45 000 €/AWU they earned four times the EU average. British producers owed this result to a large (the second largest) acreage farmed per

person. The output per hectare suffered much in 2009, so it was the size of farms which kept the income relatively high. Costs fell too, but only very little, and their structure changed. While expenditure on overheads and external factors decreased, the specific costs were higher. In particular, expenditure on fertilisers increased to record high levels.

Danish cereal specialists’ income dropped so much in 2009 that their FNVA indicator became negative, at around € -1 000 per farm. This meant heavy losses given that this does not include costs of external factors of production. With these included, the loss amounted to € -28 000 by farm. The problem in Danish farms was not in the values of output per hectare or per AWU, which were rather high. The handicap was on the cost side, especially for overheads. Their levels of cost per hectare were at the top of the scale, and — what was the direct cause of negative results — their expenditure grew very strongly in 2008 and 2009, especially for the already exorbitant costs of debt servicing.

3 Amount left for remuneration of the fixed factors of production (work, land and capital), whether external

or family factors.

Figure 23

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16

In comparison with other types of farms (see Figures 26 to 28), those specialised in cereals had incomes below the average except in particularly good years such as 2007. In a bad year such as 2009, cereal farms’ incomes were not even at half of the mean value. However, given the small workforce involved in running cereal farms, earnings from cereal production were slightly better in terms of income per person. In 2009, an average income of € 10 000 FNVA for cereal farms corresponded to 47 % of the average for all types of farms. But when expressed per AWU incomes were 72 % of the average.


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Subsidies were very important for maintaining profitability in cereal farms. In most cases, in terms of years and Member States, the output of farms was lower than the level of their costs (see Fig. 23). This meant that cereal production without subsidies created losses. Only in the year of record-high prices (2007) was it profitable in the EU on average. In 2009 cereals would bring heavy losses to producers were it not for farm subsidies. Thanks to subsidies the average remuneration of family labour became positive in cereal farms.

Figure 26

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7. VARIABILITY OF INCOME Average income figures hide a wide spectrum of results. In poor years their distribution compressed toward lower values, but in a good year the distribution of results was less concentrated — meaning higher average results in those years were a product of more farms performing very well. Average income figures presented earlier are drawn from a wide range of individual farm results. As farms, farmers and circumstances in which they operate vary, so do their economic results. Both in a good year and in a bad year there are farms with good results and those with bad ones, with other farms in between. What changes are the proportions between these groups. While FNVA/AWU in 2009 was € 10 000 on average, 53 % of sample farms analysed had values above it. But in 2007, that is in a year of very good grain prices, 81 % of EU cereal specialists analysed exceeded € 10 000 (see Fig. 29). Similarly, 13 % of the EU sample farms analysed had negative values of FNVA/AWU in 2009, and in 2007 the equivalent proportion was only 3 %.

Differences in average values between groups of MS are explained likewise. As illustrated below (Fig. 30), higher average income in the EU-15 was a result of more farms having


18

higher income levels, whereas for the EU-10 and especially for the EU-2, larger proportions of farms had lower income values. The same explanation is true for Member States. The UK with the highest average income in 2009 had 11 % of cereal farms with negative results and 58 % exceeding € 10 000/AWU. In the same year 64 % of Danish cereal specialists were in negative territory and only in 14 % of farms did the FNVA/AWU exceed € 10 000.


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The differences between farm incomes depended on a combination of factors which could vary for particular MS. In general, the main contributors to the income of cereal producers were output, which in turn is a function of physical production (yields) and prices, and subsidies. Output dominated as the main factor shaping income in all three groups of EU Member States. In the EU-15 yields and prices almost equally influenced the output level, with prices having the advantage. In the EU-10 it was similar, but with the output value slightly more dependent on yields. But in the EU-2, it was clearly differences in the production level (the yield) which were determining the level of output. There were differences in the reliance on subsidies, too, as a contributor to income. Cereal specialists in the EU-15, particularly in Greece and Portugal but also in Spain and Italy, were the most dependent on subsidies for their income, and this reliance was often higher than that on prices or yields taken separately. EU-2 countries depended the least on subsidies for their income. In some MS, such as Denmark and Finland, also the factor of costs bore very strongly on the income level. Especially overhead costs could depress income there. By contrast in Spain, Portugal and Latvia the handling of costs contributed positively to the level of income in cereal farms.

8. CONCLUSIONS The year 2009 was rather difficult for cereal producers in the European Union. Grain prices declined from high levels, yields fell and production costs stayed high. As a result, the gross margins obtained per hectare of cereals or per tonne of grain shrank by half in comparison with the preceding year and were at a mere 40 % of a five-year average. When all costs borne by farmers were taken into account, cereal margins actually turned negative in 2009 and indicated that cereal production was on average not profitable that year in the EU. By contrast, estimates for 2010 and 2011 point to a radical improvement in the profitability of cereal crops, led by rising grain prices.


19

The situation varied by type of cereal, at least as regards the levels of margins. While all grains experienced a fall in profitability for the second consecutive year in 2009, some crops were clearly paying better than others. Grain maize offered the best margins and suffered a relatively small reduction in profitability. It lost on average less than 30 % of gross margin compared to 2008, while the gross margin for barley, the worst hit, was cut by 80 %. With the average EU gross margin at about 50 €/ha, the profitability of barley production was six times lower than that of grain maize, with a margin nearing 300 €/ha. Wheat margins were situated in between, at around 150 €/ha, with durum wheat a little higher than soft wheat. The years 2010-11 brought much better margins for all cereals, restoring profitability to the good levels of 2007-08. It is estimated that grain maize benefited particularly from that improvement.

Figure 31 Figure 32

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Various natural and human factors resulted in great differences in the profitability of cereal production between Member States. In 2009, cereal producers in Italy were the least affected by the difficult market conditions and enjoyed the best margins, although not exceeding 300 €/ha on average. They owed these margins to a combination of good prices, decent yields and limited production costs. Farmers in Ireland and Spain were also able to earn nearly 200 €/ha in gross margin. In other MS the profitability was much worse, with many producers losing on the production. Average gross margins in Denmark, Sweden and Finland were significantly negative, in Finland in the region of -300 €/ha. Incomes of specialised farms covered in this report, although obtained from various farm activities, depended primarily on the development of cereal margins and, accordingly, they shrank significantly in 2009. Independently of the income indicator used, the 2009 incomes seemed the lowest in years, comparable only to those from 2005. With all costs included, average income was even significantly negative in a few MS, such as Denmark and Slovakia. In many MS losses were limited or avoided only thanks to direct support. Income estimates for 2010-11 have not yet been made, but the rise in margins suggests that the difficulties of 2009 could be compensated by developments favourable to cereal producers in the following two years.


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9. ANNEX

Details of methodology

Cost definitions

Symbols in the table below refer to cost variables described in detail in table F in the FADN farm return regulation4 and in the definitions of variables5 used in FADN standard results.

Specific costs F72 — Seeds and seedlings purchased F73 — Seeds and seedlings produced and used on the farm F74 — Fertilisers and soil improvers F75 — Crop protection products F76 — Other specific crop costs F81 — Water

Operating costs

Non-specific costs F60 — Contract work (machinery hire) F61 — Current upkeep of machinery and equipment F62 — Motor fuels and lubricants F63 — Car expenses F78 — Upkeep of land improvements and buildings F79 — Electricity F80 — Heating fuels F82 — Insurance F83 — Taxes and other dues F84 — Other farming overheads

Depreciation SE360 — Depreciation Total external factors — Wages paid — Rent paid — Interest paid

SE370 — Wages paid SE375 — Rent paid SE380 — Interest paid

Other farm costs

Own capital cost See the definitions below.

Own capital cost

– Own land cost: estimated on the basis of the rent that farm owners would have to pay if they had to rent the land they are using.

This is estimated as the owned area multiplied by the rent paid per ha on the same farm or, if there is no rented land on the farm, by the average rent paid per ha in the same region and for the same type of farming.6

– Cost of own capital (except land): the cost of own capital (permanent crops, buildings, machinery and equipment, forest land, livestock and crop stocks) is estimated at its ‘opportunity cost’, i.e. how much farmers could earn if they were to invest the equivalent of the capital value in a bank.

The interest paid on the capital is not known, as this information is optional in the FADN farm returns. Nevertheless, to take into account the actual interest rate paid for a farm, a

4 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32008R0868:EN:NOT 5 http://ec.europa.eu/agriculture/rica/definitions_en.cfm 6 If there are not enough farms (fewer than 20) in a given region for a given type of farming, the national rent

per ha for that type of farming is used (the TF8 classification is used).


21

‘weighted’ interest rate is calculated as the weighted average of this interest rate for debts, and the long-term (LT) interest rate, taken from the Global Insight database, for net worth. If the ‘weighted’ interest rate is lower than the LT interest rate (which means that the calculated rate of interest paid is lower than the LT interest rate), the LT interest rate is used instead of the ‘weighted’ interest rate.

Own capital value (excluding land and land improvement) is estimated as the average value of the assets (closing plus opening valuation divided by 2) multiplied by the real interest rate.7 The figure is adjusted by subtracting the inflation rate8 from the nominal interest rate. Where the inflation rate is higher than the interest rate, the real interest rate may be negative, leading to a negative cost of capital, which will add to the profit (i.e. it is more profitable to invest in farm assets than to put the money in the bank). The total circulating capital is not valued because of the unreliability of this variable in some MS. Nevertheless, the value of crop stocks is taken into account.

To calculate unpaid capital costs, we avoid double counting by deducting the interest paid from the sum of the own land cost and the cost for own capital except land:

Own capital costs = own land cost + estimated cost for own capital except land — interest paid

Costs allocation to particular crop production Cost item per enterprise Allocation key

Seeds & seedlings9 Output of the crop analysed / Output of arable crops Fertilisers, crop protection, fuel Output of the crop analysed / Output of crops & crop products Water10 Output of irrigated crop analysed / Output of irrigated crops Other specific costs Output of the crop analysed / Output of crops & crop products Non-specific costs Output of the crop analysed / Total output of the farm Other farm costs Output of the crop analysed / Total output of the farm

7 Any increase in the value of assets is excluded from income calculations. For example, land appreciates in

value over time, which is one of the reasons why investors invest in land. This gain is not included in the income, so it would not be consistent to include it in the cost of capital. In addition, in FADN, assets are valued at replacement value. Depreciation is based on this replacement value and therefore already takes any increase in prices (inflation) into account. Consequently, including the inflation part of interest in the cost of capital would constitute double counting.

8 The inflation rate is based on the Eurostat annual average rate of change in the Harmonised Indices of Consumer Prices (HICPs) — available from 1997. Inflation rates based on price indices for GDP and gross fixed capital consumption have been tested, but they are very high and tend to yield very high negative costs for capital, mainly in the EU-10. An inflation rate based on price indices for gross fixed capital consumption has been tested, as this seemed to be more closely related to assets. However, this rate has tended to fluctuate widely over the years in certain MS. In addition, land is one of the main assets and does not depreciate. It follows that the inflation rate for gross fixed capital consumption must not be more closely linked to the change in the price of agricultural assets than to the consumer price indices.

9 Seeds and seedlings are not allocated to permanent crops, as the corresponding item on the FADN farm returns only refers to arable crops. Young trees and bushes for a new plantation are considered to be an investment.

10 Some MS do not provide separate records for irrigated crops (this is the case for Italy). In such cases, farm costs relating to water are allocated using the same allocation key as for farming overheads. However, this cost is allocated only to crops that are likely to be irrigated (e.g. grain maize).


22

Estimation of selected output and cost items for 2010 and 2011

Selected output and cost items for 2010 and 2011 were estimated on the basis of the following assumptions and calculations:

- crop areas assumed to be the same as in 2009 results,

- coupled subsidies assumed to be the same as in 2009 results,

- by-product values assumed to be the same as in 2009 results,

- 2010-11 cereal prices indexed based on Eurostat’s Price indices of agricultural products

- 2010-11 cereal yields indexed based on DG AGRI’s Outlook yield and production estimates, which are based in turn largely on Eurostat data,11

- cereal output calculated from the above as areas x yields x prices, - 2009 costs indexed on the basis of Eurostat price indices (Agricultural prices and price indices,12 EAA Economic Accounts for Agriculture,13 and inflation rates where specific price indices were not available14).

11 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=apro_cpp_crop&lang=en 12 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=apri_pi05_outa&lang=en 13 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=aact_eaa05&lang=en 14 http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=prc_hicp_aind&lang=en


23

Tables with detailed results

page

Common wheat margins 24

Durum wheat margins 45

Barley margins 51

Grain maize margins 66

Income in specialist cereal farms 80


EU27farms specialised in the production of common wheat: 40 % or more of output from c. wheat production (avg. 53% in the period)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Representativeness of the sample:Sample farms number 1314 1350 2251 1962 2243 3769 3651 3224 Farms represented number 71455 67268 96843 85365 94825 184207 198953 165262Structural information (average per farm):Total Utilised Agricult. Area ha 93,0 102,4 86,4 87,6 94,0 83,4 73,4 68,7Total labour input AWU 1,2 1,2 1,2 1,2 1,3 1,6 1,3 1,3Common wheat area ha 46,5 49,2 43,3 44,4 45,4 40,8 38,6 36,3 36,3 36,3 in which irrigated area ha 0,8 0,4 0,2 0,3 0,5 0,4 0,8 0,9Common wheat production t 328 316 295 292 295 213 228 206 173 188Common wheat yield t / ha 7,1 6,4 6,8 6,6 6,5 5,2 5,9 5,7 4,8 5,2Common wheat price € / t 103 126 103 99 128 200 150 119 181 191Common wheat output '000 € 33,9 39,8 30,3 29,0 37,6 42,7 34,2 24,5 31,2 35,9Common wheat ha 46,5 49,2 43,3 44,4 45,4 40,8 38,6 36,3Durum wheat ha 0,5 0,4 0,4 0,3 0,5 0,3 0,2 0,2Grain maize ha 1,5 1,2 2,3 1,4 1,5 3,1 3,7 2,9Barley ha 10,8 11,8 8,6 7,9 9,6 8,1 6,9 6,1Oats ha 1,2 1,4 1,0 0,9 1,1 0,8 0,9 0,7Rye ha 0,4 0,4 0,7 0,5 0,5 0,5 0,4 0,3Summer cer_mix. ha 0,0 0,0 0,1 0,0 0,1 0,0 0,1 0,0Oth.cereals ha 0,2 0,3 0,8 0,5 0,5 0,4 0,4 0,5Total output '000 € 64,1 74,9 57,0 55,7 71,4 77,3 63,3 46,1

Receipts from common wheat (average per farm):grain €/ha 729 809 700 652 828 1047 888 674 861 989by-products (straw) €/ha 17 15 14 11 14 12 10 12 12 12coupled direct payments €/ha 331 327 249 107 27 19 16 15 15 15other crop-specific subsidies (incl. top-ups) €/ha 0 7 2 1 1 1 1Receipts per hectare €/ha 1077 1150 970 770 870 1080 916 702 889 1017Receipts per tonne of grain €/t 153 179 142 117 134 207 155 124 187 196

Common wheat production operating costs (average per farm):Specific costs €/ha 314 310 295 302 327 330 329 323 301 336

including: Seeds €/ha 56 57 53 52 55 68 69 61 64 67Fertilizers €/ha 121 117 116 123 136 135 146 156 132 162

Crop protection €/ha 124 123 115 116 123 112 101 93 93 93Water €/ha 1 0 0 0 1 1 1 1 1 1

Other specific costs €/ha 11 13 11 11 13 15 13 12 13 13Non-specific costs €/ha 253 273 254 259 293 294 281 234 247 265

including: motor fuels and lubricants €/ha 44 44 50 60 69 73 81 58 66 76machines & buildings upkeep €/ha 71 76 64 61 71 72 60 52 54 56

Contract work €/ha 47 51 49 47 53 58 59 52 53 55Energy €/ha 9 9 9 10 11 11 12 10 11 12

Other direct costs €/ha 82 93 82 81 89 81 69 62 64 66Operating costs per hectare €/ha 567 583 548 562 620 625 611 557 549 601Operating costs per tonne of grain €/t 80 91 80 85 96 120 103 98 115 116

Other farm costs, attributed to common wheat production:Depreciation €/ha 162 168 144 138 156 148 128 131Total external factors €/ha 188 196 156 156 185 183 162 146 - Wages paid €/ha 53 54 44 46 53 60 52 45 - Rent paid €/ha 93 98 78 75 94 91 83 73 - Interest paid €/ha 43 43 34 34 38 32 28 28Imputed unpaid family factors €/ha 284 396 249 246 253 236 190 217 - Family labour costs €/ha 191 198 167 170 182 169 152 151 - Own capital cost €/ha 93 198 82 76 71 68 37 66

Gross margin: receipts over operating costswithout coupled direct payments €/ha 180 241 172 102 222 436 289 130 325 400with coupled direct payments €/ha 510 567 421 209 250 455 305 146 340 416without coupled direct payments €/t 25 37 25 15 34 84 49 23 68 77with coupled direct payments €/t 72 88 62 32 38 87 52 26 72 80

Net margin (before own factors) = gross margin – depreciation – external factors without coupled direct payments €/ha -171 -123 -129 -192 -119 105 -2 -147with coupled direct payments €/ha 160 204 121 -85 -91 124 14 -131without coupled direct payments €/t -24 -19 -19 -29 -18 20 0 -26with coupled direct payments €/t 23 32 18 -13 -14 24 2 -23

Net economic margin (after own factors) = net margin – imputed own factors costswithout coupled direct payments €/ha -455 -519 -377 -438 -372 -132 -191 -363with coupled direct payments €/ha -124 -192 -128 -331 -345 -113 -175 -348without coupled direct payments €/t -65 -81 -55 -67 -57 -25 -32 -64with coupled direct payments €/t -18 -30 -19 -50 -53 -22 -30 -61

24


EU15farms specialised in the production of common wheat: 40 % or more of output from common wheat production (avg. 53% in the period)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Representativeness of the sample:Sample farms number 1314 1350 1261 1150 1390 2018 1866 1562 Farms represented number 71455 67268 63016 61934 67660 101309 90189 73676Structural information (average per farm):Total Utilised Agricult. Area ha 93,0 102,4 103,4 96,3 106,7 95,0 91,1 87,1Total labour input AWU 1,2 1,2 1,2 1,1 1,2 1,1 1,1 1,1Common wheat area ha 46,5 49,2 50,9 47,6 50,3 44,6 46,2 44,1 44,1 44,1 in which irrigated area ha 0,8 0,4 0,3 0,3 0,7 0,5 0,7 0,7Common wheat production t 328 316 367 334 356 293 336 318 262 264Common wheat yield t / ha 7,1 6,4 7,2 7,0 7,1 6,6 7,3 7,2 5,9 6,0Common wheat price € / t 103 126 104 101 128 205 156 122 193 210Common wheat output '000 € 33,9 39,8 38,2 33,8 45,7 60,0 52,3 38,9 50,4 55,3Common wheat ha 46,5 49,2 50,9 47,6 50,3 44,6 46,2 44,1Durum wheat ha 0,5 0,4 0,5 0,4 0,7 0,5 0,4 0,5Grain maize ha 1,5 1,2 2,0 1,3 1,3 1,3 1,9 1,8Barley ha 10,8 11,8 10,8 8,9 11,1 10,3 10,1 9,2Oats ha 1,2 1,4 1,2 1,0 1,3 1,2 1,4 1,2Rye ha 0,4 0,4 0,4 0,2 0,4 0,5 0,4 0,3Summer cer_mix. ha 0,0 0,0 0,0 0,0 0,0Oth.cereals ha 0,2 0,3 0,5 0,3 0,3 0,3 0,3 0,3Total output '000 € 64,1 74,9 72,0 65,5 86,9 108,7 98,4 73,9

Receipts from common wheat (average per farm):grain €/ha 729 809 750 710 910 1344 1133 881 1142 1253by-products (straw) €/ha 17 15 18 14 18 19 18 19 19 19coupled direct payments €/ha 331 327 327 138 35 31 29 28 28 28other crop-specific subsidies (incl. top-ups) €/ha 0Receipts per hectare €/ha 1077 1150 1094 862 962 1394 1181 928 1189 1300Receipts per tonne of grain €/t 153 179 152 123 136 212 162 129 201 218

Common wheat production operating costs (average per farm):Specific costs €/ha 314 310 325 331 356 412 417 427 388 434

including: Seeds €/ha 56 57 57 56 58 73 74 70 67 72Fertilizers €/ha 121 117 124 130 143 165 182 206 171 210

Crop protection €/ha 124 123 133 132 139 154 143 133 132 133Water €/ha 1 0 0 0 1 1 1 1 1 1

Other specific costs €/ha 11 13 11 12 15 19 18 17 17 18Non-specific costs €/ha 253 273 288 291 327 379 353 313 330 350

including: motor fuels and lubricants €/ha 44 44 49 59 69 78 87 62 71 81machines & buildings upkeep €/ha 71 76 76 71 81 98 84 75 78 81

Contract work €/ha 47 51 54 53 61 74 68 68 70 72Energy €/ha 9 9 10 11 12 13 15 12 14 16

Other direct costs €/ha 82 93 99 96 105 116 99 95 97 100Operating costs per hectare €/ha 567 583 614 622 683 791 770 740 718 784Operating costs per tonne of grain €/t 80 91 85 89 96 120 106 103 121 131

Other farm costs, attributed to common wheat production:Depreciation €/ha 162 168 166 153 173 195 177 177Total external factors €/ha 188 196 188 183 218 235 205 194 - Wages paid €/ha 53 54 50 52 59 68 55 52 - Rent paid €/ha 93 98 96 91 114 121 109 100 - Interest paid €/ha 43 43 41 40 45 46 41 42Imputed unpaid family factors €/ha 284 396 298 288 289 328 279 301 - Family labour costs €/ha 191 198 200 199 208 228 217 214 - Own capital cost €/ha 93 198 98 89 80 101 62 87

Gross margin: receipts over operating costswithout coupled direct payments €/ha 180 241 154 102 245 572 381 160 443 488with coupled direct payments €/ha 510 567 481 239 280 603 411 188 471 516without coupled direct payments €/t 25 37 21 14 35 87 52 22 75 82with coupled direct payments €/t 72 88 67 34 39 92 56 26 80 86

Net margin (before own factors) = gross margin – depreciation – external factors without coupled direct payments €/ha -171 -123 -199 -235 -146 142 -1 -211with coupled direct payments €/ha 160 204 127 -97 -112 173 29 -183without coupled direct payments €/t -24 -19 -28 -33 -21 22 0 -29with coupled direct payments €/t 23 32 18 -14 -16 26 4 -25

Net economic margin (after own factors) = net margin – imputed own factors costswithout coupled direct payments €/ha -455 -519 -497 -523 -435 -186 -280 -512with coupled direct payments €/ha -124 -192 -170 -385 -400 -155 -250 -484without coupled direct payments €/t -65 -81 -69 -75 -61 -28 -38 -71with coupled direct payments €/t -18 -30 -24 -55 -57 -24 -34 -67

25



2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Representativeness of the sample:Sample farms number 990 812 853 1368 1351 1211 Farms represented number 33827 23432 27165 40073 34280 30238Structural information (average per farm):Total Utilised Agricult. Area ha 54,8 64,4 62,3 62,6 66,1 64,6Total labour input AWU 1,2 1,4 1,5 1,5 1,5 1,4Common wheat area ha 29,3 36,1 33,4 31,4 36,2 34,9 34,9 34,9 in which irrigated area ha 0,0 0,0 0,0 0,3 0,0 0,2Common wheat production t 162 182 142 144 198 173 148 157Common wheat yield t / ha 5,5 5,0 4,3 4,6 5,5 5,0 4,3 4,5Common wheat price € / t 97 89 122 193 152 110 148 177Common wheat output '000 € 15,7 16,2 17,4 27,9 30,2 19,0 22,0 27,8Common wheat ha 29,3 36,1 33,4 31,4 36,2 34,9Durum wheat ha 0,0Grain maize ha 2,7 1,5 1,7 2,7 2,4 1,4Barley ha 4,5 5,4 6,2 6,2 6,4 5,3Oats ha 0,6 0,6 0,5 0,6 0,6 0,6Rye ha 1,2 1,2 0,9 0,9 1,0 1,1Summer cer_mix. ha 0,1 0,1 0,2 0,2 0,2 0,2Oth.cereals ha 1,2 1,2 1,1 0,9 1,2 1,6Total output '000 € 29,0 29,8 32,9 50,8 53,8 34,9

Receipts from common wheat (average per farm):grain €/ha 536 450 521 889 832 545 629 796by-products (straw) €/ha 3 1 1 3 2 1 1 1coupled direct payments €/ha 0 0 0other crop-specific subsidies (incl. top-ups) €/ha 28 14 6 6 6 6Receipts per hectare €/ha 566 451 522 906 841 552 636 803Receipts per tonne of grain €/t 103 89 122 197 154 112 150 179

Common wheat production operating costs (average per farm):Specific costs €/ha 195 200 221 291 348 281 264 301

including: Seeds €/ha 39 38 44 62 64 45 44 53Fertilizers €/ha 93 98 108 139 178 153 138 167

Crop protection €/ha 56 59 64 82 98 75 75 74Water €/ha 0 0 0 0 0 0 0

Other specific costs €/ha 7 5 5 7 8 7 7 7Non-specific costs €/ha 143 149 164 229 275 177 187 204

including: motor fuels and lubricants €/ha 52 62 69 86 99 68 75 86machines & buildings upkeep €/ha 23 27 32 52 52 34 34 36

Contract work €/ha 33 26 26 38 60 32 32 34Energy €/ha 5 6 7 8 7 7 7 8

Other direct costs €/ha 29 29 30 45 56 37 38 39Operating costs per hectare €/ha 338 349 385 519 623 458 451 504Operating costs per tonne of grain €/t 61 69 90 113 114 93 106 112

Other farm costs, attributed to common wheat production:Depreciation €/ha 74 84 91 127 124 108Total external factors €/ha 53 56 61 94 100 82 - Wages paid €/ha 23 25 30 46 45 36 - Rent paid €/ha 19 19 19 32 32 27 - Interest paid €/ha 11 13 12 16 24 19Imputed unpaid family factors €/ha 89 95 120 136 127 159 - Family labour costs €/ha 58 65 81 104 120 100 - Own capital cost €/ha 31 30 39 32 7 59

Gross margin: receipts over operating costswithout coupled direct payments €/ha 228 102 137 387 218 94 185 299with coupled direct payments €/ha 229 102 137 387 218 94 185 299without coupled direct payments €/t 41 20 32 84 40 19 43 67with coupled direct payments €/t 41 20 32 84 40 19 43 67

Net margin (before own factors) = gross margin – depreciation – external factors without coupled direct payments €/ha 102 -39 -15 166 -6 -96with coupled direct payments €/ha 102 -39 -15 166 -6 -96without coupled direct payments €/t 18 -8 -4 36 -1 -19with coupled direct payments €/t 18 -8 -4 36 -1 -19

Net economic margin (after own factors) = net margin – imputed own factors costswithout coupled direct payments €/ha 13 -134 -136 29 -133 -255with coupled direct payments €/ha 13 -133 -136 29 -133 -255without coupled direct payments €/t 2 -26 -32 6 -24 -51with coupled direct payments €/t 2 -26 -32 6 -24 -51

26



2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Representativeness of the sample:Sample farms number 383 434 451 Farms represented number 42826 74484 61348Structural information (average per farm):Total Utilised Agricult. Area ha 75,5 55,2 48,6Total labour input AWU 2,7 1,5 1,6Common wheat area ha 40,7 30,4 27,6 27,6 27,6 in which irrigated area ha 0,3 1,1 1,6Common wheat production t 89 112 88 99 126Common wheat yield t / ha 2,2 3,7 3,2 3,6 4,6Common wheat price € / t 178 127 113 183 175Common wheat output '000 € 15,8 14,2 9,9 18,2 22,0Common wheat ha 40,7 30,4 27,6Durum wheat ha 0,0 0,1Grain maize ha 7,7 6,5 5,0Barley ha 4,7 3,3 2,8Oats ha 0,3 0,3 0,1Rye ha 0,1 0,0 0,0Summer cer_mix. ha 0,0Oth.cereals ha 0,1 0,2 0,1Total output '000 € 27,8 25,1 18,1

Receipts from common wheat (average per farm):grain €/ha 389 468 358 659 800by-products (straw) €/ha 1 1 4 4 4coupled direct payments €/haother crop-specific subsidies (incl. top-ups) €/ha 0 0Receipts per hectare €/ha 390 469 362 663 803Receipts per tonne of grain €/t 179 128 114 184 176

Common wheat production operating costs (average per farm):Specific costs €/ha 148 158 150 157 170

including: Seeds €/ha 56 62 53 69 68Fertilizers €/ha 54 63 63 53 66

Crop protection €/ha 24 27 26 27 27Water €/ha 1 0 1 1 1

Other specific costs €/ha 13 6 7 8 8Non-specific costs €/ha 122 153 116 127 141

including: motor fuels and lubricants €/ha 51 61 44 50 59machines & buildings upkeep €/ha 19 21 19 20 21

Contract work €/ha 29 42 32 34 36Energy €/ha 6 8 6 7 9

Other direct costs €/ha 17 20 15 16 16Operating costs per hectare €/ha 270 311 266 284 311Operating costs per tonne of grain €/t 124 84 84 79 68

Other farm costs, attributed to common wheat production:Depreciation €/ha 42 40 54Total external factors €/ha 115 118 96 - Wages paid €/ha 50 50 40 - Rent paid €/ha 58 63 49 - Interest paid €/ha 6 5 7Imputed unpaid family factors €/ha 70 56 90 - Family labour costs €/ha 63 49 60 - Own capital cost €/ha 7 7 30

Gross margin: receipts over operating costswithout coupled direct payments €/ha 120 159 96 379 492with coupled direct payments €/ha 120 159 96 379 492without coupled direct payments €/t 55 43 30 105 108with coupled direct payments €/t 55 43 30 105 108

Net margin (before own factors) = gross margin – depreciation – external factors without coupled direct payments €/ha -38 0 -54with coupled direct payments €/ha -38 0 -54without coupled direct payments €/t -17 0 -17with coupled direct payments €/t -17 0 -17

Net economic margin (after own factors) = net margin – imputed own factors costswithout coupled direct payments €/ha -108 -56 -144with coupled direct payments €/ha -108 -56 -144without coupled direct payments €/t -49 -15 -45with coupled direct payments €/t -49 -15 -45

27


Bulgariafarms specialised in the production of common wheat: 40 % or more of output from common wheat production (avg. 54% in the period)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Representativeness of the sample:Sample farms number 261 238 188 Farms represented number 5970 5785 5868Structural information (average per farm):Total Utilised Agricult. Area ha 248,1 224,4 152,5Total labour input AWU 4,8 4,1 3,4Common wheat area ha 126,8 108,0 78,6 78,6 78,6 in which irrigated area ha 0,2Common wheat production t 264 438 235 269 292Common wheat yield t / ha 2,1 4,1 3,0 3,4 3,7Common wheat price € / t 188 126 114 181 187Common wheat output '000 € 49,7 55,1 26,8 48,6 54,5Common wheat ha 126,8 108,0 78,6Durum wheat ha 0,1 0,5 0,0Grain maize ha 22,8 17,9 9,5Barley ha 16,8 17,2 11,4Oats ha 2,2 2,4 0,8Rye ha 0,3 0,3 0,3Summer cer_mix. ha 0,1Oth.cereals ha 0,5 0,5 0,3Total output '000 € 89,1 103,7 51,9

Receipts from common wheat (average per farm):grain €/ha 392 510 341 619 693by-products (straw) €/ha 2 1 0 0 0coupled direct payments €/haother crop-specific subsidies (incl. top-ups) €/ha 0 0Receipts per hectare €/ha 395 511 341 619 694Receipts per tonne of grain €/t 189 126 114 181 187

Common wheat production operating costs (average per farm):Specific costs €/ha 121 155 151 147 160

including: Seeds €/ha 41 52 42 49 50Fertilizers €/ha 50 69 78 66 79

Crop protection €/ha 25 31 29 29 29Water €/ha 0

Other specific costs €/ha 4 3 2 2 3Non-specific costs €/ha 101 139 113 119 137

including: motor fuels and lubricants €/ha 58 81 65 69 85machines & buildings upkeep €/ha 15 17 16 17 17

Contract work €/ha 14 20 15 15 16Energy €/ha 3 3 2 3 3

Other direct costs €/ha 11 19 15 15 16Operating costs per hectare €/ha 222 294 264 266 297Operating costs per tonne of grain €/t 106 73 88 78 80

Other farm costs, attributed to common wheat production:Depreciation €/ha 36 45 57Total external factors €/ha 115 158 135 - Wages paid €/ha 44 52 49 - Rent paid €/ha 64 96 73 - Interest paid €/ha 7 9 13Imputed unpaid family factors €/ha -5 -18 28 - Family labour costs €/ha 5 9 14 - Own capital cost €/ha -11 -27 14

Gross margin: receipts over operating costswithout coupled direct payments €/ha 173 217 77 354 397with coupled direct payments €/ha 173 217 77 354 397without coupled direct payments €/t 83 53 26 103 107with coupled direct payments €/t 83 53 26 103 107

Net margin (before own factors) = gross margin – depreciation – external factors without coupled direct payments €/ha 22 14 -115with coupled direct payments €/ha 22 14 -115without coupled direct payments €/t 11 4 -39with coupled direct payments €/t 11 4 -39

Net economic margin (after own factors) = net margin – imputed own factors costswithout coupled direct payments €/ha 27 32 -143with coupled direct payments €/ha 27 32 -143without coupled direct payments €/t 13 8 -48with coupled direct payments €/t 13 8 -48

28


Czech Republicfarms specialised in the production of common wheat: 40 % or more of output from common wheat production (avg. 51% in the period)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Representativeness of the sample:Sample farms number 92 62 110 212 157 96 Farms represented number 1228 1046 1538 3014 1894 1019Structural information (average per farm):Total Utilised Agricult. Area ha 142,8 115,0 121,8 106,2 140,4 173,5Total labour input AWU 2,4 1,8 2,2 1,9 2,3 2,4Common wheat area ha 77,0 63,9 64,7 56,7 76,8 93,2 93,2 93,2 in which irrigated area haCommon wheat production t 436 313 326 263 373 481 435 496Common wheat yield t / ha 5,7 4,9 5,0 4,6 4,9 5,2 4,7 5,3Common wheat price € / t 96 92 118 194 161 103 172 174Common wheat output '000 € 41,7 28,9 38,5 51,1 60,1 49,5 74,8 86,5Common wheat ha 77,0 63,9 64,7 56,7 76,8 93,2Durum wheat ha 0,0Grain maize ha 4,9 2,2 5,4 8,4 11,2 7,2Barley ha 21,2 19,8 18,7 15,2 18,5 22,8Oats ha 2,1 1,7 0,7 0,8 0,4 1,8Rye ha 1,4 1,2 0,8 0,6 0,3 0,6Summer cer_mix. haOth.cereals ha 1,1 0,1 0,4 0,5 0,3 0,8Total output '000 € 82,9 58,5 77,7 95,3 116,3 103,0

Receipts from common wheat (average per farm):grain €/ha 542 453 596 902 783 531 803 929by-products (straw) €/ha 2 2 1 3 1 2 2 2coupled direct payments €/haother crop-specific subsidies (incl. top-ups) €/ha Receipts per hectare €/ha 544 454 596 905 783 533 805 931Receipts per tonne of grain €/t 96 93 118 195 161 103 172 175

Common wheat production operating costs (average per farm):Specific costs €/ha 194 181 222 280 306 269 232 255

including: Seeds €/ha 51 50 55 65 68 58 56 62Fertilizers €/ha 71 63 81 104 115 109 87 108

Crop protection €/ha 70 64 77 108 121 99 85 81Water €/ha

Other specific costs €/ha 2 4 9 3 2 3 4 4Non-specific costs €/ha 178 185 238 320 325 242 254 267

including: motor fuels and lubricants €/ha 62 65 77 89 97 81 90 99machines & buildings upkeep €/ha 35 38 81 135 130 70 70 72

Contract work €/ha 28 40 34 41 36 36 37 37Energy €/ha 4 5 7 10 11 8 9 10

Other direct costs €/ha 49 37 40 45 50 47 47 48Operating costs per hectare €/ha 372 366 460 600 630 512 485 522Operating costs per tonne of grain €/t 66 75 91 129 130 99 104 98

Other farm costs, attributed to common wheat production:Depreciation €/ha 63 72 109 159 149 102Total external factors €/

EU cereal farms report 2012ec.europa.eu/agriculture/rica/pdf/cereal_report_2012.pdfEU cereal farms report 2012 2 The analysis covers the accounting years from 2002 to 2009, and additional

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