France, the leading European exporter of soft wheat, is experiencing an exceptionally poor harvest this year. The drop in plantings, excessive rain and a lack of sunshine have weighed down yields and grain quality. Production, estimated at 26.3 million tonnes, is down 23.9% compared to the average of the last five years and could be the lowest since 1987, according to the Ministry of Agriculture.
A dark year for wheat, to which are added the difficulties of another key sector of French exports: vines. These gloomy prospects could further weaken the French agricultural trade balance, which has been declining for several years, in particular due to growing geopolitical tensions, analyses Thierry Pouch, head of economic studies at the permanent assembly of the Chambers of Agriculture.
L’Express: The Ministry of Agriculture recently announced that the wheat harvest in 2024 would be “one of the weakest harvests in the last forty years”. What does this mean for French exports?
Thierry Pouch: The expected wheat harvest could be 26 million tonnes this year, compared to an average of 36 million, a decrease of 10 million tonnes over the last five years. This will necessarily reduce the exportable surplus. France exports around 50% of its wheat production, with very important customers in the Maghreb, such as Algeria, which accounts for almost half of our exports outside the European Union.
But this historic decline comes at the worst possible time. Because, while production has been particularly poor in France, it has been better elsewhere, especially among our major American and Russian competitors. Add to that the context of the trade war with Russia, which is charging very low prices and using its influence in Africa to sometimes distribute wheat for free to certain countries. We are witnessing a Russification of the world market, which will make it all the more difficult for us to cope with.
Should we fear lasting effects on some of France’s customers?
This is possible, because the strategy pursued by Russia is paying off: it is starting to gain market share where we were historical suppliers. It has thus managed to become Egypt’s leading supplier, and to oust the French. In Algeria too, there is a strong influence from Moscow so that the country buys Russian wheat. In this respect, France’s alignment with Morocco on the subject of Western Sahara will not make things easier, because this position risks creating tensions between France and Algeria, to the benefit of Russia on wheat exports.
Our agricultural trade balance, already declining, is set to take another hit…
In recent years, we have indeed seen the French food trade balance experience a certain erosion. There is no doubt about that. The fact remains that, since 1977, we have not had a single deficit. Agriculture therefore remains one of the best-performing sectors of the French economy. Today, more than 95% of our surplus comes from countries outside the European Union. But since 2017, we have been in deficit compared to the EU, which has never happened before.
The start of the inversion of the curves between the European Union and third countries took place with the financial crisis of 2008. Some of our European partners, such as Spain, Portugal and Greece, were severely affected by the crisis and by austerity policies. They changed their eating habits, made trade-offs, and this to the detriment of French production. We saw this very clearly in the consumption of meat of French origin, which has significantly decreased in the European Union. Fortunately, therefore, third countries – most of which have high growth rates and whose standards of living are improving – have allowed us to maintain our agri-food excellence. The situation nevertheless remains precarious, especially if exports to these non-EU countries continue to erode.
What are the risks of seeing the French agricultural trade balance plummet?
Often expressed in value, agri-food trade could suffer from a decline in prices, even moderate. This is already the case for cereals. Since 2023, the surplus balance has declined in this area. In addition, there is a risk that markets will arbitrate between French cereals and those produced elsewhere, in Russia, Argentina or the United States. The slowdown in economic growth in certain countries, such as China, which is now the world’s largest importer of agricultural and food products, also weighs in the equation. Geopolitics has become a key factor.
The other risk, as we can clearly see with soft wheat, lies in the volumes available. With fewer harvests, we mechanically reduce exportable surpluses. It is likely that the balance for 2024, if it is still in surplus, will be lower than that of 2023, itself down compared to the exceptional year of 2022. This is a perspective that should be examined, because, comparatively, the United States, which had a surplus since the 1950s, has been in an agri-food trade deficit for four years. Let us be careful not to suffer the same fate.
Can the consequences of this difficult year be lasting?
In terms of production, experience shows that the bar can be quickly turned around. For example, 2016 was a catastrophic year for wheat production. We had fallen to less than 30 million tonnes. Cereal producers even had negative incomes. But we saw a real recovery afterwards. Wheat is one of the most consumed commodities in the world, with nearly 25% of global production being exported. The market is very large, with specific needs in certain regions, such as sub-Saharan Africa. So we have the means to bounce back.
One downside, however: the current geopolitical context has changed the situation considerably. Before the war in Ukraine, we could hope to recover the lost market shares. It is much more difficult now with the pressure put on by Russia. And if Ukraine, which is a major wheat-producing country, reestablishes its production tool as is currently the case, this could be detrimental to us. All the more so since the country is expected to join the European Union one day. These two major global cereal players could destabilize us for a long time.
Are economic difficulties to be feared among French cereal producers?
The drop in production and low yields suggest that treasuries could be damaged by 25,000 to 50,000 euros per farm. Hence the measures taken a few days ago by the ministry concerning insurance, the deferral of contribution payments or the early payment of CAP aid. However, some cereal growers are expressing their discouragement and are talking about stopping.
Whether for cereals, oilseeds or beets, climatic hazards make production increasingly erratic, without the accompanying measures proving sufficiently robust. The progress in agronomic and genetic research that promises crops better adapted to these climate changes takes time. And finding varieties resistant to this type of hazard is complicated. When farm accounts plummet, it is logical that some farmers consider leaving the profession.
Winegrowers are also experiencing a black year, with a drop in production expected in almost all wine-growing areas in France…
The vagaries of the climate have not spared the vine, with the combined effects of mildew, frost and hail. After two or three years of increases, we have fallen back below 45 million hectolitres of production. Furthermore, the sector is experiencing structural difficulties, linked to the regular weakening of wine consumption. The domestic outlet is increasingly difficult, and demand for wine in the world is eroding. China, for example, is no longer as buoyant a market as it was in the last ten years, when it imported a lot of Bordeaux wine. It is a profession that is now weakened.
Can France lose its place as the world’s leading wine exporter?
I don’t think this leadership is threatened, even if the situation becomes more critical from year to year. The position of world’s leading producer is played out between France and Italy, but in terms of exports, we remain ahead. This will still be the case in 2024, because winegrowers have large stocks. If production decreases, it could be an opportunity to sell off surpluses from previous years.
In addition to wheat and wine, a third sector is facing bad winds: meat. In 2023, we observed a decline in cattle production of 5.3%, and a decline in the French herd of 1.1%. These are statistical trends that we have known since 2015-2016. Because consumption is also falling. To stay on the issue of foreign trade, in terms of live cattle, France still shows a slight surplus. On the other hand, if we include processed meat, it records a trade deficit. The balance is starting to widen: imports are increasing and exports are decreasing.
Is the French agricultural balance doomed to this decline?
I am not convinced. In viticulture, cereals, dairy products, sugar, or some live animals such as pork, we are still structurally in surplus. As for exports of dairy products, particularly cheese, they have increased compared to last year. In May 2024, the cumulative twelve-month figure compared to 2023 was 16% higher. This is not nothing. This means that we must take into account all sectors to maintain our position and target promising markets that we can conquer.
What are our strengths?
Dairy products are one of them. We know that in the Maghreb and in part of sub-Saharan Africa, there are solid outlets. The needs will also be significant in Pakistan, for example, a country crossed by the new Chinese Silk Road and which could see its standard of living rise, and with it milk consumption. These are dynamics that must be anticipated. On cereals, it is the same thing: climatic accidents are there, but we are capable of moving forward.
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