Abstract
This report focuses on Greek grain and rice production, the livestock industry
for poultry, beef and pork
and the outlook for the dairy industry. It
considers recent developments in these sectors and looks at how
production
levels and consumption trends are likely to play out to the end of our
forecast period in 2013.
The olive, fruit, goat and sheep farming sectors
have not been considered in depth in this particular report,
but it is
worth noting that these are some of the country' s most successful agricultural
products and
contribute to Greece' s important food and drink industry and
export market (they are considered in the
Business Environment Overview).
Agricultural development has been largely dictated by Greece' s
mountainous
terrain, fragmented island geography and southern Mediterranean climate, hence
olives,
fruit, goats and sheep generally thrive.
According to Trade
With Greece, published by the Athens Chamber of Commerce and Industry, in
line
with EU policy the Greek government has called for environmental
issues to take centre stage. Minister of
Rural Development and Food
Alexander Kondos is quoted as saying that ' quality, ecology and
development' will make the country' s agricultural sector more competitive and
better adapted to the
demands of the domestic and international markets,
and also ensure protection for consumers, farmers
and the environment.
Organic production began in Greece in the early 1980s in response to the
ecological movement. In
response to the demand for specific organic foods
from countries such as Germany and the Netherlands
farmers began to
produce organic crops such as olives. Following the introduction of hectare
subsidies in
1996 another wave of farmers went organic. Throughout the
late 1990s it was estimated that the number
of organic farms in Greece
grew by 50-120% a year. The international reputation for the quality of
Greek
olive oil has made it a lucrative product for farmers. According to
Trade With Greece, the country is
ranked 16th in the world on the basis of
certified organically cultivated areas.
Conditions are often difficult for
wheat and corn growers and there could be problems in the future. There
are concerns that the climate is getting drier and there is also evidence that
traditional irrigation methods
might need to change. The preponderance of
small-sized, family-owned dispersed plots; concerns about
changes in EU
subsidy levels and the country' s negative stance on genetically modified (GM)
products
complicate matters.
The government is hoping that the
construction of biofuel facilities will help boost crop production.
Hellenic Sugar hopes to convert two of its production sites into bio-ethanol
plants, to help restructure the
industry in line with the EU sugar reforms
and meet Greece' s obligations under the EU Renewable
Energy Directive.
According to an article in Athens News in February 2008, 13 companies were
already
generating up to 114,000 tonnes of biodiesel, 10-30% of which was
derived from locally sourced raw
materials, mainly sunflower oil.
Production of sunflowers has increased in recent years as a result.
However, it is unclear how this crop production for fuel policy will play out.
An article at
Balkananalysis.com speculates that large investors looking
for entry to the market may be more interested
in investing in established
biofuel businesses than in constructing new plants in the current economic
climate. However, the EU' s approval of temporary anti-dumping and anti-subsidy
duties on imports of
biodiesel from the US could help boost local
production.
Production figures for pork, beef and veal are forecast to
fall, however growth is expected in the poultry
industry, with production
forecast to increase by 19% between 2009 and 2013. Recent improvements in
Greek poultry farming methods and increased consumption suggest continued
growth.
The dairy industry is the third most important sector in Greek
food and drink production representing
over 17% of total production value.
Cheese is a popular product and demand is expected to keep rising.
Feta
cheese is a traditional Greek product and has found a role in changing dietary
trends. There are
further opportunities for other dairy products.
Rice
production and consumption is also anticipated to rise, thanks to improved
yields, further
mechanisation and its rising popularity with
consumers.
Tobacco and cotton have traditionally been important crops, but
production has declined in recent years,
mainly in response to EU
decisions to reduce subsidies. Greece has one of the highest per capita EU
Common Agricultural Policy (CAP) funding levels and some of the farmers have
become subsidydependent.
Food and drink exports and imports have been
rising, imports at a quicker rate. However, BMI forecasts
that due to
increased investment in the processed foods sector the food and drink trade
balance should
approach equilibrium by 2012. According to Invest in Greece
(the official investment promotion agency)
food and drink account for
18.3% of the country' s exports by value and such exports increased by
11.2%
during the first half of 2008 compared to 2007. Also, food and
beverage is the most dynamic sector in
Greek manufacturing, accounting for
25% of turnover, 24% of employment and 25% of total invested
capital.
The biggest overriding problem for countries around the world is the global
economy. Falling commodity
prices have angered Greek farmers who, in
January 2009, came out onto the streets to protest and demand
extra
subsidies. There were also reports of stock-piling cotton, wheat and corn as
farmers refused to sell at
the lower rates. In 2009 more than ever
commodity prices will be at the mercy of global demand
dynamics, exchange
rate effects and weather-related supply issues. Supply side dynamics are
expected to
particularly weigh on wheat prices.
Prices in general have
become a sensitive issue. An article by Reuters notes that the lack of
competition,
especially in the wholesale market, is partly to blame for
some food prices in Greece exceeding the
eurozone average. Part of the
government' s answer is to strengthen the authority of the Competition
Commission to fight cartels, however, a commission official was recently found
guilty of attempting to
extort money from a dairy. In 2007 the Commission
fined seven dairies for forming a cartel to fix milk
prices. Vivartia, the
leader in the fresh milk market, has recently announced a 25% cut in the
retail price
of its Delta brand fresh milk, while in the same month dairy
farmers handed out free bottles of milk in the
middle of Athens,
protesting against the prices they receive.
The Greek economy has been
doing well in recent years, evidenced by a solid rise in GDP and real GDP
growth. However, the global recession is taking its toll. BMI is predicting
GDP growth dragging down to
-3.5% in 2009 from 2.9% in 2008 and 4.0% in
2007. Restricted credit could affect food consumption.
Unemployment is
forecast to rise to 11.0%, from an estimated 7.7% in 2008.
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