10_CAB-3038452_200519_Low Yield 2 Final March 2020_pdf
COUNTRY-LEVEL DATA extrapolation of the country-level results obtained The data inputs required to translate the farm-level in the 16 countries in scope. The data inputs income data to country-level data were sourced required to translate these country-level to EU-wide from either EUROSTAT, national statistical offices effects are shown in Table 4. or the experts (Table 3). The analysis is based on a seven-year average (2010−2016), thereby limiting the effects of yearly variations in weather conditions DATA ANALYSIS and related pest pressure. The next step in the study is to analyse the data inputs to determine what the socio-economic effects are at farm level, country level and EU EU-LEVEL DATA level. The analysis is based on the following key The EU-level effects are calculated only for assumptions: the seven staple crops and are based on an Table 3: Overview of data sources for country level analysis per country and crop Indicator Unit Source AREA (ha) Expert organisation; EUROSTAT; national statistical office PRODUCTION (t) Expert organisation; EUROSTAT; national statistical office EMPLOYMENT (FTE) EUROSTAT PRODUCTION VALUE (€) EUROSTAT Table 4: Overview of data sources for EU-level analysis per country and crop Indicator Unit Source INCOME EFFECTS EU-28 AREA (ha) EUROSTAT EU- 28 PRODUCTION (t) EUROSTAT EU-28 PRODUCTION VALUE (€) EUROSTAT SELF-SUFFICIENCY EFFECTS EU-28 IMPORTS (t) EUROSTAT EU-28 EXPORTS (t) EUROSTAT CARBON FOOTPRINT GHG EMISSIONS BY SOURCE SECTOR (SECTORS (tCO2 e) EUROSTAT USED: AGRICULTURE; LIVESTOCK) T CO2 EQUIVALENT EMISSIONS FOR BIOMASS ON 57 tCO2 e IPCC Guidelines Volume 4: Agriculture, Forestry and Other Land Use (AFOLU) ONE HECTARE YEAR AMORTISATION TIME TO CONVERT 20 years IPCC Guidelines Volume 4: Agriculture, Forestry and Other Land Use (AFOLU) ONE‑TIME DEFORESTATION TO ANNUAL IMPACT Guidelines for Measuring and Managing CO2 Emissions EMISSIONS FROM FREIGHT TRANSPORT 14 g CO2 e per km from Freight Transport Operations, ECTA DISTANCE USA TO EU 7,895 km Distancefromto.net March 2020 19
• The 75 active substances are compared to their • Yield and variable costs per hectare are subject to best currently available alternative solutions in the change ceteris paribus; the utilised area and ex- farmers’ toolboxes and the Good Agricultural farm price per crop are presumed fixed. Practices (including chemical, biological, mechanical and cultural practices); The process by which the data inputs are analysed is outlined in Exhibit 5. The basis for the country- • All substances are to be removed from the market and aggregated EU-level analyses is what happens at the same time and no other substances will be at farm level; in other words, the socio-economic introduced over the next five years. Given lengthy effects determined at the level of the average R&D and approval processes, and the small individual farm in a country/the EU are used number of pesticides in the pipeline, this might to determine the country/EU-level effects.. As not be an unrealistic scenario; discussed in the introduction, the study aims to establish the impact of removing the 75 substances • The various crops are studied in isolation; crop from the farmer toolbox by comparing current rotation (or any significant change in the rotations) farmer incomes to the hypothetical situation of a or other changes in the production area have not restricted farmer toolbox. Throughout the report, been taken into consideration; the figures, tables and exhibits will refer to the current situation as “WITH” and the hypothetical situation as “WITHOUT.” EU level effect C. Country income and employment effects A. Agronomic effects B. Farmer income effects D. EU income and self-suficiency effects Farm level effect EU level effect Exhibit 5: Data analysis process over three levels of analysis 20 Low Yield II
FARM-LEVEL EFFECTS 3. Construction of new farmer toolbox: Agronomic effects a. Describe the current farmer toolbox, To estimate the yield changes, production cost specifically chemical and non-chemical changes, long-term resistance effects and quality methods employed by the farmer to treat effects, the experts in all 16 countries followed the pest; the approach outlined below per crop in scope b. Identify which substances are on the 75 (Exhibit 6): at-risk list and will be withdrawn from the current farmer toolbox; 1. Identification of main threats: c. Identify which chemical and non-chemical alternatives are available to treat the pest. a. Establish which weeds, fungi and insects For example, an alternative to glyphosate are the main threats to the cultivation of a for treating perennial weeds is mechanical particular crop. For example, a common weeding. threat faced by potato farmers in Denmark is blight (a fungus). 4. Identification of changes in yield cost and quality 2. Correction for area treated: a. Quantify the change in yield (t/ha) as a a. Identify the share of the area where the result of using the new farmer toolbox; pest affects crop cultivation. For example, b. Quantify the change in production cost insecticides are used in maize cultivation (€/ha) due to the use of the alternative in the south of Romania much more than treatment. For example, production in the north due to high pressure from costs can increase due to an increase in insects in southern Romania; treatment frequency; b. Correct for area cultivated organically. c. Identify whether the quality of the crop will be affected with the new farmer toolbox (€/t). For example, in Finland, the new farmer toolbox will lead to the development of mycotoxins, thereby affecting the quality of the crop and the price at which it can be sold. 1. Identification of 2. Correction for area 3. Construction of new 4. Identification of yield, main threats per crop treated per pest farmer toolbox per pest cost and quality changes Exhibit 6: Overview of expert approach per crop March 2020 21
d. Identify whether long-term resistance can of systemic biases. This makes it likely that over develop with the new farmer toolbox due and under estimations for individual country/crop to the limited availability of alternative combinations will be more or less in balance. treatments. This approach allows the expert to establish the Farmer income effects effect of losing the 75 substances on: yield (t/ha); The profitability of a farm is best understood on a variable production cost (€/ha); quality effects (€/t); per hectare basis; how much does a farmer earn per and long-term resistance effects (t/ha). With regards hectare of the land he or she cultivates? In order to to yield effects, the experts distinguish between allow for comparisons of profitability across crops the short-term yield changes and the long-term and countries, the profitability is expressed both in resistance effects of not having the 75 substances absolute figures (gross profit per hectare in €) and available. The former refers to the immediate relative figures (gross margin per hectare in %). The effects of shifting to a new farmer toolbox gross profit per hectare earned by farmers within consisting of the best alternative substances. one country will differ greatly per crop. A specialty The latter refers to effects that might occur over crop cultivated in greenhouses will often have a time once weeds, fungi and insects have built up high gross profit per hectare. This is due to the high resistance to the fewer alternative substances. It ex-farm price received by the farmer and the high should be noted that not all experts were able to yield per hectare. Cereals, on the other hand, have provide estimations for long-term resistance effects a relatively low gross profit per hectare because or quality effects. These effects are therefore not of their relatively low yield per hectare and lower used to calculate the effects on farmer incomes. ex-farm price. However, expressing profitability in Another important effect which has not been terms of gross margin removes these effects, and considered is the possible increase of pest pressure allows for a better comparison between crops. To due to the restricted toolbox as well as fewer illustrate, lettuce farmers in Belgium have a high possibilities to control new pests resulting from per hectare gross profit (€13,161 per hectare) when climate change and invasive alien species. compared to Belgian maize farmers (€530 per hectare). However, they both operate at the same We note that there was considerable variation gross margin, approximately 40% per hectare. Note in the level of detail that experts could provide that the average farm size of a lettuce farmer is for changes of production cost data, both across much smaller than the average size of a maize farm. countries and across crops. Whereas for some crops in some countries, experts were able to itemise The study aims to capture the effects at the average changes with a high level of granularity, in other farmer level. The average crop yields are therefore cases they were only able to provide high-level calculated based on the national crop production estimates of how the total variable costs would output figures and the national crop cultivation change. We have intended to keep the approach area (both of which are extracted from EUROSTAT). followed for each country/crop combination In doing so, the study accounts for variations in as consistent as possible through one-on-one productivity per farm. meetings with each of the responsible experts to check that the prescribed methodology was To calculate farmer profitability WITH and followed and to cross-examine the results in detail. WITHOUT, the study assumes a stable ex-farm But ultimately, the quality of the results relies on price; the farmer will receive the same price per the judgement and estimations of the experts. tonne of crop both WITH and WITHOUT the Although different experts may reach different 75 substances. Therefore, the potential quality results for individual country/crop combinations, effects and the effects a lower supply may have on we are confident that the results present a fair and price are not taken into consideration. The study defensible aggregate picture due to the absence considers immediate effects only in the profitability 22 Low Yield II
calculations. Please refer to Table 15 in Annex 1 for Country employment effects an overview of the calculations. The study provides an indicative insight into how farmer income losses translate to employment It is important to note that most farm-households in effects. The employment effects are categorised Europe are family farms. Many of these households according to three risk levels, high, medium and earn additional off-farm income. When the low, which are assigned based on the gross margin WITHOUT alternatives mentioned above imply change between the current toolbox (WITH) and a an increase of on-farm labour demand, it may restricted toolbox (WITHOUT). negatively affect total household income. This effect is not considered in this study, however. A first step is to establish the number of jobs in scope, i.e. how many persons are employed per crop studied. Once the number of jobs per crop has been established, the jobs are categorised COUNTRY EFFECTS according to their gross margin change: high risk >70% gross margin change; medium risk >30% and Country income effects <70% gross margin change; low risk <30% gross At the country level, this study estimates the effects margin change. Please refer to Table 17 in Annex 1 of a restricted farmer toolbox by calculating the for an overview of the calculations. loss of country revenue (production value) per crop and the loss of country production per crop. To understand impacts per crop at country level, the study translates the farm-level income changes to EU-LEVEL EFFECTS country level on the basis of two assumptions: a At EU level, the study focuses solely on the seven stable ex-farm price and a fixed utilised area. Please staple crops and relies on the experts’ agronomic refer to Table 16 in Annex 1 for an overview of the estimations collected from the 16 countries calculations. currently in scope to calculate the effects for the whole of the EU. As can be seen in Table 5, the 16 countries constitute an average 80% of total EU production per staple crop. Table 5: Countries in scope used for EU-28 extrapolation for seven staple crops Share of Crop total EU Countries in Scope production SUGAR BEET 85% Austria, Denmark, France, Germany, Netherlands, Poland, Spain, Sweden, United Kingdom GRAPES 93% Austria, France, Greece Hungary, Italy, Romania, Spain POTATOES 88% Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Poland, Romania, United Kingdom MAIZE 78% Austria, Belgium, France, Germany, Hungary, Italy, Poland, Romania BARLEY 62% Denmark, Finland, France, Germany, Italy, Netherlands, Sweden, United Kingdom WHEAT 77% Austria, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Poland, Romania, Sweden, United Kingdom OILSEED RAPE 84% Austria, Denmark, Finland, France, Germany, Hungary, Poland, Romania, Sweden, United Kingdom March 2020 23
Income effects Self-sufficiency effects As shown in Exhibit 5, farm-level effects form the The impact on EU-28 crop production levels is basis of the calculations of the EU-level effects. likewise assumed to affect EU self-sufficiency, Thus the first step is to analyse the effects at the whereby self-sufficiency is defined as the proportion level of the ‘average’ EU farmer per staple crop of domestic consumption met from domestic (please refer to Table 18 in Annex 1 for an overview production. Assuming that EU demand in both the of the calculations): WITH and WITHOUT scenarios remains constant, the loss of EU staple crop production (due to the 1. Establish average EU farmer income per yield changes) can lead to a gap between supply hectare WITH and demand. Please refer to Table 19 in Annex 1 for an overview of the calculations. a. Based on EUROSTAT data, calculate average EU yield and ex-farm price, and To continue to meet demand, the EU can either subsequent revenue; choose to a) import the crops from abroad or b) b. Based on data from countries in scope, convert additional EU land for cultivation. The calculate average EU production cost; choice between either of these two scenarios c. Calculate average EU gross profit and will have an impact on two broad environmental margin indicators: carbon footprint and land use. For both scenarios, the study establishes the effects for the 2. Establish average EU farmer income per WITH and WITHOUT situations. hectare WITHOUT In the current situation, WITH the 75 substances a. Based on countries in scope, calculate available, greenhouse gas (GHG) emissions are the average yield and production cost result of the use of farm inputs (the use of fertiliser changes and diesel, and energy inputs for irrigation, drying b. Calculate average EU farmer revenue and and storage). production cost WITHOUT c. Calculate average EU gross profit and In the first WITHOUT scenario, the seven staple margin WITHOUT crops are assumed to be imported from the United States. It is assumed that the crop yield In order to translate the effects for the average and farm inputs required per hectare in the US are EU farmer to EU-28 effects, the study assumes a the same as in the EU. Additionally, it is assumed stable ex-farm price and a fixed utilised area per that CO2 emissions arising from farm inputs and crop. This is a likely scenario for staple crops, given land conversion in the US will be the same as in that there are other large producers of the seven the EU. Importing the staple crops to continue to crops outside of the EU. Assuming the ex-farm meet demand will lead to GHG emissions from the price for specialty crops remains stable is, however, following activities: land conversion, farm inputs less realistic. Lower yields for specialty crops may used on additional land required to meet EU translate to higher prices, which could in turn offset demand, and transport from the US to the EU. the income effects experienced at farm level. In the second WITHOUT scenario, additional land within the EU is cultivated to compensate for the lower yields. This will lead to GHG emissions from the following activities: land conversion and farm inputs used on converted land. 24 Low Yield II
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EU-Level Impact: Staple Crops sugar beets, grapes, potatoes, maize, barley, wheat and OSR covers between 62% and 93% of the total European farmers rely on a varied toolbox to EU production per crop. protect their crops and ensure stable yields and incomes. They have at their disposal: planting and For the seven staple crops, the currently available crop rotation choices, seed and variety selection, farming toolbox allows the EU to produce an and the use of crop protection products. The crop additional 102 million tonnes and generate an protection products form an integral component of additional €14,081 million value per year than if the the farmer toolbox. Removing the 75 substances 75 at-risk substances were not included. will consequently place pressure on the economic viability of the cultivation of crops, with farmers • Barley, wheat, oilseed rape, maize and potato facing lower yields and higher costs. farmers could face 10 to 20% lower yields, while sugar beet and grape farmers could lose upwards To understand the effects of a restricted toolbox on of 20 to 40% of their production; farmer yields and costs, experts in 16 EU countries were consulted. At the EU level, the study focuses • EU staple crop farmers face an average solely on the seven staple crops and relies on the production cost increase of 12% per hectare; experts’ agronomic estimations collected from the 16 countries currently in scope to calculate • Lower yields and higher production costs will lead the effects for the whole of the EU. The number to reduced farmer profitability. The gross margin of countries per staple crop in which experts were per hectare enjoyed by the average EU staple consulted ranges from six countries for grapes to crop farmer will drop to 23% from 44%. twelve countries for wheat. The farm-level data for Sugar beet Grapes Potatoes Maize Barley Wheat OSR 0% Germany Sweden Poland France -10% UK Spain UK -20% -15% Yield change (%) -16% -16% -16% -20% -30% -24% Finland Romania -40% -36% Finland -50% Germany Romania -60% Finland Hungary -70% Average yield loss Yield loss range Exhibit 7: Overview of short-term yield effect range provided by experts for all countries in scope March 2020 27
Table 6: Short-term yield and variable cost changes at extrapolated EU level Yield Production Cost Crop Ex-farm Yield WITH Yield Yield Cost WITH Cost Cost price Change WITHOUT Change WITHOUT (€/t) (t/ha) (∆ %) (t/ha) ( €/ha) (∆ €/ha) (€/ha) POTATOES 180 31.5 −20% 25.3 2,599 263 2,862 GRAPES 561 7.4 −24% 5.6 1,728 311 2.039 SUGAR BEET 33 72.1 −36% 46.4 1,259 295 1,555 OSR 427 3.1 −15% 2.7 686 69 755 WHEAT 188 5.6 −16% 4.7 626 39 665 MAIZE 176 7.0 −16% 5.8 895 21 916 BARLEY 183 4.7 −16% 4.0 558 30 588 At the rate of current EU demand for the seven • GHG emissions resulting from the additional staple crops, the loss of the 75 substances will land cultivated in the EU will be 32 million lead to a gap between EU production and EU tonnes of CO2 equivalent. demand. The EU will lose self-sufficiency in all seven staple crops. To continue to meet current levels of demand, the EU can either choose to a) import the EU INCOME EFFECTS crops from abroad or b) convert additional land in the EU for cultivation. Farmers in the different European countries must contend with very different climates, pest pressures a. To continue to meet current levels of demand, and regulatory environments. The heterogeneity the EU can become a net importer of all seven of yield estimations provided by the experts thus staple crops: reflects the very different environments European • The EU will likely be dependent on imports for farmers must operate in. Cereal farmers in Finland approximately 20% of its staple crop demand; rely on crop protection products to ensure stable production despite very short growing seasons and • GHG emissions resulting from importing the unpredictable annual weather patterns; the main seven staple crops will be equal to 42 million threat faced by maize farmers in southern Romania tonnes of CO2 equivalent is insects; and the strict regulatory environment in Denmark has resulted in low pesticide dependency b. To continue to meet current levels of demand, amongst farmers. As can be seen in Exhibit 7, there the EU can alternatively convert additional land is a large variation in the estimated yield losses per for crop cultivation: 13 country and per staple crop. • An additional 8.4 million hectares of land in the EU must be converted for crop cultivation To estimate what the income effect of a restricted in order to meet local demand; toolbox will be on staple crop production for the whole of the EU-28, the yield and cost change estimations provided by the consulted experts are extrapolated (Table 6). With the 75 at-risk 13 It should be noted that the likelihood of this scenario is very low. substances in their toolbox, EU farmers enjoy higher Land in the EU is scarce, and this is even more so the case for arable land. The effects of this scenario are an illustration of hypothetical yields and lower costs. A restricted toolbox will, effects. 28 Low Yield II
