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Global Sourcing of Agricultural Commodities A key dimension for the livestock sector
Policies and Challenges to meet the EU demand
55th FEFAC Annual General Meeting
Marcel Combot COCERAL
Brussels
15 June 2012
Agenda
1. COCERAL facts and figures
2. Global Grain Trade today: sourcing challenges
3. The EU and the world grain market
4. The EU and the world market for Oilseeds, Oils & Meals
5. Challenges for the EU supply
6. Conclusions
1. COCERAL facts and figures
COCERAL – facts and figures
• COCERAL is the EU association representing the trade with cereals, oilseeds, feedstuffs, olive oil and agrosupply
• Founded in 1958
• Members are national associations representing grain merchants, storers and/or international traders
• 30 Member Associations in 19 countries + Unistock
• Associate Member
– Switzerland
30 Member Associations 19 EU ountries
1 Associated in Switzerland
6
COCERAL
What COCERAL does not do • To interfere in commercial issues • To formulate standard contracts • To provide arbitration
IGTC International Grain Trade Coalition
http://www.igtcglobal.com/
CELCAA European Liaison Committee for the Agricultural and Agri-Food Trade
http://www.celcaa.eu/
EFIP European Feed Ingredients Platform
http://www.efip-ingredients.org/
2. Global grain trade today :
sourcing challenges
Europe: a steady continent in the fast moving world
North America
Caribbean
Central America
South America
North Africa
Sub- Saharan
Africa
Europe
Russia Ukraine
East Asia
Southeast Asia
Oceania
South Asia
Middle East
Imported
Exported
The EU: A major importer of Agricultural products Nr 1 in meals, Nr 2 in oilseeds and oils and Nr 4 in grains
Source: USDA, Toepfer
3. The EU and the world grain market
World: Grain Consumption increasing, Demand for ethanol flat recently, but feed/food growing
Source: USDA, Toepfer
World: Share of Feed Grain Use by Region
Share in feed grain use 2012/13
Share in growth in feed grain use over 10 years
Source: USDA, Toepfer
4. The EU and the world market for
Oilseeds, Oils and meals
World: Drivers in SBM Use
Share in SBM use in 2012/13
Share in growth in SBM Use over 10 years
Source: USDA, Toepfer
World: SBM Use by World Region in MMT
EU-27: Largest Soybean Meal (SBM) importer (mln t), with main suppliers from South America
12.014.3 14.6
13.211.3 11.1 10.8
9.97.8
8.59.1
8.7 9.0 9.1
0.1 0.10.2
0.5
0.31.1
0.4
0.3 0.20.2 0.5
0.50.5
0.6
22.3 22.423.6 23.2
20.721.6
20.9
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011
Others
United States
Brazil
Argentina
World
Source: GTIS, Toepfer
EU-27: Soybean imports (mln t): North and South America are the main suppliers
9.4 9.0 9.58.5 8.8
5.95.0
0.91.0
1.0
0.9 0.7
2.42.6
3.1 3.23.3
3.72.0
3.0
2.3
0.50.5
0.8
0.7
0.6 1.3
1.2
0.0 0.1
0.1
0.1
0.20.2
0.5
0.3 0.2
0.4
0.5
0.30.7
0.5
14.3 14.0
15.214.4
12.613.5
12.1
0
2
4
6
8
10
12
14
16
2005 2006 2007 2008 2009 2010 2011
Others
Ukraine
Canada
United States
Paraguay
Brazil
World
Source: GTIS, Toepfer
5. Challenges for the EU Supply Chain
Ensure food security in the EU
Interdipendency and tension
Domestic and Third Countries
Supply
Policies and Challenges for the EU Supply What the traders look forward to
• transparency • predictably and a clear set of rules • a level playing field for all operators in order to
avoid unfair competition or market distortions
Policies and Challenges for the EU Supply Common Agricultural Policy - CAP Reform • Public intervention: effective instrument if used as a safety net
securing a minimum income to agricultural producers
• Contractualisation and producers organisations:
– No supporte if applied to the cereals; oilseeds and by-products markets
– Cereals and oilseeds traded on global market and regulated with functioning tools (futures and frame contracts at national and international level)
– Market management by producer and interbranch organisations would fragment the market and lead to competition distortions
• Greening: caution - going too far could lead to national disparities in
how the measures are financed and this could have an influence on the relative competitive position of farmers within the EU and have a negative effect on crop production, availability and marketing
Policies and Challenges for the EU Supply Agricultural Market Information System (AMIS)
• G20 and Action Plan on Volatility: for governement and not for traders
• FUNCTION
– improve agricultural market information
– collection of reliable data on wheat, maize, rice, soybeans
– report on abnormal market conditions (not clear what is intended for that) and strengthen global warning
– collect and analyze policy information and build data collection
• Global Market Information Group => technical representatives from countries participating in AMIS => production, stocks, trade, utilization and prices (including future prices)
Policies and Challenges for the EU Supply Agricultural Market Information System (AMIS) • Private sector participation:
– essential to contribute setting up a methodology of reporting data reflecting the realities of the business
– definition of indicators: futures markets; convergence, use;
• High level ambition shared: no double work from existing sources providing data
• Expectations from Russia, China, India
Policies and Challenges for the EU Supply Market in Financial Instruments Directive (MiFID)
COCERAL is in favor of
• transparent financial agricultural commodity markets • harmonization of the EU and international rules for well-
functioning markets, • adequate levels of liquidity and
effective price volatility management
Policies and Challenges for the EU Supply Market in Financial Instruments Directive (MiFID) The future MiFID legal framework should strive
• to not unduly impact the liquidity of futures markets or curb the development of new risk management tools
• to ensure that the costs for farmers and other non-financials to access the exchanges would not be prohibitively high
• to ensure coordination at European and International level for new legislation and apply a sector adapted approach when introducing new rules.
• to avoid threatening convergence by limiting the use of financial instruments or reducing liquidity in the market.
• to increase transparency by ensuring greater reporting of positions held by categories of users.
Policies and Challenges for the EU Supply Market in Financial Instruments Directive (MiFID)
With regard to the Proposal for a Directive (COM2011)656/4:
Exemptions
Coceral is in favour of the provisions exempting companies trading
financial instruments for their own accounts or for their group
companies, or trade commodity derivatives for accounts of direct
customers/suppliers on ancillary basis
Position limits
• Rigid position limits can in turn restrict the ability of the economic
operators to hedge all their risks, ultimately resulting in greater
costs and increased volatility –
• Position limits would be more appropriate as part of a wider
position management approach
Position reporting – endorses weekly aggregate position reporting
Conclusions
• EU is a steady but important agri-business player worldwide
• Crucial to access to multiple sources year around (domestic production/import)
• Attention to secure level playing field to provide efficient , cost effective, safe and sustainable supply to the EU industry and livestock sector.
Thank you [email protected]