Global Sourcing of Agricultural Commodities A key dimension for the livestock sector Policies and Challenges to meet the EU demand 55 th 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
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COCERAL 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/ What COCERAL does not do To interfere in commercial issues To formulate standard contracts To provide arbitration
2. Global grain trade today : sourcing challenges
Europe: a steady continent in the fast moving world North America Europe Russia Ukraine East Asia Central America Caribbean North Africa Middle East South Asia Southeast Asia Imported South America Sub- Saharan Africa Oceania 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 growth in feed grain use over 10 years Share in feed grain use 2012/13 Source: USDA, Toepfer
4. The EU and the world market for Oilseeds, Oils and meals
World: Drivers in SBM Use Share in growth in SBM Use over 10 years Share in SBM use in 2012/13 Source: USDA, Toepfer
World: SBM Use by World Region in MMT
25 20 15 EU-27: Largest Soybean Meal (SBM) importer (mln t), with main suppliers from South America 22.3 22.4 0.3 0.1 0.1 0.2 9.9 7.8 23.6 23.2 0.2 0.2 8.5 0.5 0.5 9.1 20.7 0.5 0.3 21.6 0.5 1.1 20.9 0.6 0.4 8.7 9.0 9.1 Others United States Brazil 10 Argentina 5 12.0 14.3 14.6 13.2 11.3 11.1 10.8 World 0 2005 2006 2007 2008 2009 2010 2011 Source: GTIS, Toepfer
16 14 12 10 8 6 4 2 EU-27: Soybean imports (mln t): North and South America are the main suppliers 14.3 0.3 0.5 0.0 3.1 0.9 14.0 0.2 0.1 0.5 3.2 1.0 15.2 0.1 0.4 0.8 3.3 1.0 9.4 9.0 9.5 14.4 0.5 0.1 0.7 3.7 12.6 2.0 0.9 0.7 8.5 8.8 13.5 0.7 0.2 0.3 0.2 0.6 1.3 3.0 2.4 5.9 12.1 0.5 0.5 1.2 2.3 2.6 5.0 Others Ukraine Canada United States Paraguay Brazil World 0 2005 2006 2007 2008 2009 2010 2011 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 wellfunctioning 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 secretariat@coceral.com