Assessment of the Economic Importance of Azoles in European Agriculture: Wheat Case Study
An assessment of the socio-economic importance of azoles active substances in European agriculture
EXECUTIVE SUMMARY (full report download at base of page)
The objective of this study is to make an assessment of the socio-economic importance in European agriculture of azoles active substances. In order to evaluate the actual relevance of this class of compounds, the economic impact of a withdrawal from use of azoles has been estimated, considering the specific case study of wheat.
The evaluation of the impact has been carried out by taking into account the future trends of the main variables, which are yield, area, production, trade balance, consumption and self-sufficiency. The time frames of the analysis consider a short term impact analysis (2013) and a long term one (2020).
In the short term evaluation, rates of yield reduction have been used to estimate the drop in production linked to the increased diseases occurrence and to related effects that could arise from the withdrawal from use of azole fungicides. In the long term analysis, the development of resistance for the remaining fungicides has been considered along with the yield reduction effect: specifically, in a long term horizon the increasing selection pressure for the remaining fungicides would result in a lack of protection regarding diseases and would cause difficulties in managing them.
The impact analysis carried out by Nomisma has outlined some very clear results.
- The projections have shown that, with azoles still in use, wheat yield and cultivated areas would continue to increase in the next few years, resulting in an overall growth of wheat production that has been estimated at +5.0% in 2013 and +13.4% in 2020. According to these trends, the European Union would remain a net exporter of wheat and would continue to produce more wheat than what is being consumed.
- The yield of wheat would decrease in the hypothesis that the use of azoles ceased resulting in a loss of production (leaving all other variables constant) of 9.8 millions of tons in 2013 (from 141.1 to 131.3) and 18,6 millions of tons in 2020 (from 152.4 to 133.8). This decreasing production would not only mean a loss of value of 2.4 billion euros in 2013 and 4.6 billion euros in 2020. It would also mean that the European Union would be unable to satisfy its internal demand and maintain a 100% self-sufficiency rate.
- An analysis has also been made of key variables (namely imports, exports, stocks and cultivated area) that would need to adjust to compensate for the reduction of the yield and to guarantee a 100% demand satisfaction rate and a 100% self-sufficiency rate. While there would be substantial changes in all variables, it is particularly significant (and unrealistic) that the cultivated area would need to increase by 7.5% in the short term scenario and by 13.9% in the long term scenario.
- The role of azoles is highlighted in maintaining the European Union’s position as a net exporter. The sensitivity of the world price to changes in the EU are also highlighted given that it is a primary player in term of production (it accounts for 21% of total wheat production), productivity (European yield is 5.3 t/ha while the global average is 2.9 t/ha) and trade (it contributes to 16.8% of world wheat trade flows).
- In conclusion, the study shows that the economic relevance of azoles in the European Union is considerable, as their hypothetical loss would have significant relapses on both the domestic market and international markets. On the internal market, we estimate that without azoles there would be a drop in domestic production, leading to a deterioration of the demand satisfaction rate and to higher prices. This could in turn imply that the European Union could cease to be a net exporter at world level, bringing into question the possibility of the other big wheat supplier (North and South America, Australia, Russia, etc.) to be able to satisfy the global demand. This would increase the current uncertainty concerning global food security, bringing further consequences – which have been prominently emerging over the last years - such as drop in stocks, increase of prices and price volatility upsurge.
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