Competitiveness: All is not lost
Thierry Pouch, Assembly of Chambers of Agriculture (APCA)
France is the leading European agricultural power. Yet faced with the expressed ambition of the United States or Russian in an unregulated environment, the French agriculture’s competitiveness is weakened, even within the European Union:
- The share of agriculture and agribusinesses in the French economic activity fell by over 50 percent since 1980, mostly due to lowered agricultural prices in the past 25 years;
- French Farming has lost over 25 percent of its farms, giving way to larger agricultural structures;
- Lastly, France has lost its position of leading agricultural and food exporter in the European Union, and now ranks as the world’s fifth agro-food exporter behind the United States, Germany, The Netherlands and Brazil, down from its former second place.
Yet in a recent editorial we are excerpting below1, Thierry Pouch reminds us that we should not indulge in gloom and doom. Some French agricultural activities did escape erosion, such as wine production. A recent study commissioned by the European Commission shows that in the wine sector, the competitiveness of European producers not only remains strong but is also improving when compared to competitors.
How then can we extend this vitality and provide “a shared future” toward improved competitiveness for all players in French and European agricultural activities? In his introductory remarks, Phil Hogan stated that “Only with stronger and a more competitive agriculture, and stability for our farmers, can we build food security and generate growth and jobs.” Yet, the CAP that is to be administered by the Commissioner for the next seven years, is no longer adapted to the forthcoming challenges. In light of this, momagri has forwarded to all European policy and agricultural leaders a proposal that aims to provide the CAP with a new strategic direction between now and 2020.
momagri Editorial Board
The discussions initiated several years ago on the erosion of the French agricultural competitiveness are not dwindling. Numerous studies and multiple diagnoses have been conducted on the issue of competitiveness. Some are even indicating––and so much the better––that competitiveness is remaining undamaged in several sectors. A recent study commissioned by the European Commission indicates it is the case of the European and especially French wine sector.
There has recently been a widespread examination of the factors leading the decline of French agricultural market shares in global markets. The world’s second largest exporter in the early 1990s, France was demoted to the fifth place behind The Netherlands, Germany and more recently by Brazil. This has raised the issue of the competitiveness of an economic sector and a nation as compared to the competition. Much has been written in seminars and surveys, not only to make an analysis but also to uncover the leverage actions to reverse the trend. Since then, the French agricultural and food sector has kept posting comfortable surpluses––¬¬€11.5 billion in 2013 and probably more in 2014 due to the Russian embargo. This represents an encouraging sign that performances in this field are still far from being devastated. A positive trade balance does not make up for long-term competitiveness. All the more so since competitors are many and are benefitting from strategies to conquer new markets.
A recent study commissioned by the European Union shows that the competitiveness of European wine producers not only remains strong but is also improving compared to competitors. These achievements primarily concern bottled wines, whereas bulk wines are suffering from the competition from New World countries––Australia, New Zealand, South Africa and the United States.
As far as France is concerned, the competitiveness of bottled wine seems to be fundamentally rooted in high-end products, especially regarding third countries.
While the study addresses the key factors of such competitiveness, it does not include a careful consideration on what makes, and will make, successful sales in third countries.
Let us hope that competitiveness in the wine sector is not only determined by costs but also by factors closely linked to know-how, consumers’ wine recognition in third countries, sectorial organization and the variety of products and prices. In spite of rising competition, European wines are doing fairly well. Nevertheless, the study advocates searching for new markets, including in nations that drink little or no wine––Mexico and South Korea for instance. Improved cooperation in trade policies would also open up new markets for European wines.
Maintaining the competitiveness of the wine sector in France and in Europe thus entails a larger range of products. This is good news for French wines, and all the more so since a new USDA study issued in the fall of 2014 indicates that Chinese consumers were drinking more wine, and that their priority choices were for French vineyards, with Italian and Spanish wines far behind. That is reassuring for the players involved in the largest post in the French agro-food trade balance, especially at a time when they are entering an uncertain stage, that of the deregulation of their market. The findings regarding the competitiveness of European wines is indeed timely, since the agricultural sector really needs good news.
1 The complete text of the article is available from: