European farmers are set to increase grain and oilseed plantings and slash beet sugar sowings in response to price-cutting EU sugar regime reforms to be implemented this year, traders and analysts said on Friday.
EU ministers struck a deal last November to reform sugar policy, slashing support prices and also production and exports in a phased programme that will start from this July.
Furthermore, last October, the World Trade Organisation gave the EU until May 22 2006 to limit its exports and no longer ship so-called C sugar - a surplus produced above the usual subsidy-eligible quotas.
"Sugar production has to drop to reflect the C sugar ruling and to reflect reduced EU supports," a senior analyst with a large sugar merchant told Reuters.
Grain analysts and traders across the EU said they anticipated farmers would increase grain and soybean sowings, and set-aside (leaving land fallow), but it was too early to give reliable forecasts for 2006/07 output.
They noted that some sugar production would be diverted to produce beet-derived ethanol biofuel in some countries.
In France the sugar reform has led to a fall in beet sowings due to the closure of a few of the smaller refineries, but analysts said the drop may be temporary because France is likely to win market share as other countries' industries wither away.
The French farm ministry last week put the area drop at 6.8 percent against last year, with 354,000 hectares expected to be sown, some 12.9 percent below the five-year average.
Analysts said a lower beet area could generate an increase in spring crop plantings such as maize and barley in France, but there is no immediate evidence of this.
The ministry put the spring barley area down 3.7 percent on last year. And the maize growers group AGPM has also put sowings down 7 to 8 percent to around 1.48 million hectares.
The fall was mainly due to fears of another drought, which have eased somewhat in recent weeks. "If there is an impact from the sugar reform it will be small," Luc Esprit, AGPM director general, told Reuters.
BIODIESEL DEMAND: Oilseed analyst Fabien Lagarde said rapeseed sowings may have indirectly benefited from the fall in beet but stressed the rise was far more linked to soaring demand to produce biodiesel.
German farmers are likely to plant 10-15 percent less sugar beet in 2006/07 than the 418,820 hectares last season because of EU cuts in market support, industry association WVZ said.
No detailed estimates are yet available. WVZ chief executive Dieter Langendorf expects a reduction "with absolute certainty," based on seed sales and initial discussions with farmers.
German analysts said they expected more wheat to be planted, with possibly more maize in southern and eastern regions.
In Britain, the area planted to sugar beet will fall, and some beet will be used to make ethanol at a new British Sugar factory in Wissington, eastern England, that is due to come onstream early next year, analysts said. Julian Bell of the Home-Grown Cereals Authority said there were few profitable options for farmers looking to replace beet, particularly given the current high level of energy prices.
He said farmers might opt not to plant a crop this year.
In Italy, grain traders said they expected increased maize and soybean plantings in the north, more wheat and sunflower in the centre, and more wheat in the south of the country.
Italy's area sown to sugar beet is expected to plunge to at least 90,000 hectares in 2006 from 250,000 in 2005, according to the National Sugar Beet Growers' Association (ANB).
Greek sugar beet production could fall by at least a third this year as heavy rains delay plantings and farmers switch to other crops, industry officials said.
The Spanish Agriculture Ministry's latest forecast is for 35,800 hectares to be sown to summer sugar beet this year, down just 3 percent on 2005, when production was 1.9 million tonnes.
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