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2.1        European agriculture and value chains

2.1.1 Agriculture in the European economy

About 10 million farms existed in the EU-27 in 2017, contributing to 1,1% of the European GDP and 4,5% of total employment (equivalent to 8,8 million full time workers) (ESTAT, 2020k). The total value of the agriculture sector lies at around EUR 405 billion in 2018, 53% from crop production and 38,5% from animal products, in particular milk and pigs (ESTAT, 2020k). Agriculture generated economic activity for 280 000 companies in the food and beverage manufacturing industry and 920 000 wholesalers and retailers (ESTAT, 2020k). The food and drink industry itself is an important manufacturing sector in Europe, contributing to form a network of small and medium enterprises including in rural areas. The processing of food nearly doubles the value of the primary agricultural goods, with an estimated value of EUR 860 billion in 2018 (ESTAT, 2020k).

Agriculture provides important functions to the European economy by producing food, fibre, feed and energy for Europe. Agriculture and the food and beverage industry in particular have a central role in EU-27 bioeconomy, representing 78% of its employment and 66% of its added value (Ronzon et al., 2020). Agriculture also contributes to supply the manufacture of bio-based textiles, of plastics and chemicals (including pharmaceuticals), and of liquid biofuels, which accounted together for 4,6% of employment of the bioeconomy and 5,6% of its added value (equivalent to 797,000 workers and EUR 34 billion)(Ronzon et al., 2020).

Agricultural goods represent 8% of the EU’s international trades in goods (ESTAT, 2020j). The EU is the world's largest agri-food exporter, contributing to 20% of world food and drink exports in 2017. EU international trade in agricultural products has continued to grow, doubling in value since 2002 (ESTAT, 2020j). In value, the EU is a net exporter of processed food and animal products, but it runs trade deficits in vegetable products (ESTAT, 2020j). Large exports include beverages and spirits (e.g. wine from grapes), cereals and cereal products, dairy and meat produces. In addition to tropical products, the EU mainly imports animal feed and ingredients used in processing such as palm oil.

2.1.2  Agricultural land use and production

Agricultural land covers 42% of EU39 terrestrial area or a total of 237 million hectares (EEA, 2019d). Most of the agricultural land is used for arable crops, in particular cereals, and for permanent crops, such as olives, grapes, and fruits (25% of EU39 terrestrial area), the rest being used as grassland and in more complex agricultural landscapes with mixed land uses (17%). The distribution and importance of different land use classes varies considerably between Member States (Figure 2.1). The landscape in countries such as Denmark, Hungary and Poland is strongly influenced by arable crops, which cover more than half of the land area. Ireland, on the other hand, is mainly characterised by pasture farming. In countries such as Sweden and Finland, but also Greece and Croatia, over 60% of the land area is covered by natural land use classes.

Agriculture accounts for the majority of biomass supply in Europe. In the EU-28 in 2014, it represented 63% of the total biomass supply, mostly in the form of food and feed to animals, while bioenergy production and biomaterials (e.g. textiles, plastics and chemicals) accounted for respectively 2% and 0,1% of agricultural biomass (Gurria et al., 2017). The market for biomaterial and bioenergy is expected to grow in response to the shift away from fossil-based products. This may lead to increased competition for agricultural goods between the food and non-food sectors, although the use biomass unfit for food and feed consumption, such as crop residues and biowaste could mitigate this impact (EEA, 2018e).

The majority of the EU-28 agricultural output is associated with crop production at about EUR 214 billion (ESTAT, 2019a).  The relative importance of different crop production in the EU can be judged using the produced weight of dry matter (Camia et al., 2018). It shows that a large concentration of crop production in few varieties. For the period 2006-2015 in the EU-28, 40% of agricultural biomass was associated to less than 10 crops, mostly cereals (e.g. wheat, maize and barley) and plants harvested green (e.g. green maize, temporary grasses and Lucerne), as well as sugar and starchy crops (i.e. sugar beet and potatoes) and oil bearing crops (e.g. rapeseed, sunflower). Permanent crops and vegetables accounted for about 6%, while industrial crops, such as fibre flax and cotton, represented 0,2% and energy crops 0,04%.

The EU-28 is also major producer of meat and dairy products, with a total output of EUR 156 billion (ESTAT, 2019a). Despite declines in recent years with bovines, sheep and goat populations, livestock units remain significant. In the EU-28 in 2018, pig population was at 148 million heads, followed by bovine animals (87 million), and sheep and goat (98 million) (ESTAT, 2019a). Including poultry, the total production of meat has increased since 2010 to reach nearly 50 million tonnes of carcass weight in 2018, mostly from pig, poultry and bovine animals). The European agricultural landscape is highly influenced by meat production. An estimated 46% of Utilised Agricultural Area (UAA) of EU-28 is used as arable and grass-based fodder areas to produce feed for livestock (ESTAT, 2020b). European livestock production also rely on feed from extra-European countries (see Chapter 5).