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High prices encourage EU farmers to grow more grain

European Union farmers are expected to devote nearly 6% more land this year to growing cereals in response to sharp producer price increases, the EU’s statistics agency Eurostat said on Thursday.

As a result, overall cereals production would rise by about 10% from 2007 and reach 284.2 million tons, it said in a report. Nearly all principal grains harvested in Europe would see rises in production and area this year, it said. “This is certainly a response to the very high producer price increases for cereals observed in 2007 and the beginning of 2008, due to an imbalance between supply and demand for cereals worldwide,” it said. “In contrast, the rapeseed area decreases -- by 3.1% -- for the first time since 2003, but by different rates across member states. There is possibly a partial shift from rapeseed area to cereal area,” it said.

Wheat production would rise by around the same percentage amount to 123.7 million tons. Maize output was expected to increase by 17.6% to 56.7 million tons, it said. But area and production of sugar beet would fall in the 27-country bloc, mainly due to the EU’s sugar policy reform of sugar where the aim is to reduce oversupply by encouraging more uncompetitive growers and beet processors to leave the sector.

“Most of the member states see their area under sugar beet decreasing,” Eurostat said, adding that France -- the EU’s largest beet producer -- would see its beet area decline this year by nearly 11% from 2007. EU production of sugar beet in 2008 would reach 108.5 million tons, down by some 5% from 2007, it said.

Hungary, Italy and Spain would all see severe reductions in areas planted to sugar beet. The EU’s overall sugar beet area would fall by 6.8% this year, Eurostat said. (Reuters)