On Monday 9 January 2023, Luxembourg's Minister of Agriculture, Viticulture and Rural Development, Claude Haagen, met with representatives of the agricultural and agro-food processing sectors to analyse the results of the agricultural sector in 2022 and to take stock of the current evolution of agricultural markets; this was the fourth such consultation meeting held since the start of the war in Ukraine.
Based on figures from the national agricultural accounting network, Luxembourg's Rural Economy Department (Service d'économie rurale - SER) presented the final results for the year 2021 and a forecast for 2022. The operating result of Luxembourg agricultural companies (all sectors combined) fell by 10% in 2021 compared to 2020, following the surge in energy, seed, fertiliser and livestock feed prices in the last quarter of 2021.
These figures are based on the agricultural production results of 521 farms that participate in the agricultural accounting network of the Ministry of Agriculture, Viticulture and Rural Development and are extrapolated to the 1,316 main agricultural companies in the Grand Duchy.
2022 was characterised by the war in Ukraine, soaring agricultural product prices and rising energy and input costs. Nevertheless, the SER has forecast an increase of 67% in average operating results (all sectors combined). According to the Agriculture Ministry, this is explained by the following: the rise in the prices of agricultural products, in particular milk, which generates more than 40% of the total value of agricultural production in Luxembourg; a frugal management of existing stocks of fodder and organic fertilisers in combination with a reasoned use of inputs; good crisis management by both farmers and the government.
That being said, viticulture has suffered a drop in the quantity of production following prolonged drought and suffers from a 15% reduction in the forecast operating result.
Whilst the overall result for 2022 looks positive, Minister Haagen warned of the fragile and volatile situation: "The increase in the results for agriculture in 2022 is marked by the increase in the prices of agricultural products (milk, cereals, beef and pork) on the one hand, but the sector remains under pressure in the face of volatility and soaring energy, fertiliser and animal feed prices on the other hand. Disparities are also expected to be marked between the sectors and the types of farms."
Minister Haagen recalled that agriculture is subject to world market prices, which are volatile in the face of the slightest change in the geopolitical situation and climate change. As in 2022, the result of each farm will also depend in 2023 on the date of purchase of inputs and the market situation when selling its product, and unpredictability will persist. This is why, according to the Agriculture Ministry, prudent crisis management should still apply.
