Analysis of the Competitiveness of Cereal Production in Selected EU Countries

This paper examines the competitiveness of cereal production in selected EU member states, during the period 1996 – 2000. Profitability was selected as a measure of competitive performance and costs of production, value of output and partial productivity indicators were examined as possible sources (potential) of competitive performance. Using data from the Farm Accountancy Data Network (FADN) the analysis showed that productivity levels in the UK, Ireland and France were consistently higher then competing countries Denmark, Germany and Italy. In terms of profitability, the opportunity cost of owned resources had a major impact on the competitiveness of cereal production within the EU. Cash costs as a percentage of total output were lowest in Italy but in terms of total economic costs, including an opportunity cost for all owned resources, Italy had the highest cost structure amongst the countries examine. These findings have implications for EU cereal producers in the medium term as direct payments are decoupled from production and producers must make production decisions based on full economic costs of production, including adequate remuneration for owned resources.