1. Evolution and perspectives of the durum wheat market in the European Union World Pasta Congress Barcelona – 24 October 2005 Roland Brun Union of the Associations of Semouliers of the EU

2. Evolution and perspectives of the durum wheat market in the EU The Union of Associations of Semouliers of the EU countries has as its aim to ensure the representation and fostering of the interests of the semolina industry of the European Union at European and international levels. To this end, the Union ensures all necessary contacts with the Institutions of the European Union and of the professional international Organisations which, either directly or indirectly, may have an influence on the activity of the semolina industry of the European Union.

3. Evolution and perspectives of the durum wheat market in the EU Evolution and perspectives of the durum wheat market in the EU The European semolina industry in figures (2004) Number of durum wheat mills :235 Theoretical milling capacity :35,000 t/24 h Quantity of durum wheat processed in 2004:7,500,000 t - EU durum wheat :6,000,000 t - durum wheat non-European countries : 1,500,000 t Semolina production in 2004: 5,100,000 t

4. Evolution and perspectives of the durum wheat market in the EU Evolution of the quantities of durum wheat processed by the european Industry 1990:5,899,855 t 1991:6,330,000 t 1992:7,186,347 t 1993:6,651,432 t 1994:6,664,888 t 1995:6,415,833 t 1996:6,637,480 t 1997:6,548,300 t 1998:6,792,003 t 1999:6,751,714 t 2000:6,952,122 t 2001:7,091,452 t 2002 :7,153,087 t 2003:7,065,528 t 2004:7,500,000 t

5. Evolution and perspectives of the durum wheat market in the EU Production of durum wheat in the European Union /1 European production of durum wheat is marked by an extreme volatility which may be translated annually in average fluctuations in the order of 40%, though these fluctuations may reach much higher percentages at national level (in particular in Spain and in Italy). The volatility of European production is explained by the fact that durum wheat cultivation is in most cases circumscribed to a single area of production – the Mediterranean basin – marked by particular agronomic situation and climatic conditions.

6. Evolution and perspectives of the durum wheat market in the EU Production of durum wheat in the European Union /2 900.000 900.000 1.200.000 1.200.000 700.000 700.0001.000.000 910.000 910.000 900.000 900.000Greece 1.800.000 1.800.000 1.800.0001.400.0001.600.0001.350.0001.650.000France 600.000 600.000 2.100.000 2.100.0001.700.0002.000.0001.400.0001.750.000Spain 3.800.000 5.700.000 5.700.0003.850.0004.400.0003.500.0004.200.000Italy 7.235.00011.105.0007.915.0009.250.0007.340.0008.750.000E.U.200520042003200220012000

7. Evolution and perspectives of the durum wheat market in the EU Production of durum wheat in the European Union /3

8. Evolution and perspectives of the durum wheat market in the EU The requirements of the european semolina Industry Considering an internal production situated, over the last six years (2000 – 2005), at an average level of 8.6 Mt, the european semolina Industry requires, to meet its own needs, an average annual quantity of durum wheat in the region of about 7.6 Mt (6.2 Mt for the internal consumption of durum wheat pasta and bread and 1.4 Mt for the exporting of semolina and pasta). Moreover, for qualitative reasons, around 500,000 t of durum wheat are used for animal feed, 700,000 t are earmarked for seed production, while 750,000 t are foreseen for the exporting of durum wheat. Accordingly, for quantitative but also qualitative reasons, the European semolina industry finds itself obliged to import durum wheat from non-European countries.

9. Evolution and perspectives of the durum wheat market in the EU European imports of durum wheat /1 The EU, together with Algeria, represents the principal world importer of durum wheat. Prior to reform of the CAP in 1992, these imports amounted to about 200,000 t/year, since when they have fluctuated between 600,000 t/year and 2,000,000 t/year, thus a quantity which may represent close on 25% of the requirements of the European processing Industry. In practice, about 400,000 t are imported annually independent of the quantitative/qualitative level of European production. In such case, this wheat comes from North America (United States and Canada) or Australia and is characterised by a particularly high protein content and by a high gluten tenacity, being intended either for the production of certain types of high quality pasta or for correcting the protein content of European wheat.

10. Evolution and perspectives of the durum wheat market in the EU

11. European exports of durum wheat semolina /1 Today still the European Union represents one of the principal world exporter of durum wheat semolina; however, european exports of durum wheat semolina, which at the beginning of the 1990s had reached around 1,000,000 t/year, have now fallen to an average level of 200,000 t/year, thus representing a quite marginal outlet for the processing industry. However, this reduction in the export flow of durum wheat semolina has been offset by the positive trend noted as regards the consumption and exporting of pasta, since a revalorisation of the Mediterranean diet has led, in the course of the last few years, to a continually growing pasta consumption, on both the EU and international markets.

12. Evolution and perspectives of the durum wheat market in the EU The principle of total decoupling of aid to production – introduced at the time of the medium term reform of the CAP in June 2003 – is destined to have incisive repercussions on the production system and, consequently, on the supplying of the European processing Industry. According to the projections made by our Union on the basis of costs/benefits and alternatives to the production of durum wheat, of the 4 producer countries of the Union, only France was in a position to confirm, for the next few years, its present surface area in durum wheat, while a considerable reduction of areas and of production was expected for Italy, Spain and Greece. Consequences of Medium Term Reform of the CAP on the durum wheat sector /1

13. Evolution and perspectives of the durum wheat market in the EU Consequences of Medium Term Reform of the CAP on the durum wheat sector /2 ITALY consequences of the total decoupling of aid to production in the main regions producing durum wheat Tuscany:replacement durum wheat/soft wheat abandoning marginal land Marche:replacement durum wheat/soft wheat Apulia :abandoning marginal land Basilicata:abandoning marginal land Sicily:abandoning marginal land Average reduction of production, at national level, estimated at 25%.

14. Evolution and perspectives of the durum wheat market in the EU Consequences of Medium Term Reform of the CAP on the durum wheat sector /3 FRANCE Consequences of the partial decoupling of aid to production in the main regions producing durum wheat Marseilles:maintenance of durum wheat growing Orleans:maintenance of durum wheat growing Toulouse:maintenance of durum wheat growing Montpellier:maintenance of durum wheat growing

15. Evolution and perspectives of the durum wheat market in the EU Consequences of Medium Term Reform of the CAP on the durum wheat sector /4 SPAIN Consequences of the partial decoupling of aid to production in the principal regions producing durum wheat Andalusia:abandoning marginal land Saragossa :replacement durum wheat/soft wheat abandoning marginal land Average reduction in production, at national level, estimated at 25%.

16. Evolution and perspectives of the durum wheat market in the EU Consequences of Medium Term Reform of the CAP on the durum wheat sector /5 GREECE Consequences of the total decoupling of aid to production in the main regions producing durum wheat Thessaly:abandoning marginal land Macedonia:replacement durum wheat/soft wheat abandoning marginal land Average reduction of production, at national level, estimated at 15%.

17. Evolution and perspectives of the durum wheat market in the EU Consequences of Medium Term Reform of the CAP on the durum wheat sector /6 According to the European Commission (source: Prospects for agriculture markets and income in the European Union), the reduction of surface areas growing durum wheat in the EU should be limited, up until 2012, to some 300,000 ha compared to the areas ascertained prior to the medium term reform (from 3.9 M ha to 3.6 M ha). The reduction in the surface areas growing durum wheat should be limited, in view of mind a probable increase in quotations for the raw material. As regards internal consumption, this should grow progressively, thanks to the increase in human consumption, to take its place at 10.9 Mt in 2012. The EU should continue to be a net importer of durum wheat for a quantity amounting to between 1.5 and 1.7 Mt.

18. Evolution and perspectives of the durum wheat market in the EU Consequences of Medium Term Reform of the CAP on the durum wheat sector /7 Estimates of the Union of Semouliers of the EU According to the Union of Associations of Semouliers of the EU, the reduction in the surface areas growing durum wheat in the EU should be situated at far higher levels than those of the forecasts made by the European Commission. In this way the reduction could amount, globally, to around 800,000 ha (400,000 ha in Italy, 200,000 ha in Spain, 100,000 ha in Greece and 100,000 ha in Portugal), thus further accentuating the quantitative deficit of European production for meeting the requirements of the Industry.

19. Evolution and perspectives of the durum wheat market in the EU Objectives of the semolina Industry over the next few years 1. 1. Maintenance of a level of production sufficient to limit the quantitative deficit in European production compared to the needs of the processing Industry; 2. Improvement in the qualitative level of European production in particular as with regard to certain technological characteristics.

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