Estudios económicos


Latin America
Northern America
Central & Eastern Europe
Western Europe
Mid-East & Turkey
Change sector


  • Strong demand from emerging countries (notably China and India)
  • Organic market growth in advanced economies


  • Sector highly exposed to weather events
  • Considerable uncertainty around the ongoing trade war

Risk assessment


(100 = JANUARY 2018)

The United Nations Food and Agriculture Organisation (FAO) food price index fell by about 6% between September 2017 and September 2018. The decrease mainly reflected the fall in vegetable oil and sugar price indices, which fell by 21% and 20% respectively over the same period, chiefly because of high sugar production and Chinese tariffs on imports of US soybeans. The cereal price index was the only one to increase (by 9%), owing to decreased rainfall (and therefore production) in Australia and Canada – the leading global players, accounting for 22% of global wheat exports in 2017. However, it should be borne in mind that the soybean benchmark used in the FAO price index is US soybeans, whose price is falling due to the ongoing trade war between the United States and China. The price of American soybeans is therefore moving in the opposite direction to Brazilian soybean prices, which are climbing on the back of growing demand from China owing to the tension with the United States.

The sector is expected to be affected by weaker growth in advanced economies, mainly in Europe, and will likely continue to suffer in the United States from the US-China trade war, with China imposing a 25% import tax on American soybeans in retaliation for US protectionist measures. As soybeans are used to feed livestock, the trade war will also impact market players indirectly, over and above the import taxes imposed on US pork imports by China and Mexico of 62% and 20% respectively. The pork market will be further affected by the cases of African swine fever reported in 2018 in China (50 cases between August and November) and Europe (more than 1,200 cases between July and November, most of them in Romania).

The organic market is seeing significant growth, particularly in advanced economies, with the share of arable land used for organic farming rising from 0.3% in 2000 to 1.2% in 2016. This trend is expected to continue in the coming years.


Global economic growth across all sectors is expected to decline slightly in 2019 (3% according to Coface).

In Emerging Asia, growth in activity is expected to slightly decline in 2019 to 5.7%, compared with 6% in 2018. China's tariffs on US soybean imports should reduce China's external demand for soybeans for the 2018/19 season* by 11% compared with 2017/18. Chinese imports accounted for 62% of US exports in 2017, but China will source soybeans mainly from Brazil and Argentina in 2019. Its imports of US soybeans were already down 95% in September 2018 year-on-year.

The pork market has been hit by the recent cases of African swine fever: the highly contagious and deadly nature of the disease has forced Chinese farmers to slaughter a large proportion of their livestock to prevent the disease from spreading. If the epidemic is not brought under control quickly, China could be forced to increase its pork imports, which will fuel inflationary pressure in the segment at global level.

Strong growth in North America, despite the slight slowdown expected in 2019 (2.8% and 2.1% growth for the United States and 2.1% and 2% for Canada in 2018 and 2019 respectively), will boost regional demand in the sector. However, the US agri-food sector is expected to be adversely affected by the trade war with China: American agricultural products are among the most targeted by Chinese retaliation measures. With China now sourcing almost exclusively from Brazil and Argentina, the United States is trying to find other buyers to compensate for the shortfall. Europe, which has agreed to buy soybeans mainly from the United States, will not be able to offset the decline in Chinese demand for American producers.

Demand in the sector in Western Europe should be negatively impacted by poor growth prospects for 2018 and 2019, while in Eastern Europe, external demand, particularly for meat, will benefit the sector.

In Latin America, the sharp depreciation of the Argentine peso in 2018 and the increase in soybean exports to China will boost Argentine agricultural exports, but the dim growth outlook for 2018 and 2019 is likely to negatively impact the agri-food sector. Increased Chinese demand for Brazilian soybeans, although a boon for producers, is a challenge for domestic consumers, as higher prices linked to increased demand hurt local consumers as well as livestock producers.


World cereal production is expected to decline, with the 2017/18 and 2018/19 harvests down 2% compared with 2016/17, mainly due to adverse weather conditions and the El Niño phenomenon (which started at the end of 2018) mainly affecting Latin American countries – such as Peru, Brazil and Argentina – as well as Oceania. The US Department of Agriculture (USDA) forecasts world pork, poultry and beef production to increase by 2%, 4% and 3% respectively in 2018 compared with 2017 and by 1%, 2% and 1% in 2019 compared with 2018.

In the United States, growth in food production slowed slightly in the second quarter of 2018 compared with the first, growing by 2.4% after 3.3%. Soybean producers, who must already deal with the tariffs imposed by China in retaliation for the trade war started by the Trump administration, are also facing crop failures at the beginning of the 2018/19 season, with rainfall and hurricanes resulting in poor quality production.

In Europe, the sector as a whole continues to be weakened by the Russian embargo on food products from the United States and the EU, which is expected to continue until the end of 2018.

In Latin America, droughts in Argentina have impacted the sector: soybean production in 2017/18 was 31% lower than the previous season. Production may also be affected by El Niño, which is leading to higher-than-normal rainfall in Argentina. The Brazilian soybean harvest was 5% higher in 2017/18 than in 2016/17. Producers benefited from higher prices linked to firmer demand. Soybean prices on the Brazilian market are expected to continue increasing on strong demand from China in connection with the trade war. Meanwhile, Brazilian pig farmers are also facing higher prices for soybeans, which are used as a source of protein for livestock.


Last update : February 2019

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