European Community Experience in Costs of Producing Wheat

Abstract

Wheat is a major French and European commodity. There are approximately 400,000 wheat producers in France producing 25 million metric tons of wheat on 4 million hectares. European Economic Community (EEC) wheat production is slightly higher than 70 million metric tons. French wheat production is very intensive, as in all of the northern plains of Europe. Soft wheat is the main type of wheat produced in these plains, while Durum is cropped in the Mediterranean regions of the EEC. Yields are high in relation to North American standards. France averaged up to 6.4 metric tons per hectare in 1989, but production typically varies from 4 to 9 tons per hectare. These yields require high levels of nitrogen ranging from 150 to 200 units per hectare in three applications, similar to the U.S. corn production. All French wheat producers belong to the Association g6n6rale des Producteurs de bl6 (AGPB), which is similar to the U.S. National Association of Wheat Growers. AGPB, which is funded by wheat growers, owns two major organizations. The Institut Technique des C6r6ales et des Fourrages (ITCF) provides extension information to producers on how to improve production. The second organization is UNIGRAINS, which is a bank, owned and financed by the cereal growers. This bank does not loan to producers but finances the processing of cereal and animal products. UNIGRAINS estimates the cost of production for wheat, barley, corn, rapeseed, and sunflowers. However, only wheat will be discussed in this paper, as it features the most detailed analysis. This paper has the following objectives: (a) to present information regarding the costs and returns of French wheat production; (b) to evaluate the cost of production, study its trends, and compare costs with prices over time; (c) to compare the French situation with European and North American competitors (USDA cost-ofproduction data are available in France since 1979).