French Agricultural Trade and Food Markets

France is one of the largest economies in the world and represents a major agricultural producer within the European Union. Similarly, French agricultural production is highly protected and regulated by legislation, which prevents the use of inputs such as genetically engineered organisms as well as certain kinds of chemical products. This article explores France’s agriculture industry as well as its place within world markets.

French Agricultural Trade and Food Markets

France has experienced sluggish economic growth over the last three years, which has consistently been under 1.5%. Because of this, inflation has remained low mainly due to the relatively low production costs and, to a lesser extent, to the labor market conditions. France’s agricultural industry, which is highly dependent on national government subsidies as well as aid from the Common Agricultural Policy (CAP) of the EU, accounts for approximately 2.0% of the national GDP. Overall, France is a net exporter within the food and agriculture industry; however, not in all sectors. France’s agriculture trade surplus for 2015 amounted to US$10.4 billion. This amount represents a substantial decrease from the trade surplus during 2014, which was of U$12.1 billion.

The national surplus of the agriculture industry is larger with processed foods, accounting for US$7.5 billion of the surplus, than with raw products, which account to US$2.9 billion of the total surplus. Within the processed food sector, the most important industries are grain, bakery, and pastry processing as well as alcoholic beverages and oils. Interestingly, the sale of processed products dominates in markets outside of the EU, while the sale of raw products dominates French exports within the EU countries.

The French food processing industry has over 16.000 companies and is valued at around US$189 million. Meat and meat products are the largest sector within the French food processing industry accounting for more than 2.500 companies operating in the country and an estimated cash flow of US$37.1 million per year. Given the significant growth of the food processing industry in France, demand for raw imported goods, such as fish, seafood, fruits, nuts, and vegetables, has increased substantially in recent years. It is important to mention that France’s largest food and agriculture import partners, as well as overall trade partners, are all fellow EU nations, including Spain, Germany, the Netherlands, and Italy. However, changing tastes within the younger generations are transforming the French food markets and creating windows of market entry for new suppliers. New French consumers are looking for healthy, reasonably priced, and ready to eat foods.

This week, the EU member states were supposed to approve the Comprehensive Economic and Trade Agreement (CETA) with Canada. However, due to internal political struggles, Belgium was not able to vote in favor of the CETA and, thus, its implementation is on hold. If implemented, the CETA would reduce more than 90% of trade tariffs, quotas, and restrictions between Canada and the EU. This trade agreement would substantially benefit Canadian companies seeking to enter the European market, particularly in regards to the food and agriculture industry.

(Read more about Apple and Pear Production in the European Union)