ANALYSIS - French Farmers Haunted by Memories of 2003 Drought
Date: 27-Jul-06
Country: FRANCE
Author: David Evans
After weeks of temperatures topping 30 degrees Celsius (86 F) across the country, farmers have issued an alarm call for help, fearing a repeat of the financial losses three years ago.
The heatwave in August 2003 killed some 15,000 mostly elderly people, sparking criticism of France's social services.
In August that year, the government announced a 500 million euro (US$630 million) aid package for farmers, who said their losses topped one billion euros after frosts, drought and a heatwave.
"2003 remains a black year for French farmers and unfortunately has become a reference point for the agricultural world as the damages were considerable," France's main farm union FNSEA said.
"2006 started better but the combination of drought and the heatwave has seriously dampened the initial optimism," it added.
"We must mobilise all the services of the state as soon as possible to face up to the problems linked to the supply of animal feedstuffs, irrigating crops and output difficulties."
Despite spring rain, which alleviated the worst of the drought conditions, the government has imposed varying degrees of water restrictions in some two-thirds of the country.
Measures range from curbs on motorists washing their cars to irrigation controls on farmers.
Environment Minister Nelly Ollin on Wednesday launched a public awareness campaign for the public to use less water.
And the government has already sought European Commission permission to free up set-aside land for use by farmers who can no longer graze their livestock on parched fields.
"Today, it's the livestock breeders who are in the most worrying situation," Farm Minister Dominique Bussereau said.
"For the moment, the problem is not cereals. We'll have harvests not as good as predicted, but there will be sizeable harvests," he said.
The government expects to get EU permission on Thursday to use the set-aside land.
GRAIN PRICES RISE
For maize and wheat farmers, the high temperatures have also taken their toll. Grain prices jumped more than 10 euros last week as traders and speculators bet on more crop damage in France's main wheat belt north of Paris.
Paris-traded November wheat futures hit a contract high of 132 euros a tonne on Friday on initial disappointing yield reports as the harvesters rolled north. Prices have since eased, and November wheat is back to around 127 euros.
Traders looked for parallels with 2003, when the worst of the summer heatwave came a few weeks later in August, but a spring drought had already sealed the fate of the wheat crop.
In July 2003, November wheat was trading just above 120 euros a tonne, but within a few months the benchmark March contract had soared to just below 170 euros as grain supplies tightened across Europe.
Analysts say the situation is different this year, output in the EU will not be so badly hit and the EU has big grain stocks.
"We're not in a repeat of 2003 in Europe as production is better and we have higher carry-over stocks," said analyst James Dunsterville of AgriNews in Geneva.
Analysts have put the EU wheat crop at around 115 million tonnes this season, and even if the latest bout of high temperatures takes another million off the total, it is still far above the 2003 total of just 98 million tonnes.
And the EU also has relatively large stocks to draw on. In 2003, intervention stores were almost empty, whereas this season there are some 13 million tonnes in store, including 5.2 million tonnes of wheat and 5.5 million tonnes of maize.
Millions of tonnes of the grain are in landlocked Hungary, and difficult to export. Analysts say a firm market this season could play into the EU's hands, allowing it to sell these stocks more easily onto the domestic market.
