According to United Nations and European Union farm officials, farm incomes in Europe may drop this year, the first time they have declined in three years.

The 27 countries representing the EU represent one of the largest coalitions of farmers in the world. The EU’s 13.7 million farmers (a population several times larger than the United States) are the second largest agricultural producers in the world (second only to China). In 2011, EU farm production reached $488 billion, up from $446 billion in 2010.

Until recently, European farmers had been the beneficiaries of rising prices, which served to offset high costs. This year, however, has seen the bottom fall out of many EU staple crops, including wheat. Wheat prices traded in Paris are down by about 11 percent, and French farmers in particular are struggling with declining wheat prices. France is currently the largest agricultural producer in the EU.

In addition to declining prices, European farmers are facing rapidly expanding operation costs. This year, British farmers paid about 8 percent more for energy than they did last year. British fertilizer costs also increased 26 percent in 2011. According to the head of business research at a Leicestershire, England farm consulting company, “2011 may prove to be a bit of a high point. Costs are rapidly catching up with output prices, so I think it will prove to be almost a one-off good year.”

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Written by: Justin Ellison / Farm Plus Staff Writer