USDA/FAS GAIN Report DA5005
Denmark: Planting Seeds Annual

HIGHLIGHTS

Danish grass seed production decreased in 2004 to 87,932 tons, slightly down from the record 2003 harvest of 90,000 tons. Ninety-three percent of the production was exported, primarily to other EU member states. Grass seed area in 2005 is forecast to reach a record of 85,000 hectares. Decoupling of EU production support is expected to increase Danish production by up to 50 percent during the coming five to ten years.

EXECUTIVE SUMMARY

Denmark accounts for more than 45 percent of EU grass seed production and exports about 93 percent of its production - 90 percent of this to EU member countries. Exports to the U.S. and Canada increased slightly to 1,026 tons in 2003/04, which is one-fifth of the level in 1999/2000. The same declining pattern is seen for exports to South America, with 2003/04 exports of 800 tons. Exports to Asia, mainly China, seem to remain at a level of 1,500 tons. Imports from the US are minimal and confined to small amounts of bent grass and red
fescue.

In spite of increased area, Danish grass seed output in 2004 decreased slightly to 88,000 tons compared to the previous year of 90,000 tons. Total grass seed area for 2005 is estimated to increase to 85,000 hectares, 2,000 hectares more than the record year of 2004. Denmark has consolidated its position as the world’s largest exporter of grass seeds and exports are expected to continue increasing. Total 2003/04 exports reached 87,000 tons, up from 78,771 in 2002/03 and significantly higher than the average level of about 80,000 tons in 1999-03.

While the country's surpluses limit the demand for imported grass seed, small but lucrative quantities of bent grass seed for lawns and golf greens are imported with a decreasing share of this market coming from U.S. suppliers.

Of the total average grass seed price received by farmers, EU production support accounted for about 30 percent. In total, this support amounted to $41.5 million in 2004 corresponding to 48 cents per kilo.

With the implementation of EC CAP reform in Denmark by January 1, 2005, all seed production was decoupled. The hitherto per kilo support is discontinued, and producers will receive the same single farm payment rights (about $390 per hectare) as other crop producers. As a result of the reform, producers of the high yielding grass seed varieties will suffer a bit financially, while the producers of the lower yielding varieties will gain. Given the relatively free market access for planting seeds, economic competition will determine whether future EU demand will be supplied by seed producers in the EU (mainly Denmark, the Netherlands and Germany) or from Canada, New Zealand and the U.S.

Complete report in PDF format: http://www.fas.usda.gov/gainfiles/200505/146119652.pdf