USDA/FAS GAIN Report DA6005: Denmark - Planting seeds annual

Approved by: Roger A. Wentzel, Office of Agricultural Affairs
Prepared by: Hasse Kristensen

Report Highlights

Danish grass seed production increased in 2005 to a record of 106,829 tons, 21 percent above 2004 and 19 percent above the record 2003 harvest of 90,000 tons. Ninety-four percent of the production was exported, primarily to other EU member states. Grass seed area in 2006 is forecast to reach a record area 0f 88,500 hectares. Decoupling of EU production support is expected to increase Danish production of grass seed by about 50 percent during the coming 10 years.

Executive Summary

Denmark accounts for more than 45 percent of EU grass seed production and 20 percent of outputworldwide. Denmark exports about 94 percent of its production - 90 percent of this to EU member countries. Exports to the U.S. and Canada vary, but were as low as 749 tons in 2004/2005, which is one-sixth of the level in 1999/00. The same declining pattern is seen for exports to South America, with 2004/05 exports of 693 tons. Exports to Asia, mainly China, were reduced to less than half of normal in 2004/05. Imports from the U.S. are minimal and confined to small amounts of bent grass.

Danish grass seed output in 2005 increased to 107,000 tons compared to the previous year of 88,000 tons. This is mainly due to larger areas and an 32 percent increase in the yield of red fescue. Average yield of the large area of perennial ryegrass (42.5 percent of total grass seed area) was unchanged at 1,192 kg per hectare. Total grass seed area for 2006 is estimated to increase to 88,500 hectares, 2,700 hectares more than the record year of 2005. Denmark has consolidated its position as the world’s largest exporter of grass seeds and exports are expected to continue increasing. Total 2004/05 exports reached 78,500 tons, down from 87,000 in 2003/04 and at the level of the previous 5 years of about 78,000 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 support for 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.

Given the relatively free market access for planting seeds, economic competition will largely 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.

Full report in PDF format: http://www.fas.usda.gov/gainfiles/200605/146187627.pdf