Europe’s farms are holding up in 2026. Yet soaring fertiliser costs and thin margins leave little room for the next shock.
European farmers are enjoying a modicum of fragile comfort․ The July Short Term Outlook for EU agricultural markets from the European Commission shows broad resilience across the EU in 2026․ However‚ high uncertainty on energy prices‚ high production costs for fertilisers‚ animal diseases, and weather related risks tightly squeeze margins․
Production of oilseeds‚ dairy‚ pork and poultry is likely to increase in July 2026․ Cereal production is to stick around the five year average‚ while the production of beef‚ mutton and chevon‚ sugar and olive oil is about to decline․
The warning light
The real danger lies in what happens in the background of those production numbers‚ with farmers facing higher input costs (energy and fertilisers). This could eventually hit consumers as food inflation․
“Short-term prospects for EU agricultural markets in 2026 remain robust, despite sustained and new sources of uncertainty and pressure on producer margins from rising input costs,” the report says.
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Fertiliser prices have become one of the clearest pressure points in EU agriculture․ EU nitrogen fertiliser prices in April 2026 were 72 per cent over 2024 levels․ They later showed signs of stabilising in May and easing in June, but remained 56 per cent above 2024 levels by mid June. The Commission says fertiliser affordability dropped in March and April to levels last seen during the 2022 crisis. That matters because fertilisers are essential for crop yield and quality. Delayed purchases or reduced applications may appear later in the growing season․
Winter crops were generally less affected as fertiliser bought before the end of 2025 was sufficient‚ although some farmers applied less fertiliser to the final crop. This reduces the protein content of the harvested grain․ The bigger concern‚ however‚ is spring and summer crops‚ where maize may be less fertilised or smaller․
Food prices may increase
The economic environment remains difficult․ EU real GDP growth is to hit 1․1 per cent in 2026‚ with inflation reaching 3․1 per cent․ The Commission attributed the increase in inflation to higher oil and gas prices following the outbreak of war in the Middle East․ Food prices are still rising only modestly, but the report warns that food commodity futures point to further increases through mid 2027.
This is due to delays in the transmission of increased energy‚ transport and input costs to food prices․ They can move relatively slowly through farms‚ processors‚ supermarkets‚ and consumers․ “Food affordability was the most relevant concern for EU food security,” the outlook notes, referring to risks identified in the spring 2026 State of Food Security in the EU.
Consumer confidence is to remain subdued and volatile through late 2026. Rising food prices and renewed energy uncertainty keep it down.
Oilseeds rise‚ sugar falls
Oilseeds are one of the stronger sectors in the outlook․ EU production of rapeseed‚ soya bean and sunflower seed is to reach 32․7 million tonnes in 2026/27‚ up 3․1 per cent year-on.year. The figure is 5․3 per cent higher than the five-year average․ This has come largely from an increase in area and sunflower seed yield․ Production of vegetable oils is to increase‚ with oilseed meal at a record 30․4 million tonnes․
Sugar is moving in the opposite direction․ EU production is to click in at 14.1 million tonnes in 2026/27, down 15 per cent year-on-year and 13 per cent below the five year average. The decline is mainly due to to lower sugar beet area after record prices eased and costs increased.
EU olive oil production is likely to remain below the 2․1 million tonne level for the 2025/26 campaign. It marks a five per cent year-on-year climbdown, but remains above the five year average․ Spain‚ the European Union’s largest producer‚ suffered from excess rainfall at the beginning of 2026‚ affecting harvest quality․
Lower prices stabilise
After previous falls and since late April‚ prices have stabilised at lower levels․ Lower prices should make EU olive oil exports more competitive‚ with exports likely to increase by six per cent over the previous year․ Imports are to rebound by 24 per cent as Tunisian olive oil is cheaper․
The meat outlook is a mixed bag, too. Production of pork is to remain fairly stable with an increase of 0․3 per cent in 2026․ Poultry production is likely to continue its upward trend with a growth of 1․4 per cent․ Beef production is to fall by 2․2 per cent due to the continued decrease of the EU cow herd․ Prices should remain strong; however‚ exports are to fall and imports to rise․
Production of mutton and chevon is also to fall by 4․4 per cent. The principal reasons are declining flocks and livestock diseases․
Resilience with little room for error
The outlook shows an agricultural sector that is still producing, exporting and adapting. But it also shows how vulnerable EU farming has become to shocks outside the farm gate. Uncertainty concerning global energy prices‚ fertiliser affordability‚ trade disruptions and weather in key exporting countries still remains․
The Commission’s Fertiliser Action Plan, adopted on 19 May, is to address immediate concerns over fertiliser purchases. It is to support longer-term resilience and sustainability.
For now, the EU’s farm outlook remains stable enough to avoid alarm. But the margin for comfort is narrowing. If energy markets fail to normalise, if fertiliser prices rise again, or if weather conditions worsen, today’s ‘robust’ outlook could become much harder for farmers and consumers by 2027.
