EU-25 Livestock and Products Annual 2005
By USDA, Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2005 report for the EU. A link to the full report is also provided. The full report includes all the tabular data which we have omitted from this article.
Report Highlights
Pig slaughter and pork production in the EU is reaching a low in 2005, mainly in the EU-15 as
most NMS are increasing production after accession. This lower production results in a
decrease in domestic consumption as a consequence of high pork prices, while pork exports
to Japan and Russia are expected to remain stable.
As swine inventories are increasing
again across the EU, pork production is forecast to increase in 2006. This will presumably
lead to an increase in consumption and slightly higher exports.
Executive Summary
EU pig production is reaching a low in 2005 and more specifically in the EU-15, as most NMS,
except Hungary and the Slovak republic, are increasing production after accession. Pig
production is forecast to increase again throughout the EU in 2006, except in the Benelux
and Italy.
As a result, pig slaughter and pork production also decrease in 2005. This mainly
results in a decrease in consumption in the NMS and to a lesser extent in the EU-15, as a
consequence of the high pork prices. Exports, to Japan and Russia mainly, are expected to
remain stable. In 2006, pork production is forecast to increase again, which will presumably
lead to an increase in domestic consumption and a further slight increase in exports.
Swine
2004
Swine beginning inventories were updated to match an EC review of swine inventories. As a
result, pig crop was revised. Extra EU exports of pigs were higher than previously
anticipated. These exports included slaughter pigs from Poland to Russia and from Hungary
to Romania, as well as piglets from The Netherlands, Germany and Austria to Croatia and
Romania. Intra-EU trade of live pigs is also significant. Piglet exports from Denmark to
Germany increased at the expense of Dutch exports, which shifted to the NMS. Germany
and Italy imported slaughterpigs from the Benelux, Denmark and France, while Czech
slaughterpigs were exported to Hungary mainly. Total pig slaughter numbers were also
reportedly higher than previously anticipated. This was mainly because Poland and the
Czech Republic reported higher than expected pig slaughtering. Swine ending inventories for
2004 were updated as EC December census numbers were published.
2005
EU pig crop is expected to decrease only marginally from 2004, as the European pig cycle
reaches its bottom. Exports of mainly piglets, from The Netherlands, Germany and Austria
to the Balkan countries and Romania, are expected to further increase in 2005. Pig
slaughter is expected to decrease by about one percent, mainly in Hungary, Poland, The
Czech Republic and the Slovak Republic. Swine ending inventories are expected to increase
throughout the EU, but more pronounced in Hungary, Poland, Portugal and the Benelux. Pig
numbers are expected to further decline in the Czech and Slovak Republic, Spain and in the
United Kingdom.
2006
With inventories increasing, pig crop is also forecast to increase, especially in the NMS.
Exports of piglets to Croatia and Romania are forecast to stabilize, as expectations are that
domestic pig production will increase in these countries as a result of foreign investments.
Pig slaughter is forecast to increase by one percent and ending inventories are forecast to
further increase. The largest increases in slaughter should occur in Poland, Hungary,
Denmark, Germany, Ireland and Italy. Only Austria, Sweden and the Czech Republic are
forecast not to have reached the bottom of their pig cycle yet by the end of 2006.
Pork
2004
Updates to previous estimates don’t change the picture much, as a downward review of pork
production translates in a downward review of pork consumption. Provisionally final pork
export figures turned out higher than previously estimated.
2005
Pork production in 2005 is expected to slightly decrease, more or less in line with the
decrease in pig slaughter. In the EU-15, decreases in production in Italy, Spain and Denmark
are forecast to more than offset increases in the Benelux, Germany and the United Kingdom.
However, pork production decreases in the Czech Republic, Hungary and Poland are forecast
to more than offset the production increase in the EU-15. Imports and exports are expected
to remain stable overall.
Increases in export from the EU-15, mainly to Japan, Korea and
Russia, are forecast to offset decreases in exports from the NMS to Russia. Domestic
consumption of pork is expected to slightly decrease because of high pork prices and lower
supplies. Especially in the NMS pork consumption is expected to decrease about 3 percent,
while pork consumption in the EU-15 would remain stable.
2006
Pork production is forecast to increase again in 2006, in line with expectedly increased
slaughter. Pork imports are forecast to remain stable. Pork exports are forecast to increase,
as Polish exports to Russia should resume gradually after Polish plants get export approval
again from the Russian inspection services. Domestic pork consumption in the NMS is
forecast to recover, as local production is expected to increase, thus increasing supplies and
lowering pork prices. This is forecast to lead to lower exports to the EU-15. EU-15 pork
consumption is forecast to remain stable, as increased domestic production will substitute
lower imports from the NMS.
Policy
Market adjustments resulting from CAP reform and Enlargement
EU beef consumption has virtually entirely recovered from the consumption crises that
resulted from the BSE scare. However, markets in the EU-15 and the NMS evolve in very
different ways, as beef consumption per capita in the NMS is traditionally less than half per
capita consumption in the EU-15. Beef production has been responding in various ways in
different MS on the BSE crisis. The differences between MS in the implementation of the
2003 CAP Reform and the market effects of the 2004 Enlargement have enhanced these
evolutions and the full impact of these changes will further remodel EU beef markets.
The large pre accession price differential in cattle prices between EU-15 and NMS led to an
extra flow of cattle imports from the NMS into the EU-15 in the second half of 2004. These
extra 0.3 million head or a 60 percent increase (Hungary up about 170.000 head; Poland up
about 100.000 and the Czech Republic up 25.000) of cattle were mainly exported to Italy
and The Netherlands. This increased flow of cattle imports into the EU-15 barely allowed for
the compensation for the decrease in cattle supplies in the EU-15. Slaughter in the NMS
decreased significantly as a result, also because many slaughterhouses hadn’t met EU
sanitary requirements by the time of accession. The price differential rapidly decreased,
which led to a significant increase in beef prices and consequently a decrease in beef
consumption.
In the EU-15 beef production is restructuring as a result of the implementation of the 2003
CAP Reform. The fact that MS are implementing the reform in different years leads to some
short-time market influences. At the end of 2004, slaughter went up significantly in MS,
including Belgium, Germany, Portugal and the UK, that had decided to decouple cattle
slaughter premia at the beginning of 2005. This phenomenon is not expected to occur at the
end of 2005, as most MS implementing the reform in 2006, including France and Spain, are
keeping the slaughter premia coupled. However, differences in the way and the level MS are
decoupling beef premia are leading to more structural sector adjustments. Roughly
speaking, Northern European countries, including Germany, are decoupling all beef premia.
As a result, it can be expected that beef production from suckling cows and beef cattle will
decline or even disappear completely in time. Add to that the EU-wide long-term decline in
dairy herds because of increasing milk production efficiency, and it can be safely forecast
that total beef production in Northern Europe will decrease. In the Southern part of Europe,
from the Benelux down to the Iberian Peninsula and Italy, part or all beef premia will remain
coupled. This means that the beef cattle herd is not likely to decrease much, only the dairy
herd.
Another structural problem for EU beef production is that, with the decrease of the total
cowherd, calf birth numbers are expected to decrease significantly. A June 2005 study by
the French “Institut de l’Elevage”, named “ Beef Production Outlook in the EU-25 for 2012”,
even forecasts a decrease in calf births of more than 2.5 million per year or a decrease of 18
percent (even a decrease of 28 percent of calves born from dairy cows). The study argues
that the EU could import up to 200.000 calves from Ukraine and Belarus, and roughly
another 200.000 calves will become available again from the UK after the ending of the
OTMS. Most of these calves could supplement the Dutch veal sector. Italy would also import
part of these calves, together with some increased imports from the countries in former
Yugoslavia. EU beef production would greatly have to uphold production from increases in
slaughter weight.
The swine/pork market is only indirectly impacted by the 2003 CAP Reform from lower
feeding costs as grain prices are reduced through the reform. Enlargement is playing a
much bigger role as it invigorated trade between the EU-15 and the NMS. Piglet exports
from the EU-15 to the NMS increased significantly, while increased exports of slaughterpigs
went the other way. Pork trade increased both ways; higher quality cuts to the EU-15 and
more “sausage” meat to the NMS. The pig sectors in Poland, Hungary and the Czech
Republic are expected to expand in the future, as a result of foreign investments from
Danish, Dutch and German, but also third country, including U.S., producers and processors.
The competitive feeding costs, lower environmental limits and the proximity of important
export markets in Russia, Ukraine and other countries are the main drivers.
Impacts of Animal Welfare legislation (also see GAIN 34089 - Animal Welfare Legislation in the EU - Update1)
New legislation on animal welfare standards during transport is likely to discourage long
distance transport of cattle and pigs in the future. The new restrictions on travel times and
stocking densities, as well as requirements for drinking/feeding and a controlled atmosphere,
will raise the cost and economic feasibility of these transports significantly. Some feel a
solution would be to ship meat, not live animals across the EU.
More info on European animal welfare programs is available at the EC webpage
http://europa.eu.int/comm/food/animal/index_en.htm.
Further Information
To read the full report please click here (PDF format) Source: USDA, Foreign Agricultural Service - Annual Livestock and Products Report - July 2005