EU Meat Consumption to Fall Along with Production

EU - Overall meat production in the EU is expected to decrease by 1.1 per cent in 2012 and remain stable with a further small decrease of 0.1 per cent in 2013, while a decrease in total EU meat consumption is foreseen of 0.7 per cent in 2012 and 0.4 per cent in 2013, according to the European Commission's Short Term Outlook for February 2012.

29 February 2012

3 minute read

The EU meat sector in 2011 was supported by a relatively strong level of demand on the world market characterised by the quite favourable global economic situation. Global import demand increased, partly as a consequence of animal disease related supply constraints in the Far-East.

Overall supply of meat was further constrained by high feed costs despite the reasonably good harvest in the EU, US, Canada and Russia. As a consequence world prices increased which contributed to the continued good performance of EU exports.

The outlook is characterised by a further contraction in total EU meat consumption, which is expected to decrease by 0.7 per cent in 2012 and 0.4 per cent in 2013. Only poultry meat has proven to be resilient, with consumption estimated to have grown slightly in 2011 and expected to increase further over the outlook period given its healthy image and relative cheapness.

Overall meat production in the EU should decrease slightly (by 1.1 per cent) in 2012, and remain stable in 2013.

Beef and veal

The overall beef/veal consumption in the EU should fall in the next two years driven mainly by tighter supply and high prices. For the last four years, the beef/veal herd has continuously decreased and this should persist in the short-run.

In fact, the supplies of beef feeder male cattle are compromised by less male and heifer slaughtering and also due to sustained live animal export demand. Therefore, domestic production is expected to decrease noticeably in 2012 leading to a reduced export capability for 2012.

Prices for carcases of all categories and live animals are expected to remain high throughout 2012 due to limited supply and competition for earlier marketed finished cattle to offset high feeding costs.

On the world market, USA and Australia are the largest suppliers of fresh and frozen beef whereas Mercosur countries have limited production during 2011. At present, the Russian, Japanese, South Korean and the Turkish markets remain dynamic importers.

Mainly due to the firm beef and live export demand from Russia and Turkey, the EU has consolidated a net exporter position in volume, although a global descending trend is foreseen for 2012. In contrast, beef/veal imports should increase in 2012 as a consequence of tight domestic availability and gradual recovery of imports from main Mercosur suppliers.

Uncertainties

Production and trade related uncertainties would mainly originate from rising production and investment costs and their financing, from a limited sectoral adjustment capacity with respect to market volatility, and from animal health related issues (for example, the Schmallenberg virus in the beef and sheep sectors). Prices for energy and protein feed components and other essential feed ingredients have been increasing since 2010 and are expected to remain high.