17 March 2015

4 minute read

Market analysts at the Livestock and Meat Commission (LMC) write that EU suckler cow numbers are 1.3 per cent from year earlier levels.

They write that the most notable increases in suckler cow numbers in the EU-15 were in Spain and in France where herd size increased by 114,000 head and 32,000 head respectively.

Meanwhile suckler cow numbers have recorded declines in the UK, NI and ROI. There have been key changes to both total cow herd size and in the dairy/beef herd mix at individual member state level.

These changes have been driven mainly by competition for land between the dairy and beef sectors as well as issues around profitability in some regions.

Coupled Support

The increasing demand for beef across the EU and the implementation of the Voluntary Coupled Support in the beef sector under the new CAP have also been key factors behind an increase in suckler cow numbers in some member states. Voluntary Coupled Support will represent ten per cent of the estimated €41 million in the total Direct Payments envelope from the EU in 2015.

According to the latest Short Term Market Outlook for the EU, which was published recently, around forty per cent of the total Voluntary Coupled Support envelope from the EU will be allocated to the beef sector.

This equals approximately €1.7 billion of coupled support for the beef and veal sectors at EU level in 2015.

Dairy Beef Production

Total EU beef production in the EU during 2014 is estimated to have been 2.1 per cent higher than year earlier levels. This increase in beef production follows on from several years of decline in total beef production.

The increase in beef production can be partly attributed to higher dairy cow numbers across the EU in recent years with additional animals being produced for beef production as a result.

The latest EU figures estimate that two thirds of total beef production in the EU is sourced from the dairy herd. In addition to this there was a higher culling rate of dairy origin cows in some EU member states during 2014 which contributed to higher beef production.

The increased culling of dairy cows can be partly attributed to drops in the milk price as well as moves by producers to cull cows to prevent over quota milk production.

Lower Feed Costs

Lower feed costs and more favourable grazing conditions across the EU in 2014 also helped contribute to increased beef production due to an increase in average carcase weights.

The EU Short Term Market Outlook has indicated that total beef production could increase by a further two per cent in 2015. This expected increase in EU beef production will be driven by increased production capacity across the member states and some further culling from the dairy herd in some regions due to genetic improvements increasing milk output per head.

While total beef production in the EU is expected to increase demand for beef is expected to remain firm on both EU and global markets.

Exports

In 2014 the volume of beef exports from the EU increased by 29 per cent or 46,000 tonnes from year earlier levels.

This puts estimated export volumes at 224,000 tonnes for 2014. The most notable increases in export volumes year on year were to hong Kong, and the Western Balkans while the opening of the Philippines market also provided an important outlet for EU beef. The opening of the US market to moderate volumes of Irish beef and the resumption of exports from the EU to Turkey were also important developments in the EU beef market.

Exports of live animals from the EU in 2014 were 5.4 per cent higher than year earlier levels with 45 per cent of all live exports destined for Lebanon. Another important development was the reopening of the Turkish market in October 2014 which is expected to significantly increase the level of live exports out of the EU. The EU Market Outlook Report estimates live exports in 2015 to increase to the equivalent of 130,000 tonnes (carcase weight equivalent).

Imports

EU beef imports are expected to be almost unchanged from year earlier levels during 2015. In 2014 imports from Uruguay and Argentina recorded volume declines from year earlier levels due to lower export availability while imports from Australia and Brazil increased by 21 per cent and three per cent respectively.

However, with tight cattle supplies in Australia its ability to export beef onto the EU market is expected to be much lower in 2015. It is expected that an increase in volume imports from Brazil in 2015 will offset the expected lower level of imports from Australia.

EU Beef Prices

Beef prices across the EU showed a downward trend until July 2014 but since then have shown a gradual recovery with current EU beef prices well above the 2007-2011 average price. World beef prices are expected to remain high during 2015 due to tighter supplies and increased demand in the US and Asia.

Consumer Demand

Demand for beef in the EU has remained firm with the increased availability of beef in the EU in 2014 allowing per capita consumption to increase to 10.5kg, although a rising beef price could limit the upward movement of this trend.