Beef production and exports have the potential to increase, due to the expansion of the EU dairy- and suckler-cow herds. While the May-June 2014 livestock survey indicated a stabilisation of herd numbers, the December survey put the herd up 1.3% year-on-year, with the trend more noticeable in the major EU-15 beef producing countries such as France (+32,000 head), and Spain (+114,000).
One particular factor driving this growth is "the implementation of the voluntary coupled support in the beef sector under the new CAP (around 40% of the total coupled support envelop will be allocated to the beef sector)", according to the report.
EU beef production was forecast to grow by 2.1% in 2014, on the previous year, with a further increase of close to 2% expected this year, as additional culling of dairy cows is expected, and global demand looks strong.
Beef volumes increased strongly in 2014 – up 29% (equivalent to 46,000 tonnes), predominantly due to increased exports to Hong Kong, Western Balkans and the Philippines. Exports in 2015 are expected to reach 224,000t, driven by exports to the US from Ireland, and the resumption of exports to Turkey.
Imports, on the other hand, declined from Argentina and Uruguay last year, but increased from Australia and Brazil (+21% and +3% respectively). While tight supplies in Australia point to lower imports to the EU this year, Brazil may increase its share as supplies to Russia have not risen, as hoped.
Looking at prices, these have recovered well since the decline seen in the first half of last year, and are well above the 2007-11 average, reaching €383/100kg by 15 February 2015.
Pig meat production is expected to increase, despite low output prices, as lower feed prices and increased productivity affect the sector. According to the report, production developments in the EU-15 have varied from country to country, with increases seen in Spain (+3.7%), Portugal (+4.1%), the UK (+3.5%) and the Netherlands (+5.3%), but declines experienced in Germany (-0.8%) and Italy (-2%), while production in France and Denmark remained stable. Production in Poland has also increased significantly – up 9% – despite the impact of African swine fever in the country.
Preliminary data from the December livestock survey has indicated that pig numbers were up by 1.2% in 2014, with breeding sows seeing a 0.4% increase in numbers.
EU pigmeat exports (including lard, but excluding offal), hit by the absence of the Russian market, were down by around 13% last year, as new export avenues and increased demand from Asia could not fully compensate for the loss of the market. This situation resulted in an increased supply of pig meat on the domestic market pushing prices down below their 2007-2011 average, to €133/100kg in the last week of 2014. Since then the European Commission has announced the opening of a private storage aid scheme for pig meat to try and improve the pricing situation.
Prospects for exports look more positive, however, with higher pigmeat supplies and continued strong demand from Asia suggesting that exports could reach more the more favourable levels seen in 2012, by 2016 (2.1 million tonnes).
Lower feed prices in 2014 pushed up production to around 13.2 million tonnes (mt), with the likes of Germany (+4%), Poland (+9%), Spain (+10%) and the Netherlands (+2%), seeing increases. According to the Outlook, provided that feed prices remain favourable and avian influenza outbreaks are kept under control, production levels look set to reach 13.5mt by 2016.
Despite multiple challenges in the market, EU exports performed "remarkably", reaching a record 1.35mt in 2014 (+4%), with notable increases to Benin (+17%), South Africa (+25%) and Hong Kong (+13.5%). However, exports to Saudi Arabia dropped significantly (-13.5%).
The pace of export increases may slow this year, to around 2%, as the EU’s main competitors Brazil and the US are expected to see increased production. The forecast is then for exports to pick up next year, reaching 1.4mt by 2016.
Imports increased again last year and are expected to see further growth in 2015 and into next year, with declining volumes from Brazil, outpaced by those from Thai origins. Figures are expected to reach 900,000t by 2016.
Prices have seen some stability, but are higher than the 2007-11 average, and have moved within the narrow band of €183-€192/100 kg. Meanwhile, consumption is expected to see continued growth, following a 2.5% increase in per capita consumption in 2014.
Sheep & lamb:
This sector has a positive outlook following challenges seen last year, as stabilising herd numbers, firm prices and the new voluntary coupled support, play their part.
The industry was hit by a number of bluetongue outbreaks in Sardinia at the end of 2013, and 2014, resulting in a drastic number of sheep slaughterings, with Italy registering a 33% drop in sheep production compared to 2013. Outbreaks were also detected in Greece, Bulgaria, Romania and Spain.
Overall EU production was down by 1% in 2014, with production this year expected to show a marginal increase.
The EU saw an 8% drop in imports from New Zealand last year, following tight supplies in the country and a focus on increasing its exports to China. Imports were down 6% overall compared to 2013, as supplies from Australia and Argentina failed to compensate for the decline, but are expected to increased modestly in 2015, said the report.
EU live exports increased slightly, while meat exports saw a marginal decline, with trade flows expected to be stable between 2015 and 2016.
The decline in the price of Brent crude oil has had a knock-on effect on the energy-related production costs of agricultural commodities, benefiting many in the sector. Meanwhile, the weakening of the euro against the dollar, a trend since mid-2014 and one that is predicted to continue in 2015, has also helped push up EU exports, due to their more favourable value.
According to the report, EU economic growth is expected to gain slightly in strength over the two-year outlook period (1.7% and 2.1% respectively), with the rate of unemployment expected to decline from 9.8% in 2015, and 9.3% in 2016. "This could contribute to a strengthening of EU consumption, especially of meat and cheese," it said.