Threats remain on horizon for European poultry producers

Latest data published by the Association of Poultry Processors and Poultry Trade in the EU (AVEC) shows that broiler meat production in the EU has risen every year since 2008 and reached 10.17 million tons carcass weight in 2013.

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Per capita chicken meat consumption is growing only very slowly in much of Europe, meaning that producers will need to look to developing markets where growth rates may be higher.
Per capita chicken meat consumption is growing only very slowly in much of Europe, meaning that producers will need to look to developing markets where growth rates may be higher.

Latest data published by the Association of Poultry Processors and Poultry Trade in the EU (AVEC) shows that broiler meat production in the EU has risen every year since 2008 and reached 10.17 million tons carcass weight in 2013. Exports over the period -- with the exception of 2013, which registered a slight contraction -- followed the same upward path, while imports contracted.

Total poultry meat consumption over the period as a whole was higher, increasing from 11.68 million tons slaughter weight in 2008 to 11.99 million tons in 2013. 

Yet, despite this positive performance, the European poultry industry believes it is facing an uncertain future. While it recognizes that, in the long term, global demand for high-quality poultry meat will rise, in the shorter term, the legislation within which the European industry must operate is acting as a brake on its competitive position in the global market.

Complex demands

In its latest annual report, AVEC notes that, globally, the future poultry production is bright, but that its members are hindered by a number of weaknesses and face various threats.

It argues that European poultry producers, particularly those in Western Europe, face more complex and diversified consumer demands than their competitors. The European consumer is quality and price sensitive, wanting meat that is fresh and well presented with a price that is “reasonable and affordable.” 

Wide-ranging European legislation is “promoting consumer interests and expectations,” and that, consequently, the European poultry industry must comply with the “highest requirements in the world in terms of animal welfare, the environment, food safety and marketing standards.” 

This legislative burden results in higher costs of production – estimated to be an additional 5 percent on the cost of production, AVEC says.

Cost disadvantage

This puts European producers at a disadvantage in international markets, where it must compete against producers that may not have to comply with such stringent legislation, while on the home market Europe’s producers must compete against imports from producers who are not required to follow such stringent legislation.

In theory, AVEC notes, products entering the EU should be compliant with EU rules and regulations. However, there are several examples where this is not the case.

For example, the list of EU-approved GMOs is much shorter than the one approved for third countries, while the use of processed animal protein (PAP) is permitted in poultry feed in third countries, yet this is not the case in the EU. In the case of animal welfare, third countries often apply “equivalent” rules, which tend not to be so strict. Additionally, where inspections find adherence to be lacking, follow-up action is not always taken.

However, the burden of EU legislation does not end there. EU producers that want to produce poultry meat for export to third countries must comply with local EU legislation and its consequent costs, but customers in third countries will only pay up to certain limits despite any difference in quality.

EU producers are faced with a situation that is almost impossible to resolve: How to remain profitable in a global context when complying with competitive disadvantages stemming from EU legislation.

Route forward

AVEC suggests that these disadvantages could be turned to advantages and, in order to do this, it will be necessary to raise awareness among European consumers of the origin of their meat, especially when it comes from third countries. But the industry needs EU support to inform consumers that the standards adhered to by European producers are the highest in the world.

Additionally, it can be reasonably assumed that consumer expectations in third countries will rise, particularly with the development of larger middle classes, which tends to be more educated and more sensitive to issues such as environmental protection and animal welfare.

With this in mind, EU poultry producers should be able to benefit from the changing international arena, while third countries will need to adapt and change their production methods to changing expectations.

Poultry meat labeling

European poultry producers will soon be working with new labeling rules. Where the labeling of fresh poultry meat is concerned, the new regulation will apply from April 2015, while for poultry meat used as an ingredient, discussions are ongoing. Similarly, information on stunning also still is under discussion.

From April next year, labels on fresh poultry meat must show the place of rearing and slaughter, i.e. the name or names of the member state and/or third country.

Regarding poultry meat as an ingredient, AVEC says it is in favor of the mandatory labeling of the origin of poultry meat in all products containing more than 25 percent poultry. Better information for consumers may encourage retailers and food service companies to source their products from the EU.

Where stunning is concerned, studies have been commissioned on providing information to consumers on stunning methods, however AVEC notes that its members are opposed to poultry meat labels detailing the method of stunning. It argues that it is more important for consumers to know whether stunning is performed well, rather than its method.

Home market no guarantee

AVEC also notes that per capita consumption and population growth are stagnant in many developed countries, while poultry production is forecast to increase.

The association argues that its members will have to find new export markets in developing countries where consumption growth rates are expected to be high, but where disposable income may be lower than the EU average.

The EU may well sign several trade agreements within the next decade, and this will have an impact on the trade in meat. While the EU has reached an agreement with Canada that does not include poultry meat, it is in the process of negotiating with the U.S., Mercosul and Thailand – all of which are significant poultry meat exporters.

Any agreement could see the emergence of significant new challenges for European producers, and AVEC says that “the EU negotiators and the EU institutions have the responsibility and the duty to preserve the standards reached by European producers and not to see them degraded.”

The outcome of the Trans Pacific Partnership between the U.S. and 11 countries of the Pacific may also have an impact on trade.

Environmental concerns

Environmental legislation is also predicted to have a growing impact on poultry meat production. It will not only increase costs due to compliance, but there are likely to be additional costs for housing as well as waste treatment. The growing number of farmed animals in the world will lead to more environmental pressure on land and this will have consequences. Poultry meat already has a good carbon footprint, AVEC notes, but the association is working toward further improvement.

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