European compound feed production could further contract by 1% this year, warns the European Feed Manufacturers Federation (FEFAC).
FEFAC experts predict a further reduction in cattle and pig feed this year, and a stabilsation in poultry feed. While performance will vary from country to country, overall the federation predicts a contraction of 1% compared with 2009.
The less than positive prediction is, nevertheless, be improvement on the contraction that took place last year, when output contracted by 3.8% to 147.6 million tons.
FEFAC points to a number of drivers for the compound feed market this year, including a continuation of the difficulties in the dairy sector, despite a modest increase in milk prices, the end to the downward trend in the pig production cycle, and a continued recovery in consumer demand for poultry products.
Additionally, the federation says, the current forecasts for the EU cereals harvest this year indicate relatively low quotations for new crop grains, while soybean prices are expected to remain stable. The announced increase in global quotations due to record harvests in South America is likely to be offset by a less advantageous dollar/euro exchange rate and as a consequence, FEFAC expects that production of cattle feed will contract by 2%, and that pig feed will be down by 1%, while production of poultry feed will stabilize.
In 2009, production estimates for the EU 27 (excluding Greece, Malta, and Luxembourg) reveal that compound feed production for all animal species was, unsurprisingly, affected by the economic downturn. Cattle feed production declined by some 6%, pig feed was down by 5% and poultry feed output fell by 1%. Turnover recorded by the European compound feed industry is thought to have been worth Euro 40 billion (US$52.3 billion) last year.
Commenting at FEFAC’s annual general meeting earlier this year, outgoing president, Pedro Correa de Barros, noted that the global financial crisis had taken its toll on livestock consumption and therefore feed production and that consumer confidence had to plummeted to historically low levels, resulting in consumers losing their “appetite” for healthy animal products.
He continued that Europe’s dairy farmers had gone though the deepest market crisis since the beginning of the Common Agricultural Policy, while the pig sector had done little better. The financial crisis, he said, had prolonged the downturn in the market cycle, leaving farmers in very poor financial condition.
The crisis in the dairy sector triggered a severe contraction in demand for compound feed, particularly in the third and fourth quarters, while the economic crisis had amplified the downward slope of the pig production cycle.
Low market quotations for cereals last year, resulted in farmers seeing few incentives to put their cereals on to the market, and so preferred to use them on farm. Consumers last year, tended to switch to less expensive sources of animal protein.
While no country was immune to the downturn, its impact on feed production varied from country to country.
Spain and France now rank almost equally for the position of Europe’s largest compound feed producer in terms of total output. Spain recorded a relatively small contraction in output last year, will production falling by 2.6%. Germany, France, Italy and the Netherlands all recorded falls of between 3.6% and 6.1%.
Cattle and pig feed production went down in almost all countries, whereas poultry feed production increased in Italy, Belgium, Hungary, Poland and Portugal, but dropped in France, Germany, the Netherlands and Spain.
However, economic issues, are not the only difficulties that European producers are having to confront. In his departure speech, Mr Correa de Barros, expressed his deep frustration at the industry’s lack of success in convincing the public authorities of the need to urgently adopt a “technical solution” for the presence of not yet authorized events in feed and food imports.
“Doing nothing is probably politically correct, but I am sure it is the most irresponsible solution as our livestock farmers are the ones who have to pay the bill,” he said.
In his inaugural address to FEFAC members, incoming president Patrick Vanden Avenne noted that the competitiveness of European livestock production needed to be increased, and that livestock producers and the feed sector needed to produce more, and better, with less.
He said: “Resource efficiency is the key driver of our industry. We will pursue the development of precompetitive R&D projects leading to the adoption of new feed technology and feed formulation strategies seeking to further improve feed efficiency.”
On the marketing and use of feed, he stressed FEFAC’s call for the early adoption of the EU feed materials catalogue comprising 400 new product entries at EU level.