Changing fortunes of the EU poultry industry
The European Union industries have staged a remarkable recovery following the avian influenza outbreaks since late 2005 despite slow growth.
In this two-part article, an analysis of poultry production trends in the European Union (EU) in the decade to 2005 is followed by an investigation of the impact on the poultrymeat business of avian influenza (AI) outbreaks since autumn 2005. The overall verdict? The EU is losing ground to other regions but the situation could be much worse.
EU growth lags behind the world 1995-2005
Chickenmeat and egg production in the 27 countries of the EU in the decade from 1995 to 2005 failed to keep pace with the rate of growth in Europe as a whole, and came nowhere near the expansion that has occurred in global output.
Official data on the production of poultrymeat and eggs in 2006 have yet to be released by the Food and Agriculture Organization (FAO). Based on the latest 2005 assessments, chickenmeat output, i.e. table birds and culled layers, in Europe exceeded 11.1 million tonnes (mt), having climbed from 8.7mt ten years earlier. This represents a gain of some 28%. However, as a proportion of the world total, production in Europe has declined from almost 19% to less than 16% over this period. The global total jumped by more than 50% from 46.6mt to 70.5mt. While the EU also witnessed expansion over this period, the increase amounted to just 24% as output climbed from around 7.5mt to 9.3mt.
Developments since 2005 in both the chickenmeat and turkey sectors are presented later in this article.
Gloomy outlook for egg producers
For eggs, the picture is even less encouraging. Here, while world output grew by just under 38% from a little less than 43mt to 59mt, production in Europe went up by a mere 6% from 9.4mt to 10.0mt. Again, as a proportion of the global total, between 1995 and 2005, Europe's contribution has declined from 22% to 17%. The rise in the EU over the decade was only 3% from 6.5mt to 6.7mt and indeed, production has virtually stagnated since the year 2000.
According to meatnews.com, Germany, France and Austria have all responded rapidly to the suspected and confirmed findings of highly pathogenic avian influenza (HPAI) in wild birds in recent months. All are applying the statutory EU protection measures against the H5N1 strain of this virus. The measures are aimed at preventing the spread of HPAI from wild birds to poultry or other captive birds, as well as avoiding the contamination of products. Clearly, any outbreaks in commercial poultry flocks would impact adversely on the demand and production of poultry products.
Feed cost rises ameliorated by more US maize plantings
Another major concern for poultry producers is the rise in feed costs primarily as the result of the rapid increase in biofuel production, particularly in the USA. The good news from that country is that American farmers have planted a record 37.6 million hectares of maize in 2007 the largest area since 1944 and 19% more than in the previous year. This might go some way towards easing the fears of animal feed shortages in the short term.
Losses due to AI lower than expected
Outbreaks of HPAI in EU member states since the autumn of 2005 have had a detrimental impact on poultrymeat production and consumption throughout the region. Uptake in some countries, particularly in Italy, France and Greece, slumped by up to 50% over short periods. According to reports from the Foreign Agricultural Service of the United States Department of Agriculture (USDA FAS), the impact on broiler output was expected to be a reduction of at least 4%. However, a recovery in the second six months of 2006 looks to have limited the cutback in broiler output to a little over 2%. Broiler production in the EU of 25 countries in 2006 is currently estimated at just over 7.6mt against a revised estimate for 2005 of 7.8mt. Bulgaria and Romania are not yet included in these statistics.
In contrast, broiler imports suffered as, at around 500,000t, they were some 10% below the 2005 level. As the report states, this was despite, "the re-opening of EU markets for low-tariff salted poultry imports from Brazil at the end of June 2006 as a result of the World Trade Organization decision in the so-called ‘salted poultry case', which was won by Brazil and Thailand."
Increased export refunds helped maintain EU 2006 broiler exports close to the year-earlier level, with noticeable shifts in shipments from the Middle East to Russia, Hong Kong and southern Africa.
According to the FAS, the cut-back in broiler consumption in the EU last year was in the region of 2.7% at almost 7.4mt.
The forecast for 2007 points to production just failing to match the latest estimate for 2005 of 7.8mt, as producers continue to be wary of the consequences of new AI outbreaks, rising feed costs and a less-than-optimistic outlook on exports. This, along with some recovery in imports, could bring total available supplies back up to 8.3mt.
Having joined the EU in January 2007, Romania and Bulgaria are expected to import more poultrymeat from other member states.
Decline in turkey output brakes
In the turkey sector, EU output in 2006 is now considered to have declined by around 3.5% on the year. This had been anticipated as a drop of 5.5%. While production dipped sharply in France the EU's leading producer and the United Kingdom, it actually expanded in Italy, Hungary and Poland.
A reduction in total EU turkey exports mainly reflected a slump of some 45,000t (60%) in shipments from France, which lost its AI-free status from February to June 2006.
EU turkey consumption in 2006 fell by a little under 3% compared with an anticipated decrease of around 3.5%.
For this year, a recovery in turkey production is not expected and indeed, total output is unlikely to reach 2.0mt. The HPAI outbreak in Hungary earlier this year is unlikely to impact greatly on the turkey market as the bulk of production there is used for further processing into added-value products. It appears that most consumers do not link these products with AI.
Turkey imports are expected to rise as a result of the opening of a new tariff rate quota for Brazil. Exports are expected to continue to slide to around the 150,000t mark.
The combined result of these forecast changes is that turkeymeat consumption in the EU could decline further, falling below the 1.8mt level.