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Broilers & Layers / Egg Production

All change in Europe: implications for the poultry market

January 23, 2015

The European Central Bank (ECB) has announced that it will start quantitative easing (QE)  -- i.e. pumping money into the European economy. Anyone trying to forecast how demand in the poultry industry will perform over the year ahead is now going to have to take this new element into consideration and plan accordingly. Forecasting is never easy.

For Europe’s poultry industry, QE can be expected to have several impacts. With the ECB printing more money, it becomes easier to invest, and it is hoped that consumers will eventually be more inclined to spend.

This hope for higher consumption ought to extend to consumption of animal protein - so it should be positive for chicken meat and egg sales.

Winners and losers

But against this needs to be weighed the value of the euro, which has fallen in relation to other currencies and could well fall further.

The weakened euro will, of course, make Europe’s imports more expensive, and that’s important where feed -- the poultry sector’s biggest cost -- is concerned. Like poultry producers across the globe, European producers have benefited from feed prices coming off their prolonged highs. Now, however, increases are again lurking on the horizon for Europe’s producers.

But for Europe’s chicken meat and egg exporters, there is going to be an advantage to the euro weakening, and their products are going to become more attractive in international markets.

Anecdotal it may be, and a little more complex given the removal of Switzerland’s currency peg to the euro, but you only have to think of consumers living along the border between France and Switzerland to understand that, while it may long have been cheaper to shop in France, it now is certainly much more worthwhile to do the weekly shop there, and while Swiss consumers may be happy about this, an awful lot of Swiss producers are not.

No man is an island

And looking further afield, European exports will become more competitive in international markets. But there will not only be tougher competition in the global arena, sales into Europe are going to become more difficult too, even if European consumers are expected to be more willing to spend.

This will be great news for Europe’s poultry producers but not so good for those overseas producers that sell there.

But let it not be forgotten, these changes are going to take some time to come into effect, and there are those that say that QE, far from putting the European economy back on track, will actually make things much worse.

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