EU-27 Livestock and Products Semi-annual

An Expert's View about Animal Husbandry and Support Services in France

Posted on: 12 Mar 2012

The 2011 and 2012 cattle production, slaughter and stock figures are adjusted to a higher level than anticipated in the Annual Livestock Report.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 2/27/2012 GAIN Report Number: NL2008 EU-27 Livestock and Products Semi-annual EU-27 Semi-annual 2012 Approved By: Mary Ellen Smith Prepared By: Bob Flach Report Highlights: The 2011 and 2012 cattle production, slaughter and stock figures are adjusted to a higher level than anticipated in the Annual Livestock Report. Also the 2011 and 2012 cattle export figure has been adjusted upwards as Turkey lowered the import tariff for live cattle countering the higher Turkish import tariffs for beef. The 2011 and 2012 pig production and slaughter figure is revised upwards based on higher than expected breeding efficiency. Breeding and fattening is expected to continue on a high level until 2013. Most of this additional volume of pork produced is expected to be destined for exports. Executive Summary Cattle & Beef A revision of official census and slaughter numbers in 2010 is the basis for higher estimates of the calf crop and ending inventories in 2011 and 2012. Slaughter is also revised to a higher level as a result of increased feed costs and high carcass prices throughout the EU. The 2011 cattle export figure has been adjusted upwards by more than 100,000 head as Turkey lowered the import tariff for live cattle countering the higher Turkish import tariffs for beef. The 2011 and 2012 beef export figures are adjusted to a lower level accordingly. Swine & Pork The 2011 and 2012 pig crop and slaughter figure is adjusted upwards based on higher than expected breeding efficiency, likely caused by the restructuring of the industry. Breeding and fattening is expected to continue on a high level until 2013, the year when the new environment and animal welfare regulations will be imposed. Due to good demand on the world market, most of this additional volume of pork produced is expected to be destined for exports. Cattle Country EU-27 Commodity Animal Numbers, Cattle (1,000 Head) USDA USDA USDA Official [EU- Posts estimates Official [EU- Posts estimates Official [EU- Posts estimates 27] [EU-27] 27] [EU-27] 27] [EU-27] Market Year 2010 2011 2012 Total Cattle Beg. Stocks 88,300 88,300 86,993 87,437 85,750 86,500 Dairy Cows Beg. Stocks 23,617 23,566 23,072 23,122 22,835 22,900 Beef Cows Beg. Stocks 12,337 12,320 12,285 12,306 12,230 12,180 Production (Calf Crop) 29,350 30,000 29,350 29,750 29,350 29,600 Extra EU27 imports 1 1 1 19 2 1 TOTAL SUPPLY 117,651 118,301 116,344 117,206 115,102 116,101 Extra EU27 exports 623 623 700 811 700 750 Cow Slaughter 11,670 11,679 11,770 11,850 11,665 11,650 Calf Slaughter 6,738 6,954 6,820 7,000 6,550 6,800 Total Slaughter 28,291 28,524 28,200 28,230 28,000 28,100 Loss 1,744 1,717 1,694 1,665 1,602 1,601 Ending Inventories 86,993 87,437 85,750 86,500 84,800 85,650 TOTAL DISTRIBUTION 117,651 118,301 116,344 117,206 115,102 116,101 Not Official USDA data. Source: Eurostat and FAS Offices in the EU. Revision of the official 2010 census figure lifts the stock forecasts for 2011 and 2012. Official census numbers for the cattle herd in December 2010 have been revised up by 444,000 head to 87.4 million head. In addition, slaughter was higher than anticipated due to new figures of backyard slaughtering of young cattle. These revisions are the basis for higher estimates of the calf crop and ending inventories in 2011 and 2012. Slaughter is also revised to a higher level as a result of the situation in the French dairy and beef sector. The French dairy sector experiences uncertainties with new milk contract conditions while the effect of the drought on the beef sector was more significant than previously foreseen. Also slaughter in the United Kingdom has been revised upwards as a consequence of increased feed costs (see graph below). Another factor for the elevated slaughter was the high carcass prices throughout the EU (see graph below). The outbreak of the Schmallenberg Virus (SBV) is not expected to significantly affect calf production or loss, in contrast to exports, in particular to Russia, Northern Africa and the Middle East. Despite the losses in these regions exports will still be 50,000 higher than previously forecast due to the new trade opening in Turkey. The 2011 export figure of live animals has been adjusted by more than 100,000 head as Turkey lowered the import tariff for live cattle countering the higher Turkish import tariffs for beef (see Beef Section). Beef Country EU-27 Commodity Meat, Beef and Veal (1,000 Head)(1,000MT CW) USDA USDA USDA Official [EU- Posts estimates Official [EU- Posts estimates Official [EU- Posts estimates 27] [EU-27] 27] [EU-27] 27] [EU-27] 2010 2011 2012 Slaughter (Reference) 28,291 28,524 28,200 28,230 28,000 28,100 Beginning Stocks 0 0 0 0 0 0 Production 8,022 8,048 8,050 8,030 8,000 8,000 Extra EU27 imports 437 437 370 365 375 360 TOTAL SUPPLY 8,459 8,485 8,420 8,395 8,375 8,360 Extra EU27 Exports 337 337 475 450 465 445 TOTAL Domestic Use 8,122 8,148 7,945 7,945 7,910 7,915 Ending Stocks 0 0 0 0 0 0 TOTAL DISTRIBUTION 8,459 8,485 8,420 8,395 8,375 8,360 Not Official USDA data. Source: Eurostat and FAS Offices in the EU. Export figures are revised lower as Turkey lifted its import tariffs. The higher than expected slaughter is not expected to result in higher domestic beef supply in 2011 and 2012. This can be explained by the higher portion of young cattle slaughtered, commercially as well as back yard. The import of beef, historically predominantly sourced from South America, remains limited. An important factor is weak EU demand as a result of high prices in combination with the waning buying power of European consumers. Consumption, in particular in France and Italy is declining more than anticipated. Since the Turkish government lowered their import tariffs on beef in May 2010, Turkey became an important market for EU beef exports. In July 2011, however, Turkey adjusted its import tariff to support more live cattle imports instead of beef. The 2011 and 2012 beef exports are adjusted to a lower level accordingly. Swine Country EU-27 Commodity Animal Numbers, Swine (1,000 Head) USDA Posts USDA Posts USDA Posts official [EU- estimates official [EU- estimates official estimates 27 ] [EU-27] 27] [EU-27] [EU-27] [EU-27] Market Year Begin 2010 2011 2012 TOTAL Beginning S tocks 152,198 152,198 151,084 150,773 149,100 148,384 Sow Beginning S tocks 13,897 13,842 13,559 13,534 13,390 13,086 Production (Pig Cro p) 262,200 262,200 259,600 263,200 258,000 261,000 Extra EU27 imports 2 2 1 1 1 1 TOTAL SUPPLY 414,400 414,400 410,685 413,974 407,101 409,385 Extra EU27 1,614 1,628 1,650 1,582 1,700 1,550 exports Sow Slaughter 4,233 4,211 4,300 4,130 4,280 4,000 Total Slaughter 254,514 254,873 253,000 257,000 251,900 255,000 Loss 7,188 7,126 6,935 7,008 6,601 6,835 Ending Inventories 151,084 150,773 149,100 148,384 146,900 146,000 TOTAL DISTRIBUT ION 414,400 414,400 410,685 413,974 407,101 409,385 Not Official USDA data. Source: Eurostat and FAS Offices in the EU. The pig crop and slaughter is adjusted higher based on increased breeding efficiency. In 2011, the EU swine sector started with a significantly smaller breeding stock than a year before; the number of sows and covered sows were reduced by 2.2 percent and 3.2 percent respectively. Possibly this cut is a statistical inaccuracy of the census, but the reduction is reported for the majority of the Member States. Based on this cut of the breeding stock, the pig crop was expected to fall one percent in 2011. Elevated commercial slaughter figures in 2011 suggest, however, that the pig crop must have increased compared to 2010. This can be explained by a significant higher piglet sow ratio (see graph below), likely caused by the restructuring of the industry by which the most inefficient farmers terminated their breeding activities. The relatively low slaughter weight of the animals, also suggest slaughter of animals at an earlier stage, and thus an acceleration of slaughter, with a significant cut of the stock. Based on this theory, elevated commercial slaughter is anticipated to cause ending inventories to be cut by 1.6 percent. A stronger cut than was foreseen in the Annual Report. Elevated piglet prices and increased efficiency will keep production on a high level. Piglet prices recovered strongly during the last quarter of 2011, and the first month of 2012. Based on this positive market circumstances, the pig crop and slaughter is adjusted upwards from the forecast in the Annual Report. This adjustment to higher production levels is only reported in the EU-15 and most pronounced in Spain, Germany, Denmark and France. According this scenario, breeding and fattening will continue at a high level until 2013, the year the new environment and animal welfare regulations will be imposed. Following this scenario of elevated slaughter, the ending inventories for the year 2012 are adjusted lower. Pork Country EU-27 Commodity Pigmeat (1,000 Head)(1,000 MT CW) USDA USDA USDA Official [EU- Posts estimates Official [EU- Posts estimates Official [EU- Posts estimates 27] [EU-27] 27] [EU-27] 27] [EU-27] Market Year Begin 2010 2011 2012 Slaughter (Reference) 254,514 254,873 253,000 257,000 251,900 255,000 Beginning Stocks 0 0 0 0 0 0 Production 22,552 22,571 22,530 22,750 22,480 22,600 Extra EU27 imports 25 25 15 18 15 15 TOTAL SUPPLY 22,577 22,596 22,545 22,768 22,495 22,615 Extra EU27 exports 1,754 1,752 2,000 2,202 1,900 2,150 TOTAL Domestic Use 20,823 20,844 20,545 20,566 20,595 20,465 Ending Stocks 0 0 0 0 0 0 TOTAL DISTRIBUTION 22,577 22,596 22,545 22,768 22,495 22,615 Not Official USDA data. Source: Eurostat and FAS Offices in the EU. Despite higher pork production than expected, the declining trend remains intact. Based on the adjustment of slaughter, pork production is estimated at a higher level for the year 2011 and 2012. The forecast of a lower pork production in 2012 compared to 2011 remains however, intact. Due to good demand on the world market, most of this additional volume is expected to be destined for exports. Pork exporters are benefitting from the increased demand for pork in particular Russia, South Korea, China and Hong Kong (see graph below). Also the low value of the Euro and Danish Kroner against the currencies of important competitors (Brazil and Canada) and customers (Japan and China) is benefitting exports. Exports to South Korea might decline, as this market is rebuilding its stock after the Foot and Mouth Disease (FMD) outbreaks. EU exporters are most optimistic regarding exports to China, as more Member States are becoming eligible to export to this market (see Annual Report), despite growing competition from other exporters and Chinese domestic production. During 2011, EU exports of fresh and frozen pork nearly tripled to China, while exports to Hong Kong increased nearly forty percent. Policy Policy developments in the EU cattle sector Update on the EU beef import quota for high quality beef In the first year, which covered eleven months from August 2009 through June 2010, import licenses for 9,822 MT out of the 20,000 MT of the available quota volume were delivered. In the second quota year, import license applications for the HQB quota have been filed for nearly all the available volume, namely; 19,141 MT. The U.S. share is estimated at about 15,500 MT. Through February of the current quota year 2011/2012, demand for import licenses for the HQB quota continues to outstrip availability. License allocations for the United States stand at 11,231 MT out of the current total of 13,333 MT. Australia has secured 1,787 MT, Canada 140 MT and New Zealand 175 MT. Background: The HQB quota is the result of a U.S. - EU compromise to settle the hormone dispute and the resulting Memorandum of Understanding (MOU) was formally approved in Council Regulation (EC) No 617/2009, published in the Official Journal on July 15, 2009. The details for the administration of this zero duty, 20,000 MT beef quota were published in Commission Regulation (EC) No 620/2009. The quota was put into place on August 1, 2009, for a period of three years. As foreseen in the MOU and with mutual agreement, the quota is expected to be expanded to 45,000 MT on August 1, 2012. The HQB quota will then total 48,200 MT as Canada also settled with the EU on its own hormone dispute. The following countries received EU authorization to certify beef under the HQB quota: Australia (January, 2010), Canada (March, 2011), New Zealand (July, 2011) and Uruguay (August 2011). Argentina and Brazil are at different stages in the process of authorization as well. Animal Disease Situation The Schmallenberg virus has been found in cattle in Germany, the Netherlands, Belgium, the UK and France. Russia, the Ukraine, Egypt and Mexico imposed a ban on live cattle, embryo?s and semen from these countries. For more information see GAIN Reports NL2003 and NL2007. DISCLAIMER The numbers in the PSDs in this report are not official USDA numbers, but they result from a collaborative effort by FAS EU offices to consolidate PSDs from all 27 EU member states. This report is the result of active collaboration with the following EU FAS colleagues in the following member states: Xavier Audran from FAS Paris covering France Stefano Baldi from FAS Rome covering Italy Ornella Bettini from FAS Rome covering Greece Mila Boshnakova from FAS Sofia covering Bulgaria Monica Dobrescu from FAS Bucharest covering Romania Bob Flach from FAS The Hague covering the Benelux Diogo Machado from FAS Madrid covering Portugal and Spain Steve Knight from FAS London covering the United Kingdom and Ireland Roswitha Krautgartner from FAS Vienna covering Austria Leif Erik Rehder from FAS Berlin covering Germany Jana Mikulasova from FAS Prague covering the Czech Republic and Slovak Republic Ferenc Nemes from FAS Budapest covering Hungary and Slovenia Yvan Polet from FAS Brussels / U.S. Mission to the EU Piotr Rucinski from FAS Warsaw covering Poland, Estonia, Latvia and Lithuania Asa Wideback from FAS Stockholm covering Denmark, Finland and Sweden NOTE In this report the following HS codes and conversion factors are used: HS codes Conversion factors Beef 0201, 0202 PWE X 1.40 = CWE 021020, 160250 PWE X 1.79 = CWE Pork 0203, 021011, 021012, 021019, 160241, 160242, 160249 PWE X 1.30 = CWE PWE = Product Weight CWE = Carcass Weight ABBREVIATIONS EU: All twenty-seven Member States of the European Union. EU-25: All Member States of the European Union, except NMS-2. EC: European Commission MS: An EU Member State NMS: The twelve new Member States which joined the EU in May 2004 and January 2007. NMS-2: Romania and Bulgaria, which joined the EU in January 2007. Benelux: Belgium, the Netherlands and Luxembourg Related reports from FAS Post in the European Union: Country Title Date EU-27 Update of the Schmallenberg virus outbreak in the EU 02/27/12 EU-27 Sustainability in the EU Commodity Markets 02/03/12 EU-27 Schmallenberg virus found in cattle 02/03/12 Italy Italian Livestock and Products Outlook 2012 01/30/12 EU-27 EU reviews Regulation on Animal Welfare during transportation 12/21/11 Romania EU lifts the export ban of Romanian pork 12/07/11 Czech Republic Czech Agricultural Census 2010 Confirms the Largest Farm Size 12/09/11 Germany Stricter Control On Antibiotics In Animal Husbandry 11/14/11 Poland Increased Demand for U.S. Bovine Genetics in Poland and Baltic Countries 11/08/11 EU-27 Livestock and Products Annual 9/6/2011 EU-27 Implementation of Animal Welfare Directives in the EU 07/19/11 EU-27 New Animal Welfare Strategy 2011-2015 05/04/11 Czech Republic Blue Tongue Vaccination 05/03/11 EU-27 EU Novel Foods Proposal failed to win Approval 04/20/11 EU-27 EU-27 Livestock Semi Annual Report 2011 03/07/11 EU-27 Proposed Novel Foods Regulation could impede Animal Product Exports 02/04/11 The GAIN Reports can be downloaded from the following FAS website: http://gain.fas.usda.gov/Pages/Default.aspx -For additional livestock market related information, please contact: Bob Flach (FAS The Hague) Phone: ++31 70 310 2303 E-mail: bob.flach@fas.usda.gov -For additional livestock policy related information, please contact: Yvan Polet (FAS Brussels U.S. Mission to the EU) Phone: ++32 2 811 4095 E-mail: yvan.polet@fas.usda.gov
Posted: 12 March 2012

See more from Animal Husbandry and Support Services in France

Expert Views    
Livestock and Products Annual   By Foreign Agricultural Service
EU Poultry Production and Exports to Grow Again   By Foreign Agricultural Service
EU-27 Broiler and Turkey Sectors to Grow in 2012 and 2013   By Foreign Agricultural Service
Agricultural Biotechnology Annual   By Foreign Agricultural Service
EU Livestock and Products Annual   By Foreign Agricultural Service