Poultry Sector Growth Slowing in 2011

An Expert's View about Poultry in Italy

Last updated: 19 Mar 2011

After a significant surge in 2010 fueled by extremely strong export demand in Russia and Hong Kong, EU-27 broiler production is expected to grow moderately in 2011 as new import regulations in Russia are likely to hit exports.

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: 3/1/2011 GAIN Report Number: FR9059 EU-27 Poultry and Products Semi-annual EU-27 Poultry Sector Growth Slowing in 2011 Approved By: Daryl A. Brehm Prepared By: Xavier Audran, Lashonda McLeod Report Highlights: After a significant surge in 2010 fueled by extremely strong export demand in Russia and Hong Kong, EU-27 broiler production is expected to grow moderately in 2011 as new import regulations in Russia are likely to hit exports. EU-27 chicken meat imports decreased in 2010 due to lower imports from Brazil and no rebound is expected for 2011. Poultry meat, which is the cheapest source of protein, was less affected by the European economic recession than other meats; but consumption growth (around one percent) is less than the demographic one - showing a probable slight decrease in per capita consumption. EU-27 poultry producers were generally able to pass most of the feed grain cost increase to their customers, either domestically or abroad. Author Defined: DISCLAIMER The PS&D numbers as reported are not official USDA numbers, but rather represent PS&D?s contributed by FAS EU-27 offices merged into a consolidated EU-27 PS&D. This report is the result of active collaboration with the following EU FAS colleagues in the 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 (Belgium, Netherlands and Luxembourg) 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 Sabine Lieberz from FAS Berlin covering Germany Jana Mikulasova from FAS Prague covering the Czech Republic and the Slovak Republic Ferenc Nemes from FAS Budapest covering Hungary and Slovenia Yvan Polet from FAS USEU covering EU-27 policy issues Piotr Rucinski from FAS Warsaw covering Estonia, Latvia, Lithuania, and Poland Asa Wideback from FAS Stockholm covering Denmark, Finland, and Sweden Executive Summary: After a significant surge in 2010 (almost 4 percent) fueled by extremely strong export demand and lower imports, EU-27 broiler production is expected to grow moderately in 2011 by 1 percent as new import regulations in Russia are likely to hit EU exports. The German dioxin scandal of January 2011 is expected to have no impact on German broiler production, and no impact on the EU-27 production level. The hike in global grain prices since the summer of 2010 impacted directly on broiler production costs but it appears that producers were able to pass most of the increase to their customer, either domestically or abroad. EU-27 broiler exports were buoyant in 2010, fueled by a strong demand in Russia where they partly replaced U.S. exports of broiler meat due to the PRT dispute. Exports of EU-27 broiler meat to Hong Kong doubled, with the likeness of a significant share going to mainland China. EU-27 exports of chicken meat to the Middle East and Sub-Saharan Africa also increased sharply in 2010, benefiting from the weakness of the Euro versus other currencies (especially the Brazilian Real). EU-27 broiler exports are expected to decrease in 2011 as Russia lowered its poultry TRQ and removed its country-specific allocations, allowing all poultry exporters to compete for the TRQ. On the other hand, EU-27 broiler exports to Hong Kong are expected to remain buoyant, fueled by the demand in China. EU-27 chicken meat imports decreased in 2010; lower Brazilian meat exports to the EU-27 not being compensated by higher Thai exports. The decrease in Brazilian exports is attributed to a combination of the strong Real versus the Euro, incorrect Brazilian use of the new EU-27 licensing system and the fact that because of the EU definition, frozen chicken meat cannot be sold as fresh after defrosting. No rebound of EU-27 broiler imports is expected for 2011. While global meat consumption in the EU-27 has been negatively impacted by the economic recession, poultry meat, which is the cheapest source of protein, was less affected. However, its consumption growth (around one percent) is less than the demographic one, showing that, per capita, consumption is probably slightly decreasing. Sales of cheaper cuts also increased to the detriment of more expensive parts. This trend is forecast to continue in 2011. Production: After a significant surge in 2010 (almost 4 percent) fuelled by extremely strong export demand and lower imports, EU-27 broiler production is expected to grow moderately in 2011 by 1 percent as new import restrictions in Russia (see trade section) are likely to hamper EU exports, thus limiting the production growth to slowly increasing domestic demand. Production is expected to increase in all major EU-27 broiler production countries such as Germany, the UK, Benelux, Spain, France and Poland. However, in all those countries, the growth is likely to be lower than in 2010. The German dioxin scandal of January 2011 is expected to have only minimal impact on the German broiler production which is also foreseen to increase. According to meat analysts, the scandal mostly affected egg consumption and pork prices. The hike in global grain prices since the summer of 2010 impacted directly on broiler production costs but it appears that producers were able to pass most of the increase to their customers. The following graph shows that while wholesale broiler prices were low in the first half of 2010, they increased to their 2008 level (at a time when grain prices were also high) in the second half. Preliminary data show that prices continued to grow, albeit at a slower rate, in the first months of 2011. Figure 1 : Price of ready-to-cook chicken at Rungis wholesale market (source itavi.asso.fr using SNM data) Broiler Production (Top 5 EU-27 Member States) 1000MT 2009 2010 2011 United Kingdom 1221 1323 1325 Benelux 1152 1190 1210 Spain 1112 1143 1176 France 935 963 980 Poland 815 880 920 Consumption: While global meat consumption in the EU-27 has been negatively impacted by the economic recession, poultry meat, which is the cheapest source of protein, was less affected. However, its consumption growth (around one percent) is less than the demographic one, showing that, per capita, consumption is probably slightly decreasing. Several market analyses showed that while the average consumer switched from beef or pork meat to poultry meat, the lower income consumers simply reduced their protein purchases. Sales of cheaper cuts also increased to the detriment of more expensive parts. The poultry price increase noticed in the second half of 2010 (and expected to continue for the beginning of 2011) will only reinforce these trends in 2011. Broiler Consumption (Top 5 EU-27 Member States) 1000MT 2009 2010 2011 United Kingdom 1502 1645 1675 Spain 1124 1130 1135 France 912 939 970 Germany 897 910 915 Italy 709 714 717 Trade: EU-27 broiler exports were buoyant in 2010, fueled by a strong demand in Russia where they partly replaced U.S. exports of broiler meat, which have been banned for several months, due to the trade dispute on the Pathogen Reduction Treatments (PRT) issue. Exports of EU-27 broiler meat to Hong Kong doubled. Presumably, a significant share of those exports might, in fact, be re-exported from Hong-Kong to mainland China. EU-27 exports of whole chicken to the Middle East (namely Saudi Arabia) and chicken parts to Sub-Saharan Africa also increased sharply in 2010, benefiting from the weakness of the Euro versus other currencies (especially the Brazilian Real) throughout 2010. EU-27 exporters were able to pass most of their production cost increase to their customers. This is especially true for exports of whole chickens, while prices for parts remained stable. This can be attributed to the fact that most of the parts exported are low priced cuts from broiler carcasses, the most noble parts (filets) being sold on the EU-27 domestic market at a premium price. (Source World Trade Atlas) EU-27 broiler exports are expected to decrease in 2011, as Russia lowered its poultry TRQ to 350,000 MT and excluded whole birds from it. Russia also removed its country-specific allocations, allowing all poultry exporters (including the U.S.) to compete for the TRQ. On the other hand EU-27 broiler exports to Hong Kong are expected to remain buoyant, fueled by the demand in China. Broiler Extra EU-27 Exports (Top 5 EU-27 Member States) 1000MT 2009 2010 2011 France 250 275 285 Benelux 211 240 250 Germany 92 90 90 Poland 45 60 40 Spain 31 45 56 EU-27 chicken meat imports decreased 6 percent in 2010 as Brazilian meat exports to the EU-27 fell 11 percent and were not compensated by higher Thai exports. The decrease in Brazilian exports is attributed to a combination of the strong Real versus the Euro, incorrect Brazilian use of the new EU-27 licensing system and the fact that because by EU definition, frozen chicken meat cannot be sold as fresh after defrosting. Brazil is also claiming not to be able to fill the 170,000 MT quota for salted product. No rebound of EU-27 broiler imports is expected for 2011. Broiler Extra EU-27 Imports (Top 5 EU-27 Member States) 1000MT 2009 2010 2011 Benelux 300 300 300 United Kingdom 190 205 220 Germany 78 60 60 Spain 32 29 27 France 20 18 20 Production, Supply and Demand Data Statistics: Production, supply and demand for broiler meat for EU-27 Poultry, Meat, Broiler EU-27 2009 2010 2011 Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 USDA Official New Post USDA Official New Post USDA Official New Post Inventory (Reference) 0 0 0 Slaughter (Reference) 0 0 0 Beginning Stocks 0 0 0 0 0 0 Production 8,756 8,758 8,920 9,095 9,000 9,185 Whole, Imports 0 0 0 Parts, Imports 719 720 680 676 710 675 Intra-EU Imports 0 0 0 Other Imports 0 0 0 Total Imports 719 720 680 676 710 675 Total Supply 9,475 9,478 9,600 9,771 9,710 9,860 Whole, Exports 0 0 0 Parts, Exports 783 778 840 992 840 940 Intra EU Exports 0 0 0 Other Exports 0 0 0 Total Exports 783 778 840 992 840 940 Human Consumption 8,692 8,700 8,760 8,779 8,870 8,920 Other Use, Losses 0 0 0 Total Dom. Consumption 8,692 8,700 8,760 8,779 8,870 8,920 Total Use 9,475 9,478 9,600 9,771 9,710 9,860 Ending Stocks 0 0 0 Total Distribution 9,475 9,478 9,600 9,771 9,710 9,860 MIL HEAD, 1000 MT
Posted: 18 March 2011, last updated 19 March 2011

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