January 6, 2012

 

German association previews agricultural prospects for 2012

 

 

The German Farmers' Association (Deutcher Bauernverband - DBV) considers the outlook for 2012 as agricultural markets are at a favourable state for 2011.

 

Higher prices, however, do not mean better revenue, as grain harvests are low, pushing up feed prices.

 

The past year has been good for the dairy industry. The milk market has finally stabilised, leading to an increase of milk production (about 29.8 million tonnes).

 

The milk price is expected to remain steady at around EUR0.35 (US$0.46) per kilogram - which is parallel with rising milk prices and the growing cost of milk production.

 

For 2012, DBV expects the upward trend in the milk market to continue, despite an expected dip in milk prices paid at the start of the year.

 

Producer prices have been strong yet again. Prices for young bulls and cull cows respectively have been EUR0.30 (US$0.38) and EUR0.40 (US$0.51) higher than last year.

 

Export opportunities have continued to develop in Turkey.

 

Retail prices of beef increases by 10%, which did dampen some consumer spending.

 

DBV says that the price slump seen at the end of the year is a sort of acceptance that prices have reached a limit.

 

Pig slaughter for 2011 is expected to break records, estimated at 59.3 million pigs. However, future production looks limited.

 

The average price for hogs in 2011, based on grade E is expected to be EUR1.53 (US$1.96) per kilogram, an increase of EUR0.11 (US$0.14) compared to the previous year.

 

High feed prices are ultimately responsible for modest results in pig and piglet production. Higher producer prices are urgently needed in 2012, says DBV.

 

At an EU level, a significant decline in the sow inventory is recognised. If this continues, there could be disastrous effects for EU pig production.

 

The year 2012 will also be influenced by the conversion to group housing - which for many businesses will require significant investment.

 

Consumption of poultry increases slightly in 2011, but is significantly weaker than in previous years. Over 2012, the sector will focus on export markets for poultry meat.

 

After introducing an early ban on battery cages in 2010, Germany has seen its self-sufficiency in egg production dipped by 55%.

 

With the introduction of the ban to the rest of the EU at the start of the month, German producers are hoping that they are in a better position to respond to the market.

 

The decisive factor of this, though, is whether the ban will be implemented consistently in member states.

 

Persistent drought and a rainy harvest mean it is a hard year for arable farmers; 41.4 million tonnes of grain were harvested - falling short of the multi-year average increase of 9%.

 

In 2012, producers are looking for a revival of trade. Prices are expected to remain high, due to strong global demand.