January 25, 2012

Following the strong increase in exports in 2010 and 2011, the EU became a net exporter of beef, as posted in EC's annual analysis of "Prospects for Agricultural Markets and Income in the EU 2011-2020".

According to this analysis, "the improved net trade position was boosted by a weaker Euro and the shortage of supply in traditional meat exporters such as Brazil and particularly Argentina." This "helped to improve EU export competitiveness in the context of a tight international beef market".

Significantly, the 2011 report sharply revised earlier projections. The December 2011 analysis projects EU beef and veal export levels at around 2.5 times larger than those projected in December 2010, while imports are projected at around half the levels set out in December 2010. The new analysis thus projects only relatively small levels of EU net beef imports in the period up to 2020 (ranging from 42,000–71,000 tonnes per annum). However this assumes a weakening of export competitiveness as a result of a strengthening of the euro. In addition, it should be noted that the projected net imports of beef and veal are counterbalanced by EU exports of live animals, with this yielding an EU net trade surplus in beef and live cattle over the period to 2020. This is despite a projected decline in live animal exports of around 40% over the projection period.

The trade position set out by the EC in December 2011 is in part a result of a projected decline in per capita consumption of beef in the EU, with consumption now projected to fall to 8.1 million tonnes in 2020, while production is set to decline 1.3% to 7.4 million tonnes. Overall, while EU beef and veal exports are projected to grow 3.8% between 2010 and 2020, beef imports are projected to grow only 1.1%.

In terms of EU beef price developments, the December 2011 analysis highlights the strong increase in EU beef prices in the last quarter of 2010, with prices remaining well above 2010 levels throughout 2011 (average prices in 2011 were 9.5% above 2010 levels, with further average price increases of around 1.7% projected for 2012). According to the EC, these price developments "reflected world market price developments over 2010 and 2011, driven by increasing global demand and tight supply".

The analysis notes that while overall supplies of beef to the EU market have declined, EU imports of zero-duty, high-quality beef from intensively fed, hormone-free cattle have increased.