March 5, 2007

EU beef production likely to decline
 

The decline in beef production within the EU is projected up to 2013 at least in the latest report from the European Commission.

According to the report released by the commission, beef production within the 27 member states will be down by approximately 470,000 tonnes per annum in 2013 compared to 2006.

The projection is reflecting the expected continuation of the effects of de-coupling from headage based supports to the Single Farm Payment at the start of 2005 as well as the expected increase in production costs arising in particular from higher feed costs over the next six years.

The total cattle herd is projected to decline by about 6 percent over the entire EU -- or five million head -- to an estimated herd size of 83 million by 2013.

The commission believes this will be driven by a structural decline in the dairy herd as well as a smaller decrease in the beef herd. However the specialising beef production regions in Spain, France, Belgium and Netherlands, where most of the cattle premiums remain coupled to production, are expected to expand their fattening herds.

The commission is of the belief that overall beef consumption levels will stabilise in the medium term, following the slight increase last year, which was due to higher availability.

The potential increase in consumption as a result of higher income levels in many parts of the EU is expected to be partly offset by continued beef price rises and low consumption in the new member state.

The report predicts sheep meat production will also decline over the period as the commission projects output will have fallen to 1.06 million tonnes, which is 5 percent below 2006 levels. This will be brought about by a continuation in the restructuring of the sheep flocks in Ireland, Britain and France. The decline of the Irish sheep flock is continuing to be driven by the low return for producers in recent years.