March 15, 2012

EU 2011 compound feed output dips 1%

EU compound feed production in 2011 may have reached 150 million tonnes, down 1% from 2010's 151.4 million tonnes, preliminary statistical data by the European Feed Manufacturers' Federation (FEFAC) showed.

All types of production, including cattle, pig or poultry, have dropped, with cattle feed seeing the sharpest decline at 3%. For the second year, poultry feed is the leading segment of compound feed slightly above pig feed.

The most important factors which have weighed in on the EU feed demand in 2011 were the still fragile economic situation of the pig sector and the high feed material costs. As for ruminants, the severe drought on the first months led to a lower forage harvest during the spring cut but this was offset by the good autumn weather conditions that favoured grass growth.

Most EU member countries saw their production fall, sometimes dramatically as in Ireland with a drop of 9%. The Netherlands saw a decrease of 5%. A few countries such as Italy or Germany managed to buck the general market trend with positive growth around 3%, supported by a surprisingly quick recovery of pig farming activity mainly due to increasing exports.

FEFAC said the high cereal prices over the last two years improved the competitive market position of industrial compound feed production versus home mixing. However, this gain was offset to a certain extent by the development of alternative pig feeding strategies based on roughly grinded feed and liquid feeding.

As a result, Germany's position as a leading EU country in terms of total compound feed production before France was strengthened, with Spain scoring third.

The final estimate and detailed breakdown of the 2011 results will be presented at the next FEFAC Annual General Meeting on June 15 in Brussels.

FEFAC experts foresee a stabilisation in cattle feed production, a further reduction in pig feed production of 0.5% and a 1% increase in poultry feed demand which could be offset by a significant setback for layers feed production in certain countries, as a direct consequence of the application of the new cages standards from January 1.

Further market uncertainties are linked to the development of the Schmallenberg virus in ruminant populations and the new group-housing requirements for sows which may lead to a significant reduction in young sows replacement in certain producer regions. Overall, compound feed production is expected to remain unchanged over 2011.

Feed material markets are characterised by the upward trend on soymeal quotations due to high Chinese demand and seasonal drought in South America. Price quotations for cereals are at high levels and may remain so while experts are still evaluating the impact of February frost in a large part of the EU countries and while fear of a potentially severe drought in Western Europe is growing. Access to raw materials may be further curtailed by the persisting problems linked to asynchronous approval of not yet authorised GM events.