September 10, 2007

 

High grain prices may lose out EU meat producers

 

 

Swine, cattle and poultry breeders across the European Union are struggling to stay afloat, weighed down by soaring feed prices, but powerless to pass costs on to consumers.

 

Either the might of the big supermarket chains or the availability of cheaper imported meat, or both, mean farm gate prices have barely gone up in recent years.

 

Industry sources say many breeders risk going out of business which will possibly spur a hike in food prices.

 

Pig farmers in Ireland lament that they are losing between 2 euros (US$2.75) to 3 euros (US$4.13) per finished pig due to soaring feed costs and may be forced out of business unless pig meat prices improve.

 

Laszlo Barany, chairman of the Hungarian Poultry Product Council said the "age of cheap meat could be over if the era of cheap grain is over".

 

World grain prices have doubled in the last 12 months. In Hungary, the situation was heightened by severe drought which threatens to worsen a long-running decline in livestock numbers. Barany said the rise in grain prices has "shocked the livestock sector in an unprecedented way".

 

Feed prices in EU's leading pork producer, Germany, have doubled this year, but retail meat prices rose only 3 percent in the first six months.

 

In August, meat prices actually fell 1.7 percent on the year. Michael Starp, managing director of the pork and beef division of the German farmers' association DBV, says the industry is facing a catastrophe.

 

According to Starp, many pig farmers have been losing money in the past year and may not continue business for much longer. He said there needs to be a re-think among retailers as they cannot use their market strength to compel farmers to sell at a loss indefinitely.

 

He added meat supply scarcity is much likely to happen if supermarkets don't change their price policy.

 

The outbreak of foot-and-mouth-disease in Britain -- a major pork producer-- has spiked feed and meat price increases in EU.

 

The situation is worse for farmers in Spain, Italy and Portugal because they are further from main grain producing regions and therefore pay more for grain prices.