February 29, 2016

EU beef, pork production surge in 2015; to remain high this year

Several factors such as the abolishment of the dairy quota in April 2015 and the expansion of the sow herd led to a surge of beef and pork production in the European Union, and production is expected to remain high this year, a semi-annual livestock report prepared by the US Department of Agriculture (USDA) said.

The report said favorable feed prices and a good demand for high-quality beef also led to a strong expansion of the dairy herd in Europe.

The abolishment of the dairy quota early in 2015 led to a strong expansion of the dairy herd particularly in the UK, Ireland and the Netherlands, where farmers are expected to keep their milk production at high levels despite low milk prices.

The number of beef cows is also expected to increase in Spain, France, Poland, the Czech Republic and Bulgaria due to such factors as are the low feed prices and growing domestic and third-country demand for high-quality beef. The French beef herd is forecast to increase as the new subsidy scheme for beef cattle has become available, the USDA report said.

It noted that cow slaughter surged in 2015 due to the low milk prices, resulting in the stockpiling of supply and lower domestic prices amid a stagnating domestic consumption and EU meat import ban by Russia.
 

With low beef prices and a favorable exchange rate, exports of beef are expected to increase this year, the USDA said.

Record volume of pork

Last year, the EU produced a record volume of 23.35 million metric tonnes of pork, with the average carcass weight increasing from 89.1 kg to nearly 89.8 kg. The high rate of slaughter was caused by the expansion of the sow herd combined with a significant rise in sow productivity, the USDA report said. Pork production rose most significantly in Spain, Italy and Germany. The record production also boosted exports to 2.4 million metric tonnes, which is 10% higher than previous year and 40% higher than the previous 10 years' average.

Pork production is expected to remain at a high level in 2016, although lower than in2015. The USDA said the domestic and world market would still be unable to absorb this supply.

In March last year the European Commission (EC) opened a pigmeat private storage aid (PSA) scheme, which provides EU funding to help cover the costs of storing certain pigmeat products for periods of three to five months. It was devised to ease pressure on the EU market, which is still struggling from the Russian ban on imports from February 2014. The scheme attracted 65,000 metric tonnes of pork in seven weeks.

The EC opened a new PSA program on Jan. 4 this year and attracted over 90,000 metric tonnes of pork, predominantly boned legs from Germany and Spain. "Private stocks of pork are also anticipated to remain at a high level as it is not expected that the Russian market will reopen anytime soon", the USDA report stated.