Despite being the second-largest market for compound feed in the world, the EU is stagnating in terms of volume growth, according to Rabobank.

 

In an analytical article posted on its website, the agricultural lender said that in the last 10 years, production has grown by only 4%, whereas the global market almost doubled in that period.

 

For this year, Rabobank expects a very small increase of 0.3%, supported by growth in poultry and cattle feeds.

 

Production last year of poultry feed, whose market is the largest compound feed market in Europe, decreased 0.2% to 53.6 million tonnes compared with the 2015 level, mainly caused by outbreaks of avian Influenza in various European countries.

 

Feed production grew at a 1.4% CAGR (compound annual growth rate) in 2007-2015, while that of poultry meat production was 3.3%, up to 11m tonnes of meat in 2016, with a further forecasted growth of 2.1% in 2017.

 

Production of pig feed declines

 

Production of pig feed, whose market is the second-largest compound feed market in Europe, declined 1.6% in 2016 to 49.4m tonnes, compared with 2015. This, despite rising pig prices, slightly higher meat production, and optimism in the market last year. Again, efficiency improvements played a role in pig feed demand, although less than for poultry, according to the Rabobank article.

 

Production last year of the third-most important compound feed market in the EU, cattle feed, also declined, by 1.5%, from 2015 to 41.4 million tonnes, equalling 27% of total EU compound feed production.

 

"With the abolition of milk quotas in 2015, the subsequent decline, and ultimate recovery, in milk prices, the dairy sector has gone through a volatile season", Rabobank said.

 

"In the coming years, we expect milk production within Europe to shift north and west, towards areas with cheaper feed sources, i.e. grass", it added.