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EU Meat Sector Trends and Trade

by 5m Editor
13 October 2010, at 12:00am

The Common Agricultural Policy in Europe has been undergoing a series of reforms and changes over the last 20 years, but still it has an image of protectionism among a large number of non-EU countries, writes ThePoultrySite senior editor, Chris Harris.

Speaking at the World Meat Congress in Buenos Aires, Lars Hoelgaard, the deputy director general for the DG Agriculture and Rural Development at the European Commission said that the reforms have lowered intervention prices and helped to remove the safety net.

The reforms have also abolished or removed export refunds on products such as cereals, milk, wine, pig meat and olive oil.

The changes have also improved market access by introducing tariff rate quotas and bilateral trade agreements.

"There are no refunds for milk, cereals and wine and there are reduced refunds for meat," said Mr Hoelgaard.

"The CAP has been made stronger as there are no direct payments to farmers for production. Production has been decoupled."

He said the coupling comes with cross compliance over issues such as health, the environment and animal welfare.

"We have gone from an amber box to a green box non-trade distorting support," he said.

"CAP has become more green in its demands of the environment and animal welfare and also green in as much as it is non-trade distorting."

He said that farmers decide what to produce and how much to produce or not to produce and the direct payments are made for good agricultural and environmental conditions.

This Mr Hoelgaard said it bringing an element of income stability in time of increased price volatility for the farmer.

The result is a more sustainable and competitive EU agriculture sector.

The new reforms will abolish all export refund by 2013. To date there has been a 54 per cent reduction in tariffs.

He said the reforms have made the EU prepared for a World Trade Organisation Doha deal, but he questioned whether some other countries around the world are in a similar position.

"Are the Americans ready for a Doha deal? That's the question we are all asking ourselves," Mr Hoelgaard said.

Beef Sector

In looking at the meat markets across the EU, Mr Hoelgaard said that the EU held a 13 per cent share of the global beef market but it has change from having a net surplus of beef to being a net importer.

Total global beef production stands at around 17.4 million tonnes.

However, he added that the price gap between the EU and the rest of the world is narrowing.

"There will be an increase in imports and exports will be stagnating or going down," he said.

He aid that as milk quotas will disappear in 2015, there will be a general destocking of the milk herd. The EU beef outlook will also be affected by a constrained consumption because of the economic situation, but there will be a continued increase in imports into the EU from the Mercosur countries of South America because of a sustained demand.

Pig Meat Sector

In the pig meat sector, the EU is the second largest producer in the world, with 21.6 per cent of the market following China with 45.7 per cent. Global pig meat production is around 103.19 million tonnes.

However, Mr Hoelgaard said that pig carcase prices have been dipping because of eh increase in production, but market prices are closing with the rest of the world.

He said that the increase in feed price is reducing profitability and this could require some major structural adjustments in the market. The sector is also going change because of land, capital and environmental constraints.

The pace of domestic production is expected to slow and there is expected to be a slow fall in pork exports in the face of increasing international competition.

While consumption is expected to remain fairly stable in the near future, any rise is expected to outpace production increases.

Poultry Sector

The European Union is a small player in the global poultry market with just 11 per cent share of the market. The major producers and players in the market are the US, China and Brazil. Global poultry production stands at around 20.617 million tonnes.

There has been an increase in production in the EU triggered by higher EU domestic demand, but EU exports have been increasingly constrained by international competition.

Preferential import quotas for Brazil and Thailand have helped to increase imports.

Mr Hoelgaard said that total meat production in the EU is expected to grow slightly in coming years, although it is set to be a net importer of beef, poultry and sheep meat.

While pig meat is the favoured meat of the European consumer, there is a growing consumption of poultry meat.

There is a gradual narrowing of the gap in prices between the EU and the rest of the world, but EU exports are facing uncertain times due to problems with the exchange rate, domestic demand and the current financial crisis.

Mr Heolgaard said that when the next round of the Doha talks come around, the market sector will see market access concessions by the EU, with high tariff cuts or large additional tariff quotas for sensitive products.


October 2010