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EU-27: Poultry and Products Semi-Annual Report 2011

by 5m Editor
18 March 2011, at 12:00am

After a significant surge in 2010 fueled by extremely strong export demand in Russia and Hong Kong, EU-27 broiler production is expected to grow moderately in 2011 as new import regulations in Russia are likely to hit exports, according to the latest GAIN Report from the USDA Foreign Agricultural Service.

Executive Summary

After a significant surge in 2010 (almost four per cent), fueled by extremely strong export demand and lower imports, EU-27 broiler production is expected to grow moderately in 2011 by one per cent as new import regulations in Russia are likely to hit EU exports. The German dioxin scandal of January 2011 is expected to have no impact on German broiler production, and no impact on the EU-27 production level. The hike in global grain prices since the summer of 2010 impacted directly on broiler production costs but it appears that producers were able to pass most of the increase to their customer, either domestically or abroad.

EU-27 broiler exports were buoyant in 2010, fueled by a strong demand in Russia where they partly replaced US exports of broiler meat due to the PRT dispute. Exports of EU-27 broiler meat to Hong Kong doubled, with the likeness of a significant share going to mainland China. EU-27 exports of chicken meat to the Middle East and Sub-Saharan Africa also increased sharply in 2010, benefiting from the weakness of the Euro versus other currencies (especially the Brazilian real).

EU-27 broiler exports are expected to decrease in 2011 as Russia lowered its poultry TRQ and removed its country-specific allocations, allowing all poultry exporters to compete for the TRQ. On the other hand, EU-27 broiler exports to Hong Kong are expected to remain buoyant, fueled by the demand in China.

EU-27 chicken meat imports decreased in 2010; lower Brazilian meat exports to the EU-27 not being compensated by higher Thai exports. The decrease in Brazilian exports is attributed to a combination of the strong Real versus the Euro, incorrect Brazilian use of the new EU-27 licensing system and the fact that because of the EU definition, frozen chicken meat cannot be sold as fresh after defrosting. No rebound of EU-27 broiler imports is expected for 2011.

While global meat consumption in the EU-27 has been negatively impacted by the economic recession, poultry meat, which is the cheapest source of protein, was less affected. However, its consumption growth (around one per cent) is less than the demographic one, showing that, per capita, consumption is probably slightly decreasing. Sales of cheaper cuts also increased to the detriment of more expensive parts. This trend is forecast to continue in 2011.

Production

After a significant surge in 2010 (almost four per cent) fuelled by extremely strong export demand and lower imports, EU-27 broiler production is expected to grow moderately in 2011 by one per cent as new import restrictions in Russia (see trade section) are likely to hamper EU exports, thus limiting the production growth to slowly increasing domestic demand. Production is expected to increase in all major EU-27 broiler production countries such as Germany, the UK, Benelux, Spain, France and Poland. However, in all those countries, the growth is likely to be lower than in 2010. The German dioxin scandal of January 2011 is expected to have only minimal impact on the German broiler production which is also foreseen to increase. According to meat analysts, the scandal mostly affected egg consumption and pork prices.

The hike in global grain prices since the summer of 2010 impacted directly on broiler production costs but it appears that producers were able to pass most of the increase to their customers. The following graph shows that while wholesale broiler prices were low in the first half of 2010, they increased to their 2008 level – at a time when grain prices were also high – in the second half. Preliminary data show that prices continued to grow, albeit at a slower rate, in the first months of 2011.


Figure 1. Price of ready-to-cook chicken at Rungis wholesale market
(source itavi.asso.fr using SNM data)


Broiler production (top five EU-27 Member States; '000 metric tons)
2009 2010 2011
United Kingdom 1221 1323 1325
Benelux 1152 1190 1210
Spain 1112 1143 1176
France 935 963 980
Poland 815 880 920

Consumption

While global meat consumption in the EU-27 has been negatively impacted by the economic recession, poultry meat, which is the cheapest source of protein, was less affected. However, its consumption growth (around one per cent) is less than the demographic one, showing that, per capita, consumption is probably slightly decreasing. Several market analyses showed that while the average consumer switched from beef or pork meat to poultry meat, the lower income consumers simply reduced their protein purchases. Sales of cheaper cuts also increased to the detriment of more expensive parts. The poultry price increase noticed in the second half of 2010 (and expected to continue for the beginning of 2011) will only reinforce these trends in 2011.

Broiler consumption (top five EU-27 Member States; '000MT
2009 2010 2011
United Kingdom 1502 1645 1675
Spain 1124 1130 1135
France 912 939 979
Germany 897 910 915
Italy 709 714 717

Trade

EU-27 broiler exports were buoyant in 2010, fueled by a strong demand in Russia where they partly replaced US exports of broiler meat, which have been banned for several months, due to the trade dispute on the Pathogen Reduction Treatments (PRT) issue. Exports of EU-27 broiler meat to Hong Kong doubled. Presumably, a significant share of those exports might, in fact, be re-exported from Hong-Kong to mainland China. EU-27 exports of whole chicken to the Middle East (namely Saudi Arabia) and chicken parts to Sub-Saharan Africa also increased sharply in 2010, benefiting from the weakness of the Euro versus other currencies (especially the Brazilian Real) throughout 2010.

EU-27 exporters were able to pass most of their production cost increase to their customers. This is especially true for exports of whole chickens, while prices for parts remained stable. This can be attributed to the fact that most of the parts exported are low priced cuts from broiler carcasses, the most noble parts (fillets) being sold on the EU-27 domestic market at a premium price.


EU-27 export price (USD per MT) for selected broiler commodities
(Source World Trade Atlas)

EU-27 broiler exports are expected to decrease in 2011, as Russia lowered its poultry TRQ to 350,000MT and excluded whole birds from it. Russia also removed its country-specific allocations, allowing all poultry exporters (including the US) to compete for the TRQ. On the other hand, EU-27 broiler exports to Hong Kong are expected to remain buoyant, fueled by the demand in China.

Broiler extra EU-27 exports (top five EU-27 Member States; '000MT)
2009 2010 2011
France 250 275 285
Benelux 211 240 250
Germany 92 90 90
Poland 45 60 40
Spain 31 45 56

EU-27 chicken meat imports decreased six per cent in 2010 as Brazilian meat exports to the EU-27 fell 11 per cent and were not compensated by higher Thai exports. The decrease in Brazilian exports is attributed to a combination of the strong Real versus the Euro, incorrect Brazilian use of the new EU-27 licensing system and the fact that because by EU definition, frozen chicken meat cannot be sold as fresh after defrosting. Brazil is also claiming not to be able to fill the 170,000MT quota for salted product. No rebound of EU-27 broiler imports is expected for 2011.

Broiler extra EU-27 imports (top five EU-27 Member States; '000MT)
2009 2010 2011
Benelux 300 300 300
United Kingdom 190 205 220
Germany 78 60 60
Spain 32 29 27
France 20 18 20

Further Reading

- You can view the full report by clicking here.

March 2011