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Czech Meat and Milk Producers Struggle to Compete

by 5m Editor
1 February 2010, at 12:15pm

CZECH REPUBLIC - Cheaper imports have been blamed for the fall in production of all meats and milk last year.

Domestic meat production decreased by 7.2 per cent year-on-year to 556,066 tonnes in slaughter weight last year, with pork production falling most, the Czech Statistical Office (CSU), according to Prague Daily Monitor. Milk purchases dropped 3.2 per cent to 2.292 billion litres.

Last year's harvest of cereals at 7.832 million tonnes was 6.4 per cent lower than in 2008.

Pork production reached 284,572 tonnes last year, 10.2 per cent lower than in 2008. Beef production was down 3.7 per cent to 76,478 tonnes. Poultry meat production was also 3.7 per cent lower – at 194,252 tonnes.

According to Tomas Doucha from the Institute of Agricultural Economics and Information, the drop in meat production corresponds to the development of prices.

He said: "The 2010 development will again depend on the development of prices. Cattle production, mainly milk, will also depend on additional incentives from the European Union and from the Agriculture Ministry."

Meat processing companies ascribe the fall in domestic pork production to its imports.

"This is because the old [EU] countries have lost many export territories in the world," Czech Meat Processors Association president Jaromir Kloud told CTK.

Pork from western Europe now targets the markets of new EU members instead of Russia, Japan or Korea, he noted, adding that domestic producers are unable to compete with this.

Annual pork consumption in the Czech Republic has been moving moderately above 40 kilogrammes per capita for several years. The trend will continue and in a year, the share of imported pork in its domestic consumption could reach 50 per cent, Mr Kloud said. He does not expect the higher imports to impact consumer prices of pork, however.

Prices of agricultural commodities were falling in the whole of last year. There was a slump by 29.3 per cent in average agricultural producer prices of milk last year. Average monthly prices were deep below the level of the same period of the preceding year during the whole year. Milk of the highest quality was collected for an average price of 6.20 koruna (CZK) per litre.

According to an analysis of the Institute of Agricultural Economics and Information, production cost of a litre of milk is around CZK8. As a result of production being in the red, a number of breeders reduced or cancelled their livestock altogether throughout the year.

"Our estimates show that dairy cattle fell by 35,000 heads to 375,000 last year," Agricultural Association chairman, Miroslav Jirovsky, said.

Mr Jirovsky expects the livestock slaughter to continue this year as well reports Prague Daily Monitor.

Average prices of chickens for slaughter were almost 10 per cent lower year-on-year. Producer prices for pigs for slaughter fell by just 0.8 per cent, while average prices of bulls for slaughter grew by 2.1 per cent. Prices of calves, heifers and cows decreased.

There was a deficit in Czech trade in beef, pork and poultry meat last year, the same as in trade in live pigs. Trade in live cattle and live poultry showed a surplus. Beef and poultry meat was imported mainly from Poland and pork from Denmark.

Trade in milk and dairy products ended in a surplus but the structure of this trade changed against 2008. Imports of consumer milk and soured dairy products dropped some 12 percent, but 37.5 percent more butter was imported.

Exports of soured dairy products jumped by more than 20 per cent and exports of butter fell by 3.7 per cent. These exports targeted mainly Germany.