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AHDB European Market Survey

08 June 2012

AHDB European Market Survey - 8 June 2012AHDB European Market Survey - 8 June 2012

Consumer panel data and market reports from various Member States confirm the pressures on consumer spending in the EU (see EMS12/21) and on the demand for meat.


Consumer demand for meat in EU suffering

In France, data from Kantar Worldpanel for 2012 up to 15 April indicate that total meat purchases (including further processed products) were unchanged year on year. This was the result of the poor economic situation, which at the same time resulted in only small price rises. Trends in household purchases varied considerably by meat, with beef and veal under the greatest pressure and losing market share to other meats. The decline in purchases of beef amounted to three per cent with average price rises of three per cent resulting in expenditure being unchanged. For frozen minced beef, which is categorised separately, household purchases were also down three per cent. Lower demand and reduced supply availability contributed to the eight per cent decline in veal purchases while prices rose by three per cent.

French purchases of fresh pork were unchanged, helped by intense promotional activity, while prices rose by five per cent. In contrast household purchases of lamb were up 25 per cent but this was mainly due to the fact that Easter is included in this year’s figures, unlike last year when it was later in April. The lamb supply situation was also somewhat better than last year, when there were shortages of imported product. The strong performance of charcuterie products was helped by good demand for cheaper products, especially bacon products, whereas ham purchases were marginally lower.

In contrast to France, consumer panel data for Spain surprisingly suggest some small recovery in household purchases. Data from MARM, the Spanish Ministry of Environment and Rural and Marine Affairs, indicate that in the 12 months ended March 2012, total meat purchases were up two per cent year on year with similar increases for all the main fresh meats with the exception of sheep meat which was down four per cent. This was helped by overall retail price stability, mainly the result of price falls for pig meat (both fresh and processed). Given the deteriorating economic situation in Spain, some downturn in purchases seems inevitable in the coming months.

Demand for meat is also under some pressure in Italy, with household purchases down one per cent year on year in the first quarter of 2012 with all meats under pressure. Total spending on meat was also marginally down.

Further decline in Polish and Czech pig herds

New figures from Poland and the Czech Republic show that the size of their pig herds continues to decline. Both have been particularly hard hit by negative margins as a result of high feed costs.

Until recently, Poland had the third largest pig herd in the EU, with nearly 19 million head as recently as December 2006. By December 2011, this was down to just over 13 million head and latest figures, for March 2012, show this had fallen to 11.5 million head. The fall was partly seasonal as the March figure is normally lower than the December one but the March 2012 number was 12 per cent lower than in March 2011. Numbers of both piglets and young pigs (under 50kg) were down sharply, by 17 and 18 per cent respectively since March 2011 but numbers of finishers were down by only six per cent. This is largely because of increasing imports of weaners, particularly from Denmark.

The fall in the number of breeding sows was lower at five per cent but this follows a particularly sharp fall in the previous year and March 2012 numbers were 19 per cent lower than two years earlier at 1.1 million head. The number of in-pig sows and gilts was down by only one per cent, suggesting that the decline in the pig herd may be slowing. However, reports suggest that some larger producers have delayed investing in group housing for their pregnant sows until the end of the year. This may lead to a further decline in the breeding herd.

The falling herd is reflected in slaughter numbers for the first quarter of 2012, when Poland slaughtered 4.9 million pigs. This total was two per cent lower than in the same period last year, despite an increase in March throughputs. As a result of the lower supplies, Polish pig prices have risen rapidly, with the reference price averaging almost seven zlotys per kg in April, 15 per cent higher than in April 2011. In euro terms, the price was €1.67 per kg, almost 10 per cent higher than a year earlier.

The pig herd in the Czech Republic is significantly smaller than the Polish herd, with figures for April 2012 putting it at 1.58 million head. This was almost 10 per cent lower than a year earlier. Sow numbers were down by 11 per cent at marginally over 100,000 head. However, with nearly all Czech producers having complied with the partial ban on sow stalls or decided to leave the industry, there are hopes that the industry may be in a better position for the future.

The fall in pig slaughterings in the Czech Republic has been even sharper than in Poland. Throughputs in the first quarter of 2012 totalled 675,000 head, nine per cent lower than a year earlier. As in Poland, this has led to a sharp increase in prices with the April average reference price at CZK43.59 per kg, 16 per cent higher than in April 2011. The euro price was 14 per cent higher year on year, averaging €1.76 per kg.

Falls in Russian beef and pork imports

Russian beef imports in the first quarter of 2012 were down five per cent compared with the same period last year. The fall was largely due to a 57 per cent fall in shipments from the EU and a 67 per cent fall in imports from Australia. In February 2012, Russia restricted beef imports from EU countries following the spread of the Schmallenberg virus but the main impact was in the live cattle trade which was banned.

In contrast, shipments from Brazil and Paraguay were up 16 per cent and 50 per cent respectively. There was also strong growth in trade with Mexico and the US which were both up sharply. The US tariff rate quota for frozen beef was expanded from 41,700 metric tons in 2011 to 60,000 metric tons this year. The US also has access to the global 11,000 tonne quota for fresh/chilled beef. The average price of Russian beef imports was up 23 per cent in US dollars to $4,590 per tonne and 27 per cent in roubles.

Imports of pork were down four per cent for January to March compared with the same period of 2011. The fall was largely due to a 72 per cent fall in shipments from Brazil, which was previously the largest supplier of pork to Russia. Restrictions on pork imports from Brazil imposed back in June 2011 are still adversely affecting trade. The reduction in shipments from Brazil has created opportunities for other countries particularly in North America and the EU. There was growth in imports from Canada, the US and the Ukraine up 56 per cent, 62 per cent and 41 per cent respectively. Russia has eliminated the country-specific quota that was open only to US pork, but this will allow the US to participate in the 400,000 tonnes TRQ that is open to all countries. Of the smaller markets trade with Chile increased three-fold to 1,600 tonnes.

Pork shipments from the EU were up 10 per cent, with a 19 per cent increase in imports from Germany and shipments from Spain more than doubling. There was also growth from smaller suppliers such as Ireland and Austria, although volumes were still only 3,000 tonnes and 1,000 tonnes respectively. The overall average unit price of Russian pork imports was up 10 per cent in US dollar terms at $3,370 per tonne and by 13 per cent in roubles.

Russian fresh and frozen pork imports in 2012 will be constrained by the reduction in the tariff quota to 400,000 tonnes, down from 472,100 in 2011. For fresh and frozen beef it is unchanged at 560,000 tonnes.

The USDA forecasts published in March 2012 estimate that Russian beef production for 2012 as whole will fall by one per cent but pork production will increase by five per cent. Despite the growth in pork production, helped by more favourable feed prices, it is still being adversely affected by African Swine Fever. Beef consumption is expected to rise by around one per cent in 2012 given a forecast increase in beef imports with pork consumption up around three per cent, partly since pork imports are expected to remain lower through the year as a whole.

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