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USDA GAIN: Livestock and Products


06 March 2014

USDA GAIN: EU-28 Livestock and Products Semi-annual 2014USDA GAIN: EU-28 Livestock and Products Semi-annual 2014

Based on official statistics, both cattle and swine slaughter is revised downwards from previously anticipated. However, the forecast of a higher meat production in 2014 remains intact. A higher availability of animals and an abundance of feed are the main reasons for this projection to stand. As a result of the Russian ban, China is likely to become the main export market for EU pork.

USDA GAIN: Livestock and Products

Cattle

Slaughter is adjusted downwards as farmers rebuild their herds.

Based on official Eurostat monthly slaughter figures, slaughter has been more significantly cut in 2013 than anticipated in the FAS Annual Livestock Report. The most significant cuts are reported in Italy, Germany, France, Poland, the UK and the Benelux countries. The reduced slaughter of calves can partly be explained by the continuing economic crisis in the main veal markets, in particular Italy, France and Spain. This affected also slaughter in the Netherlands, the biggest exporter of veal in the EU. Another factor, which has been underestimated, is the high milk price, which tempts farmers to hold to their heifers and older cattle (see graph below). The abolishment of the milk quota in 2015 is a further push for farmers to enlarge their dairy herd (see for more information the FAS Dairy Annual). Based on the good margins in the dairy sector, the 2013 ending inventories of dairy cows are adjusted to a higher level, while the beef cow inventories are adjusted downwards. This year, slaughter is forecast to remain at a lower level than previously anticipated. As a result of the reduced slaughter, ending inventories in 2013 and 2014 are revised upwards from the forecast in the Livestock Annual.

Forecast of recovery of slaughter and beef production in 2014.

Despite the lower than anticipated slaughter, the forecast of increased slaughter and beef production in 2014 compared to last year remains intact. The rebound is supported by the increased availability of animals and a slight improvement of the economic situation in the EU. Increased slaughter is expected to take place across the EU and will be most pronounced in France, Spain and Ireland.

Beef

Adjusted trade balance will slightly ease domestic supply.

With the lower slaughter, beef production in 2013 and 2014 is revised to a lower level accordingly. As supply of beef on the world market is limited, the lower domestic EU beef production is directly affecting availability on the market and consumption. Though, imports have been underestimated in the Annual Livestock Report. During the last quarter, imports from Brazil accelerated (see graph below) supported by the depreciation of the Real against the Euro. The depreciation of the currencies in South America is expected to maintain the slightly higher import level through 2014. At the same is the appreciation of the Euro against the currencies in the export destinations anticipated to limit EU beef exports. In 2014, the adjusted trade balance will together with the recovery of beef production ease domestic supply and support an increase in consumption and stock-building.

Policy

Member States Maintain Coupled Payments for Beef Production

With the new Common Agricultural Policy (CAP) agreed in December 2013, Belgium, France, Germany and Spain reportedly opt to maintain support for EU beef production through reserving budgets for coupled payments. Other Member States (MS) still have time to make this decision. Under the new CAP, MSs can opt dedicating up to ten percent of their Pillar I budget for such a coupled support.

EU Meat Origin Labeling Rules Approved

On December 13, 2013, the EU approved Regulation 1337/2013 regarding country of origin labeling for pork, lamb, goat meat and poultry. This regulation mandates labeling the place of rearing and slaughter, but not the place of birth, contrarily to the existing EU labeling for beef, which also includes place of birth.

Enforcement Procedure for Failure to Implement Pig Housing Legislation

In January 2014, the European Commission (EC) sent a reasoned opinion to Belgium, France, Cyprus and Greece for failing to implement Council Directive 2001/88 on the housing of pigs, which included a final implementing date of January 1, 2013. A reasoned opinion is the last step in the EU enforcement procedure before a formal complaint is filed to the European Court of Justice (ECJ). The four MSs have two more months to comply with this directive before being turned over to the ECJ.

African Swine Fever Detected in Lithuania and Poland

On January 27, 2014, the EC notified the OIE and Chief Veterinary Officers (CVO) of the detection of African Swine Fever (ASF) in wild boar in the South of Lithuania. Russia immediately stopped imports of pork and live swine from Lithuania. On January 29, Russia extended the ban to the whole EU-28 on the premise that the EU and Russia have no agreement on regionalization. High level representatives from EC Directorate General Health and Consumers (SANCO) have engaged talks with the Russian CVO about a pragmatic solution to the problem. On February 17 and 18, Poland confirmed that it had also found wild boars infected with ASF close to the border with Belarus.

March 2014

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