EU Feed Output 'Fragile', Says FEFAC

EU - Compound feed production dropped by almost four per cent in 2009, according to the feed producers' organisation, FEFAC. The outlook for this year remains fragile.

29 June 2010

3 minute read

Final results for 2009

In the wake of the XXV FEFAC Congress on competitive sustainability of the EU feed and livestock sector in Hamburg, on 10 to 11 June 2010, FEFAC members have provided final estimates for the compound feed production for the EU-27 (but excluding Greece, Malta and Luxembourg) in 2009.

The total production estimate is now set at 147.6 million tonnes, which is 3.8 per cent below the figure for 2008 (153.4 million tonnes). The significant downturn has affected all animal species, in particular cattle feed (around -6 per cent), pig feed (-5 per cent) and, to a lesser extent, poultry feed (-1 per cent).

Four key factors have weighed on the EU feed demand in 2009:

the dramatic crisis affecting the dairy sector, which triggered a severe contraction of the demand for efficient cattle feed, i.e. compound feed; mainly in the third and fourth quarters
the continuation of the downward slope of the pig production cycle, amplified by the financial difficulties of pig farmers
the low market quotations for cereals, with the consequence that farmers had few incentives to put their cereals on the market rather than using them on the farm, and
the financial crisis, which led to lower consumer demand for products of animal origin, i.e. to a switch to less expensive animal proteins sources.

As far as countries are concerned, Spain and France are now shoulder to shoulder for the position of EU leading country in terms of total compound feed production, preceding Germany. Spain indeed registered a lower decrease, i.e. -2.6 per cent whereas Germany, France, Italy and the Netherlands experienced a downturn within a range of -3.6 to -6.1 per cent. Cattle and pig feed production went down in almost all countries, whereas poultry feed production increased in Italy, Belgium, Hungary, Poland and Portugal but dropped in several countries, including France, Germany, the Netherlands and Spain.

Outlook for 2010

FEFAC experts identified as key drivers for the compound feed market in 2010 a continuation of difficulties in the dairy sector despite a modest increase in milk prices, the end of the downward trend in the pig production cycle and a continued recovery in consumer demand for poultry products.

The current forecasts for the EU cereals harvest 2010 indicate relatively low quotations for new crop grains in 2010, while soybean meal prices are expected to remain stable: the announced decrease in global quotations due to record harvests in South America is likely to be offset by a less advantageous dollar/euro exchange rate. As a consequence, FEFAC experts foresee further reductions in cattle feed production (down two per cent) and pig feed (down one per cent) and a stabilisation in poultry feed production. Overall, compound feed production may decrease by one per cent compared to 2009.