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AHDB European Market Survey

12 March 2012

AHDB European Market Survey - 9 March 2012AHDB European Market Survey - 9 March 2012

In Russia steady consumer demand and domestic production constraints have contributed to ongoing high demand for imported red meat.


Contrasting trends in Russian beef and pork imports

In Russia steady consumer demand and domestic production constraints have contributed to ongoing high demand for imported red meat. However, because of problems for some supplying countries, notably Brazil, and Russian quotas pork imports in 2011 showed only a two per cent growth while beef and veal imports were down four per cent.

For beef and veal, strong global demand coupled with supply shortages contributed to the fall in imports while the average import price in 2011 was up 16 per cent year on year in US dollars. For EU suppliers the average import price was up 22 per cent, which contributed to the stability in its trade, with a fall for Germany offset by growth for Lithuania and Ireland. Brazilian product was also less competitive and shipments were down 21 per cent given domestic shortages, although it remained the largest supplier to Russia with a 37 per cent market share. In contrast, there was a marked growth for Australia and the US while Mexico also emerged as a significant supplier in 2011 shipping 22.500 tonnes. However, Argentina lost further ground.

The small rise in fresh and frozen pork imports in 2011 reflected better global supply availability and a somewhat smaller price rise compared to beef of seven per cent in US dollar. Also supplies of Russian pig meat were higher in 2011 as production was up an estimated five per cent.

For imported product, the volume increase occurred despite the disruption in supplies from Brazil with its shipments down 41 per cent even though the price rise only averaged two per cent. Brazil remained the largest individual country supplier with a 20 per cent market share. However, from September onwards shipments only averaged 3,000 tonnes per month as the ban on supplies from processing plants in three states took hold. Canada, in particular has emerged as a major supplier to the Russian market with shipments up by two thirds. Imports from the EU showed a less marked rise of 17 per cent and while shipments from Germany were marginally lower this was more than offset by a large rise for Spain. There was also modest growth for Denmark and the smaller suppliers of Ireland and the Netherlands.

Russian fresh and frozen pork imports in 2012 will be constrained by the reduction in the tariff quota (TRQ) to 400,000 tonnes compared with 472,100 tonnes in 2011. For fresh and frozen beef it is unchanged at 560,000 tonne. Russia is due to ratify its WTO membership (see EMS11/50) by mid-2012 but it is not clear as to what TRQs will apply.

Spanish sheep and cattle numbers in decline

There has been a further marked decline in the Spanish sheep flock with breeding ewes and ewe lamb numbers in November 2011 down nine per cent on a year earlier. Total sheep numbers are down eight per cent. This is having an impact on overall EU sheep numbers as Spain has the second largest sheep flock in the EU after the UK. Cattle numbers in Spain in November 2011 were also lower.

Since reaching a peak in 2003 the sheep breeding flock has now declined by almost 30 per cent. In 2011 producers in Spain were affected by higher production costs associated with increased prices of cereals and decoupling of the ewe premium from 2010. There has also been reduced domestic demand for lamb because of the economic problems in Spain, although this only had a limited impact on the light lamb price which was up seven per cent in 2011 compared with 2010. The run down of the breeding flock is reflected in increased adult sheep slaughterings which in the year 2011 were up 32 per cent on year earlier. Fewer lambs were retained for breeding as lamb slaughterings were unchanged at 11.1 million head in 2011, despite the lower breeding flock in November 2010.

The cattle herd in Spain is less important in the EU context and total numbers were down three per cent. The beef sector benefitted from good export demand with the R3 young bull beef price in 2011 up eight per cent on 2010 but it continued to suffer from high production costs especially in relation to feed. Some of the figures for the different categories should be treated with caution as the November 2011 census is still provisional. Both beef and dairy cow numbers were well down as producers culled their herds with cow slaughterings in 2011, up nine per cent compared with 2010. Total cattle and calf slaughterings were unchanged. Heifers for breeding in November 2011 were down by as much as 22 per cent suggesting a further decline in cow numbers can be expected. For cattle under one year, numbers were reduced by the lower domestic calf crop as imports of calves for finishing in the year 2011 were slightly higher.

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