The EU meat sector in 2011 was supported by a relatively strong level of demand on the world market characterised by the quite favourable global economic situation. Global import demand increased, partly as a consequence of animal disease related supply constraints in the Far-East.

Overall supply of meat was further constrained by high feed costs despite the reasonably good harvest in the EU, US, Canada and Russia. As a consequence world prices increased which contributed to the continued good performance of EU exports.

The outlook is characterised by a further contraction in total EU meat consumption, which is expected to decrease by 0.7 per cent in 2012 and 0.4 per cent in 2013. Only poultry meat has proven to be resilient, with consumption estimated to have grown slightly in 2011 and expected to increase further over the outlook period given its healthy image and relative cheapness.

Overall meat production in the EU should decrease slightly (by 1.1 per cent) in 2012, and remain stable in 2013.

Pig meat

In the pigmeat sector, the sharp rise in grain prices from 2010 led to increased feed costs that persisted throughout 2011, reducing the scope of higher pig meat prices to improve producer margins. Margins improved only in the last quarter of 2011 softening the pressure from feeding costs. The world consumption of pigmeat declined but external demand remained strong with tight supply from competitors.

The outlook for 2012 is characterised by firm producer margins driven by continuously high pig meat prices and stable feed prices. However, EU production is expected to decline (-1 per cent) due to poor profitability in past years and the need for investments3. 2011 was exceptionally good for pigmeat exports, and the outlook for 2012 remains favourable despite a slight decrease of 2 per cent.

EU pigmeat imports are expected to decrease further, with -3.5 per cent in 2012. Consumption of pigmeat (absolute and per capita) is expected to decrease slightly in the next two years (roughly by 1-1.5 per cent).

Uncertainties

Production and trade related uncertainties would mainly originate from rising production and investment costs and their financing, from a limited sectoral adjustment capacity with respect to market volatility, and from animal health related issues (for example, the Schmallenberg virus in the beef and sheep sectors). Prices for energy and protein feed components and other essential feed ingredients have been increasing since 2010 and are expected to remain high.

Further Reading

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