The EU meat sector in 2012 continues to be supported by strong global demand, driven by the relatively favourable situation in emerging economies. However, domestic demand suffers from a slowdown in the EU economic growth. Overall meat supply is still relatively tight in many world regions and is further constrained by high feed costs. As a consequence, world prices remain high and EU meat exports flourish.

Based on the December 2011 census, the EU animal herd is estimated to stand at 86 million heads cattle, 148 million pigs and 98 million sheep and goats altogether, corresponding to an average reduction of 1.6 per cent (bovines -1.4 per cent, pigs -1.7 per cent, sheep -1.3 per cent and goats -2.9 per cent) as compared to the previous year.

The contraction of animal heads (and in particular of breeding females) is directly affecting the overall meat production, which is expected to decline by 0.4 per cent in 2012 and by 1.0 per cent in 2013.

Pigmeat

Despite a decline in pig population by 1.7 per cent (-3.2 per cent for sows), the EU pig meat production is expected to remain stable in 2012 and then to decline by two per cent the following year. This effect would be mainly caused by a further reduction in the sow herd, as new animal welfare rules on group housing of pregnant sows will become obligatory from 20138, therefore requiring significant investments for pig producers.

Although several Member States have launched initiatives to financially support farmers to adjust to the new requirements, producers that have not adapted their production technology during the transitional period of 10 years might come under pressure and cease their activity. The new Member States are less affected, as substantial investments in production systems were made after accession.

As regards trade, the current weak Euro and the robust global demand, particularly in China, lead to a favourable outlook for EU exports in 2012, with an expected increase of 3.5 per cent following the exceptional growth registered in 2011.

On the contrary, in 2013, exports are foreseen to decline by more than 10 per cent, as a consequence of the production drop. EU pigmeat imports are always marginal and would further decline, both in 2012 and 2013, to settle at around 13-14 thousand tons per year.

Consumption is expected to decrease slightly in both years (-0.4 per cent and - 1.0 per cent respectively). Pigmeat prices are likely to remain at elevated levels throughout 2012.

Although feed costs are also high (especially for soya), producer margins are stable and above the average of the last five years.