The latest Short-term Outlook from the European Commission projects a very small decline in EU pork production in 2016, while Europe’s beef production is expected to continue the rebound that began in 2014.
EU sow inventory was down 2 percent in the December 2015 survey, a decrease of about 200,000 head compared to 2014. Piglets, which will be slaughtered in the first half of this year, were still up 1 percent, so only a slight decline (-0.3 percent) in pork production is expected this year, to 23.279 million metric tons (mt). This follows a 3.6 percent increase in production in 2015, with the largest increase coming from Spain (+276,000 mt). But production was also up significantly in Germany, the Netherlands, the United Kingdom, Poland and Hungary.
It is important to note that 90 percent of the increase has been in the more developed countries (EU-15) where, with low feed costs, producers have attempted to cover recent investments by increasing production to compensate for low pig prices.
The growth in EU exports in 2015 (up 9 percent year-over-year) was driven largely by demand from China, the weak euro and abundant EU supplies. Further expansion of EU exports is projected this year, though at a lower rate of growth – up 3 percent to 2.136 million mt (carcass weight). The Outlook report assumes Russia’s ban on EU pork will continue, and notes that the market would not take the same volumes previously imported even if it does reopen.
To put the 820,000 mt increase in EU pork production in 2015 in perspective, 18 percent went into the private storage aid schemes (March 2015 and Jan 2016), 20 percent went to the increase in exports and the remainder was put on the EU market (see charts). This translated into a 1 kg increase in EU per capita consumption (to 32.5 kg, the highest since 2008). Given the stabilization of production, and continued growth in exports, consumption is expected to decrease slightly in 2016.
After years of decline, the EU beef cow herd increased in 2015 and is projected to increase again in 2016. Growth is led by Poland, but numbers are also increasing in Spain, France, Hungary, the Baltic States and the Czech Republic. The dairy herd is adjusting to the abolishment of milk quotas in April 2015 and at the same time, low global dairy prices. So in 2015 there was a significant increase in dairy cow and heifer slaughter across the EU, especially among new EU member states. But those increases were partly offset by female retention in Denmark, Ireland, the Netherlands and the United Kingdom.
Poland (+60,000 mt or 14 percent) and Spain (+58,000 mt or 10 percent) saw the biggest increases in beef production in 2015, with the EU total up 2.2 percent to 7.719 million mt. Production is expected to increase by another 2 percent in 2016, to 7.876 million mt, reflecting growth in the beef herd and some continued female slaughter as the dairy sector continues to adjust.
With only a slight increase in beef muscle cut exports in 2015 and a 2.5 percent decline in beef imports, EU per capita consumption increased by nearly 2 percent to 10.7 kg, recovering to 2012 levels. Given the continued growth in production, beef consumption is expected to increase again this year to 10.9 kg, (+1.6 percent and the highest since 2011). Imports are expected to increase by 1.5 percent to 304,000 mt, while exports increase by 5 percent to 217,000 mt (carcass weight).