EU Compound Feed Down in 2009; Fragile Recovery Predicted
In 2009, the European federation of feed manufacturers, FEFAC, estimates the compound feed production for the EU-27 at 144 million tonnes (mt), i.e. 4.5% below the figure for 2008 (150.6 mt). The significant downturn has affected all animal species, in particular cattle feed (around -8%), pig feed (-6%) and, to a lesser extent poultry feed (-1%). These provisional results are in line with the FEFAC expert forecast from April last year, which tprojected a 5% decrease for 2009.
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 3rd and 4th quarter;
- 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;
- 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.
Outlook for 2010
For 2010, FEFAC experts identified 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 a further reduction in cattle feed production (-1%), a stabilisation of pig feed and a slight increase in poultry feed production (+2%). Overall, compound feed production may remain at the low 2009 output level with a risk of a further slight decrease.
FEFAC, the European Compound Feed Manufacturers’ Federation, represents 21 national Associations in 20 EU Member States as well as Associations in Switzerland, Turkey, Croatia, Serbia and Norway with observer/associate member status. The European compound feed industry employs over 110,000 persons on app. 4,500 production sites often in rural areas, which offer few employment opportunities.
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Farm animals in the EU-27 consume an estimated 470 million tonnes of feed a year, of which app. 30% are produced by the compound feed manufacturers. Turnover of the European compound feed industry was estimated at € 40 billion for 2009.
