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EU. Compound feed production down 4.5% in 2009
09.04.2010 15:45 "Agro Perspectiva" (Kyiv) —
The European Compound Feed Manufacturers’ Federation (FEFAC) announced on April 7 that compound feed production in the European Union (E.U.) dropped 4.5% in 2009, and industry experts are forecasting a fragile recovery for 2010.
The E.U.-27 produced 144 million tonnes of ompound feed in 2009 compared to 150.6 million tonnes in 2008. According to FEFAC, 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%). FEFAC said these provisional results are perfectly in line with the federation’s forecast from April 2009, which tabled on a 5% decrease for 2009.
Four key factors have weighed on the E.U. 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 third and fourth 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; and
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.
FEFAC experts identified as key drivers for the compound feed market in 2010 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 E.U. cereals harvest 2010 indicate relatively low price quotes 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, according to FEFAC. As a consequence, FEFAC experts are forecasting further reductions in cattle feed production (-1%), a stabilization 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, according to FEFAC.
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