The EU meat sector is expected to be supported by strong demand on the world market driven by favourable economic conditions. In Europe, prospects of improved economic growth should leave consumers with more disposable income allowing for a higher consumption of meat products.

In 2012, unfavourable weather in several parts of the world (drought in the US, Black Sea region and Eastern Europe) drove up grain, and consequently feed prices, which affected meat production and put pressure on margins despite meat prices reaching historical highs worldwide in 2012 and 2013.

In the current outlook, feed prices are expected to remain relatively high throughout the projection period, though significantly below 2012 levels. Projected meat prices are also to remain firm due to strong world demand and limited supply response.

Figure 1. Total meat consumption in retail weight (kg per capita)

EU meat demand: poultry meat to grow the fastest but at a slower pace than previously

Lower availabilities, higher meat prices and the ongoing economic downturn with high unemployment rates especially in the southern European countries meant that overall meat consumption contracted in 2012 and 2013 (-1.5 per cent from 2011), reaching its lowest level for the past 11 years (64.7kg per capita)⁵ in 2013, as consumers turned to cheaper meats and cuts.

⁵ Consumption per capita is measured in retail weight. Coefficients to convert the carcass weight into retail weight are 0.7 for beef and veal, 0.78 for pig meat and 0.88 for poultry and sheep meat.

Consumption is expected to recover from 2014 as more meat comes in onto the market. By the end of the projection period, per-capita consumption is expected to reach 66.1 kg, similar to the 2011 level (Figure 1). The recovery is moderate because more people are changing their food habits towards more fish and/or ’less meat’ in their diets.

Individuals typically consume around 10kg more meat in the EU-15 than in the EU-N13 but this gap is expected to narrow slightly in the next few years, due mainly to faster growing poultry meat consumption in the new Member States. Current EU-15 and EU-N13 per capita consumption levels of pork, poultry and sheep meat are quite similar, but individuals in the EU-15 tend to eat far more beef: about 12kg as against 4kg in the EU-N13.

Figure 2. EU meat consumption in 2023 as compared with 2010-12 average (%)

Over the projection period, poultry meat is expected to remain the most dynamic product (thanks to its price, convenience and health considerations) and partially compensate for falling beef and sheep meat consumption. Poultry consumption is expected to increase both as a proportion of total meat consumption and in absolute terms (Figure 2). Pork will remain Europe's favourite meat, while the consumption of beef and sheep meat is projected to drop in both in absolute and relative terms.

Poultry Meat

Recent developments

Poultry meat has partly made up for the reduced availability of beef and pig meat. Thanks to short rearing times and the fact that it is relatively easy to invest in the sector, poultry meat production has maintained its recent steady upward trend, though at a slower rate than before. Again, higher feed costs and the economic environment had a significant impact, reflected in slower growth in 2011-13.

In a context of growing world demand, EU exports grew substantially in 2010 (+24 per cent) and 2011 (+12 per cent). Nevertheless, respective export growth was much weaker in 2012 (+2 per cent) and 2013 (+1 per cent), as strong demand in some African countries (mainly South Africa and Benin) and the Middle East (Saudi Arabia) was offset by fewer shipments to Hong Kong and Russia (Graph 3.10). Lower export refunds in October 2012 and their complete removal in January 2013 for chicks and in July for frozen poultry carcasses seem not to have had a noticeable effect on exports.

2012 imports remained rather stable at around the same level as in the previous year, but increased by 3.4 per cent in 2013 in response to firm growth in domestic consumption. Higher imports from Thailand (for which a quota for salted raw poultry meat was opened in July 2012) compensated for the shortage of supply from Brazil - a result of production constraints and exporters focusing more on Asian markets).

Cautious spending in an uncertain economic environment saw consumption slowing down in 2011 and 2013 (unlike 2012, when consumption of other meat fell sharply). Per-capita consumption in both the EU-N13 and EU-15 is around 20 to 21 kg.

Market outlook: filling the gap left by other meats

The increase in poultry production is expected to be hindered by feed costs staying relatively high though below the record 2011 and 2012 levels. Poultry meat will remain the most dynamic meat and expand at a rate of 0.8 per cent per year in 2012-23. By 2023, production is expected to reach 13.6 million tonnes (Figure 3).

According to current projections, the dynamic import demand in the Middle East (especially Saudi Arabia) and China is expected to continue and should boost EU exports to 1.4 million tonnes in 2023, which is 15 per cent above the 2010-12 average. Exports are expected to grow by 120,000 tonnes as compared to 2012, with greater demand also from South Africa and Ghana. On the other hand, projected production increases in Russia will lead to a contraction in import demand there. EU imports should fluctuate around the tariff rate quota level (around 800 000 tonnes).

Figure 3. EU poultry meat market developments (million tonnes)

Figure 4. EU poultry export developments ('000 tonnes)

In 2012 and 2013, poultry meat prices followed the same pattern as pig meat prices; after recording very high levels (€2,000 per tonne on average) in 2012 and during the summer months of 2013, they started to ease somewhat in the second half of the year as feed prices fell thanks to the availability of the new harvest.

As feed prices are projected to stay high over the outlook period (albeit below the record levels of previous years), and domestic and export demand is on the rise, poultry prices are expected to recover steadily from a drop in 2014, and exceed the 2012 high by the end of the projection period (Figure 5). Price path development may not be as smooth as depicted in the graph below.

Figure 5. Projected price and possible price paths for EU poultry meat (€/tonne)

Further Reading

You can view the full report by clicking here.

January 2014