FEFAC reports record growth in EU compound feed
In 2007, the compound feed production for the EU-27 according to Fefac data, reached 149.8 million tonnes, which is 3.4% higher than the figure for 2006. This is the highest annual growth rate registered in almost 20 years.
The key factor that influenced the compound feed market was the dramatic price increase for all key feed materials, with two main consequences:
1) the high cereal prices encouraged farmers to put their cereals on the market rather than using them on the farm and
2) livestock producers facing a huge increase in feed costs - which they could not pass on to consumers of animal products - turned to use the most efficient feed, i.e. industrial compound feed.
This was in particular the case in the pig sector and, which explains the 3.6% increase in pig feed production for 2007 on an EU-basis. All EU-15 member states experienced growth in pig feed production, although on different scales (from +0.3 and +0.7% resp. for Denmark and Spain up to +8 and +11% for resp. Germany and Austria).
In poultry feed the market share of industrial compound feed vs. home mixing is much higher than in pig feed. This explains why the evolution of compound feed production is more closely related to the development of poultry meat an egg production.
In this sense, the increase in poultry feed production is largely influenced by the recovery of poultry consumption in countries such as France and Italy which were seriously affected by the Avian influenza crisis. These two countries with resp. +3.4 and +4.2% however recovered only half the tonnage they lost in 2006 compared to 2005. France is still by far the leading producing country for poultry feed.
The most significant increase is for cattle feed with +5.3%, but as for poultry, 2006 was a "bad year" for industrial cattle feed production. For some countries, this increase may be explained by the high feed material prices, which traditionally leads cattle farmers to preferably buy more compound feed rather than straight feedstuffs.
As in 2006 Ireland showed in 2007 the opposite of other countries with a -11% which follows a +16% in 2006 (vs. 2005). The disappointing results in 2007 may be explained to some extent by the impossibility to import corn gluten feed form the USA due to the zero tolerance policy in the EU regarding not approved GMO contents.
Total compound production in the EU is actual 1.5 million tonnes higher if the feeds produced in Luxembourg, Malta and Greece are added to total volume, and thus reached 151.3 million tonnes.
According to Fefac experts, the following factors are expected to influence the development of compound feed production in 2008:
· Feed material prices: as in 2007 prices of feed materials are expected to remain at a high level. EU livestock farmers, in particular pig producers, can no longer support a +50% production cost increase and need to pass it on to consumers, otherwise we must fear that a significant number of pig holdings will close in 2008.
· The reduction in pig production: in 2007 pig meat production reached the top of the cycle and the production in 2008 is expected to decrease, hence a likely reduction in the feed demand.
· The 2% increase in dairy quotas for 2008/09 should in principle result in a higher demand for feed and especially compound feed, as dairy farmers may not have had time to adapt and increase the number of animals; therefore the only solution for them to increase their production could well be to increase animal yields.
As a consequence the Fefac experts foresee for 2008 a +1% and +2% increase resp. For cattle and poultry feed and a reduction of pig feed by 1-2%, hence a total stagnation of compound feed production.
The key factor that influenced the compound feed market was the dramatic price increase for all key feed materials, with two main consequences:
1) the high cereal prices encouraged farmers to put their cereals on the market rather than using them on the farm and
2) livestock producers facing a huge increase in feed costs - which they could not pass on to consumers of animal products - turned to use the most efficient feed, i.e. industrial compound feed.
This was in particular the case in the pig sector and, which explains the 3.6% increase in pig feed production for 2007 on an EU-basis. All EU-15 member states experienced growth in pig feed production, although on different scales (from +0.3 and +0.7% resp. for Denmark and Spain up to +8 and +11% for resp. Germany and Austria).
In poultry feed the market share of industrial compound feed vs. home mixing is much higher than in pig feed. This explains why the evolution of compound feed production is more closely related to the development of poultry meat an egg production.
In this sense, the increase in poultry feed production is largely influenced by the recovery of poultry consumption in countries such as France and Italy which were seriously affected by the Avian influenza crisis. These two countries with resp. +3.4 and +4.2% however recovered only half the tonnage they lost in 2006 compared to 2005. France is still by far the leading producing country for poultry feed.
The most significant increase is for cattle feed with +5.3%, but as for poultry, 2006 was a "bad year" for industrial cattle feed production. For some countries, this increase may be explained by the high feed material prices, which traditionally leads cattle farmers to preferably buy more compound feed rather than straight feedstuffs.
As in 2006 Ireland showed in 2007 the opposite of other countries with a -11% which follows a +16% in 2006 (vs. 2005). The disappointing results in 2007 may be explained to some extent by the impossibility to import corn gluten feed form the USA due to the zero tolerance policy in the EU regarding not approved GMO contents.
Total compound production in the EU is actual 1.5 million tonnes higher if the feeds produced in Luxembourg, Malta and Greece are added to total volume, and thus reached 151.3 million tonnes.
According to Fefac experts, the following factors are expected to influence the development of compound feed production in 2008:
· Feed material prices: as in 2007 prices of feed materials are expected to remain at a high level. EU livestock farmers, in particular pig producers, can no longer support a +50% production cost increase and need to pass it on to consumers, otherwise we must fear that a significant number of pig holdings will close in 2008.
· The reduction in pig production: in 2007 pig meat production reached the top of the cycle and the production in 2008 is expected to decrease, hence a likely reduction in the feed demand.
· The 2% increase in dairy quotas for 2008/09 should in principle result in a higher demand for feed and especially compound feed, as dairy farmers may not have had time to adapt and increase the number of animals; therefore the only solution for them to increase their production could well be to increase animal yields.
As a consequence the Fefac experts foresee for 2008 a +1% and +2% increase resp. For cattle and poultry feed and a reduction of pig feed by 1-2%, hence a total stagnation of compound feed production.
