The EU Outlook report for the next decade was published to coincide with the second day of the Outlook Conference in Brussels this week. It is published jointly by DG Agri and the Joint Research Council, the research service organisation to the Commission.
As with any 10-year forecast, there has to be a note of caution. It is made on assumptions and knowledge that is in place today and which it's presumed will continue for the next decade uninterrupted, which is extremely unlikely.
The greatest turbulence in agriculture is caused by extreme events, whether disease in livestock or exceptional weather conditions. These events disrupt production and can create either extreme surplus, as has been the case with exceptional arable harvests in recent years or indeed scarcity if a disease outbreak was to lead to a major cull of livestock.
With the assumption that these influences will remain normal over the next decade, let us consider the forecast for the major agri-food sectors over the next decade.
Meat sector
The report considers the prospects for the main meats produced in the EU – beef, sheepmeat, pigmeat and poultry. Overall population and income growth globally are expected to create higher demand, estimated at 13.5% or almost 43m tonnes over the next decade. Growth is not expected to be equally divided across the sectors, however, with poultry predicted to grow by 5%, with EU exports forecast to reach 1.7m tonnes by 2026, a growth of 15%.
Interestingly, prices are expected to remain under pressure, assuming grain prices stay around current levels and are unlikely to reach the levels achieved between 2011 and 2015, which makes poultry meat the least expensive protein.
Pigmeat
Pigmeat experienced strong growth in production between 2011 and 2015, when prices collapsed across the world. They have recovered somewhat this year and production is expected to grow only slightly over the next decade (just over 1%) though weak domestic consumption in the EU is expected to lead to a growth in exports.
Beef
In the beef sector, developments in the dairy sector will have greatest impact as 70% of cows in the EU are kept primarily for milk production.
Suckler cow numbers are expected to fall by 1m in the EU 15 countries to 10.5m by 2026 but increase in the EU-N13 countries by 850,000 to 1.2m, leaving a total EU suckler cow population of 11.7m by 2026.
While beef production is expected to show an increase in 2016 and 2017, longer-term decline is expected after that, with 7.5m tonnes of beef forecast to be produced in 2026. EU per-capita consumption is currently around 11kg per person and is forecast to fall to 10.2kg per person by 2026. There will still be a huge difference between the EU 15 (11.8kg per person) and the EU-N13 (3.7kg per person).
Prices, currently on average around €3.75/kg in the EU, are predicted to remain under pressure over the next year, coinciding with increased production, falling perhaps as low as €3.30/kg late next year. However, after that it is thought with production going into gradual decline, prices might recover. As a measure of the unpredictability of the beef market, two forecasts are provided for the 2017-2026 period. The pessimistic one shows average EU prices falling as low as €2.60/kg, whereas the optimistic version suggests almost €4.00/kg. The 2016 range predicted is between €3.00/kg and €5.00/kg, so wide as to be effectively meaningless.
Sheepmeat
After years of decline, the December 2015 EU census revealed a growth in the sheep flock of 1m to 72m, with growth predominantly taking place in Spain and the UK. Relative profitability and coupled support in some member states are thought to be the drivers of this and production is expected to remain stable over the next decade. Consumption of sheepmeat is low in the EU at 2kg per person and is expected to remain stable throughout the decade; though a growing Muslim population could drive that further.
Most valuable protein
Sheepmeat is currently the most valuable protein at the farm gate and the report is forecasting that it will be somewhere in the €4.00/kg to €6.00/kg over the next decade. Market growth beyond the EU is limited as Australian and New Zealand supplies are expected to recover after recent drought and EU prices are ahead of the world market because of tariff protection.
Part two will cover dairy and arable forecasts.
The EU Outlook report for the next decade was published to coincide with the second day of the Outlook Conference in Brussels this week. It is published jointly by DG Agri and the Joint Research Council, the research service organisation to the Commission.
As with any 10-year forecast, there has to be a note of caution. It is made on assumptions and knowledge that is in place today and which it's presumed will continue for the next decade uninterrupted, which is extremely unlikely.
The greatest turbulence in agriculture is caused by extreme events, whether disease in livestock or exceptional weather conditions. These events disrupt production and can create either extreme surplus, as has been the case with exceptional arable harvests in recent years or indeed scarcity if a disease outbreak was to lead to a major cull of livestock.
With the assumption that these influences will remain normal over the next decade, let us consider the forecast for the major agri-food sectors over the next decade.
Meat sector
The report considers the prospects for the main meats produced in the EU – beef, sheepmeat, pigmeat and poultry. Overall population and income growth globally are expected to create higher demand, estimated at 13.5% or almost 43m tonnes over the next decade. Growth is not expected to be equally divided across the sectors, however, with poultry predicted to grow by 5%, with EU exports forecast to reach 1.7m tonnes by 2026, a growth of 15%.
Interestingly, prices are expected to remain under pressure, assuming grain prices stay around current levels and are unlikely to reach the levels achieved between 2011 and 2015, which makes poultry meat the least expensive protein.
Pigmeat
Pigmeat experienced strong growth in production between 2011 and 2015, when prices collapsed across the world. They have recovered somewhat this year and production is expected to grow only slightly over the next decade (just over 1%) though weak domestic consumption in the EU is expected to lead to a growth in exports.
Beef
In the beef sector, developments in the dairy sector will have greatest impact as 70% of cows in the EU are kept primarily for milk production.
Suckler cow numbers are expected to fall by 1m in the EU 15 countries to 10.5m by 2026 but increase in the EU-N13 countries by 850,000 to 1.2m, leaving a total EU suckler cow population of 11.7m by 2026.
While beef production is expected to show an increase in 2016 and 2017, longer-term decline is expected after that, with 7.5m tonnes of beef forecast to be produced in 2026. EU per-capita consumption is currently around 11kg per person and is forecast to fall to 10.2kg per person by 2026. There will still be a huge difference between the EU 15 (11.8kg per person) and the EU-N13 (3.7kg per person).
Prices, currently on average around €3.75/kg in the EU, are predicted to remain under pressure over the next year, coinciding with increased production, falling perhaps as low as €3.30/kg late next year. However, after that it is thought with production going into gradual decline, prices might recover. As a measure of the unpredictability of the beef market, two forecasts are provided for the 2017-2026 period. The pessimistic one shows average EU prices falling as low as €2.60/kg, whereas the optimistic version suggests almost €4.00/kg. The 2016 range predicted is between €3.00/kg and €5.00/kg, so wide as to be effectively meaningless.
Sheepmeat
After years of decline, the December 2015 EU census revealed a growth in the sheep flock of 1m to 72m, with growth predominantly taking place in Spain and the UK. Relative profitability and coupled support in some member states are thought to be the drivers of this and production is expected to remain stable over the next decade. Consumption of sheepmeat is low in the EU at 2kg per person and is expected to remain stable throughout the decade; though a growing Muslim population could drive that further.
Most valuable protein
Sheepmeat is currently the most valuable protein at the farm gate and the report is forecasting that it will be somewhere in the €4.00/kg to €6.00/kg over the next decade. Market growth beyond the EU is limited as Australian and New Zealand supplies are expected to recover after recent drought and EU prices are ahead of the world market because of tariff protection.
Part two will cover dairy and arable forecasts.
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