The European Commission published its “Prospects for EU agricultural markets and income 2015-2025” in the middle of December. It visualises market difficulties in all commodities over the next few years, and modest recovery and relative stability after 2020.


There are 23.3m dairy cows in the EU and the demand for dairy products is forecast to continue rising and expected to support an increase in production of close to 1% per year to 164m tonnes in 2025. However, this growth in production is expected to be delivered with greater productivity per cow and in fact projections suggest there will be up to 2m less cows in the EU by 2025 with numbers forecast to be 21.5m.

The EU’s share of world exports should grow slightly, thanks to its considerable potential to increase production, unlike the main competitor, New Zealand. Dairy will continue to be one of the less traded commodities with only 7.5% of dairy production forecast to be traded in 2025. Price is believed to have bottomed this year at €304/t, with modest recovery to €327/t by 2020 and stronger growth thereafter with an expected value of €327/t by 2020 and stronger growth thereafter with an expected value of €374/t in 2025 which returns dairy prices to 2014 levels.


In terms of specialist beef production, the EU suckler herd is forecast to hover around 12m throughout the next decade, so combined with reduction in dairy cows, the EU will produce less beef in 2025 than it does now. The current deficit in EU beef production compared with consumption, currently running at 80,000t per annum is forecast to increase to 146,000t per annum in 2025. That means that the EU will continue to be a net importer of beef for the next decade. This doesn’t reflect the huge trade that takes place in beef, with the beef carcase production a multitude of component parts, many of which are worth more outside the EU, particularly the lower value offal and by products. The EU is a particularly strong market for the high value steak cuts and therefore is a sought-after market by all major beef producers.

Worryingly, the EU report forecasts an overall decline in EU beef value in the coming years from an average €3,770/t in 2015 to €3,219/t in 2019. It is then predicated that there will be small annual increases to an average value of €3,468 in 2025, still almost €300/t below present values. At a global level, with Brazil used as the base price, prices are forecast to fall even more dramatically in the next few years from a present level of €2,681/t to €1,851/t in 2020 before modest recovery in the remainder of the decade to €2,097/t by 2025.


For sheep producers, production across the EU is forecast to remain stable over the next decade at around 930,000t. With total consumption forecast to grow marginally by 30,000kg over the next decade, the EU will continue to have a deficit of production compared with consumption which will reach 180,000t by 2025. The big supplier to the EU historically has been New Zealand but with increased value in Asian and Chinese markets, NZ has been doing less business with the EU, failing to fill its import quota in recent times.

Sheep meat continues to be Europe’s most expensive protein with a value of €5,350/t calculated for 2015. As with the other commodities, prices are forecast to fall over the coming years to €4,642/t in 2019, then recovering annually to a forecast value of €5,076/t by 2025. Global values are expected to fall from €3,889/t in 2015 to €3,184/t by 2019 then recovering annually to €3,479/t by 2025.


It is important to approach all forecasts with a great deal of caution as several assumptions are made in trying to read future market and production trends. These positions are taken with the best information that is available at present – outcomes will change over the years as circumstances and events change. It is the same as weather forecasting – we can use numbers of livestock in the system at present to take a view on the next year or so with some accuracy, but long-term forecasts are subject to influence by things not yet thought of. This report doesn’t consider trade deals, so discussions with the US on TTIP or Mercosur haven’t been factored in, which will alter markets dramatically if they take place. Similarly global weather events can impact supply in a way that hasn’t happened recently. A bad harvest can reduce grain supply which in turn will drive energy prices upwards.

Irrespective of what might happen, it is clear that the indicators don’t point to a magic bullet in the marketplace for Irish farmers trading a commodity product. The challenge to our industry is can we add value to reflect the unique combination at a global level of: grazed grass production, complete traceability, carbon footprint measurement, the highest levels of animal welfare and environmental controls to reposition Irish beef in a new higher-value market??