FEFAC noted that the most important factors that weighed on the E.U. feed demand in 2011 were the still fragile economic situation of the pig sector and the high feed material costs. As for ruminants, the severe drought on the first months led to a lower forage harvest during the spring cut, but this was offset by the good autumnal weather conditions that favored grass growth.
E.U. member countries recorded very heterogeneous performances, with some experiencing dramatic falls of their compound feed production such as Czech Republic (-14%) or Denmark (-6.6%), whereas several countries such as Germany, Poland and, to a lesser extent, Italy, managed to buck the general market trend with positive growth around 3%, supported by a surprisingly quick recovery of pig farming activity.
FEFAC said the high cereal prices over the last two years contributed to improve the competitive market position of industrial compound feed production versus home mixing. However, this gain was offset to a certain extent by the development of alternative pig feeding strategies based on roughly grinded feed and liquid feeding.
As a result, Germany’s position as the leading E.U. country in terms of total compound feed production before France was strengthened, with Spain ranking third.
FEFAC experts identified the following key drivers for the compound feed market in 2012:
• On the livestock sector side, the entry into application of the new cages standard for laying hens from Jan. 1, 2012 and the new group-housing requirements for sows, which may lead to a significant reduction in young sows replacement in certain producer regions; the development of the Schmallenberg virus in ruminant populations may also weigh on the demand;
• On the feed demand side, the high quotations for all feed materials, whether energy sources like cereals or protein sources like soybean meal, due to high Chinese demand and seasonal drought in South America, will further affect the profitability of the livestock industry, in particular the pig farmers;
• On the supply side, the persisting problems on the trade of maize co-products (DDGS, Corn gluten feed) linked to asynchronous approval of not yet authorized GM events, despite the adoption of the technical solution last year.
As a consequence, FEFAC experts foresee a stabilization in cattle feed production, a slight increase in poultry feed demand (+1%) offset by a reduction in the demand for layer feeds (-5%) and a further setback in pig feed production (-0.5%). Overall, compound feed production is expected to remain stable vs. 2011.