On the pig feed side, after two years of moderate growth, the production decreased by 1% in 2016. This partly can be explained by the effects of African Swine Fever in Eastern Europe, which weighed heavily on the development of pigmeat production, but also by low market prices for pigmeat in the first half of 2016 and large availability of feed grade cereals at low prices, which benefitted on-farm mixing.
The picture is extremely contrasted throughout Europe for cattle feed. The Netherlands and Poland have seen their production of cattle feed increase by more than 8%, whereas France moved in the opposite direction, reflecting the diverging national milk production following the abolishment of dairy quotas, FEFAC said.
Finally, despite the avian influenza (AI) outbreak impacting several poultry producing regions of Europe, poultry feed production performed rather well in 2016 and confirmed its position of leading segment of E.U. industrial compound feed production, well ahead of pig feed.
FEFAC noted that for the third year in a row, Poland was one of the best performing countries, with annual growth of +4.7%, boosted by the demand for poultry feed (+6%), which has turned Poland into the largest poultry producing country in the E.U., but also a +8% in cattle feed. Among the other large E.U. producing countries, Italy, the Netherlands and Spain recorded positive results (+1.0/1.5%), whereby Germany remained stable. France has seen its production fall by 3% to 4% in all segments, these changes being due either to the shrinking of dairy production after the withdrawal of the dairy quotas or the impact of AI in the South of France in particular.
However, France remains in third position in terms of total compound feed production, although the gap with the second, Spain, has widened significantly. Germany remains the leading country.
FEFAC market experts are relatively prudent concerning industrial compound feed production in 2017. The dairy sector still needs to recover from the severe milk price crisis, thereby likely negatively impacting the dairy herd in 2017, while also national adjustments to meet environmental criteria play a role. These developments may lead to a reduction of cattle feed production by 0.5%. The expected stabilization of pigmeat production in Europe could induce a moderate reduction in demand for pig feed (-1%). Poultry exports will continue to be affected by AI, thus putting pressure on E.U. poultry production and subsequently the feed segment (+0%). Overall, this would lead to a 0.5% decrease in compound feed production in 2017 versus 2016.
A number of parameters will evidently affect this outlook, FEFAC said. The evolution of outbreaks of AI and African Swine Fever will be decisive, in particular in terms of E.U. export capacities preservation.