The report from the US Department of Agriculture also argues that while strong internal and export demand fuelled increased poultry output in Europe during 2008, the economic recession is expected to keep broiler production growth to less than 1% in 2009. The EU-27 region also regained a positive trade balance in chicken meat after exports climbed by 16% last year, said the US Government.
Exports are forecast to remain stable this year but demand could be affected by the impact of the financial crisis on key markets such as Saudi Arabia and Ukraine, as well as forthcoming moves by Russia on the possible banning of poultry imports treated with Pathogen Reduction Treatments (PRT).

Consumption

Overall EU consumption grew in 2008 – despite rising feed costs – and is expected to increase further in 2009. However, the exception to this was the UK, which saw consumption fall after average price hikes of 9%, said the report. It added that consumption of chicken meat should increase in Europe due to poultry being a low-cost source of protein and because of the growing EU-27 Muslim population.
“Even if total meat consumption is forecast to fall due to the financial slowdown, chicken meat is often a replacement for more expensive red meat.  Processors and consumers are expected to increase demand for chicken meat as a partial substitution for beef,” said one expert.
Figures from France for 2008 showed that while overall chicken meat consumption went up, household purchases fell – particularly in the costlier free-range sector of the market. However, these were more than off-set by the increase in purchases from the hotel, restaurant and institution (HRI) sector.

Impact from Financial Crisis

Unsurprisingly, the economic downturn has had a number of effects on meat consumption in Europe. EU meat consumption has been hit by the economic downturn with consumers abandoning higher priced meat in favour of poultry meat, the US analysts said.
Broiler prices in the EU remained above 2007 levels until September 2008 but since then have fallen slightly as the recession made itself felt, said the experts. But falling feed costs began to  improve margins by the end of 2008. EU production expectations for broilers in 2009 are flat as the economic crisis continues

Production

EU broiler production grew in 2008 thanks to strong internal and export demand. However, the global economic downturn is expected to curb 2009 broiler growth to below 1%.
EU broiler meat output varied between member states:
German production grew thanks to a successful marketing campaign for domestically produced birds and an increased slaughter capacity within the industry.
French broiler production grew by 1%, driven by surging export demand which compensated for sluggish exports within EU states. However, US analysts forecast that broiler output in  France is likely to fall as demand decreases. Slaughter data for November and December 2008 show a notable year-on-year decrease of 5%, following on from several months of growth. The increase in broiler chicks stabilized at the end of 2008, as producers lowered their production expectations, said the US experts.
Italy – returning consumer confidence in poultry following bird flu outbreaks plus the attractiveness of chicken as a lower cost meat fuelled increases in output. A government sponsored initiative to support domestically produced animals also contributed. Additionally, the Italian Ministry of Health will require a labeling system that distinguishes Italian origin poultry from imports.
The Benelux countries saw prices increase close to record levels, not seen since the 1997 BSE crisis. This price recovery was a result of low commercial stocks following on from AI outbreaks and because of recent EU enlargement, where EU-produced broilers were seen replacing US imports, particularly in Romania and Bulgaria.
“As a consequence of these elevated prices, the average poultry farmer benefited from good profit margins, despite the high feed costs”, said a US analyst.
He added that the Benelux broiler industry peaked in 2008 and this year’s domestic output is expected to fall – based on deteriorating export demand and the expectation that feed prices will not drop below 2007 levels.

EU Broiler Trade

The EU became a net exporter of broiler meat in 2008 and this positive trade balance is expected to continue in 2009.

Imports

EU-27 broiler imports grew in 2008, though at a slower rate  than in 2007. They are forecast to stabilize in 2009, limited by a tariff rate quota and potential slow growth in demand. Traditional exporters of chicken meat into the EU, like Thailand and Brazil, had mixed results in 2008. Brazil filled its 2007/2008 tariff rate quota (TRQ) for broiler meat but saw exports decline in the second half of the year (2008/09 TRQ).
Thai poultry exports to the EU, which are limited to cooked, processed products due to HPAI concerns, grew significantly to 179,000 MT in 2008 fuelled by the demand from the EU-27 processing industry. Chile entered the import picture in 2008 as the development of its poultry industry led to an almost doubling of European chicken meat imports, with frozen chicken breasts and salted chicken cuts making up the vast majority of these.

Exports

EU-37 chicken meat exports jumped by 16% in 2008 after the complete lifting of all sanitary barriers by importers of EU product – with Russia, Saudi Arabia and Ukraine as the major markets. Exports to Vietnam surged by more than 300% and intra EU shipments to Romania and to a lesser extent Bulgaria also increased. Prospects for 2009 remain mixed with the financial crisis looming large in any forecast.
The US Government analysts said the EU could benefit indirectly if a Russian PRT ban scheduled for implementation this year sees the likely fall off in US poultry imports.
“However, exports to African countries and Ukraine are likely to decrease unless the EU increases its export restitutions,” they said.

EU Member Overview on Exports

France

France has a negative intra-EU trade balance in poultry meat, importing three times more than it exports  – for both processing and HRI sectors.  Exports to the UK fell by a third in 2008. However, France is still the largest EU exporter to third countries, with exports of whole frozen chickens to Saudi Arabia and Yemen.

The US report revealed: “France regained some market share previously lost to Brazil thanks to exports restitutions and a better match to market requirements. French exports of parts and processed chicken meat to Russia, increased significantly in 2008.”

United Kingdom

The UK remains a significant importer of poultry cuts, particularly white meat from Brazil and Thailand.  Following bird flu outbreaks in early 2008 which blocked trade, the UK regained a number of third country markets in November.  Intra-EU exports resumed on July 8, 2008 under separate EU rules on avian influenza.

Germany

Brazil and Thailand continue to be the main extra-EU suppliers for Germany.  However, Brazil is exporting less salted and more standard broiler meat. Russia continues to be the main destination for German poultry meat exports, followed by the Ukraine. Exports to both destinations increased in 2008 and are expected to be stable in 2009.

Overall EU Exports to Russia

EU broiler exports to Russia in 2008 increased to 144,000 MT. However, Russia has decreased its import quota for EU poultry for 2009 from 244,400MT in 2008 to 185,800MT – a decrease of 24 percent. This is likely to limit the room for an increase in EU exports to Russia. Furthermore, it is unclear to what extent poultry exports to  will be affected by the Russian delisting of several EU poultry plants in 2008 for not complying with Russia’s sanitary regulations, including alleged violations of stringent Russian residue limits.
However, the EU, along with Brazil, may try to benefit from the potential Russian ban on poultry treated with PRTs scheduled to be implemented sometime in 2009 and other sanitary issues between the United States and Russia.