The International Meat Trade

The international meat trade The international meat trade Jennifer Spencer Wo o d h e a d p u b l i s h i n g l i m i...

Author: Jennifer Spencer

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The international meat trade

The international meat trade Jennifer Spencer

Wo o d h e a d p u b l i s h i n g l i m i t e d Cambridge, England

Published by Woodhead Publishing Limited, Abington Hall, Abington Cambridge CB1 6AH, England www.woodhead-publishing.com First published 2003, Woodhead Publishing Ltd © 2003, Woodhead Publishing Ltd The author has asserted her moral rights. This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. Reasonable efforts have been made to publish reliable data and information, but the author and the publisher cannot assume responsibility for the validity of all materials. Neither the author nor the publisher, nor anyone else associated with this publication, shall be liable for any loss, damage or liability directly or indirectly caused or alleged to be caused by this book. Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming and recording, or by any information storage or retrieval system, without permission in writing from the publisher. The consent of Woodhead Publishing Limited does not extend to copying for general distribution, for promotion, for creating new works, or for resale. Specific permission must be obtained in writing from Woodhead Publishing Limited for such copying. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation, without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. ISBN 1 85573 534 2 Typeset by SNP Best-set Typesetter Ltd., Hong Kong Printed by Astron On-Line, Cambridgeshire, England

Contents

Preface About the author Acknowledgements Notes on tables and sources List of tables List of figures List of abbreviations Index 1 1.1 1.2 1.3

Policy and support measures World Trade Organisation EU Mid-Term Review US Farm Bill

2 2.1 2.2 2.3 2.4

Production Beef Sheep meat Pig meat Poultry meat

3 3.1 3.2 3.3 3.4

Consumption Beef Sheep meat Pig meat Poultry meat

4 4.1 4.2 4.3 4.4

Exports Beef Sheep meat Pig meat Poultry meat

5 Imports 5.1 Beef 5.2 Sheep meat

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Contents / page i

Contents

5.3 Pig meat 5.4 Poultry meat 6 6.1 6.2 6.3 6.4

Prices Beef Sheep meat Pig meat Poultry meat

Appendices Appendix 1 Common Agricultural Policy Appendix 2 World Trade Organisation negotiations Appendix 3 Glossary of terms

Contents / page ii

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Preface

Despite the highly perishable nature of meat, it has a long history of trading across vast distances. The trade has its roots in the nineteenth century, when increasing industrialisation and sharp growth in population in the countries of Western Europe meant that problems of meat shortages and malnutrition were becoming commonplace. At the same time, in the sparsely populated, still predominantly pastoral countries of Australia, New Zealand, North and South America, there was the potential to produce plenty of meat. There was also a great need to gain some return from the vast tracts of land. For example, in 1880 there were 60 million sheep in Australia whereas the entire human population was only about two million. Although the wool had a value, the only way to dispose of surplus carcasses was to boil them down for tallow. The only problem was how to preserve the meat on its long journey across the world’s oceans. In the mid-1800s, Britain was importing some canned meat from these countries, but there was huge demand for fresh meat. Work started on developing effective refrigeration processes. After several failed attempts by various companies, in May 1877, the Frigorifique sailed from Buenos Aires to Rouen with a cargo of meat, some of which, though not all, was fit for human consumption at the end of the journey. A few months later, the Paraguay was fitted with improved freezing equipment and loaded with mutton in Buenos Aires. Seven months later the cargo was landed in France in perfect condition. In February 1880, after a journey of 64 days on board the Strathleven, a cargo of beef, mutton and lamb from Australia was unloaded in the port of London. On inspection, the meat was found to be ‘in a perfectly sound state, frozen quite hard’. It had been valued at 11/2–2d. a pound in Australia but was sold on London’s Smithfield market at 5–6d. a pound. The London Daily Telegraph reported ‘It has been tested by the ordinary methods of cooking and found to be in such good condition that neither by its appearance in the butchers’ shops, nor by any peculiarity of flavour when cooked for the table could it be distinguished from freshly-killed meat’.

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Preface / page i

Preface

Meat from New Zealand had to undergo an even longer and more difficult voyage. Nevertheless, the first consignment of 5000 mutton and lamb carcasses from New Zealand arrived in London in May 1882 after a journey of 98 days on board the Dunedin. The meat was still frozen hard when it was taken to Smithfield market the next day to be sold. In the following years, this new industry would develop rapidly. Many specialist meat plants were set up in these newly exporting countries to prepare and freeze meat ready for the long journeys, and their capacity to provide meat of an acceptable quality grew. Today, the value of the global meat trade annually can certainly be measured in billions. Nowadays, the various flows of the international meat trade are complex, with many more countries of the world participating in some way, often as both importer and exporter. Methods of cutting and keeping the meat in good condition have become more sophisticated. Exports of chilled meat have become more important, allowing a very high quality product to be traded, and a large proportion of meat is now boned before export. Australia, New Zealand and Argentina are still major producers and exporters of meat, benefiting from the abundance of land on which to raise the animals. Indeed, Australia is the world’s largest exporter of beef, although very little is now sent to Europe. Its major outlets are now other countries in the Pacific Rim, which nevertheless still require the meat to cover vast distances. New Zealand is the largest exporter of sheep meat, and has maintained strong links with Western Europe. The United Kingdom is still its major export market, 120 years after the Dunedin landed its cargo in London, although now an increasing proportion of the lamb sent is in chilled, rather than frozen, form. Australia is the only other country to export large quantities of sheep meat long distances, but in this case very little now comes to Europe. Argentina remains an exporter of beef but its internal economic problems and competition from other countries means that its significance has diminished in relation to the past. Other countries of South America instead have grown in importance. Most notable has been the rapid rise in Brazil’s exports since the mid-1990s, particularly as this has been in not just one sector but three: beef, pig meat and poultry meat. Now, however, North America and the European Union are the preeminent exporting regions of the world for beef, pig meat and poultry meat. This trade is helped by the use of export refunds or other export aid and so its continuation at the same level in coming years may depend on

Preface / page ii

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Preface

the outcome of the current international world trade talks. There is no doubt that Brazil plans to continue to increase its meat production potential, even if this means clearing vast tracts of rainforest. It may well in the next few years threaten to overtake North America and the European Union at the top of the exporting league. There is also large untapped production potential in China. If China was successful in improving animal husbandry, animal health and meat plant hygiene standards, it could emerge as another major world exporter of beef, pig meat and poultry meat in the near future. Of course, for every export transaction that takes place, there is also an import transaction. Again, certain countries dominate world import trade, reflecting mostly the preferences of their consumers and the shortfall in their own production ability. Most notable are the European Union for sheep meat, the United States for beef and Japan and Russia for beef, pig meat and poultry meat. The world market for sheep meat is, in fact, quite limited as many nations have no tradition of including it in their diet. Even in the EU there are only a handful of countries where it forms a significant proportion of overall meat consumption. Despite the enormous quantities of beef produced in the United States, the country still has a need to import a large quantity each year. This is partly because per capita consumption is amongst the highest in the world (it is higher only in Argentina) and partly because it needs to import a specific quality of product for its huge burger manufacturing industry. Japan and Russia have both emerged as significant importers, but for different reasons. In the case of Japan, the traditional diet has undergone a transition as its society has changed, and now includes a greater proportion of meat. Its large population relative to its land area has prevented this demand from being satisfied by its own production. In Russia, the collapse of the Communist regime, and, as a result, the staterun farms, severely limited its ability to feed its population. Therefore, during the 1990s it imported large quantities of meat at low prices, usually as part of food aid schemes, whenever these were made available. Meat is a high-value product, which means that countries that have built up their meat industry, either to feed their own population or to export, have often also sought to protect that industry. Many countries in the world, particularly often the largest and most powerful, have used various means to support local prices, promote exports and impede

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Preface / page iii

Preface

imports. As well as being expensive for governments to maintain, such practices can lead to distortions in trade. Levels of protection for producers and the implementation of trade barriers have declined somewhat since the mid-1980s. The most important development in recent years was the implementation of the GATT Uruguay Round Agreement on Agriculture in 1995, which committed member countries to specific reductions in support. In 2000, a new round of trade talks under the World Trade Organisation (WTO) got underway with the aim of furthering reductions in support and removing trade barriers. The outcome of these talks may not be applied in the meat sectors for several years but, nonetheless, whenever any new commitments are implemented, they are likely to lead to a change in trade patterns. This book seeks to describe the main trade patterns at the start of the twenty-first century with some description of developments in the previous few years by way of explanation for the current state of play. It starts by setting out the main policy and support arrangements in place and the moves to reduce these under the WTO. The following chapters then give an overview of the world’s meat industry: which countries are the largest producers and consumers, which are expanding their exports, where their main markets are and how prices compare between the different markets. All four main meats are examined in each chapter: beef, sheep meat, pig meat and poultry meat. Although there are sometimes connections between developments in the different meat sectors, this is not always the case and therefore each meat has been examined in turn. As many data as possible have been included in table format, in order to provide a reasonably comprehensive reference tool for those wishing to look more closely at the background. Many sources of information have been used to compile the data in this report. I would like to acknowledge the role that these played in being able to provide detail. All are valuable resources for those wishing to keep up-to-date with developments in the world meat trade.

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About the author

Jennifer Spencer has worked with the Meat and Livestock Commission (MLC) in Milton Keynes for nearly 25 years. From 1983 to 1988 she was their EEC Liaison Officer, dividing her time between the UK and Brussels and involved in assessing the impact of the Common Agricultural Policy on the meat industry. From 1988 to 1993 she was Principal Economist, writing extensively for in-house publications and trade journals. Since this time she has been the manager of the MLC’s Economics Services, transforming it from an industry-funded activity to one that is now run on a commercial basis. In this role Jennifer leads the development and operation of market information systems and has co-authored and edited numerous specialist reports on the UK and international meat industries.

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About the author

Acknowledgements

My thanks are due to Joanne Knowles, a Senior Market Analyst in the Economics Department of the Meat and Livestock Commission, who has written chapters 1 and 6. I would also like to acknowledge the contribution of other colleagues, whose work I have drawn upon in the compilation of this report: Judith Carrington, Lionel Colby, Jane Connor, Sue Fisher, Maria Heaney and Angharad Jones.

Acknowledgements

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Notes on tables and sources

The following notes apply to the presentation of the data in the tables: 1 Units of volume are generally shown as product weight (i.e. both bone-in and boneless). However, some tables specify that the volumes are shown as carcass weight equivalent (designated as cwe). 2 Production figures are generally shown as net. This refers to the meat produced from all animals slaughtered in the country concerned. Gross indigenous production (GIP) refers to the production potential of the animals reared in the country concerned and is calculated by taking net production, subtracting the meat equivalent of live imports and adding the meat equivalent of live exports. 3 The data have been compiled from a number of different sources. Therefore, while every attempt has been made to collect figures on the same or similar basis, there can be discrepancies when comparisons are made with specific figures. For example, it is noticeable that imports quoted by one country may not correspond exactly with exports to that country quoted by the exporting country. The tables in Chapter 2 in particular combine sources but nevertheless give a generally good overview of trends. 4 For 1990, figures for Germany exclude the former East Germany; for later years, figures relate to the united Germany. Similarly, for 1990, figures for Russia actually refer to the former Soviet Union; figures for later years refer to the Russian Federation. Finally, figures in this publication for the EU cover the 15 member states, including the countries of Austria, Sweden and Finland, except for 1990, when these three countries are excluded. 5 Amounts in tables for individual countries do not always add up to the totals shown because of rounding.

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Notes on tables and sources / page i

Notes on tables and sources

Sources A wide range of sources was used in the compilation of the data for this publication. Most of the sources listed below are periodicals or information services, which give various data series. They have been listed country by country for ease of reference, giving, firstly, the name of the publishing organisation and, secondly, the title(s) of the publication(s) or service(s). Argentina SAGPyA: Noticias de los Mercados de la Carne Australia Meat and Livestock Australia: Meat the Market; Monthly trade statistics Belgium Office Belge du Commerce Extérieur: Quarterly trade statistics Canada Agriculture and Agri-Food Canada: Livestock Market Review; Statistics Canada Denmark Danske Slagterier: Markedsnyt European Union Eurostat Agricultural Statistics Quarterly Bulletin; Comext CD-ROM Intra- and Extra-EU trade, from SOEC (Statistical Office of the European Communities); Official Journal of the European Communities France CFCE: Marché International du Bétail et des Viandes Germany Statistisches Bundesamt: Monthly trade statistics ZMP: Geflügel Greece Greek Ministry of Agriculture: Annual trade statistics

Notes on tables and sources / page ii

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Notes on tables and sources

Ireland Central Statistics Office: Monthly trade statistics Japan ALIC: Monthly Statistics Netherlands Produktschappen Vee, Vlees en Eieren: Cijferinfo Pluimveesector; Veeen Vleessector Cijferinfo New Zealand Meat NZ: Annual Reports Saudi Arabia Central Department of Statistics: Annual trade statistics South Korea South Korean Customs Service: Quarterly trade statistics Thailand Thai Broiler Processing Exporters Association: Quarterly trade statistics UK Meat and Livestock Commission – UK Weekly Market Survey Customs and Excise, Intrastat: Monthly trade statistics Uruguay INC: Instituto Nacional de Faena y Exportación USA USDA: Livestock and Poultry – World markets and Trade; Monthly trade statistics General Meat and Livestock Commission – European Weekly Market Survey OECD: Agricultural Policies in OECD Countries – Monitoring and Evaluation, 2001 OECD: Agricultural Policies in OECD Countries – Monitoring and Evaluation, 2002

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Notes on tables and sources / page iii

Notes on tables and sources

Borthwicks: A Century in the Meat Trade 1863–1963, Geoffrey Harrison, London 1963 Golden Jubilee: The Story of the First Fifty Years of the New Zealand Meat Producers Board 1922–1972, Dai Hayward (ed), Wellington, New Zealand 1972 The Book of the Meat Trade, Frank Gerrard (ed), Caxton Publishing Co. Ltd 1949 A number of websites and online databases were also used in the collection of the data. The references are as follows: United Nations: Global Trade Atlas Annual database FAO: http://www.fao.org/ USDA: http://www.fas.usda.gov/ http://www.agriculture.senate.gov EU Commission: http://www.europa.EU.int/comm/eurostat WTO: http://www.wto.org/

Notes on tables and sources / page iv

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Tables

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

World beef and veal production (000 tonnes cwe) EU beef and veal production by country (000 tonnes cwe) World sheep and goat meat production (000 tonnes cwe) EU sheep and goat meat production by country (000 tonnes cwe) World pig meat production (000 tonnes cwe) EU pig meat production by country (000 tonnes cwe) World poultry meat production (000 tonnes cwe) EU poultry meat production by country (000 tonnes cwe)

3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8

Consumption in major beef markets EU beef consumption Consumption in major sheep meat markets EU sheep meat consumption Consumption in major pig meat markets EU pig meat consumption Consumption in major poultry meat markets EU poultry meat consumption

4.1 4.2 4.3 4.4

Australia – beef and veal exports (000 tonnes) United States – beef and veal exports (000 tonnes) EU – beef and veal exports to non-EU countries (000 tonnes cwe) EU member states – beef and veal exports to non-EU countries by product, 2000 (000 tonnes cwe) Ireland – beef and veal exports (000 tonnes) France – beef and veal exports (000 tonnes) Germany – beef and veal exports (000 tonnes) Netherlands – beef and veal exports (000 tonnes) New Zealand – beef and veal exports (000 tonnes) Brazil – beef and veal exports (000 tonnes) Uruguay – beef and veal exports (000 tonnes) Argentina – beef and veal exports (000 tonnes) New Zealand – sheep meat exports (000 tonnes) Australia – sheep meat exports (000 tonnes) United Kingdom – sheep meat exports (000 tonnes)

4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15

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Tables

4.16 Ireland – sheep meat exports (000 tonnes) 4.17 Spain – live sheep exports (000 head) 4.18 EU member states – pig meat exports to non-EU countries by product, 2000 (000 tonnes) 4.19 EU – pig meat exports to non-EU countries (000 tonnes cwe) 4.20 Denmark – pig meat exports (000 tonnes) 4.21 Netherlands – pig meat exports (000 tonnes) 4.22 Belgium – pig meat exports (000 tonnes) 4.23 France – pig meat exports (000 tonnes) 4.24 Germany – pig meat exports (000 tonnes) 4.25 Spain – pig meat exports (000 tonnes) 4.26 Canada – pig meat exports (000 tonnes) 4.27 United States – pig meat exports (000 tonnes) 4.28 Brazil – pig meat exports (000 tonnes) 4.29 United States – poultry meat exports (000 tonnes) 4.30 EU member states – poultry meat exports to other EU and non-EU countries (000 tonnes) 4.31 EU – poultry meat exports to non-EU countries by product, 2000 (000 tonnes) 4.32 EU – poultry meat exports to non-EU countries (000 tonnes, cwe) 4.33 France – poultry meat exports (000 tonnes) 4.34 Brazil – poultry meat exports (000 tonnes) 4.35 China – poultry meat exports (000 tonnes) 4.36 Thailand – poultry meat exports (000 tonnes) 5.1 5.2 5.3

United States – beef and veal imports (000 tonnes) Japan – beef and veal imports (000 tonnes) EU – beef and veal imports from non-EU countries (000 tonnes cwe) 5.4 EU member states – beef and veal imports from non-EU countries by product, 2000 (000 tonnes cwe) 5.5 Italy – beef and veal imports (000 tonnes) 5.6 France – beef and veal imports (000 tonnes) 5.7 Netherlands – beef and veal imports (000 tonnes) 5.8 United Kingdom – beef and veal imports (000 tonnes) 5.9 Greece – beef and veal imports (000 tonnes) 5.10 Russia – beef and veal imports (000 tonnes) 5.11 South Korea – beef and veal imports (000 tonnes) 5.12 Egypt – beef and veal imports (000 tonnes)

Tables / page ii

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Tables

5.13 EU member states – sheep meat imports from non-EU countries by product, 2000 (000 tonnes cwe) 5.14 EU – sheep meat imports from non-EU countries (000 tonnes cwe) 5.15 France – sheep meat imports (000 tonnes) 5.16 United Kingdom – sheep meat imports (000 tonnes) 5.17 Italy – sheep meat imports (000 tonnes) 5.18 Greece – sheep meat imports (000 tonnes) 5.19 Saudi Arabia – sheep meat imports (000 tonnes) 5.20 United States – sheep meat imports (000 tonnes) 5.21 Japan – pig meat imports (000 tonnes) 5.22 Russia – pig meat imports (000 tonnes) 5.23 United States – pig meat imports (000 tonnes) 5.24 EU member states – pig meat imports from non-EU countries by product, 2000 (000 tonnes) 5.25 EU – pig meat imports from non-EU countries (000 tonnes cwe) 5.26 Germany – pig meat imports (000 tonnes) 5.27 Italy – pig meat imports (000 tonnes) 5.28 France – pig meat imports (000 tonnes) 5.29 United Kingdom – pig meat imports (000 tonnes) 5.30 Spain – pig meat imports (000 tonnes) 5.31 Russia – poultry meat imports (000 tonnes) 5.32 Japan – poultry meat imports (000 tonnes) 5.33 EU member states – poultry meat imports from other EU and nonEU countries (000 tonnes) 5.34 EU – poultry meat imports from non-EU countries by product, 2000 (000 tonnes cwe) 5.35 EU – poultry meat imports from non-EU countries (000 tonnes cwe) 5.36 Germany – poultry meat imports (000 tonnes) 5.37 United Kingdom – poultry meat imports (000 tonnes) A1.1 A1.2 A1.3 A1.4 A2.1

Guarantee section expenditure in the meat sectors (million euro) Main types of market support Main premium payment schemes in the livestock sectors Major EU market access agreements 2001/2 Numerical targets agreed in the Uruguay Round Agreement on Agriculture A2.2 Article 20 of the Agreement on Agriculture

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Tables / page iii

Figures

1.1 Total Support Estimate by country (% of GDP) 1.2 Producer Support Estimate by country (% of value of gross farm receipts) 1.3 Producer Support Estimate by commodity (% of value of commodity farm receipts) 2.1 2.2 2.3 2.4

World beef production in selected countries, 1990–2000 World sheep meat production in selected countries, 1990–2000 World pig meat production in selected countries, 1990–2000 World poultry meat production in selected countries, 1990–2000

3.1 3.2 3.3 3.4

World beef consumption in selected countries, 1990–2000 World sheep meat consumption in selected countries, 1990–2000 World pig meat consumption in selected countries, 1990–2000 World poultry meat consumption in selected countries, 1990–2000

6.1 Producer prices for steers/young bulls in selected countries, 1990–2000 6.2 Indices of EU producer prices for cattle, 1990–2000 6.3 Producer prices for sheep in selected countries, 1990–2000 6.4 Indices of EU producer prices for sheep, 1990–2000 6.5 Producer prices for finished pigs in selected countries, 1990–2000 6.6 Indices of EU producer prices for pigs, 1990–2000 6.7 Indices of EU producer prices for poultry, 1990–2000

Figures

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Abbreviations

ACP ALIC BSE BSP CEEC CFCE CMA CSO cwe EU FAO FMD GATT GDP GIP INC ITQ kg MLA MLC MTR na NAFTA OBCE OECD PSE PVE SAP SCP SOEC TSE URAA USDA

African, Caribbean and Pacific Agriculture & Livestock Industries Corporation Bovine Spongiform Encephalopathy Beef special premium Central and Eastern European Countries Centre Française du Commerce Extérieur Centrale Marketinggesellschaft Central Statistics Office carcass weight equivalent European Union Food and Agriculture Organisation Foot and Mouth Disease General Agreement on Tariffs and Trade Gross Domestic Product Gross indigenous production Instituto Nacional de Carnes Import tariff quota kilogram Meat and Livestock Australia Meat and Livestock Commission Mid-Term Review not available North American Free Trade Agreement Office Belge du Commerce Extérieur Organisation for Economic Co-operation and Development Producer Support Estimate Produktschappen Vee, Vlees en Eieren Sheep annual premium Suckler cow premium Statistical Office of the European Communities Total Support Estimate or Transmissible Spongiform Encephalopathy Uruguay Round Agreement on Agriculture United States Department of Agriculture

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Abbreviations / page i

Abbreviations

WTO ZMP

World Trade Organisation Zentrale Markt- und Preisberichtstelle

.. –

negligible nil

Abbreviations / page ii

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Index

animal diseases Bovine Spongiform Encephalopathy (BSE), 2/2, 2/5, 2/8, 2/27, 4/3, 5/6, 5/15, 6/1, 6/4, 6/6, 6/11, A3/1 Foot and Mouth Disease (FMD), 2/3, 2/8, 2/16, 2/18, 2/20–21, 4/1, 4/9, 4/16, 4/25, 5/1, 5/22, 6/4, A3/2 swine fever, 2/18, 2/20, 4/16, 4/19, 4/25, 6/11, A3/1 Transmissable Spongiform Encephalopathies (TSE), 5/15 animal welfare, 1/7, 2/17–19, 2/25, 2/27, 3/1, A2/6 Argentina beef consumption, 3/4 beef exports, 4/9–11 beef prices, 6/2 beef production, 2/1, 2/3, 2/5, 2/7 Australia beef consumption, 3/4 beef exports, 4/1–2 beef prices, 6/2 beef production, 2/1, 2/4–5, 2/7 sheep meat consumption, 3/6–7 sheep meat exports, 4/13 sheep meat prices, 6/5 sheep meat production, 2/10–11, 2/15–16 Austria beef consumption, 3/5 beef exports, 4/4 beef production, 2/3 pig meat consumption, 3/14–15 pig meat exports, 4/17 pig meat production, 2/19 poultry meat consumption, 3/19 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat production, 2/11 beef production cycle, 2/6 Belgium/Luxembourg beef consumption, 3/5 beef exports, 4/4

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beef production, 2/3 pig meat consumption, 3/14 pig meat exports, 4/17, 4/20 pig meat imports, 5/33 pig meat production, 2/19 poultry meat consumption, 3/19 poultry meat exports, 4/27 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat imports, 5/13–14, 5/17 sheep meat production, 2/11 Brazil beef consumption, 3/3–4 beef exports, 4/9–10 beef production, 2/1, 2/3, 2/5, 2/7 pig meat consumption, 3/12–13 pig meat exports, 4/16, 4/25 pig meat production, 2/17, 2/20, 2/26–27 poultry meat consumption, 3/17–19 poultry meat exports, 4/25, 4/29–30 poultry meat production, 2/28, 2/30, 2/32–35 Bulgaria sheep meat consumption, 3/7 Canada beef consumption, 3/4 pig meat exports, 4/16, 4/22–23 pig meat production, 2/17, 2/24–26 poultry meat consumption, 3/17 Central and Eastern Europe beef consumption, 3/4 beef production, 2/4–5 pig meat consumption, 3/11–12 pig meat production, 2/17, 2/20, 2/24, 2/27 sheep meat consumption, 3/7 sheep meat exports, 4/14 sheep meat production, 2/10, 2/12–13, 2/16 China beef consumption, 3/3–4 beef exports, 4/11 beef imports, 5/12

Index / page i

Index

beef production, 2/1, 2/4–5, 2/7–8 pig meat consumption, 3/11–13 pig meat exports, 4/16, 4/24 pig meat imports, 5/29 pig meat production, 2/17–18, 2/23, 2/25–27 poultry meat consumption, 3/17–19 poultry meat exports, 4/25, 4/30 poultry meat imports, 5/32 poultry meat production, 2/28–29, 2/33–35 sheep meat consumption, 3/6–9 sheep meat imports, 5/21 sheep meat production, 2/9–10, 2/13, 2/15–16 Common Agricultural Policy, 1/8, 6/1, 6/8, A1/1, A3/1 consumer preferences beef, 3/6, 5/2 pig meat, 3/11–12, 5/22 poultry meat, 3/19 sheep meat, 3/10 Denmark beef consumption, 3/5–6 beef exports, 4/4 beef production, 2/3 pig meat consumption, 3/14–15 pig meat exports, 4/17–20 pig meat prices, 6/14 pig meat production, 2/18–19, 2/21–23 poultry meat consumption, 3/19 poultry meat exports, 4/27 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat production, 2/11 domestic support measures, 1/7 Egypt beef imports, 5/11 environmental issues, 1/7, 2/17–19, 2/25, 2/27, 5/29 EU agricultural budget, A1/1, A3/2 European Commission, 1/8 European Union beef consumption, 3/3–6 beef exports, 4/1, 4/3–5 beef imports, 5/3–4 beef prices, 6/1–2 beef production, 2/2–3, 2/5, 2/7–8 pig meat consumption, 3/11–14

Index/ page ii

pig meat exports, 4/16–18 pig meat imports, 5/21, 5/24 pig meat prices, 6/8–11 pig meat production, 2/17–19, 2/22–24, 2/26–27 poultry meat consumption, 3/17–19 poultry meat exports, 4/25, 4/27–28 poultry meat imports, 5/30, 5/32–33 poultry meat prices, 6/12, 6/14 poultry meat production, 2/28–29, 2/32, 2/34–35 sheep meat consumption, 3/6–11 sheep meat exports, 4/14 sheep meat imports, 5/12–15 sheep meat prices, 6/4–7 sheep meat production, 2/10–16 export subsidies/credits, 1/6, 2/8, 2/14, 4/3–4, 4/14, 4/17, 4/28–29, 5/11, 6/1, A1/2–3, A2/1, A2/3, A3/2 feed prices, 6/8, 6/10–12 Finland beef consumption, 3/5 beef production, 2/3 pig meat consumption, 3/14 pig meat production, 2/19 poultry meat consumption, 3/19 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat production, 2/11 Food and Agriculture Organisation (FAO), 2/27, A3/2 France beef consumption, 3/5–6 beef exports, 4/4, 4/6–7 beef imports, 5/5–6 beef prices, 6/2 beef production, 2/3 pig meat consumption, 3/14–16 pig meat exports, 4/17, 4/20–21 pig meat imports, 5/24, 5/27 pig meat prices, 6/10 pig meat production, 2/18–19, 2/22 poultry meat consumption, 3/19–20 poultry meat exports, 4/27–29 poultry meat production, 2/30, 2/32 sheep meat consumption, 3/9–10 sheep meat exports, 4/14–15 sheep meat imports, 5/13–16 sheep meat prices, 6/7 sheep meat production, 2/10–13

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Index

Germany beef consumption, 3/5–6 beef exports, 4/4, 4/7 beef imports, 5/5 beef production, 2/3 pig meat consumption, 3/14–16 pig meat exports, 4/17, 4/21–22 pig meat imports, 5/24–26 pig meat prices, 6/10 pig meat production, 2/18–19, 2/22 poultry meat consumption, 3/19–20 poultry meat exports, 4/27 poultry meat imports, 5/32–33, 5/36 poultry meat prices, 6/14 poultry meat production, 2/30, 2/32 sheep meat consumption, 3/9–10 sheep meat imports, 5/13, 5/16 sheep meat production, 2/11 Greece beef consumption, 3/5 beef imports, 5/5, 5/8–9 beef production, 2/3 pig meat consumption, 3/14 pig meat imports, 5/29 pig meat production, 2/19 poultry meat consumption, 3/19 poultry meat production, 2/30 sheep meat consumption, 3/9–10 sheep meat imports, 5/13–14, 5/18 sheep meat prices, 6/7 sheep meat production, 2/10–11 Hong Kong pig meat consumption, 3/12 poultry meat consumption, 3/17 Hungary pig meat production, 2/27 poultry meat exports, 4/25, 4/31 poultry meat production, 2/28, 2/31, 2/33, 2/35 sheep meat production, 2/12, 2/16 import tariffs/import tariff quotas, 1/6, 4/9, 4/12, 5/3–5, 5/14, 5/24, 6/1, 6/4, A1/3–4, A2/1–2, A3/3 India beef consumption, 3/4 sheep consumption, 3/6 Iran sheep meat production, 2/10 Ireland beef consumption, 3/5

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beef exports, 4/4–6 beef prices, 6/2 beef production, 2/3 pig meat consumption, 3/14 pig meat exports, 4/17 pig meat production, 2/19 poultry meat consumption, 3/19 poultry meat production, 2/30 sheep meat consumption, 3/9–10 sheep meat exports, 4/14–15 sheep meat prices, 6/7 sheep meat production, 2/11–13 Italy beef consumption, 3/5–6 beef exports, 4/4 beef imports, 5/5–6 beef production, 2/3 pig meat consumption, 3/14–16 pig meat exports, 4/17, 4/22 pig meat imports, 5/24, 5/26–27 pig meat prices, 6/10 pig meat production, 2/19, 2/22 poultry meat consumption, 3/19–20 poultry meat exports, 4/27 poultry meat production, 2/30, 2/32 sheep meat consumption, 3/9 sheep meat imports, 5/13–14, 5/17–18 sheep meat production, 2/11, 2/13 Japan beef consumption, 3/4 beef imports, 5/1–3 beef prices, 6/3 pig meat consumption, 3/12–13 pig meat imports, 5/21 pig meat production, 2/17, 2/21 poultry meat consumption, 3/17 poultry meat imports, 5/30–31 sheep meat imports, 5/20 Kuwait Sheep meat imports, 5/20 market support measures/premiums, 1/7, A1/1–2, A2/5–6 Mercosur, 4/9, A3/4 Mexico beef consumption, 3/4 pig meat imports, 5/21, 5/29 poultry meat consumption, 3/17 Mid-Term Review, 1/8, 2/8, A3/4

Index / page iii

Index

North American Free Trade Agreement (NAFTA), 4/2, 4/23–24, 5/1, A3/4 Near and Middle East beef imports, 5/11 sheep meat consumption, 3/7 sheep meat imports, 5/12, 5/19 sheep meat production, 2/10, 2/15 Netherlands beef consumption, 3/5 beef exports, 4/4, 4/8 beef imports, 5/5, 5/7 beef production, 2/3 pig meat consumption, 3/14 pig meat exports, 4/17, 4/19 pig meat imports, 5/29 pig meat prices, 6/10 pig meat production, 2/18–19, 2/22–23 poultry meat consumption, 3/19 poultry meat exports, 4/27 poultry meat imports, 5/33 poultry meat prices, 6/14 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat exports, 4/14–15 sheep meat imports, 5/13–14, 5/17 sheep meat production, 2/11 New Zealand beef production, 2/4 beef exports, 4/1, 4/8 sheep meat consumption, 3/6–7 sheep meat exports, 4/12–13 sheep meat prices, 6/4–5 sheep meat production, 2/10–16 Oman sheep meat imports, 5/20 Organisation for Economic Co-operation and Development (OECD), 1/1, 2/25, A3/4 Producer Support Estimate, 1/1, 1/3–5, A3/4 Total Support Estimate, 1/1–2, A3/5 pig production cycle, 2/24, 6/8, 6/11 Poland beef consumption, 3/4 pig meat consumption, 3/12 pig meat prices, 6/8–9 pig meat production, 2/27 sheep meat production, 2/12, 2/16 Portugal beef consumption, 3/5

Index/ page iv

beef production, 2/3 pig meat consumption, 3/14 pig meat imports, 5/29 pig meat production, 2/19 poultry meat consumption, 3/19–20 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat imports, 5/13 sheep meat production, 2/11 processing industry beef, 2/4–5, 5/1 consumption of processed pig meat, 3/15–16 pig meat, 2/21–23, 4/23 poultry meat, 2/28–32 trade in processed beef, 5/4–5, 5/8 trade in processed pig meat, 4/21, 4/24, 5/22, 5/24–25, 5/28–29 Romania sheep meat consumption, 3/7 Russia beef consumption, 3/3–4 beef imports, 5/9–10 beef production, 2/4, 2/8 pig meat consumption, 3/11–12 pig meat imports, 5/21–22 pig meat production, 2/17, 2/20, 2/25, 2/27 poultry meat consumption, 3/17–18 poultry meat imports, 5/30 poultry meat production, 2/28, 2/31, 2/33 sheep meat consumption, 3/6–7 sheep meat production, 2/10, 2/13 Saudi Arabia beef imports, 5/11 sheep meat consumption, 3/6–7 sheep meat imports, 5/19 seasonality of prices, 6/4, 6/6, 6/11, 6/14 sheep production cycle, 2/14 South America beef consumption, 3/4 beef exports, 4/1, 4/9 beef production, 2/3 South Korea beef imports, 5/1, 5/10–11 pig meat consumption, 3/12 pig meat exports, 4/24–25 pig meat imports, 5/21, 5/29 pig meat production, 2/21

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Index

Spain beef consumption, 3/5 beef exports, 4/4 beef imports, 5/5, 5/9 beef prices, 6/2 beef production, 2/3 pig meat consumption, 3/14–16 pig meat exports, 4/17, 4/21–22 pig meat imports, 5/24, 5/28–29 pig meat production, 2/18–19, 2/22, 2/24 poultry meat consumption, 3/19–20 poultry meat exports, 4/27 poultry meat prices, 6/14 poultry meat production, 2/30–32 sheep meat consumption, 3/9–10 sheep meat exports, 4/14–16 sheep meat imports, 5/13, 5/18 sheep meat prices, 6/7 sheep meat production, 2/10–12, 2/14 special safeguards, 1/7, A2/4 Sudan sheep meat production, 2/10 Sweden beef consumption, 3/5–6 beef production, 2/3 pig meat consumption, 3/14 pig meat production, 2/19 poultry meat consumption, 3/19–20 poultry meat production, 2/30 sheep meat consumption, 3/9 sheep meat production, 2/11 Syria sheep meat production, 2/10 Taiwan beef imports, 5/12 pig meat consumption, 3/12 pig meat exports, 4/24–25 pig meat production, 2/21 Thailand poultry meat exports, 4/25, 4/30–31 poultry meat production, 2/28, 2/31–35 Turkey sheep consumption, 3/6 sheep meat production, 2/10 Ukraine beef production, 2/4 United Arab Emirates sheep meat imports, 5/20

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United Kingdom beef consumption, 3/5 beef imports, 5/5, 5/8 beef prices, 6/1–2 beef production, 2/3 pig meat consumption, 3/14–15 pig meat exports, 4/17 pig meat imports, 5/24, 5/28 pig meat prices, 6/10 pig meat production, 2/19 poultry meat consumption, 3/19–20 poultry meat imports, 5/33, 5/36 poultry meat prices, 6/14 poultry meat production, 2/30, 2/32 sheep meat consumption, 3/9–10 sheep meat exports, 4/14–15 sheep meat imports, 5/13, 5/15–16 sheep meat prices, 6/7 sheep meat production, 2/10–12 United States beef consumption, 3/3–5 beef exports, 4/1–2 beef imports, 5/1–2 beef prices, 6/2 beef production, 2/1–2, 2/5, 2/7–8 pig meat consumption, 3/11–13 pig meat exports, 4/16, 4/23 pig meat imports, 5/21, 5/23 pig meat prices, 6/8–9 pig meat production, 2/17, 2/20, 2/21, 2/24–26, 2/28 poultry meat consumption, 3/17–20 poultry meat exports, 4/25–26 poultry meat prices, 6/11–12, 6/14 poultry meat production, 2/28–29, 2/31–34 sheep meat consumption, 3/6–7 sheep meat imports, 5/20 sheep meat production, 2/10 Uruguay beef consumption, 3/4 beef exports, 4/9–10 US Farm Bill, 1/8–9 wool, 2/9, 2/11–12, 2/16 world beef consumption, 3/2 beef prices, 6/1 beef production, 2/1 pig meat consumption, 3/11 pig meat prices, 6/8 pig meat production, 2/17, 2/23

Index / page v

Index

poultry meat consumption, 3/16–17 poultry meat prices, 6/11 poultry meat production, 2/28 sheep meat consumption, 3/6 sheep meat prices, 6/4 sheep meat production, 2/9

Index/ page vi

World Trade Organisation (WTO), 1/1–2, 5/1, 5/12, 5/20, 5/30, 6/1, A3/6 Doha Round, 1/3, A2/2 Uruguay Round, 1/3, A1/3–4, A2/1–2, A3/5–6

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1 Policy and support measures

1.1

World Trade Organisation 1.1.1 Export subsidies 1.1.2 Market access 1.1.3 Domestic support 1.1.4 Non-trade concerns

1.2

EU Mid-Term Review

1.3

US Farm Bill

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All countries support agricultural activities in various ways in order to compete on the world market. However, this sometimes leads to distortion of trade and protectionism of domestic markets. The Organisation for Economic Co-operation and Development (OECD) came into force on 30 September 1961. The OECD along with the World Trade Organisation (WTO) promotes policies that aim to expand and encourage world trade by reforming agricultural policy and reducing trade distorting support measures of member countries through negotiations. The OECD monitors and evaluates agricultural policy developments using a measure called the Total Support Estimate (TSE). TSE is an indicator of the annual monetary value of all gross transfers from consumers and taxpayers arising from policy measures to support agriculture. This is regardless of their objectives and impacts on farm production and income or consumption of farm products. When expressed as a percentage of the Gross Domestic Product (GDP) it gives an indication of the burden this overall support represents for the economy irrespective of the size and structure of a country’s agricultural sector. In 2000, total support to agriculture (TSE) in the countries surveyed by the OECD amounted to US$ 327 billion, accounting for 1.3% of GDP in those countries. However the percentage TSE varied across countries from 0.2% in New Zealand to over 5.3% in Korea and Turkey. Figure 1.1 shows how the TSE varies from country to country and also how it has changed in the different countries from 1986 to 1988 and 1998 to 2000. For most countries, the TSE has declined considerably in the period covered, particularly in many Eastern European countries as they attempt to come more in line with the EU, ready for membership. The important exceptions are Turkey and Mexico, where the TSE has increased in the period shown. The value of the support paid to individual producers is indicated by Producer Support Estimate (PSE), measured at the farm-gate level, arising from policy measures that support agriculture, regardless of their nature, objectives or impacts on farm production or income. Expressed as a percentage of gross farm receipts, the PSE shows the amount of support to individual farmers, irrespective of the sectoral structure (type, size and number of farm holdings) of a given country. The PSE given to producers in New Zealand was only worth one per cent of their total farm income in 1998–2000 whereas in the

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0

2

4

1.1 Total Support Estimate by country (% of GDP).

New Zealand

Australia

Canada

United States

Mexico

EU

Czech Republic

Japan

Norway

Poland

Iceland

Switzerland

Hungary

Korea

Turkey

6 % of GDP

8

10

12

14

1986–1988

1998–2000

The international meat trade

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Policy and support measures

EU it was worth 40% to individual producers. Figure 1.2 shows the variation in PSE between different countries and how this has varied over time. Different commodities receive differing levels of support. Within OECD member countries, as a percentage of farm income generated, sheep meat production is the most subsidised. However, support in this and the poultry meat sector is declining whereas in the beef and pig meat sector support is becoming a larger percentage of the total income these commodities generate for the farmer. This is illustrated in Fig. 1.3, which shows the PSE for the four different meats, aggregated for all OECD member countries.

1.1 World Trade Organisation The objective of the World Trade Organisation (WTO) is to contribute to further liberalisation of agricultural trade. This benefits those countries that can compete on quality and price rather than on the size of their subsidies. Agricultural trade was first brought into the WTO negotiations at the 1986–1994 Uruguay Round of discussions. The Uruguay Round agreement, which came into effect in 1995, set up a framework of rules and started reductions in protection and tradedistorting support. In particular it set targets for cutting tariffs, domestic support and export subsidies, both in quantity and value. Article 20 of the Agricultural Agreement from the Uruguay Round committed members to start negotiations on continuing the reform at the end of 1999. These negotiations are now included in the Doha Declaration, which was agreed on 14 November 2001. The declaration reconfirmed the long-term objective already agreed in Article 20: to establish a fair and market-orientated trading system through a programme of fundamental reform. The programme encompasses strengthened rules and specific commitments on government support and protection for agriculture. The purpose is to correct and prevent restrictions and distortions in world agricultural markets. The agricultural negotiations within the Doha Round are expected to conclude by 1 January 2005. The main areas of discussion are covered below.

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–10

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1.2 Producer Support Estimate by country (% of value of gross farm receipts).

Ca

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Au

da Cz

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20

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Chapter 1 / page 4 rla

nd S

wit ze

80

1986–1988

1998–2000

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Ko

rea EU

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Beef and veal

Sheep meat

Pig meat

1.3 Producer Support Estimate by commodity (% of value of commodity farm receipts).

0

10

20

% 30

40

50

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Poultry meat

1986–1988

1998–2000

Policy and support measures

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1.1.1 Export subsidies Twenty five WTO members can subsidise exports, but only for products on which they have a commitment to reduce those subsidies. Export refunds are the main method used to subsidise exports and these are paid on certain products to ensure that they are competitive on the world market. Export refunds are used by the EU and Eastern Europe on beef, pig meat and poultry meat, and by the USA on frozen poultry meat. The EU has liberalised trade with Eastern Europe by negotiating a ‘double zero’ option allowing selected products to be traded in either direction without export refunds. Exports can also be subsidised through export credits. Export credits are used to supply products to a country on a credit agreement using preferential rates over a long term. This is an option favoured by the USA.

1.1.2 Market access Among WTO member countries, most agricultural products are protected only by import tariffs. As part of the Uruguay Round agreement, all non-tariff barriers had to be eliminated or converted to tariffs (tariffied). As a result, some were deemed to be too high to allow any real scope for imports, so a system of tariff-rate quotas was created to maintain existing import access levels and provide minimum access opportunities. This means lower tariffs are applied if the import is made within a volume quota and higher rates are applied for quantities outside these quotas. Thirty eight WTO members currently have a combined total of 1379 tariff quotas. Of the total, currently 562 are scheduled to increase over time, 812 to remain unchanged and five to decrease in quantity. Methods used for giving exporters access to quotas include firstcome first-served allocations, import licences according to historical shares and other criteria, administered through state trading enterprise, bilateral agreements and auctioning. The terms can also specify time periods for using the quotas, for example periods of time applying for licences, or for delivering the products to the importing countries. The ‘double zero’ option, negotiated between the EU and Eastern Europe also includes import tariffs as well as export refunds. Selected products can be traded either way between the EU and Eastern Europe at zero import duty, although quantitative restrictions still apply.

Chapter 1 / page 6

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Special agricultural safeguards are contingency restrictions on imports taken temporarily to deal with special circumstances such as a sudden surge in imports. The special safeguard provisions for agriculture differ from normal safeguards. In agriculture higher safeguards duties can be triggered automatically when import volumes rise above a certain level, or if prices fall below a certain level. Moreover, it is not necessary to demonstrate serious damage is being caused to the domestic industry. Currently, 38 WTO members have reserved the right to use a combined total of 6072 special safeguards on agricultural products. They could only be used on products that were tariffied, but they could not be used on imports within tariff quotas, and they could only be used if the government reserved the right to do so in its schedule of commitments on agriculture. In practice, the special agricultural safeguard has been used in relatively few cases. The US has used the special agricultural safeguard clause to protect its domestic sheep meat market and Japan has used it to protect its domestic pig meat market.

1.1.3 Domestic support The WTO is trying to reduce the total value of all domestic support measures considered to distort production and trade. However, it will allow domestic support that does not distort trade. These subsidies have to be government funded and must not involve price support. They tend to be programmes that are not directed at particular products, and include direct income support for farmers that are not related to (are decoupled from) current production levels or prices. They also include environmental protection and regional development programmes. Another type of domestic support that is currently allowed is payments directly linked to acreage or animal numbers, but under schemes that also limit production by imposing production quotas or requiring farmers to set aside part of their land. Countries using these subsidies include the EU, Iceland, Norway, Japan, the Slovak Republic and Slovenia.

1.1.4 Non-trade concerns In the Doha Round, non-trade concerns are to be discussed such as animal welfare, food safety and managing the environment, among

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others. Under WTO these may become voluntary codes of practice, for example additional labelling, rather than hard and fast rules.

1.2 EU Mid-Term Review The proposals presented by the European Commission in July 2002 for the Mid-Term Review (MTR) of its Common Agricultural Policy (CAP) tackle the area of production and trade distorting domestic support. The proposals, if accepted, will encourage farmers to produce at high standards for the highest market return, rather than for the sake of maximum possible subsidy. The MTR will strengthen the EU position in the WTO negotiations. To achieve this, the Commission proposes to: • cut the link between production and direct payments (de-coupling) including headage payments in the beef sector; • make payments conditional on meeting environmental, animal welfare and occupational safety standards (cross compliance); • substantially increase EU support for rural development via modulation of direct payments; • introduce new rural development measures to improve quality, food safety and animal welfare.

1.3 US Farm Bill The ‘Farm Security and Rural Investment Act of 2002’ replaces the ‘FAIR Act of 1996’ and sets out various agricultural programmes under ten headings, notably the commodity (farm subsidy) programmes, conservation and trade. It will last for six years. The Farm Bill includes various direct price support subsidies; new environmental programmes and the expansion of others; country of origin labelling rules; increased export promotion measures and technical assistance to overcome non-tariff barriers to the export of US commodities; increased food aid provisions. The main thrust of the subsidy regime is counter-cyclical (paid when the income for farmers for different crops falls below a certain target price) and therefore has the effect of cancelling out any market signals. This means that farmers could continue to over-produce in times of surplus.

Chapter 1 / page 8

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Under the new Farm Bill, the USA is subsidising its farmers to the maximum level of its current ceilings under WTO. This is likely to restrict its ability to accept further reductions in production-distorting domestic support in the framework of the WTO negotiations.

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2 Production

2.1

Beef 2.1.1 Profile United States European Union South America China Australasia Other countries

2.1.2 Industry structure 2.1.3 Trends 2.1.4 Future developments 2.2

Sheep meat 2.2.1 Profile China Near and Middle East European Union Australasia Other countries

2.2.2 Industry structure 2.2.3 Trends 2.2.4 Future developments 2.3

Pig meat 2.3.1 Profile China European Union United States Russia/Eastern Europe Brazil South East Asia

2.3.2 Industry structure 2.3.3 Trends 2.3.4 Future developments

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2.4

Poultry meat 2.4.1 Profile United States China European Union Brazil Thailand Russia Hungary

2.4.2 Industry structure 2.4.3 Trends 2.4.4 Future developments

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2.1 Beef 2.1.1 Profile World production of beef and veal now amounts to about 56 million tonnes annually. Beef is only the third most important meat produced after pig meat and poultry meat but nevertheless accounts for 26% of world meat output. Cattle production is widespread virtually throughout the world, being a traditional livestock enterprise. Often it is based on extensive grazing systems although in some areas, especially North America and parts of Europe, production is generally relatively intensive, using cereals to fatten the animals. In some countries it is strongly linked to milk production so that output of beef is a by-product of the dairy industry, with surplus dairy calves and culled dairy cows used for fattening for meat. Table 2.1 shows beef production levels in the world’s major producing countries since 1990.

United States The United States is the largest beef producer with considerable implications for the world market. It accounts for about 22% of world beef output and is the second largest exporter. However, it is also the largest consuming country as well as the world’s principal importer. Beef production is based on feedlots utilising maize to produce high quality clean beef from steers and heifers. There is also a high demand for manufacturing beef especially for the beefburger market, and so there is also a market in lower quality beef such as from culled cows, much of which is imported.

Table 2.1 World beef and veal production (000 tonnes cwe)

United States EU Brazil China Argentina Australia World

1990

1995

1996

1997

1998

1999

2000

10465 8749 4115 1144 3007 1677 53434

11585 8185 5710 3296 2688 1803 54083

11749 8088 6187 3333 2694 1745 54620

11714 7945 5922 4105 2712 1810 55265

11803 7698 5794 4485 2469 1955 55061

12123 7762 6413 4711 2719 2011 56196

12311 7445 6540 4991 2683 1988 56425

Source: FAO (except EU, Eurostat).

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Beef production in the United States has increased strongly since 1990, encouraged principally by the growth in export demand. European Union The EU-15 is the second largest beef producer accounting for 14% of world output although its share is falling. In recent years it has been the world’s third largest exporter, and third largest importer. The biggest single producer in the EU is France followed by Germany. These two countries between them account for over 42% of the beef produced in the EU, although in both countries production fell gradually throughout the 1990s. In contrast, those countries where growth has occurred are Spain and Ireland. There are wide variations in both the structure and type of beef and veal production in the different member states of the European Union. Young bull beef accounts for the largest share of total production (35% in 1999) followed by cow beef accounting for 27%. However, within the different member states the share accounted for by the different categories of production varies quite widely. In Germany, for example, bull beef accounts for approximately 45% of total production whereas in the United Kingdom the proportion accounted for by bull beef is closer to 14%. In France, cow beef accounts for the largest proportion of production whilst in the UK, due to BSE controls, cow beef does not enter the food chain at all. Production of veal is concentrated in the Netherlands, Italy and France. Successive reforms of the beef regime, the introduction of controls on milk production in 1984 and measures introduced in 1996 as a result of BSE have helped to shape the EU beef sector. While leading to an overall decline in beef production, they have promoted an increased proportion from specialist beef (suckler) herds rather than as a by-product of the dairy industry. Historically, however, the category of beef produced by the different member states reflects both traditional consumption patterns and production structures. The large Dutch and Italian veal producing sectors, for example, reflect the fact that the cattle sectors in both countries are highly dairy orientated and the rearing of dairy breed calves for veal has developed as a result of this. In Germany, however, a similarly orientated industry has resulted in the evolution of intensive beef finishing systems, a system to which dairy breed bulls are best suited. Table 2.2

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Table 2.2 EU beef and veal production by country* (000 tonnes cwe)

France Germany Italy UK Ireland Spain Netherlands Belgium/Lux Austria Denmark Sweden Portugal Finland Greece EU-15

1990

1995

1996

1997

1998

1999

2000

1912 2187 919 987 569 499 468 326 239 202 145 112 118 66 8749

1899 1541 979 995 572 495 532 376 208 184 145 99 96 64 8185

1982 1573 973 704 582 536 544 384 239 182 139 95 97 58 8088

1982 1535 933 687 574 548 522 354 221 179 151 104 100 56 7945

1881 1459 863 702 613 607 496 314 210 164 144 94 94 57 7698

1845 1447 908 672 712 640 473 305 219 159 146 95 91 51 7762

1755 1363 894 700 632 602 441 301 215 156 152 98 90 46 7445

* gross indigenous production. Source: Eurostat.

shows the relative importance of the various member states and how beef production has changed since 1990. South America South America, led by Brazil and Argentina, is a major source of beef because the region has a natural advantage in terms of plentiful grazing resources, low cost of land and favourable climatic conditions. Production is based on extensive systems. Brazil has the largest commercial herd in the world and yet is only its third largest producer, because herd productivity is very low. This means that the potential for growth is considerable. One reason for the low productivity is the incidence of animal diseases but resources are being put in place to reduce this, especially to eradicate Foot and Mouth Disease (FMD). There have been improvements in management practices and investment and this is reflected in the growth in production since 1990. In contrast, the industry of Argentina is better organised and more productive although problems with FMD remain. Argentina has been unable to expand its production since 1990 because of its severe economic problems and the government’s austerity measures, which have stifled investment.

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China China relies more on pig meat and poultry meat as the main source of animal protein although the beef industry has been increasing in importance through government policy, substantial increases in productivity of beef cattle and increased commercialisation. The Chinese government has recognised that, unlike the grain dependent pig and poultry sectors, cattle production can utilise grazing and conserved forage that is widely available in some parts of China. Consumers are also increasing their demand for beef, so it is likely that imports, while remaining small, could grow in future years. Australasia The beef industry of Australia has somewhat similar characteristics to those of Argentina and the industry relies on the abundant availability of land on which the animals are raised, although the importance of grain fed beef is somewhat greater than in Argentina. Although in terms of production Australia is only sixth in the world it is the largest exporter. New Zealand is a much smaller producer, although a large proportion of this is exported. Other countries Other parts of the world that have implications for the beef market are Russia and the Ukraine. However, the industries there suffered economic collapse during the 1990s and production fell sharply. As a result, cattle production (based mainly on the dairy herd) has become unprofitable with increased prices of inputs, low productivity and reduced demand for beef as a result of declining consumer purchasing power. The beef industry of the Central and Eastern European countries is also largely based on the dairy sector. These countries experienced considerable problems during the 1990s although the situation has now become more stable. Future membership of the European Union may also contribute to some further stability in the next decade or so, although it is unlikely to encourage much growth.

2.1.2 Industry structure The beef processing industry (in its widest sense, to include slaughter, boning and cutting) world-wide has generally been characterised by over-capacity, lack of investment and low margins, large seasonal

Chapter 2 / page 4

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supply variations, high labour costs and no substantial economies of scale. The one exception to this is the United States. It enjoys substantial economies of scale given that it has both the largest beef industry and high processing concentration, with the three major companies, Iowa Beef Packers (IBP), Excel and ConAgra having a market share of over 60%. On the world market this enables the country to keep down unit processing costs while at the same time it can supply large quantities of individual cuts. For Australia, despite its importance on the world market, the processing industry has a higher unit cost structure, is considerably less concentrated and so does not enjoy the same economies of scale. A somewhat similar situation applies to Argentina and Brazil. Therefore, this offsets some of the competitive advantage associated with lower cattle prices. In contrast the EU as an exporter to the world market suffers from both high cattle prices and high unit processing costs from the poor processing industry structure; no company has more than a five per cent market share at the EU level. Unlike the poultry sector, there has been very little foreign investment in beef processing and hence the lack of multinational beef processing companies.

2.1.3 Trends During the 1990s world beef production only increased by a small extent. This was in contrast to the steady long-term growth in output of pig meat and poultry meat. The main reasons for this were the stability or even small fall in beef output in some major producing countries such as Argentina, economic problems in the former Soviet Union and Central and Eastern Europe plus the collapse of the beef industry of the former East Germany. Production also fell in the EU, partly because of policy reforms designed to reduce output and because of lower consumer demand resulting from the incidence of BSE. Since the mid-1990s, production has been increasing in some major countries, notably the United States, Brazil and China in response to improved profitability. Prices fell world-wide following the BSE crisis in the United Kingdom in 1996 and this was exacerbated by the economic crisis in South East Asia in 1997 and 1998. However, by the end of the 1990s, some stability in production in major producing countries was restored.

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There is a beef production cycle that can occur at both individual country and world levels, as the substantial trade flows in beef mean that prices tend to move together. During a period of rising beef prices, producers tend to build up cattle numbers and especially breeding cattle, and reduce their sales of slaughter stock. The eventual increase in slaughter stock (after four to six years) because of increasing breeding numbers contributes to rising beef production and falling prices which in turn induces additional herd offtake, especially of females, as producers reduce their herds. This ‘liquidation’ phase in the cycle eventually becomes sufficient to result in lower production. Prices then start to increase again and hence the cycle is complete. Given the long-term nature of beef production, the cycle can be up to ten years in duration. However, in countries where the dairy sector has an important influence on the beef industry, such as many in the EU, the cattle cycle can be less evident. The difficulty for beef producers is that when prices fall significantly it can take up to five years to reduce output enough to allow prices to recover adequately. Figure 2.1 shows the development of beef production in major countries since 1990. It contrasts the rises in the US, Brazil and China with the decline in the EU.

2.1.4 Future developments One problem for the beef cattle industry is that there is less scope for productivity improvements to reduce its cost structure compared with the poultry and pig meat industries. This reflects the genetic makeup of cattle, poor production structure and the fact that cattle are used for other purposes, such as dairy production. However, there continues to be progress in the genetic make-up of beef herds, improved management practices and increased carcass weights. These factors should all contribute to a better performance of the beef sector in the future. The increase in world prices, which began in 2000, is expected to continue given the recovery of import demand in South East Asia in particular. Any period of economic growth will create additional demand for beef. Of the major exporting countries, production in Australia is expected to increase through to 2010. Expansion in South America is also forecast to take place and be partly facilitated by better export prospects.

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million tonnes cwe

1991

1992 1993

1994

2.1 World beef production in selected countries, 1990–2000.

0 1990

2

4

6

8

10

12

14

1995

1996

1997

1998

1999

2000

Australia

Argentina

China

Brazil

EU

US

Production

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If these countries gain FMD-free status they will also gain improved access to the world market. The beef industry of the United States was entering a herd rebuilding phase in 2000 and no increase in output is expected in the medium-term despite good export prospects. Growth in beef production in China may have to be more modest in future as availability of good grazing land represents a constraint, but demand for beef can be expected to increase further if there is economic growth. Stability and eventual recovery in beef production in Russia may take time given the long-term nature of the beef industry and the problems that persist there. In recent years, the Russian beef industry has been affected by shortages of veterinary inputs and animal feed, poor genetics and management practices and lack of investment. Beef production trends throughout the EU will be influenced by the legacy of the BSE crisis. The supply management schemes introduced by the European Commission finished in 2000 and the short-term result is that production might increase. In addition, it is also assumed that there might eventually be a gradual relaxation in the United Kingdom to allow some cow beef back into the food chain. In the long-term, however, EU beef production is likely to resume its downward trend as a result of a continuing decline in the size of the cow herd. The main influence on the overall size of the cow herd will come from the dairy sector where improving milk yields will result in a requirement for fewer cows. In addition, the increase in suckler cow numbers in a number of member states in recent years now looks to be coming to an end with various reforms serving to restrict growth. A more recent threat is that of a renewed crisis over BSE, this time across the EU. This had come about as a result of new cases of BSE in cattle herds in Germany and Spain and an apparent increased incidence of the disease in France. All factors point to a decline in EU beef and veal production in the long-term. As the next round of the WTO talks on agriculture get underway, the pressure is likely to be on to further reduce subsidised exports. In addition there will be continued pressure to decouple subsidies from production, a move that has been re-enforced by the European Commission’s own Mid-Term Review, which aims to move away from direct producer subsidies linked to production. These factors will serve to put pressure on EU beef prices and a scenario of declining prices over the next decade is probable.

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Therefore, growth to 2010 in world beef output is expected to be modest (only averaging about one per cent each year) and well below the anticipated growth in the poultry meat and pig meat sectors.

2.2 Sheep meat 2.2.1 Profile World production of sheep and goat meat amounts to about 10.5 million tonnes annually. It is only the fourth most important meat after poultry meat, beef and pig meat, and it only accounts for about five per cent of world output. Production is normally based on grazing and hence relies on availability of large areas of pastures with limited alternative use. Because of this, sheep meat production is not widely distributed throughout the world. Intensive production of sheep is not usual because of the high feed costs that this would entail and poor feed conversion rates, which would make it uneconomical. The extensive nature of production contributes to the ‘green’ image of sheep, which is an advantage as consumer concerns about intensive agriculture increase. In many countries, the production of meat has only been of secondary importance as sheep have been kept more for their wool. This is certainly the case in Australia, Eastern Europe/the former Soviet Union, many parts of Asia and South America. However, this is now changing. As wool faces strong competition from synthetics and declining demand, producers are able to gain an increasing economic return from meat production. This is being facilitated by a switch away from wool to meat breeds with consequent higher unit output of meat. A key resource advantage of wool production is that it can take place in areas where availability of grazing is more constrained; in contrast ewe breeding and fattening of lambs requires a better feed resource from higher quality grazing. Table 2.3 shows the level of sheep meat production in the world’s most significant producing countries since 1990. China China is the world’s largest sheep meat producer accounting for almost a quarter of world output. However, this statistic must be qualified. Firstly, virtually none of this is exported outside China, so changes

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Table 2.3 World sheep and goat meat production (000 tonnes cwe)

China Nr/Mid East EU Australia N Zealand Russia C/E Europe United States World

1990

1995

1996

1997

1998

1999

2000

1069 1454 1163 641 532 na na 165 9683

1749 1699 1147 631 535 261 137 130 10550

1815 1726 1137 583 511 230 142 122 10285

1935 1799 1112 575 544 200 127 118 10396

2255 1890 1153 624 547 178 124 114 10882

2495 1874 1146 622 519 143 119 113 11077

2654 1874 1149 656 527 156 122 104 11294

Source: FAO (except EU, Eurostat).

in Chinese production have little impact on the rest of the world. Secondly, the importance of sheep meat as a contributor to total meat output is still small in China, although its role as a source of animal protein is increasingly recognised. This is because of the low inputs required compared with the heavy cereal dependence of the intensive pig and poultry sectors. There is potential for extensive grazing in areas such as the plains of Inner Mongolia and the scope for increases in productivity is considerable. Near and Middle East The Near/Middle East is the world’s second largest sheep meat producer now accounting for about 17% of world output although much of this is goat meat. Given the arid nature of much of the region sheep and goats are an important contributor to the supply of animal protein. The key producers are Iran, Turkey, Sudan and Syria. Production in the Gulf States (a major import market) is much lower despite it being the world’s largest importer of live slaughter sheep. European Union EU-15 sheep meat production accounts for around ten per cent of the world total. It is dominated by the UK, Spain and France, which between them account for 70% of the total. Greece is the next largest producer, accounting for a further 11%. Sheep meat production is dominated by the production of lamb, which accounts for about 80% of the sector. Most of the remainder is produced as mutton, although goat meat accounts for around seven per

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Table 2.4 EU sheep and goat meat production by country* (000 tonnes cwe)

UK Spain France Greece Ireland Italy Germany Portugal Netherlands Austria Sweden Belgium/Lux Denmark Finland EU-15

1990

1995

1996

1997

1998

1999

2000

391 224 177 128 85 56 29 28 30 6 4 3 1 1 1163

399 227 147 123 92 54 40 27 22 7 4 3 1 2 1147

383 219 153 128 85 56 43 26 26 7 4 4 2 1 1137

352 246 150 128 71 56 44 26 22 8 4 3 2 1 1112

391 252 145 125 79 52 45 25 20 8 4 4 2 1 1153

402 241 140 119 82 52 44 24 23 7 5 4 2 1 1146

392 257 138 120 77 49 45 25 25 9 5 4 2 1 1149

* gross indigenous production. Source: Eurostat.

cent. These proportions have changed very little in the last ten years. Over half of the goat meat is produced and consumed in Greece, and most of the rest is confined to the Mediterranean EU member states of Spain, France and Italy. Table 2.4 shows the relative importance of the different EU member states and how sheep meat production has changed since 1990. Australasia In Australia the availability of grazing is especially constrained by dry climate conditions in many parts of the country and so the sheep industry is very much wool-based. Of its total sheep meat production, 50% is mutton, mainly from the culling of the wool flock. Australia accounts for six per cent of world output (see Table 2.3). In New Zealand the sector is more meat-based helped by higher quality grazing resources with the dominant product being lamb destined for the world market. Mutton accounts for less than 25% of total sheep meat production. Not only is lamb production well organised with a high quality of product but, since it is based on large-scale farms, it is a low cost producer and does not benefit from government subsidies. New Zealand accounts for less than five per cent of world output, but its significance rests on its dominant role as an exporter.

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Other countries Production of sheep and goat meat is not widespread outside the above five countries or regions. In the huge landmass of Central/Eastern Europe and Russia sheep have not made a significant contribution to total meat output. Sheep flocks that do exist are held mostly for wool production. In some parts of Eastern Europe, notably Hungary and Poland, sheep production is no longer considered a viable enterprise as it competes with the more lucrative arable production. Domestic markets are limited and a significant part of production is based on supplying the EU market.

2.2.2 Industry structure The world sheep meat processing industry is not well documented but generally can be considered fragmented and traditional. The one major exception is New Zealand because of the importance of exports and hence concentration of a few major companies (following steady rationalisation in the industry) with strong attention to quality and added value products (including chilled). Major companies that generally have dedicated lamb plants include AFFCO Holdings, Alliance Group, Primary Producers Co-op Society (PPCS) and Richmond. This is not a well documented area in the EU and the industry is very small compared with other meat sectors. In the United Kingdom there are abattoirs dedicated to producing for the export market. Besides the UK, the other main abattoir sectors are concentrated in Spain and France, although these mainly supply their own domestic markets, and a small export orientated industry in Ireland. There is some specialisation by companies in sheep slaughter but individual operators are small. Slaughter is undertaken in specialised plants or in conjunction with cattle; in France, and especially Spain, slaughter in public abattoirs remains important. The industry is characterised by a lack of further processing and so the trade is mainly in carcasses although cuts are increasing in importance; one problem for the industry is the high cost of butchery (given small carcass size). The situation is not helped by over-capacity, exacerbated by the sharp seasonal variation in sheep slaughter and the decline in throughput during the 1990s. Such factors have contributed to low margins and a lack of investment funds.

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2.2.3 Trends World sheep and goat meat production has increased only slowly during the 1990s averaging just over one per cent per annum and so below the rate of population growth. The production rise has also been below that of other meats. World production trends, however, are very much influenced by developments in China, for which growth has averaged about ten per cent annually, but it should be noted that official figures can often be inflated. Nevertheless, helped by government policy there was a considerable rise in the rate of offtake during the 1990s. This was helped by the rise in productivity as a result of increased adoption of meat breeds. In the Near/Middle East there were also increases in many of the major countries except Turkey. Production in other countries has tended to show a downward trend. Production developments in New Zealand indicate a marginal reduction during the 1990s. This is despite the steady fall in the breeding flock because of the greater attractiveness of alternative enterprises. Those producers remaining in sheep have had to increase productivity sharply through higher lambing rates and raising carcass weights in order to maintain incomes. In Australia, until 1997, there was some reduction in production, given the lower returns from wool production and improved returns from other enterprises, and so there was some switch away from sheep towards beef and deer production and forestry. In more recent years, however, lamb production has increased in importance helped by good returns both on the domestic and export markets. In contrast the fall in production during the 1990s in Russia and Central/Eastern Europe was marked as the wool market collapsed. This was prompted by the phasing out of government subsidies and in many cases the withdrawal of state organisations in the production of sheep. Over the ten year period to 2000, sheep meat production in the EU contracted slightly reflecting the decline in the sheep population. Most significant were the declines that occurred in some of the more important production areas, namely France (down 22%), Ireland (down nine per cent) and Italy (down 14%). The reason for most of the decline was falling profitability, which led many sheep producers to leave production permanently. France and

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Italy are net importers of sheep meat and have seen their self-sufficiency levels fall, as imports have had to rise to ensure adequate supplies meet demand. By way of contrast, Spain is the only EU country to have recorded a significant increase since 1990, with production up by 15%. (Although Germany is also shown to have recorded an increase, the figure given for 1990 is unusually low compared with other years and is therefore anomalous.) This increase has been fuelled by a rise in exports, which has helped to maintain profitability. Spain is now a net exporter of sheep meat. In the UK, production was broadly stable throughout the 1990s. The UK too is a net exporter in the sheep meat sector. However, the strong pound and reduced demand on the Continent led to a decline in exports in 2000 and there was a decline in production. Another, much sharper, decline occurred in 2001, as a result of Foot and Mouth Disease. EU sheep meat production can also be affected by events on the world market and by changes in weather patterns. In 1998, widespread disruption was caused when the world sheep skin market collapsed in the wake of severe recession in Russia. There were also unseasonable weather patterns that affected marketings particularly in the UK and Ireland. Unlike the situation for other meats there is no obvious sheep production cycle. Climate, and especially rainfall, influencing availability of grazing, can be an important factor in more marginal producing areas such as the Near/Middle East. This can also influence the productivity of ewes and the size of the lamb crop and reduce carcass weights of sheep for slaughter. Figure 2.2 illustrates the development of sheep meat production in major countries since 1990. The very significant rise in Chinese production can be seen clearly.

2.2.4 Future developments There is only limited scope for increases in technical efficiency in sheep production. This is more confined to areas where resource levels permit, such as New Zealand, where there is higher quality year-round pasture. Harsh rearing conditions prevent productivity increases in many other parts of the world.

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million tonnes cwe

1991

1992

1993

1994

1995

2.2 World sheep meat production in selected countries, 1990–2000.

0.0 1990

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1996

1997

1998

1999

2000

New Zealand

Australia

EU

China

N/M East

Production

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Future trends in world prices of lamb, mutton and wool would suggest that the prospects for the sheep sector will be good to 2005 unless there is a major world recession. Developments within China are of major significance in determining the outlook for the world sheep meat market. There is scope for further increases in production as factors influencing developments during the 1990s will continue to apply, assuming ample grazing, conserved fodder resources and further increases in productivity. The wool market has been good and consumers are increasing their demand for mutton (lamb is not widely produced) and goat meat. For New Zealand, in line with developments during the 1990s, sheep numbers are expected to continue to decline as farmers continue to switch to dairy cattle, deer and forestry as these sectors offer the prospect of better profitability. But ongoing improvements in productivity should moderate the fall in sheep meat production, which could even stabilise if lamb prices improve. The New Zealand lamb industry should benefit from lower production in the EU as a result of developments in the UK. The outbreak of FMD led to a ban on UK exports throughout most of 2001, so New Zealand was able to divert more to Continental Europe. Also, emergency slaughter of UK lambs is likely to lead to a decline in production in the first few years of the new millennium, so New Zealand supplies may again be needed to make up the shortfall. For Australia, total sheep meat production is projected to increase marginally, helped by prospects for better wool prices. Lamb, as well as mutton, production seems likely to rise helped by good export markets. In some parts of Eastern Europe, notably Hungary and Poland, sheep production is no longer considered a viable enterprise with farmers obtaining better returns from arable production. There seems little prospect of any major production rise in the region in the coming years. In the long-term, EU sheep meat production is expected to continue falling. The largest impact on the EU sheep meat sector will be changes to pig and poultry production as well as consumption of these two meats. When measuring the cross elasticity of demand, changes to the price of pig and poultry meat have proven to have the most impact on sheep meat demand. If production of these two meats continues to grow this could have a detrimental effect on the EU sheep meat sector. Overall, therefore, future growth in world sheep and goat meat production seems likely to be small.

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Production

2.3 Pig meat 2.3.1 Profile World production of pig meat in 2000 amounted to over 90 million tonnes and it is now the most important meat accounting for 40% of world output. Production and trade, however, are far less widespread than in the beef sector. Religious sensibilities prevent consumption in Moslem societies and access to cheap feed in certain areas, such as Africa, can also be a constraint on commercial pig production. Production is highly concentrated, with China, the EU-15 and the United States accounting for nearly 75% of the total. Normally it is based on intensive production practices. This means that large quantities of cereal based feed are used, especially in the more developed pig economies. Yet there is still a degree of backyard production, especially in China and countries with less developed pig sectors. Backyard production can utilise household waste and by-products but modern intensive production relies on high quality feed to maximise growth rates and production of lean meat. Environmental and welfare pressures are becoming more important. This is because of increasing intensification of production, stocking densities, certain pig production systems (such as rearing under confined conditions, use of growth promoters) and problems relating to manure disposal. This has already put a brake on expansion in production in many parts of the EU and Japan and to a limited extent in some parts of North America. Table 2.5 shows pig meat production levels in the world’s major production areas since 1990.

Table 2.5 World pig meat production (000 tonnes cwe)

China EU United States C/E Europe Brazil Canada Japan Russia World

1990

1995

1996

1997

1998

1999

2000

24016 14218 6964 na 1050 1124 1555 na 69856

33401 16105 8097 4467 1430 1276 1322 1865 78567

33015 16368 7764 4593 1600 1228 1266 1705 78458

37155 16290 7835 4297 1518 1257 1283 1546 82170

39899 17657 8623 4390 1652 1338 1286 1505 87686

41096 18021 8758 4510 1683 1562 1277 1485 89808

43053 17606 8590 4343 1887 1675 1270 1250 91030

Source: FAO (except EU, Eurostat).

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China China relies on pig meat as the main source of animal protein. By international standards the efficiency of the pig sector is constrained by low productivity. There are issues relating to genetics, feed and management and even ongoing disease problems (FMD and swine fever) so the scope for development of the pig sector is considerable. In spite of some growth in modern intensive production, an estimated 85% of pigs are found on household units with fewer than five pigs. Variable carcass weights and poor lean to fat ratio can be a problem for the industry. Processing facilities that do not meet international standards except in very few cases do not help the situation. Consumers are also slowly increasing their demand for other meats, with pig meat losing market share to poultry in particular. European Union The EU-15 is the world’s second largest pig meat producer accounting for 19% of world output in 2000. However, its share has fallen steadily during the 1990s in response to little demand growth in comparison with China. All member states are involved in pig meat production to some degree but 70% of production is accounted for by just five member states. The biggest producer of pig meat in the European Union is Germany accounting for over 20% of gross indigenous production. Spain and France are next, accounting for 15% and 13% respectively. The Netherlands and Denmark each account for about ten per cent of EU production but, unlike the countries mentioned previously, are more than self-sufficient with their industries relying heavily on export trade. The majority of pig meat produced within the EU is derived from ‘clean’ pigs (i.e. excluding animals used for breeding), raised especially for meat production. However, the meat from cull sows and boars also contributes to the overall tonnage. Net production within certain member states can rely heavily on net trade flows in live pigs. The Netherlands has historically been a substantial exporter of live pigs to countries such as Spain and Germany. Production systems throughout the EU are, on the whole, very similar with the majority of production emanating from large, modern, intensive rearing systems. The legislation applying to pig production can vary from one member state to another. In the Netherlands and Denmark, for example,

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Production

Table 2.6 EU pig meat production by country* (000 tonnes cwe)

Germany Spain France Netherlands Denmark Italy Belgium/Lux UK Austria Portugal Sweden Ireland Finland Greece EU-15

1990

1995

1996

1997

1998

1999

2000

3142 1772 1817 1904 1208 1211 747 953 401 278 291 160 187 147 14218

3430 2252 2140 1885 1517 1276 1029 1009 454 284 311 207 168 144 16105

3435 2361 2149 1895 1527 1349 1050 993 462 292 321 221 172 141 16368

3505 2421 2228 1402 1574 1355 1042 1092 465 306 332 243 180 144 16290

3746 2749 2333 1826 1698 1330 1095 1150 488 332 333 251 185 142 17657

3973 2918 2349 1851 1709 1391 1054 1045 500 324 329 256 182 139 18021

3864 2955 2305 1790 1677 1401 1090 901 485 311 279 236 172 140 17606

* gross indigenous production. Source: Eurostat.

where production is very intensive but space increasingly limited, national legislation concerning manure disposal and other measures designed to protect the environment are either in place or under debate. In the Netherlands in particular this is causing a decline in pig numbers in order to comply with manure control legislation. In the UK, welfare legislation came into force in 1999, which banned the use of stalls and tethers for breeding pigs. This required reinvestment by some producers. Figures quoted by the European Commission at the beginning of 2001 suggested that elsewhere in the EU almost 65% of pregnant sows are restrained in individual stalls. An EU proposal to amend existing legislation on the protection of pigs, to ban the use of stalls and tethers, was put forward at the beginning of 2001. The proposal is intended to be in force in full in 2012 although new holdings must comply from 2002. The Netherlands, Denmark, Finland and Sweden also have national legislation in place banning stalls for pregnant sows and ensuring the provision of surroundings allowing natural behaviour and social interaction. Table 2.6 shows the relative importance of the various EU member states in terms of pig meat production.

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United States The United States is a key pig meat producer and became an increasingly dynamic exporter during the 1990s. But because of little increase in domestic demand, its share of world output declined marginally during the 1990s, accounting for about 9.5% in the year 2000. However, this period has seen the emergence of large-scale corporate farming which has displaced smaller family farming units and as a result unit production costs have fallen. There have also been sharp rises in productivity (pigs reared per sow, feed conversion) making the industry increasingly competitive with the largest production units in the world. For example Smithfield Foods, the largest corporate producer, owned 785000 sows at the end of 1999. Its substantial cereals output, especially of maize and soya, and the location of pig farms in major grain producing areas help the US situation. Similar developments also apply to Canada even though output is only one fifth that of the United States. Russia/Eastern Europe The pig industries of Russia and Central/Eastern Europe went through a period of structural and economic adjustment during the 1990s but pig meat has remained by far the most important meat produced. The collapse of the centralised economy, with pig production often dominated by state farms and collectives, has only been partially replaced by private enterprises under the more market-orientated economy that now prevails. The former was characterised by inefficient production and subsidised inputs such as feed and utilities. These were then withdrawn and so pig prices had to be increased at a time when the pig meat market was in decline because of falling consumer purchasing power. As a result, pig herd liquidation became considerable. There are some signs of stability and even upturn in Central/Eastern Europe but the recovery is being dampened by increasing consumer preference for poultry meat. Brazil In Brazil there has been a considerable modernisation of the pig sector in recent years including integration with some of the major poultry processing companies. With access to low cost feed, labour and housing, Brazil has the lowest unit production costs in the world. However, its potential has been constrained by a small domestic market and only limited access to the world market because of tariff barriers and disease restrictions (both swine fever and FMD).

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Production

South East Asia The proximity of the Japanese pig meat market for South Korea and Taiwan and increasing domestic demand resulted in an expansion in production in these two countries during much of the 1990s. However, both have suffered from FMD outbreaks in recent years, and subsequent export bans have interrupted their considerable trade with Japan. The situation in these countries is especially important to the EU given the importance of the Japanese market to EU exporters. At times when South Korea and Taiwan are unable to export, EU exporters are able to gain a greater share of the lucrative Japanese market.

2.3.2 Industry structure The pig meat processing industry is less associated with overcapacity at the world level than is the case in the beef sector. In the more developed pig industries, processing normally takes place in a singlespecies, large-scale slaughter facility and associated cutting and packing plant producing considerable economies of scale. Further processing can also be undertaken so as to maximise the returns from the pig carcass. The industry generally benefits from a good level of investment and a relatively stable supply throughout the year (unlike the beef sector with its large supply variations). Nevertheless, competition in the industry can be intense and so margins are not high compared with other food processing sectors. The United States’ processing industry is especially competitive. It has the largest plants in the world and also a high degree of concentration. The ‘top five’ companies led by Smithfield Foods and Iowa Beef Packers and followed by Swift and Excel account for about 65% of total US pig slaughter. This gives the US a competitive advantage on the world market and especially over most EU exporters. One exception would be the Danish company Danish Crown (slaughtering about 16 million pigs per annum) which is the third largest in the world after Smithfield and Iowa Beef Packers. Otherwise, the EU abattoir sector is more fragmented and hence with fewer economies of scale. High throughput enables a company or country to keep down unit processing costs while at the same time giving it the ability to supply large quantities of individual cuts. There is very limited foreign investment (and certainly less than in the poultry sector) in pig meat processing and hence there is a lack of

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multinational pig meat processing companies. Smithfield Foods is the one major exception now having investments (including in pig production) in Poland, Mexico, Brazil and France. It is widely considered that Denmark has the best structured industry in the EU. The company Danish Crown, following its merger with Vestjyske in October 1998, now slaughters 16 million pigs per annum giving it a market share of over 80%. Such is the level of concentration in the Danish pig sector that the two largest companies (Steff-Houlberg being the other) account for 95% of domestic slaughter. For the other key exporting country, the Netherlands, the dominant processor is Dumeco with a market share of about 35% of Dutch pig slaughter. It is the second largest pig processor in the EU. Given that its own domestic supply is now declining, Dumeco has also been investing in processing in other EU countries, notably Spain and Italy. The degree of concentration is inevitably lower in the Netherlands although the ‘top five’ market share still amounts to 75% with the other major companies being Sturko Meats and the Hendrix Group. In France, the degree of concentration is somewhat lower with the ‘top five’ companies having a market share of just over 40%. The largest pig processor is Socopa with a market share of about 13% and handling 3.5 million pigs per annum. The ‘top five’ concentration in the largest pig market, Germany, only amounts to about 35%; the largest company is Nordfleisch followed by Westfleisch. The problem of over-capacity in the pig abattoir sector in the EU has contributed to low profitability for many years, although the situation is better than in the cattle sector. Rationalisation has taken place to some extent so now there are fewer abattoirs and higher average throughputs. Only the Netherlands has undertaken an industry sponsored rationalisation programme (in 1995) with those ceasing production receiving compensation payments. Denmark can be considered the only major producing country where over-capacity is not a major issue. Average throughputs have been increasing to the extent that some abattoirs in the EU are handling more than two million pigs per annum with the Steff-Houlberg abattoir at Ringsted being the largest at over three million pigs. For the abattoir sector, some processing is only to the intermediate stage (cutting and packaging) but others are involved in further processing in order to obtain maximum valorisation of the carcass. The Danish industry has been especially successful at this.

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As for the other meat sectors, there has been very little cross-border investment in the form of acquisitions and mergers within the EU. This has clearly been a contributory factor to the low level of concentration for the EU industry compared with the United States. However, in the case of further processing there are a number of multinational companies involved in several EU markets such as Sara Lee, Nestlé, Tulip International and Unilever. Yet at the EU level, the largest still only has a small market share (less than five per cent). It is sometimes suggested that the well organised Danish companies should be involved in processing on other EU markets. But the fact that the industry is co-operative based (with the producers as shareholder members) makes this difficult. However, this structure is considered one of the key reasons for the success of the Danish industry. It results in a high degree of integration and contributes to the focused strategy of the whole industry. The importance of co-operatives is greater in Denmark, at 95%, than in any other country. France, however, is not far behind, at about 85%. These two countries are considered to have the best structured pig industries in the EU. In the Netherlands, co-operatives now account for only about one-third of marketings, and there are even fewer in Germany. Throughout the EU, increased uptake of quality assurance schemes and the need for greater traceability from producer to consumer is forcing the whole pig meat chain to work more closely together.

2.3.3 Trends World pig meat production increased steadily during the 1990s averaging about 2.5% annually. This was above the rate of population growth but below that of poultry meat for which growth has been about five per cent per annum. World production trends, however, are very much influenced by developments in China where growth has averaged about six per cent annually, although official figures can often be inflated. The rate of growth has been somewhat less in other parts of the world including in the main developed pig meat economies. The main exception to this was the year 1998 when there was a sharp expansion throughout the world to the extent there was over-production at a time when consumer demand was being reduced by the economic crisis in Asia and Russia.

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This provoked sharply lower prices across the world that lasted throughout 1999 and many farmers suffered losses in revenue. The growth in production has been steady in North America in response to the industry investment and modernisation and exploitation of export market opportunities. During the 1990s growth averaged two per cent annually in the United States but has been even more marked in Canada, at about 3.5% a year. The modernisation of the pig sector in Brazil has also resulted in a steady rise in production averaging about 5.5% annually. Growth has been much smaller in the EU as there has been no major increase in market demand. EU consumption has been much more stable and there is a dependence upon export refunds when trading on many world markets. Throughout the 1990s, growth averaged just over one per cent a year. However, there were some marked exceptions, notably Spain where production rose by almost six per cent on average each year. Spain is a relatively low-cost producer and has increased its domestic production since it joined the EU in order to reduce its reliance on imports of live pigs. In contrast, the fall in production during the 1990s in Russia was marked. Structural change in the industry and feed shortages were contributory factors. The reduction in Central and Eastern Europe during the first half of the 1990s was also sharp but since then the situation has shown some stability and even recovery. A pig production cycle can be observed in western industrialised countries and this has become increasingly uniform between the EU and the United States. This is because of the substantial world trade flows in pig meat which mean that prices also tend to move together. The complete cycle lasts about five years. During a period of rising pig prices, producers tend to build up breeding sow numbers by holding back female gilts that would otherwise have been marketed as slaughter stock. The resultant eventual rise in availability of slaughter pigs (but with a time lag of at least one year given the gestation period of four months and growing period of about six months) contributes to rising pig meat production and consequently falling prices which in turn induces additional herd offtake, especially of females, as producers then reduce their herds. This ‘liquidation’ phase in the cycle eventually becomes sufficient to result in lower pig meat production and so pig prices start to increase again and hence the cycle is complete. This cycle is becoming less obvious because of

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the increased specialisation of pig production and lack of alternative income (e.g. compared with mixed farmers). Figure 2.3 illustrates pig meat production levels since 1990 in the world’s largest producing countries. In particular, the spectacular growth in China contrasts with the virtually flat situation elsewhere.

2.3.4 Future developments There remains scope for more increases in technical efficiency in pig production from further improvements in genetics, investment in larger scale production facilities and management. In particular, there remains considerable scope for such a rise in many developing pig economies (e.g. in China) and even in countries with sophisticated pig industries given that many producers still have a technical performance well below average. The outlook is also for continued relatively low feed prices (climatic conditions permitting) but environmental costs could well increase in many parts of the world especially in relation to manure disposal and stocking density limits. More welfare issues will also have the impact of raising production costs (less use of growth promoters, more housing required). The increase in world prices that took place at the end of the last decade has already provoked renewed expansion in pig production helped by good demand throughout the world from stronger economic growth, especially in South East Asia and Russia. In the United States too the pig sector is now in a re-building phase following the 1998 crisis. Production will be rising again from mid-2001 onwards with the rate of growth accelerating in the period 2002–04 to average about 2.5% per annum (based on projections of the Organisation for Economic Co-operation and Development). In Canada, where production did not fall during the crisis, further growth is also expected. Developments within China are of major importance in determining the outlook for the world pig meat market. But the situation is somewhat unclear given uncertainty about the future level of animal feed production; cereal production is now being constrained by land shortages in some instances yet demand for pig meat by the growing population is rising. While there is scope for considerable improvements in feed conversion, the uptake of more intensive pig production would actually increase demand for domestically produced feed away

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million tonnes cwe

1991

1992 1993

1994

1995

2.3 World pig meat production in selected countries, 1990–2000.

0 1990

5

10

1996

1997

1998

1999

2000

Canada

US Brazil

20

15

EU

China

25

30

35

40

45

The international meat trade

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from food waste. This may imply that the rate of growth in pig meat production will slow down considerably and there will be a further switch to poultry meat production (a more efficient feed converter) and hence poultry meat consumption. This contrasts with the situation in the key import market, Japan, where production will continue to edge down because of constraints on land availability and high production costs, but demand and, hence, imports will increase further. Brazil, in the light of the success of its poultry industry on the world market and a competitive advantage in its pig production costs, could also be an increasingly important exporter of pig meat with production inevitably increasing. Projections indicate a similar rise to that which has occurred in the last few years. Stability and eventual recovery in pig meat production in Central/Eastern Europe and Russia is taking time and has yet to occur in the latter country in spite of government policy to encourage expansion. Consumer demand for pig meat is increasing again in response to renewed economic growth. However, the long-term nature of the pig industry, with its inherent technical constraints and investment requirements, means that the upturn in pig production will take longer. For Russia this will have a critical bearing on future import requirements with domestic supply shortages increasing in 2001. Increasing investment is helping the recovery in production already taking place in Central/Eastern Europe; growth is likely to continue in key producing countries such as Hungary and Poland. Further economic growth, partly the result of accession to the EU, will continue to stimulate demand in the region and so the outlook for the pig sector appears more certain than in Russia. Future growth in world pig meat output is inevitable and second only to the poultry sector. Projections of the Food and Agriculture Organisation (FAO) indicate a rise of about 2.25% per annum, despite assumed slower growth in China. After a prolonged period of low prices in the late 1990s, many EU pig producers were left with debt and a degree of uncertainty about the future. However, it is clear that some producers in certain member states were willing to expand production once again, although this will be limited by welfare and environmental legislation. Demand for pig meat within the EU, on the other hand, is likely to remain relatively firm as BSE continues to rock demand for beef in a number of countries. World-wide demand for pig meat is also expected

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to remain high. Far Eastern demand is likely to improve as these countries’ economies recover and this could increase demand for EU pig meat. However, with production in North America projected to grow and the US dollar weakening, the world trading environment for pig meat will be increasingly competitive.

2.4 Poultry meat 2.4.1 Profile World poultry meat production since 1990 has averaged at 60 million tonnes per annum. It is now the second most important meat, after pig meat, accounting for 28% of total meat output. Production of poultry is widespread throughout the world, being one of the easiest livestock species to produce. Nevertheless, world production is dominated by just three areas, the United States, China and the European Union, which between them account for nearly two-thirds of the total. In addition, Brazil, Thailand and Hungary are increasingly important on the world scene, with large-scale investment having taken place in the first two in recent years. Modern, intensive production systems rely on large-scale input of high-quality cereal-based feed. These systems are usually vertically integrated, with the same company handling all stages of the production chain from the weaning of chicks to the processing of increasingly sophisticated poultry meat products. Such systems can provide important economies of scale. Table 2.7 shows poultry meat production levels in the world’s major producing regions since 1990. Table 2.7 World poultry meat production (000 tonnes cwe)

United States China EU Brazil Thailand Russia Hungary World

1990

1995

1996

1997

1998

1999

2000

10759 3728 6007 2422 668 na 451 41040

13827 8670 8042 4154 1007 859 387 54621

14567 8999 8358 4152 1045 678 377 56283

14999 10585 8636 4571 1057 621 402 59854

15178 11349 8826 4696 1190 681 452 61969

16039 11943 8777 5647 1190 737 390 65109

16471 12500 8802 6125 1221 755 373 67257

Source: FAO (except EU, Eurostat).

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United States The United States is the key poultry meat producer, consumer and exporter of the world. Output accounts for one quarter of world production. The vertically integrated production and processing sector is very dynamic and innovative and with considerable economies of scale. Of course, the US is able to benefit from access to cereals for feed purposes. China China now accounts for 15% of world poultry meat output. Domestic demand for poultry meat has been growing strongly in response to increased consumer preferences and rising incomes. It has also developed export markets (especially to Japan). This has partly resulted from the establishment of large-scale, modern, vertically integrated operations with priority placed on exports. Investment by foreign companies (led initially by those in Thailand) has resulted in good opportunities as a result of China’s low feed and labour costs (especially in comparison with Thailand). Its proximity to Japan gives lower transport costs and some joint ventures have been set up in China. Government policy has also favoured the establishment of such export-orientated industries. Nevertheless, estimates indicate that 80% of production is still undertaken by private households while profitability of the large, state sector companies has been under severe pressure in recent years. European Union Virtually throughout the EU, poultry meat production and processing has benefited from continued high investment, considerable economies of scale and productivity increases in order to reduce unit costs. Production is also highly integrated back into feed milling and breeding/hatchery operations. Contract production and co-operatives are generally more widespread in some countries (especially France, Italy and Scandinavia). Most production is based on cereals as the major feed ingredient and especially wheat and maize, mainly grown in the EU. Soya bean meal is generally used as the protein supplement. For the EU, poultry meat production is dominated by broilers which account for 68% of output. Production is spread throughout the EU member states mainly to meet domestic requirements plus, in the case of France and the Netherlands, export demand. The largest

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producer is France, closely followed by the UK, accounting for 25% and 18% of EU production respectively. The four next largest producers are Italy, Spain, Germany and the Netherlands, each accounting for approximately 10–15%. Turkey meat production is much more concentrated with the dominant producer being France, accounting for 40% of the EU market. France has a substantial domestic market and is the main exporter within the EU. Other large producers, all with large domestic markets, are Italy, the UK and Germany each accounting for 15–20% of EU output. Elsewhere, turkey meat production is of minor importance. Table 2.8 gives data for the relative shares of production by member state and how these have changed since 1990. Brazil Brazil represents nearly nine per cent of world poultry meat output with a substantial domestic market. It is also increasingly a key exporter. It is considered to be the lowest cost producer in the world as the industry has good access to locally-grown cheap feed and benefits from low labour costs and favourable climatic conditions. These factors contribute to faster bird growth. There has also been large investment in production and processing resulting in a modern, intensive, market

Table 2.8 EU poultry meat production by country* (000 tonnes cwe)

France UK Italy Spain Germany Netherlands Belgium/Lux Portugal Denmark Greece Ireland Austria Sweden Finland EU-15

1990

1995

1996

1997

1998

1999

2000

1165 1043 1100 834 449 520 167 191 132 160 81 87 45 33 6007

2079 1404 1098 1008 664 610 270 231 184 161 112 99 80 43 8042

2230 1466 1117 954 693 650 297 245 182 176 118 98 82 49 8358

2275 1512 1137 998 734 671 315 267 185 173 124 104 90 53 8636

2324 1526 1148 999 790 674 346 298 194 149 122 107 88 61 8826

2233 1527 1131 1001 826 704 325 287 205 154 122 104 92 66 8777

2255 1526 1080 986 914 696 296 293 205 155 126 106 99 65 8802

* gross indigenous production. Source: Eurostat.

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orientated industry. The industry is mainly based on broilers as there is only one major turkey-producing company (Sadia). Thailand Thailand has been a major poultry meat exporter for some years as a result of large investment in production and processing. It no longer has a competitive advantage in price, however, as many of the feed, machinery and equipment requirements have to be imported while the industry no longer benefits from such labour rates. In order to protect its export markets it is increasingly moving into value-added activity. Also, certain companies, led initially by the Charoen Pokphand Group, are investing abroad (i.e. China). Russia The poultry meat sector in Russia went through a particularly severe crisis in the late 1990s, almost to the extent of a collapse, for similar reasons to Hungary (see below). Economic difficulties, lack of feed supplies and improved breeds, low efficiency and general productivity problems all contributed to high unit production costs. Devaluation of the rouble as a result of the economic crisis of autumn 1998 offered some protection to the domestic industry from imports but domestic demand has also been severely reduced. Hungary Although Hungary is a small poultry meat producer at world level it has been a major supplier to the EU market, especially to Austria, Germany and Italy. Economic adjustment in the 1990s, with a switch from a centralised to a market economy, caused severe disruptions in the industry as profitability fell sharply. This was mainly the result of the abolition of subsidised inputs, feed and utilities. Additionally, demand has been lower both on the domestic market, as consumer incomes fell and poultry meat prices increased, and export markets, especially on the key Russian market. There has also been a large structural adjustment in the industry as government-owned companies suffered from bankruptcies and some were subsequently sold to the private sector.

2.4.2 Industry structure In terms of poultry meat industry structure in major exporting countries, the United States is the strongest. It enjoys a high degree of

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concentration and has the highest economies of scale. Tyson Foods dominates the industry with a market share of about 25% and the ‘top five’ companies have a market share of about 55%. This illustrates the extent of the competition faced by the EU, the other major exporter on the world market. EU poultry meat production is only 60% of that of the United States while the ‘top five’ EU companies have a market share of less than 25%. In Brazil the leading producer/processors are Sadia and Perdigao with a combined market share of about 20%. Both are heavily involved in the export markets, with the ‘top five’ companies accounting for about 35% of market share. In the medium-term, increased concentration in the industry can be expected as the number of medium and smaller companies decline. Of significance, especially in terms of export implications, is the investment by foreign companies in the Brazilian poultry industry including the French company, Doux, which has bought the fourth largest Brazilian poultry company, Frangosul. In Thailand, the Charoen Pokphand Group is the largest company with a market share of about 15% with the ‘top five’ companies accounting for about 50% of the market. In the European Union, the concentration of the poultry industry is higher than in the red meat sector. Although this can give some advantages in terms of marketing strength, concentration at the EU level is not high when compared with the United States poultry industry. At the individual country level, the ‘top five’ company concentration tends to be more than 50%. It is as much as 60% in northern EU countries but somewhat lower in major southern EU markets such as Spain and Italy. However, there have been only limited cross-border acquisitions/ mergers within the EU. France has the largest companies in the EU. The two largest, Doux and Bourgoin, account for about 12% of total EU output. This is partly because they have expanded into other EU countries, notably Spain and Germany. AIA Verona of Italy and the Hillsdown Group (now taken over by Grampian in the UK) have been other major EU processing companies but are now tending to decline in relative importance.

2.4.3 Trends Poultry meat production has had the fastest growth of all the meats, averaging a rise of five per cent annually in the period 1990–1998. This

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can be especially attributed to the phenomenal growth in China, of about 15% a year on average, although it should be noted that Chinese figures are difficult to verify and could be inflated. There has been strong growth in Brazil, of nearly nine per cent, and to a lesser extent in Thailand, of six per cent a year. Even in the more mature markets of the EU and the United States, annual growth has remained marked at 3.5% and 4.5% respectively. In the United States, broiler production has been the major contributory factor to this growth whereas in the EU it has been turkey meat. Since 1996, the poultry meat sector in the EU has been a net beneficiary of the BSE crisis which affected consumer demand for beef. In contrast, the major structural and profitability problems in both Hungary and Russia resulted in major production falls. The problems started earlier in Hungary and the country now seems to be recovering from these difficulties with production having increased from 1994 onwards as the private sector developed, in some cases helped by foreign investment and government incentives. However, production in Russia has fallen by 55% compared with 1992 when the Federation was formed. Figure 2.4 illustrates the rise in poultry meat production in the world’s major producing countries since 1990. It clearly demonstrates the phenomenal rise that took place in China between 1990 and 2000.

2.4.4 Future developments The poultry meat sector is expected to remain the most dynamic of all the meats. Future production growth of about five per cent per year could occur through to 2010. This will be facilitated by further intensification of production accompanied by vertical integration and continued relatively low feed prices (climatic factors permitting). There is considerable scope for further productivity gains especially in countries that have not yet reached the optimum level. Of the major trading countries, production growth in the United States is expected to average about four per cent a year, mainly in response to continued rising domestic demand, but also increasing exports. Annual production growth is expected to be nearer two per cent in the EU. Further marked growth can be expected in China, although the rate of growth will probably slow to average about six per cent. Forecasts for China show major differences, however, partly depending

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million tonnes cwe

1991

1992

1993

1994

1995

2.4 World poultry meat production in selected countries, 1990–2000.

0 1990

2

4

6

8

10

12

14

16

18

1996

1997

1998

1999

2000

Thailand

Brazil

China

EU

US

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upon assumptions made on the future availability of feed, the key variable influencing all developments in the poultry sector. In Brazil, some slowdown in animal production growth to about five per cent is expected, partly because of continued tighter margins for the poultry industry and some industry rationalisation. Some slowdown in production growth seems likely in Thailand. The future situation is less clear in Russia although the Russian government is giving additional support to the industry including easier credit and the lowering of tariffs on inputs. There is also some increased local and even foreign investment taking place and so there are now some signs of growth in the industry. However, the extent of the problems in the sector suggest that a major upturn will be slow. In the long-term, developments will be influenced by political and economic developments, both of which are uncertain. Future production growth also seems likely to be modest in Hungary, of around one or two per cent annually. There are a number of uncertainties in relation to the future of the EU industry, which suggest some slowdown in the rate of growth in production in the long-term. There have already been signs of some slowdown, since the effects of the BSE crisis in the beef sector have lessened. In the long-term, there is the increasing threat from imports from outside the EU, including Brazil, China, Thailand and countries of Eastern Europe (notably Hungary and Poland). These countries are also important competitors for EU exporters. EU consumer concerns over bird welfare and feed regimes have increased in recent years. These concerns are likely to grow, if anything, and are likely to influence the level of consumer demand and increase production costs. In spite of these factors, however, the industry remains very market orientated and can be expected to continue to grow, but with further emphasis on value-added rather than volume growth.

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3 Consumption

3.1

Beef 3.1.1 World profile 3.1.2 The EU profile

3.2

Sheep meat 3.2.1 World profile 3.2.2 The EU profile

3.3

Pig meat 3.3.1 World profile 3.3.2 The EU profile

3.4

Poultry meat 3.4.1 World profile 3.4.2 The EU profile

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The wide differences in the rate of consumption of different meats in various countries and regions across the world illustrate the complex nature of meat demand and tastes. The reasons people have for eating more of one meat than another are often embedded in the traditions of the region in which they live. Religion and culture play a very important role in some areas, giving rise to a taboo on eating particular types of meat. The geography of an area can also give rise to established patterns of consumption. For example, in very dry areas only goats or certain breeds of sheep can survive adequately and this would reinforce the importance of the meat from these animals in the diet of the people. In many countries of South America the geography favours extensive cattle ranching and thus beef has traditionally formed the bulk of protein input. Improvements in breeding and management practices may make it more practical in other areas, where grazing land is at a premium and the agricultural focus is on cereal production, to produce intensively reared pigs and poultry which rely on feed inputs. Meat consumption levels remain low in the developing countries and preferences are mainly dictated by traditional tastes. In developed countries consumption is generally much higher. While tradition and cultural factors are important, other factors can also have a significant influence. Changes in supplies and thus price relativity can result in increased consumption of one meat compared with another. Both pig and poultry meat have benefited from lower cost production resulting from more efficient production methods. There has also been an increasing requirement for convenience of preparation and versatility, to fit in with modern lifestyles, and this has also tended to favour poultry meat consumption. Health and welfare issues have become much more important to consumers in the past 20 years or so. This has meant that decisions about meat consumption have become complex and changing, often influenced by short-term concerns, which can be exacerbated by media exposure.

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3.1 Beef 3.1.1 World profile Total world consumption of beef is estimated at about 56 million tonnes a year. Although the global figure has been growing in recent years, this is more a reflection of population growth. Figures which give consumption levels on a per capita basis show where consumer preferences lie as, unlike total tonnage figures, they are unaffected by changing population levels. At world level, average per capita consumption of beef in 2000 was less than 10kg and had been falling marginally during the previous ten years. The growth in world population had not been matched by a corresponding overall increase in beef and veal consumption. However, it is important to note that there have been different trends between developed and developing countries; the fall can be accounted for by lower consumption levels in developed countries as consumption in developing countries has increased slightly in recent years. Figure 3.1 shows the development of beef consumption in some of the major markets since 1990. The particularly sharp increase in China’s consumption is very obvious. Beef has become more expensive relative to other meats, so that in some parts of the world there has been a switch to cheaper pig meat and poultry meat, both of which are now more important in consumption terms on a global basis. Both the pig meat and poultry meat sectors have also made greater efforts than the beef sector in satisfying the demand for convenience products. This is a particularly important factor in the developed world. There are major differences by country in per capita consumption depending upon income levels. Consumer preferences and attitudes towards beef are also important determinants. In developing countries, per capita consumption averages only 6kg per head but it is four times higher than this in developed countries. Table 3.1 shows some of the most important countries for beef in the world, either because of the total size of the market or because of relatively high per capita consumption levels. The variations seen in the per capita levels illustrate well the effect that population figures can have.

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million tonnes cwe

1991

1992

1993

1994

1995

3.1 World beef consumption in selected countries, 1990–2000.

0 1990

2

4

6

8

10

12

14

1996

1997

1998

1999

2000

Russia

Brazil

China

EU

US

Consumption

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Table 3.1 Consumption in major beef markets

United States European Union Brazil China Argentina Russia Mexico Japan India Canada Australia Uruguay

000 tonnes cwe

Per capita kg

12356 7515 6102 5290 2551 2329 2309 1545 1400 980 676 200

42.8 19.9 34.6 3.6 65.2 15.9 19.8 11.9 1.4 31.3 33.8 60.0

Source: Eurostat, USDA estimates for 2000.

Americans eat more meat than any other nationality and the beef market in the United States is the largest in the world. Per capita consumption now averages about 42.8kg each year. Beef still enjoys a high demand and accounts for over 30% of total meat consumption, the second most important meat consumed after poultry meat. Although much smaller markets overall, consumption of beef is particularly important in both Argentina and Uruguay. The strong tradition of beef consumption has developed because of the importance of cattle ranching in the overall economy and this has resulted in astoundingly high levels of consumption on a per capita basis. In 2000 it was 65.2kg in Argentina and 60.0kg in Uruguay, in both cases well above the world average. However, in both markets, consumption is sensitive to economic conditions and there were some quite wide variations throughout the 1990s. Although Australia appears as a small market in volume terms, this is of course because of the small population. In per capita terms, consumption is amongst the highest in the world. Like many of the South American countries this is the result of the importance of cattle production in the economy and the relatively low price of the product. In Russia and Central and Eastern European countries, both total consumption and per capita consumption fell sharply during the 1990s in response to the decline in consumer purchasing power. In large markets such as Russia and Poland the reduction was 40% and more. Even lower down the scale, per capita consumption in China only amounts to 3.6kg and so accounts for less than ten per cent of the

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meat market there. Beef forms a minor role in the diet. However, as the economy has improved in recent years and consumer purchasing power has increased, per capita consumption has risen quite rapidly.

3.1.2 The EU profile Consumption in the EU remains less than half that of the United States, at only 19.9kg per head. The relatively high price of beef and increased consumer preference for pig meat and poultry meat means that it accounts for little more than 20% of total EU meat consumption. Per capita beef consumption in the UK is now only about 40% of the United States average. Table 3.2 shows both total and per capita consumption for the EU as a whole and for individual member states. Although EU consumption fell by almost eight per cent in 1996 as a reaction to fears over BSE and its implications for human health, consumption subsequently recovered over the following three to four years. However, the long-term trend in beef consumption is downwards and the estimated per capita consumption level of 19.9kg in 2000 was about 2.9kg per head lower than ten years previously. Within the EU overall average for beef and veal, there is considerable variation in consumption by country. France in particular has a

Table 3.2 EU beef consumption

France Italy Germany United Kingdom Spain Netherlands Belgium/Luxembourg Greece Sweden Portugal Austria Denmark Finland Ireland EU-15

000 tonnes cwe

Per capita kg

1546 1418 1159 1025 576 296 205 202 192 169 159 119 98 62 7515

25.4 24.6 14.1 17.2 14.6 18.8 18.0 19.2 21.6 16.9 19.6 22.4 18.9 16.7 19.9

Source: Eurostat figures for 1999 or 2000 as available.

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strong tradition of eating beef and veal and per capita consumption is estimated to be about 28% above the EU average. Consumption is also above average in Italy (+24%), Denmark (+13%), and Sweden (+ nine per cent). Although Germany, with a population of 80.9 million in 1998, is the largest consumer market, on a per capita basis it is only 71% of the EU-15 average. According to a survey commissioned by the Meat and Livestock Commission (MLC) in 1999 into European attitudes to meat, 91% of EU households consumed meat; of these households 86% ate beef. Approximately 60% of those eating beef did so between one and three times a week and a further 15% did so even more frequently. The survey also showed that consumers saw flavour and taste as the most important attributes of beef, followed by tenderness and nutritional value. Across the EU as a whole, cost remained the attribute with which consumers were least satisfied. Towards the top end of the market, demand for quality, home produced products was found to be rising, for example under the ‘Label Rouge’ scheme in France which guarantees the production and processing practices including the type of feed and production system used. According to the survey, 38% of consumers would prefer to buy meat produced in their own country.

3.2 Sheep meat 3.2.1 World profile World consumption of sheep meat (excluding goat meat) is substantially lower than other meats at around eight million tonnes annually. There are several reasons for this. Partly it is because sheep meat production is not as widespread as other meats, so in many countries there is no tradition of consumption. It also tends to be higher-priced than other meats, particularly pig and poultry meat. At the world level, average per capita consumption amounts to only 1.9kg carcass weight equivalent per annum and so it is not a major meat in the diet of consumers. In developing countries, per capita consumption is only 1.8kg and even in developed countries it is still no more than 2.4kg.

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Table 3.3 Consumption in major sheep meat markets

China European Union India Turkey Australia Saudi Arabia Russia United States New Zealand

000 tonnes cwe

Per capita kg

2569 1382 928 366 333 262 187 146 107

2.0 3.7 0.9 5.6 17.6 12.5 1.3 0.5 28.9

Source: Eurostat, USDA estimates for 2000 (includes goat meat).

Sheep meat does have a high status throughout much of the Middle East and North Africa boosted by its use for religious and social reasons. As a result, per capita consumption in these areas is much higher and it is normally the preferred and traditional meat. Per capita consumption averages about 5kg per head in the Near/Middle East and as much as 12.5kg in Saudi Arabia. For the Gulf States, demand is boosted by the high purchasing power of Arab consumers. Table 3.3 gives total consumption figures for some of the major markets and also the wide variations in per capita consumption levels. In stark contrast to the other meats, the United States is not a major market for sheep meat (representing less than 0.5% of total meat consumption) and Americans have no tradition of consuming it. The overall average is low at 0.5kg, although this masks a higher figure among some ethnic minorities. Although China is the world’s largest producer, sheep meat represents less than five per cent of its total meat market. Consumption per capita is still only 2kg (mainly in the form of mutton) so it plays a relatively small part in the average Chinese diet. In Russia and Central and Eastern Europe, per capita consumption is generally low, as sheep meat is not traditionally consumed in most countries. Only in Bulgaria and Romania is sheep meat consumed in any significant quantity, accounting for 6.0kg and 2.6kg per capita respectively. Per capita consumption in Russia now amounts to just 1.3kg contrasting with a level of almost 3kg at the beginning of the 1990s. Figure 3.2 shows the development of lamb consumption in some of the more

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0.0 1990

0.5

1.0

1.5

2.0

2.5

3.0

1991

1992

1993

1994

1995

1996

3.2 World sheep meat consumption in selected countries, 1990–2000.

million tonnes cwe

1997

1998

1999

2000

New Zealand Australia S. Arabia

China EU

Consumption

important markets. Apart from in China there has been little growth since 1990. Long term developments would suggest that there is little scope for any significant rise in per capita consumption as supply constraints and expected small growth in production may not exceed the projected growth in population. Sheep meat will therefore continue to lose market share to other meats, notably pig meat and poultry meat.

3.2.2 The EU profile As a proportion of total meat consumed in the EU, sheep meat takes the smallest share, representing only four per cent of total meat consumption. Per capita consumption of sheep meat is around 3.7kg annually, a level that has remained constant since the early 1990s. Data from individual member states suggest that some growth in lamb consumption occurred at the end of 2000 as a result of consumer concerns over BSE in cattle, and that declining volume consumption in some countries is counterbalanced by expansion in other countries. Table 3.4 gives total consumption in some of the major markets and also the wide variations in per capita consumption levels. Within the EU the majority of the countries consume very little sheep meat. Only five of the EU-15 have per capita consumption above

Table 3.4 EU sheep meat consumption

United Kingdom France Spain Greece Germany Italy Portugal Ireland Belgium/Luxembourg Netherlands Austria Sweden Denmark Finland EU-15

000 tonnes cwe

Per capita kg

394 304 243 145 96 91 37 31 23 22 10 9 7 2 1382

6.6 5.0 6.2 13.8 1.2 1.6 3.7 8.3 2.2 1.4 1.3 1.0 1.3 0.4 3.7

Source: Eurostat figures for 1999 or 2000 as available.

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the EU average level of 3.7kg per annum. Interestingly, those countries ranked highly in terms of per annum consumption of sheep meat are generally ranked much lower for consumption of either beef or pig meat. The main sheep meat consuming countries, per capita, are Greece, Ireland, the United Kingdom, Spain and France. Sheep meat plays the greatest role by far in the Greek diet. Although annual consumption appears low at 145000 tonnes in 2000, this equates to per capita consumption of about 13.8 kg per annum. The country with the highest level of total consumption is the UK, consuming an estimated total of 394000 tonnes in 2000, which equates to per capita consumption of around 6.6kg per annum. Ireland has one of the lowest levels of total consumption at 31000 tonnes carcass weight but one of the highest levels of per capita consumption at 8.3kg per annum. In France, total consumption in 2000 stood at 304000 tonnes with per capita consumption at 5.0kg per annum. About 60% of lamb consumed in France is imported. Market research carried out by A C Nielsen showed that the heavy buyers of lamb, such as those consuming over three times the national average, are older members of the population. In fact, according to the data, over 80% of heavy French lamb buyers are over 40 with a third either retired or not working. Interestingly, French lamb purchasers also fall into two main income categories and are either those with high levels of disposable incomes or those on very low level incomes. Another survey, assessing French perception of lamb, shows that consumers consider lamb to be time intensive in terms of preparation, and therefore not as convenient as other meats. To date, there seems to have been little or no innovation within the lamb category in France. However, lamb is also positively associated with taste and considered reasonably priced. Lamb sales in France have been found to be particularly sensitive to price variations. German lamb consumption increased by five per cent in 2000 although it plays a relatively minor part in the diet. Encouragingly, research by CMA attributes much of the growth to a growing base of younger consumers. About 60% of consumption is imported and therefore any increase in consumption is likely to be satisfied by greater imports. Having remained stable for a considerable number of years, the outlook for future EU consumption of sheep meat will be dependent upon consumers’ perception of sheep meat. As sheep meat consump-

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tion is particularly sensitive to changes in prices, any disruptions to supply, which may affect prices, are also likely to affect consumption levels. The European BSE situation in cattle led to some increase in the consumption of sheep meat, although this may prove to be a short-term substitution that will disperse once confidence in beef recovers.

3.3 Pig meat 3.3.1 World profile Total world pig meat consumption is in the order of 90 million tonnes each year. Average per capita consumption amounts to 15kg. As it is the most important meat produced it accounts for 40% of world consumption. One important difference between pig meat and the other meats is that there are large groups of people, including Moslem and Jewish communities, which do not eat pig meat for religious reasons. However, it is the preferred meat in the diet of consumers throughout Europe, Russia and in South East Asia, led by China (where per capita consumption is at least three times that of other meats). Per capita consumption is also high in the United States. As production growth exceeded population growth during the 1990s, per capita consumption increased by about one per cent per annum. This has been helped by a change in relative prices and a switch from beef. The pig meat industry has generally made great efforts in most parts of the world in meeting consumer requirements and especially satisfying the demand for more good-value, convenient and versatile products through more addedvalue activity. As well as consumer preferences, per capita income levels also influence consumption of pig meat. In developing countries per capita consumption is only 11kg. Pig meat is the most important meat consumed world-wide, and clearly this is boosted by the level of 30.1kg per capita in China, the largest market in the world, accounting for almost 45% of the total. In developed countries per capita consumption averages nearer 30kg but can exceed 50kg in some European countries. Table 3.5 shows some of the largest markets for pig meat in the world and the dominance of China can be clearly seen. In Russia and Central and Eastern European countries, per capita consumption fell during the 1990s because of the economic situation of

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Table 3.5 Consumption in major pig meat markets

China European Union United States Japan Russia Brazil Poland South Korea Taiwan Hong Kong

000 tonnes cwe

Per capita kg

40418 16324 8449 2234 1969 1811 1548 1160 930 388

30.1 43.3 30.2 16.6 12.0 10.1 39.9 20.9 42.6 45.0

Source: Eurostat, USDA estimates for 2000.

these countries. The fall was especially sharp in Russia averaging six per cent annually from 1992 onwards. The fall in Central/Eastern Europe averaged two per cent per annum but has since shown signs of increasing again. It should be noted that in this region there is consumer preference for pig meat and in countries such as Hungary, the Czech Republic and Poland it is as high as (and in some cases even higher than) in the EU. In the United States, pig meat is the third most important meat consumed (behind poultry meat and beef), only accounting for 25% of the total market. Demand and hence per capita consumption was basically stable during the 1990s; while pig meat was able to take market share from beef it lost it to poultry meat. Pig meat demand is not increasing in the retail sector but has been in the food service sector (i.e. catering) with any increase in total consumption due to population growth. Although Japan is an important importer of pig meat and a relatively large market overall, meat does not feature as prominently in the Japanese diet as in other developed countries, as it has to compete with several other protein sources, including fish. Per capita consumption is relatively stable and in 2000 was 16.6kg. Figure 3.3 illustrates the development of pig meat consumption in some of the major markets since 1990. It is striking how little change there has been in any of the markets shown, except China. In the western industrialised countries there is no indication that demand for pig meat will increase significantly in future. Since population growth is small then any expansion in the pig meat markets of countries such as the EU and Japan will also be small. In the United States

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million tonnes cwe

1991

1992

1993

1994

1995

3.3 World pig meat consumption in selected countries, 1990–2000.

0 1990

5

10

15

20

25

30

35

40

1996

1997

1998

1999

2000

Japan Brazil

US

EU

China

Consumption

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demand will benefit from favourable prices but any growth in consumption will be modest.

3.3.2 The EU profile Per capita levels in the EU are up to 40% higher than in the United States with a particularly strong consumer preference for charcuterie products in certain member states. Pig meat also has a much higher market share of about 45% of the total meat market. Table 3.6 gives total consumption in some of the major markets and also the wide variations in per capita consumption levels. Pig meat is the most popular meat consumed in the EU, accounting for about one-half of total meat consumption. In many countries a significant proportion of pig meat is consumed in a processed form, such as sausage. Total EU pig meat consumption has increased by about 12% over the last decade, having reaching a peak of 16.3 million tonnes in 2000, although this rate of increase has not been so great as that for poultry meat. Average per capita consumption in 2000 is estimated at 43.3kg, about 2.5kg more than in 1990. There is considerable variation in total pig meat consumption between the various member states. At 4.5 million tonnes, Germany had the highest level of pig meat consumption in the EU in 2000. Consumption was way in excess of that in Spain, France and Italy, the Table 3.6 EU pig meat consumption

Germany Spain France Italy United Kingdom Netherlands Austria Belgium/Luxembourg Portugal Denmark Greece Sweden Finland Ireland EU-15

000 tonnes cwe

Per capita kg

4516 2601 2180 2108 1415 654 492 484 446 343 339 315 178 135 16324

55.0 66.0 35.8 36.6 23.8 41.6 60.8 45.4 44.7 64.4 32.3 35.6 34.4 36.3 43.3

Source: Eurostat figures for 1999 or 2000 as available.

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next largest consumers, although to some extent this is due to the large population of Germany. The United Kingdom was the fifth largest consumer of pig meat, at 1.4 million tonnes. Spain has the highest level of per capita pig meat consumption, at around 66kg, with Denmark, Austria and Germany not far behind. A large proportion of this is in the form of processed products. Only six member states have consumption above the EU average. Pig meat consumption per capita is lowest in the United Kingdom, at around 23.8kg. The proportion of meat available to consumers in a processed form has slowly been increasing throughout Europe. The two main reasons for this are, firstly, convenience and, secondly, the fact that processed meats are viewed as food products and therefore the connection with live animals is obscured. Since the majority of processed meat products are pig meat based it is a significant sector of the pig meat market. Germany, Italy, France, Spain and the UK are the main producers of processed meat products in the EU with a combined market size of about seven million tonnes. Most of this is produced industrially, although small, local producers still account for around 20% of output in the four Continental countries. There is an enormous difference in the range of processed products produced and consumed in individual member states and the make-up of the market is very different between countries. There is no harmonised system of collecting data on the European processed meat market and so the facts presented below are derived from a number of national sources, using national definitions. The main difference between consumption in the United Kingdom and other member states is that in the UK very few charcuterie type products are consumed. Frozen convenience products and chilled ready meals are far more popular. Almost 20% of the retail market consists of ready meals whilst sales of more traditional meat components such as pies, pasties and puddings account for a further 20%. Also, unlike other EU countries, processed products based on beef are important. In Germany approximately half of all meat consumed is in a processed form, with per capita consumption amounting to around 31kg, the highest in Europe by far. The majority of processed products are pig meat based. Sausages account for about three-quarters of processed meat consumption, the most popular being Brühwurst (a mixture of finely minced pork and beef, quick-smoked then scalded) and Rohwurst

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(cured and either smoked or air-dried). Ham consumption varies between 3 and 4kg per person. Over half of all products are consumed out of the home, with a large number of Imbiss (snack) stands driving the catering sector. In France, processed meats are estimated to account for about 20% of total meat consumption, at around 18–19kg per person. Approximately 90% of meat used in the processing industry is pig meat. France is a leader in the production of cooked ham products with the superior quality York ham accounting for over three-quarters of production. Cooked ham consumption in France is estimated to be around 4kg per capita. Pâté and ready cooked meals are also significant with the latter category growing very quickly. Over half of all products are still produced for sale as loose products over charcuterie counters for sale in specialist outlets. In Italy, annual consumption of processed meat is estimated to be in the region of 16kg per person. Consumption is highest in the south and on the islands although cooked ham consumption is highest in the more affluent northwest. An average cooked ham consumption of around 5kg per capita is the highest in Europe. Bologna sausages (boiled and subsequently hung to dry) account for about one quarter of processed meat consumption, followed by dried ham including Parma ham (15%) and salami (10%). Most salami is pure pork while some is a mixture of pork and beef, varying by region. Total pig meat consumption is highest in Spain, with approximately 30%, or about 18kg per person, consumed as processed meat products. There are two distinct types of production. Firstly, cured and air-dried products, such as Serrano ham, chorizo and salchichon sausage. At around 4kg per head, Spain is Europe’s largest consumer of cured ham. Secondly, there are cooked products, such as York hams, small sausages (salchichas) and pâtés. Per capita consumption of cooked ham is between 2 and 3kg.

3.4 Poultry meat 3.4.1 World profile Total world poultry meat consumption is in the order of 60 million tonnes annually. At the world level, consumption has grown in line with

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Consumption

production, that is about five per cent annually, with per capita consumption increasing by about 3.5% a year after taking into account the increase in population. Per capita consumption now averages about 10kg a year. Poultry meat is the second most important meat consumed, having overtaken beef. This growth has been facilitated by low prices relative to other meats, helped by falling production costs, and the fact that poultry meat is acceptable to most cultures and religions. However, there are major differences by country, related particularly to income levels; per capita consumption is five times higher in developed economies than in developing ones. Table 3.7 gives details of some of the largest markets for poultry meat in the world. The wide variation in per capita consumption levels is very clear. The United States remains the dominant world consumer with annual per capita consumption at 51.6kg carcass weight. There is high consumption of both broiler and turkey meat, totalling about 39kg and 8kg respectively. In spite of the already high per capita consumption in the United States, it continued to increase during the 1990s by about two per cent annually and this growth could continue for the foreseeable future. Consumption in China is almost as great as in the United States, although poultry meat plays a far more minor role in the Chinese diet. In other parts of the Far East, however, poultry meat is far more important, for example in Hong Kong, where it is the highest in the world. Figure 3.4 illustrates the development of poultry meat consumption in some of the larger countries since 1990. Unlike other meats, poultry meat Table 3.7 Consumption in major poultry meat markets

United States China European Union Brazil Mexico Russia Japan Canada Hong Kong

000 tonnes cwe

Per capita kg

13546 12497 8087 5254 2514 1993 1912 1078 341

51.6 9.2 21.5 26.3 20.6 8.2 13.8 34.9 59.4

Source: Eurostat, USDA estimates for 2000.

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million tonnes cwe

1991

1992

1993

1994

1995

3.4 World poultry meat consumption in selected countries, 1990–2000.

0 1990

2

4

6

8

10

12

14

1996

1997

1998

1999

2000

Russia

Brazil

China

EU

US

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Consumption

consumption has shown some clear expansion in many regions, including China, the United States and Brazil.

3.4.2 The EU profile There is no doubt that consumer demand in the European Union for poultry meat continues to be sustained by its good image. Virtually everywhere in the EU, consumer surveys show the main attributes to be that it is light, has a low fat content, is versatile and is considered as being good value for money. At the time of the BSE crisis in the beef sector in March 1996, poultry meat was the main beneficiary of the temporary shift away from beef, although there has subsequently been some shift back again. At the top end of the market there has also been increasing demand for quality products. As mentioned before, an obvious example is ‘Label Rouge’ in France which guarantees the production and processing practices including the type of feed used, bird life span and production system (free range, stocking density limits etc.). Table 3.8 gives total consumption levels in some of the major markets and also the wide variations in per capita consumption levels. On a carcass weight basis, EU per capita poultry meat consumption averaged 21.5kg in 2000 and it is now the second most important

Table 3.8 EU poultry meat consumption

United Kingdom France Germany Italy Spain Netherlands Portugal Belgium/Luxembourg Greece Austria Ireland Sweden Denmark Finland EU-15

000 tonnes cwe

Per capita kg

1720 1512 1285 1095 1029 319 307 198 195 139 113 111 102 64 8087

28.9 24.9 15.6 19.0 26.1 20.3 30.7 18.6 18.5 17.2 30.4 12.5 19.2 12.5 21.5

Source: Eurostat figures for 1999 or 2000 as available.

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meat consumed, having overtaken beef in 1995. However, compared with the United States, EU consumption is still relatively low at only about 42% of the US average. Within the overall average for poultry meat there remain considerable variations by country. In Spain and Portugal, which have had a long tradition of eating white meat, per capita consumption is well above the EU-15 average. Consumption is also above average in the UK (34% more) and France (16%). Yet in Germany, the largest consumer market in the EU, it is still only 73% of the EU average and, in Sweden, only 58%. In the case of broiler meat, the average for the EU-15 amounts to about 14.5kg. In Spain, Portugal and the UK it averages at least 20kg but in contrast it is less than 8kg in Germany. For turkey meat, the figure for the EU-15 amounts to about 4.5kg. For the major turkey markets of Germany, France, Italy and the UK, it averages about 4.5–5.5kg per capita, yet in Spain it is nearer 1.5kg. As well as being consumed fresh, turkey is also an important cheap ingredient in further processed products. The rate of growth for total poultry meat averaged about two per cent annually during the 1990s. However, this represents a considerable slowdown compared with the rise of four per cent annually during the second half of the 1980s. By category, during the 1990s the annual rate of growth for turkey meat, at about four per cent, has been considerably higher than for broilers (about 1.75%). For the latter, the market has become more mature with the main opportunities confined to convenience and high quality products. In contrast, the turkey sector has been in a developing phase as a result of the demand factors already highlighted.

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4 Exports

4.1

Beef 4.1.1 Australia 4.1.2 United States 4.1.3 European Union 4.1.4 New Zealand 4.1.5 South America 4.1.6 China

4.2

Sheep meat 4.2.1 New Zealand 4.2.2 Australia 4.2.3 Eastern Europe 4.2.4 European Union

4.3

Pig meat 4.3.1 European Union 4.3.2 Canada 4.3.3 United States 4.3.4 China 4.3.5 Other countries

4.4

Poultry meat 4.4.1 United States 4.4.2 European Union 4.4.3 Brazil 4.4.4 China and Thailand 4.4.5 Hungary

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4.1 Beef Historically there have been two trading zones for beef, which have served to confine the trading patterns for most of the world. To a large extent geographical proximity, historical trading links and disease status dictate these zones. Firstly, there is what is known as the Pacific Rim zone covering Australia and New Zealand as a major exporting area, the Far East import markets and North America as both a major importer and exporter. This zone has traditionally been Foot and Mouth Disease (FMD) free. Secondly, there is the Atlantic region, comprising the EU and South America as the major exporters, and the EU and the rest of Europe, the former Soviet Union and the Near/Middle East as importers. The existence of FMD in South America for many years has prevented it from participating in trade with Pacific Rim countries, despite its geographical location. Generally prices are higher in the Pacific Rim zone compared with the Atlantic region (except the EU) as the former contains more markets for high quality beef. Between 1990 and 1997, the European Union as a whole was the world’s largest exporter, although it is of course made up of 15 different states. Since 1998, exports have declined but it still forms a very significant part of world trade. Although certain member states export large quantities, none on their own can compete in volume with Australia and the United States. Australia and the United States dominate the world export market and both have seen an increase in trade during the 1990s, mainly as a result of increasing consumer demand in South East Asia. The Japanese market is the most important destination for both of them, because Japanese production is constrained by the shortage of land and forage, but prices are high.

4.1.1 Australia The export market is particularly important for Australia, with more than half of its beef production destined for the export market. Australia used to export mainly manufacturing quality beef to the United States market but this trade has fallen since 1990. However, the increase in import demand in South East Asia and its geographical proximity has led to a large rise in Australian exports of high quality beef,

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Table 4.1 Australia – beef and veal exports (000 tonnes)

Beef and veal of which to: United States Japan South Korea Canada Taiwan Philippines EU

1990

1995

1996

1997

1998

1999

2000

730.8

748.9

694.8

801.7

856.1

868.0

901.6

366.3 200.0 70.6 33.2 29.9 0.5 5.4

210.7 320.3 63.6 31.3 31.7 14.9 7.8

179.9 280.5 57.6 28.7 23.8 20.5 10.5

220.9 311.7 60.9 34.9 33.9 26.9 10.8

285.2 320.9 33.5 38.6 33.7 20.2 11.0

291.1 313.3 77.9 43.3 34.7 20.4 8.9

352.4 325.7 73.3 40.5 28.6 14.3 5.6

Source: MLA.

some of which is grain-fed. This trade is notably to the Japanese market where there is demand for premium, chilled beef for the high quality end of the fresh market. Prices are much higher than can be obtained on the United States market. Table 4.1 shows Australian beef exports from 1990 to 2000. Almost all of the growth since 1990 has been in exports of chilled beef to Japan.

4.1.2 United States The quantity of beef exported from the United States is lower than Australia’s total and, perhaps more significantly, only accounts for about ten per cent of national production so plays a smaller role in the overall economics of the industry. However, the United States beef processing industry became increasingly export orientated during the 1990s as it recognised the increased opportunities at a time when its own domestic demand had become more reluctant to grow further. With its ability to supply high quality grain-fed beef in large quantities (including in individual cuts) it has seen considerable growth in its exports to Japan. Growth has been especially marked for grain-fed, high quality, chilled beef where it competes directly with Australian product. Its exports to South Korea have also grown substantially while the North American Free Trade Agreement (NAFTA) has resulted in a sharp rise in exports to Mexico. Unlike the European Union, it has only a small trade in low value commodity beef. Table 4.2 shows the overall growth in US exports since 1990 and the part that Japan, Mexico and South Korea have played in this development.

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Exports

Table 4.2 United States – beef and veal exports (000 tonnes)

Beef and veal of which to: Japan Mexico South Korea Canada EU

1990

1995

1996

1997

1998

1999

2000

340.0

581.5

596.9

676.5

696.1

758.1

830.2

191.9 28.1 32.6 64.9 1.8

328.4 28.9 90.8 95.9 3.0

333.6 58.1 70.4 89.7 1.9

343.4 105.6 89.3 84.2 2.9

336.5 141.1 52.9 76.0 3.2

359.5 156.8 106.1 71.9 4.2

366.1 177.2 143.3 72.9 4.8

Source: USDA.

4.1.3 European Union Total EU exporting activity in beef and veal and live cattle and calves amounts to about 2.8 million tonnes (carcass weight equivalent) each year. This includes all member states’ exports, both to other EU and non-EU countries. There is no overall quantitative restriction on EU-15 exports of chilled and frozen beef and live animals to countries outside the EU. However, the EU has a commitment under the WTO to limit the exports that can benefit from export refunds. As world beef prices are generally lower than in the EU, this effectively provides a ceiling on EU annual exports. The volume of subsidised exports is controlled by a licence system. The quantity of beef that can benefit from refunds has been reduced progressively since 1995, and this is reflected in the EU’s total export figures. For the 12 months to June 2001, the limit stood at 821700 tonnes. This is underlined by the reduction in the EU’s expenditure on export refunds. In 1995, EU beef export refunds totalled 1761 million ECU but by 1999 this had fallen to 834 million ECU (on the introduction of the euro, one euro was equivalent to one ECU). Consequently, since 1995, beef exports to non-EU countries have declined, as shown in Table 4.3. They were particularly low in 1998, as a result of a drop in the rate of export refunds and stiff competition from suppliers outside the EU, such as Australia, Brazil and the United States. In 1999 they recovered because of the large release of intervention beef and the food aid exports to Russia. There was then another sharp fall in 2000, when the discovery of BSE in Continental cattle led to restrictions on exports.

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Table 4.3 EU – beef and veal exports* to non-EU countries (000 tonnes cwe)

Total of which to: Egypt Russia Lebanon Saudi Arabia Iran South Africa Algeria

1990

1995

1996

1997

1998

1999

2000

816.0

1199.3

1104.2

1051.5

769.2

961.3

663.5

105.7 146.6 0.8 39.8 125.3 2.8 11.5

188.2 275.6 49.0 60.7 55.5 53.3 30.0

158.1 348.4 50.2 38.6 56.1 51.5 32.0

158.5 427.4 63.9 40.4 49.7 41.2 11.2

140.0 260.3 57.1 36.8 32.2 12.3 26.2

199.5 402.3 61.6 30.9 15.5 14.6 22.4

185.1 158.8 57.6 28.5 7.3 5.8 5.3

* includes the meat equivalent for live animals and processed beef. Source: EU Commission.

Table 4.4 EU member states – beef and veal exports to non-EU countries by product, 2000 (000 tonnes cwe)

Ireland Germany Netherlands France Italy Spain Denmark Austria other countries EU-15

Live animals

Chilled

Frozen

Salted/Dried

Prepared

Total

17.3 33.7 7.0 22.0 2.1 0.5 0.6 1.7 .. 84.9

30.6 8.2 16.3 6.8 2.0 8.4 10.4 5.1 0.8 88.7

203.2 103.5 37.0 18.1 37.3 18.0 10.4 6.5 13.9 447.7

0.3 0.3 .. 0.1 0.3 0.7 0.5 .. 0.2 2.5

1.0 0.6 6.4 12.6 16.9 0.3 0.7 0.4 0.8 39.7

252.4 146.2 66.8 59.6 58.5 28.0 22.6 13.6 15.8 663.5

Source: EU Commission.

Refunds are only available on certain categories to certain destinations and this is reflected in the main destinations for EU exports. Russia has always been an important destination, and EU initiatives to supply Russia with food aid meant that in 1999 it accounted for over 40% of the Community’s total. A further 20% was exported to Egypt and other important destinations are some other Middle Eastern and African countries. Table 4.4 gives EU exports in 2000 by different product. The majority of beef exported is frozen, partly because a large proportion of the beef originates from EU intervention stocks. This quantity has fluctuated since 1995 in line with the total. Chilled beef exports, although accounting for less than ten per cent of the total, have been relatively

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Exports

stable. Exports of processed beef have declined considerably and are now relatively minor. In terms of total exports of beef to non-EU countries, taking into account exports of live cattle, fresh, chilled, frozen, salted, dried and prepared beef, Ireland is by far the largest exporter, followed by Germany, then, a long way behind, the Netherlands and France. For all these countries, frozen beef exports are most significant, although quite high volumes of live cattle are also exported. Export data by individual member states in Tables 4.5 to 4.8 are drawn generally from national sources; they include trade with other member states too. The EU’s major exporter is Ireland. Table 4.5 shows Irish exports of both beef and veal and live cattle between 1990 and 2000. In 2000, Ireland accounted for over one-third of the Community’s exports. It is important for exports of both live animals and beef, although in recent years there have been some wide fluctuations in the volume of live cattle exports. In 1995, Ireland exported 370000 live cattle, with very significant markets in Egypt, the Yemen and Libya, where demand for cattle for Halal slaughter was strong. By 1997, these countries had imposed bans because of concerns over the removal of Specified Risk Material at slaughter and this export trade had all but dried up. Ireland began to export increased numbers instead to the rest of the EU. In both 1998 and

Table 4.5 Ireland – beef and veal exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Beef and veal of which to: EU UK France Italy non-EU Egypt Saudi Arabia Russia

284.0

422.5

338.8

334.8

361.9

474.8

380.4

141.5 80.8 35.6 5.5 142.5 11.8 9.1 34.8

170.0 50.6 55.9 15.7 252.5 28.8 27.7 100.4

126.5 48.1 32.0 11.7 212.3 26.5 14.2 96.4

144.9 74.5 23.2 14.8 189.8 56.5 22.3 50.5

161.7 57.6 42.4 20.9 200.3 81.7 24.9 38.7

227.7 83.1 47.6 25.3 247.0 110.0 20.5 56.5

200.4 87.5 34.3 22.1 178.0 105.2 17.5 11.2

Live cattle* of which to: EU non-EU

184.9

370.0

190.8

57.1

170.0

306.8

329.4

133.3 51.6

107.0 262.9

46.8 144.0

50.0 7.1

142.3 28.7

218.3 88.5

260.8 68.6

* figures in 000 head. Source: CSO.

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The international meat trade

Table 4.6 France – beef and veal exports (000 tonnes) 1990 Beef and veal of which to: EU Italy Greece Germany Belgium Russia Egypt Live cattle* of which to: EU

1995

1996

1997

1998

1999

2000

329.0

431.7

358.3

364.2

313.4

332.8

255.3

187.7 62.6 9.1 85.6 5.2 15.6 13.7

315.9 100.8 56.8 88.2 9.0 16.2 32.0

246.9 75.7 57.4 59.7 9.5 32.0 27.3

265.2 85.7 70.2 52.6 11.8 43.3 22.3

267.5 94.3 74.6 53.4 8.2 24.2 1.8

266.0 88.2 72.9 48.5 9.5 48.3 2.0

233.9 77.7 65.4 41.6 9.4 9.1 1.9

1437.7

1734.8

1740.2

1764.5

1696.4

1595.5

1550.1

1416.8

1678.9

1663.0

1695.6

1638.7

1543.2

1478.3

* figures in 000 head. Source: CFCE.

1999, the only non-EU market of note was the Lebanon. However, the EU markets of Spain, Italy and the Netherlands had become correspondingly much more significant for store and suckled calves. Until 2000, over half of Ireland’s exports were to non-EU countries. Egypt is the main market, taking frozen boneless beef, while frozen boneless intervention beef has been particularly important in supplying Russia. Exports to other EU countries are predominantly chilled boneless cuts and chilled bone-in hindquarters to the United Kingdom, France and Italy. Exports from France are shown in Table 4.6. France is the EU’s major exporter of live cattle and calves and the numbers involved have been relatively stable over the last five years. Almost all of these exports are to other EU countries and, although France has exported small numbers to Libya in recent years, it finds it difficult to compete with Ireland in many non-EU markets. Italy is by far and away the main destination, with strong demand for male store cattle over 300kg in weight, which have not already received EU premiums. Spain is the only other significant destination, taking mainly store animals in the 160–300kg weight range and rearing calves under 80kg. French exports of beef and veal are also significant, although they have fallen a little in recent years because of a reduction in the volume sent to countries outside the Community. Italy and increasingly Greece are the main markets in the EU, both taking mostly chilled bone-in young bull beef. The importance of Germany as an export destination

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Exports

Table 4.7 Germany – beef and veal exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Beef and veal of which to: EU Italy France Netherlands Denmark Greece non-EU Russia Egypt Uzbekistan

577.3

357.9

358.0

392.2

343.4

429.7

350.6

318.0 109.8 115.9 na na 45.4 259.3 77.1 44.5 –

209.3 59.6 78.3 19.8 22.7 16.0 148.6 49.6 23.7 10.0

191.2 51.0 59.4 29.5 22.1 8.7 166.8 65.9 15.7 32.0

215.3 61.3 52.4 41.1 33.2 6.6 176.9 105.1 12.3 18.3

226.1 77.7 50.0 40.2 28.5 10.1 117.3 82.4 5.3 4.8

228.7 71.5 56.2 41.6 22.5 12.8 201.0 153.1 7.5 8.1

254.2 85.4 52.7 48.8 25.2 13.9 96.4 56.3 5.8 0.9

Live cattle* of which to: EU

437.3

618.8

527.1

734.6

735.6

648.1

580.8

na

361.4

346.9

586.4

608.6

512.7

464.7

* figures in 000 head. Source: Statistisches Bundesamt.

declined markedly from 1996 onwards, as the BSE issue affected demand, although it still takes a sizeable quantity of beef, much of it in boneless form. In non-EU markets, demand in the once important Egypt has also fallen off significantly, although Russia has remained an important market for frozen intervention beef. Exports to non-EU countries were particularly low in 2000 because many countries imposed bans following concerns over the incidence of BSE. Table 4.7 shows German exports between 1990 and 2000. Germany is the only EU country, apart from Ireland, to export live cattle and calves in any significant number. Most go to other EU countries, although since 1996 the country has exported more to non-EU countries than any other member state. Around half of its exports are to the Netherlands, which are dominated by rearing calves of less than 80kg. Although Germany used to export to Turkey, the only non-EU destination of note now is the Lebanon. In 2000, Germany was only second behind Ireland in terms of its overall volume of beef exports. Almost three-quarters is exported to other member states, with Italy, France and the Netherlands important destinations for chilled bone-in beef. Exports to countries outside the Community are almost all in frozen form. As for Ireland and France, exports of intervention beef to Russia have accounted for a large proportion of exports in recent years.

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The international meat trade

Table 4.8 Netherlands – beef and veal exports (000 tonnes)

Beef and veal of which to: EU France Germany Italy Greece UK non-EU Egypt Russia

1990

1995

1996

1997

1998

1999

2000

324.5

385.1

376.4

427.5

353.5

389.0

351.0

284.4 67.6 50.9 84.1 45.4 10.4 40.1 3.1 0.8

309.0 78.9 78.8 68.2 28.5 6.3 76.1 21.5 7.2

290.2 71.7 72.4 63.9 21.4 12.9 86.2 24.6 14.2

314.8 70.6 77.0 77.3 18.6 18.4 112.7 29.8 52.8

285.7 72.3 65.3 75.4 13.7 10.3 67.8 21.8 20.7

305.1 79.4 70.1 74.4 9.6 10.6 83.9 34.7 30.8

298.0 86.2 65.5 62.9 10.1 9.0 53.1 22.4 17.4

Source: PVE.

Table 4.8 gives details of Dutch exports of beef and veal. The Netherlands was the largest EU exporter of beef in both 1996 and 1997 although since then Ireland and then Germany have exported more. About 80% is sent to other EU countries and, unlike most other member states, almost half of this is veal (although this cannot be distinguished from beef in the trade statistics). France, Germany and Italy have consistently been the main markets. Greece was also a significant destination in the early 1990s but now accounts for very little. As for other exporting member states, Russia is an important destination, and, unusually, Egypt has also remained significant.

4.1.4 New Zealand The export orientated New Zealand beef industry has had only limited success in South East Asia and its traditional trade with North America remains of considerably greater importance. In fact, the United States and Canada account for around three-quarters of New Zealand’s export market. Table 4.9 shows the development of New Zealand’s beef trade since 1990.

4.1.5 South America For South American exporting countries, the competition from EU subsidised exporters on markets such as the Middle East, Russia and Eastern Europe restricted beef export opportunities during much of the

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Exports

Table 4.9 New Zealand – beef and veal exports (000 tonnes)

Beef and veal of which to: United States Canada Japan Taiwan EU

1990

1995

1996

1997

1998

1999

2000

241.3

341.4

335.6

346.0

353.8

298.4

310.9

184.0 22.0 6.2 na 0.1

194.0 41.9 21.3 13.9 5.4

169.7 46.3 21.3 13.0 9.3

194.5 41.0 21.8 13.9 9.2

223.7 25.9 20.0 11.5 12.8

191.5 28.9 16.7 14.6 4.9

221.7 14.5 13.1 11.2 2.7

Source: United Nations.

1990s. This meant that Argentina, Brazil and Uruguay increasingly relied on the EU to take its product. In fact, the EU is a price premium market and access to certain South American countries is assured through the operation of various EU concessionary schemes. These cover high quality chilled hindquarter cuts, frozen beef for both table beef and manufacturing markets and processed beef (corned beef and cooked frozen). However, the Mercosur free trade agreement within South America that started in 1991 has now resulted in a considerable upturn in regional trade. Chile has emerged as a major market for Argentina and Uruguay and there has been increased demand from Brazilian consumers. However, this latter trade fell back substantially in the late 1990s as a result of the poor economy and the devaluation of the Brazilian currency. From the end of 1996, zones were created within South America which were designated as ‘free of Foot and Mouth Disease’. This started to result in new export opportunities in the Pacific region for chilled and frozen beef. Argentina in particular had some success on the North American market and was seeking to penetrate the South East Asian market. However, FMD outbreaks occurred in certain areas of Argentina, Brazil, Uruguay and Paraguay in late 2000 and early 2001, which temporarily resulted in some trade restriction. Table 4.10 gives Brazilian chilled and frozen beef exports since 1990. These have grown rapidly in the ten years to 2000, fuelled by growth in exports to the EU. Like Argentina, this has mostly been in chilled boneless beef under the EU’s ‘Hilton’ or high quality cuts quota. However, Brazil has also made huge strides in exporting to the EU out-

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The international meat trade

Table 4.10 Brazil – beef and veal exports (000 tonnes)

Beef and veal of which to: EU Netherlands Italy UK Spain Israel

1990

1995

1996

1997

1998

1999

2000

47.1

37.5

46.7

52.4

80.9

150.7

188.7

25.8 3.2 9.5 2.0 3.7 0.1

28.7 10.2 6.6 3.5 3.0 1.0

37.4 11.8 10.9 4.0 6.4 3.2

40.2 13.7 12.1 5.3 4.8 4.1

53.2 19.5 14.4 4.9 7.5 7.1

89.1 29.4 19.8 12.6 13.0 5.7

100.5 25.7 20.9 18.6 15.2 12.4

Source: United Nations.

Table 4.11 Uruguay – beef and veal exports (000 tonnes) 1990 Beef and veal of which to: Israel Canada Brazil United States Chile UK Germany

1995

1996

1997

1998

1999

2000

126.3

83.7

132.1

176.2

168.4

150.7

171.0

12.0 na 69.8 4.6 0.1 11.2 4.1

20.3 na 20.9 1.7 4.4 13.0 5.2

23.1 na 38.9 24.1 5.4 13.3 5.4

29.0 na 59.9 20.7 9.7 18.4 4.9

29.6 1.4 42.2 16.2 16.9 12.2 5.9

29.1 17.1 18.1 22.7 8.3 10.0 5.6

26.3 24.7 22.0 19.4 6.1 5.0 3.9

Source: INC.

side the constraints of quota. This is usually too expensive for countries to contemplate, but the low cost of production in Brazil has enabled this trade to take place. As well as the quantities shown in the table, Brazil is an important exporter of processed beef products. Indeed this trade has grown in the previous decade so that in 2000 it totalled around 140000 tonnes. The main markets are the EU (and especially the United Kingdom) and the US. Table 4.11 shows that growth in Uruguayan exports has also occurred since 1990, particularly to Israel and Canada. Unlike Argentina and Brazil, Uruguay exports very little processed beef. Table 4.12 shows exports of chilled and frozen beef from Argentina since 1990. Although traditionally exports of frozen beef were most important, in recent years these have been overtaken by chilled

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Exports

Table 4.12 Argentina – beef and veal exports (000 tonnes)

Beef and veal of which to: EU Germany UK Chile Israel United States Brazil

1990

1995

1996

1997

1998

1999

2000

169.7

216.4

216.2

199.0

282.0

159.9

159.7

72.3 40.0 na 2.6 16.6 – 32.8

66.6 34.5 7.6 45.6 11.5 0.1 68.6

65.0 31.8 7.8 55.6 9.9 0.1 55.5

55.2 28.3 7.0 59.8 10.8 6.1 33.9

75.3 36.9 2.7 91.6 16.2 17.8 40.8

44.0 26.1 2.1 39.6 11.7 23.5 9.3

40.6 27.3 3.0 29.6 16.3 15.0 8.7

Source: SAGPyA.

boneless beef, aimed at the premium market. As well as the quantities shown, a significant quantity of processed beef (such as corned and other canned beef) is also exported, although quantities have fallen since 1990. In 2000, approximately 80000 tonnes of processed beef were exported, with about 30000 tonnes each to the EU and the US.

4.1.6 China Despite the substantial size of the beef industry, China has never been a major exporter and is banned from many markets because of the internal disease situation and lack of internationally recognised processing facilities. Beef quality is not generally of a high enough standard to meet the requirements of most markets. Its only main market has been Russia yet here it has had to face strong competition from subsidised EU beef. Nevertheless, exports appear to be increasing slowly, although in 1999 they totalled less than 20000 tonnes. Of this 8500 tonnes were sent to Hong Kong and 6100 tonnes to Russia.

4.2 Sheep meat Only two countries are strategically important on the world sheep meat market as exporters: New Zealand, the key exporter of lamb, and Australia, a more important exporter of mutton. The small world trade reflects the lack of demand for sheep meat in many parts of the world. Existing trade flows have their roots in very long-term traditions.

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The international meat trade

4.2.1 New Zealand The New Zealand sheep meat industry has a tradition of exporting that goes back more than 100 years and was initially stimulated by import demand in the United Kingdom. Lamb dominates this trade and product is recognised as being of a high quality. New Zealand is a sophisticated exporter, able to meet individual market requirements. Trade was traditionally in frozen carcasses but considerable product diversification trade in recent years has resulted in a significant increase in cuts, chilled lamb and some further processed products. Despite New Zealand’s lack of geographical proximity and shipping times of up to three months its sophisticated cold chain means that there are no major shipping constraints. Table 4.13 gives New Zealand exports of sheep meat since 1990. Export developments are dominated by the requirements of the EU, which is a price premium market that accounts for over half of its lamb trade. However, because of import tariff quotas under the WTO, New Zealand has been unable to increase shipments. It has made attempts to reduce its dependence on the UK market and instead to increase its penetration on the price premium markets of France and Germany. On markets other than the EU, since 1990 New Zealand has increased exports to both Saudi Arabia and the United States, although both markets remain fairly small. Although the quantities going to the US appear to be insignificant in view of the size of its population, this did not prevent the US from attempting to reduce imports from both New Table 4.13 New Zealand – sheep meat exports* (000 tonnes)

Lamb of which to: EU UK Germany France non-EU Saudi Arabia US Japan Mutton

1990

1995

1996

1997

1998

1999

2000

272.1

292.4

298.0

290.0

282.0

271.9

292.1

156.2 93.6 11.5 6.2 115.9 9.2 5.0 18.2

154.1 86.9 18.8 16.5 138.3 13.4 9.3 8.9

162.0 84.7 26.7 16.9 136.0 17.0 10.9 11.7

161.8 82.1 23.0 17.4 128.4 19.0 13.4 11.9

156.1 75.3 25.8 12.0 125.9 14.2 17.8 12.5

148.9 68.1 23.2 16.6 123.0 15.9 17.2 9.4

153.2 70.3 22.6 19.4 138.9 19.3 17.2 7.8

66.9

66.8

72.4

64.5

59.6

54.1

49.5

* years ended September. Source: Meat NZ.

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Exports

Zealand and Australia, arguing that imports were harming its domestic industry. Its complaint was not upheld by the WTO. New Zealand’s mutton exports are shared more or less equally between EU, mostly the UK and Germany, and non-EU markets.

4.2.2 Australia Table 4.14 gives Australian exports of sheep meat between 1990 and 2000. Australian exports have been mainly based on output of wethers and cull ewes that are a by-product of the wool sector, and this accounts for the predominance of mutton in the export mix. Over 60% of sheep meat exports in 2000 were of mutton. Because there is only limited access to the EU market for mutton, product is exported to a large number of other destinations both for fresh consumption and for the further processing industry where it is an especially cheap ingredient. Besides South Africa and Saudi Arabia, large quantities are also exported to the US and South East Asia. Increased export market opportunities for lamb have meant that more efforts are now being put into developing this trade. The United States has emerged as the largest market buyer and, besides Papua New Guinea and South Africa, other significant markets are Mexico and the Middle East. Live sheep are exported to the Gulf Sates of the Middle East where there is a strong demand for sheep meat from freshly killed animals and for religious purposes (notably for the Haj festival). In 2000, export levels were boosted by the re-opening of the Saudi Arabia market following the lifting of disease related restrictions. Table 4.14 Australia – sheep meat exports (000 tonnes) 1990 Sheep meat of which to: EU UK non-EU South Africa US Saudi Arabia Live sheep*

1995

1996

1997

1998

1999

2000

190.9

191.0

196.4

221.0

235.7

248.3

291.4

13.0 7.9 177.9 1.2 13.6 15.1

14.7 10.0 174.8 25.5 17.3 21.0

17.1 10.9 179.3 29.4 20.0 17.4

17.2 11.4 203.8 33.6 23.2 21.8

18.6 12.8 217.0 31.2 31.6 20.5

17.3 11.6 231.0 37.4 32.6 22.9

19.4 13.0 272.0 45.6 39.7 23.4

3531.0

5944.3

5678.5

4882.6

5162.6

5034.3

5351.8

* figures in 000 head. Source: MLA.

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The international meat trade

4.2.3 Eastern Europe Eastern Europe has been an exporter of sheep meat for many years because of its proximity to certain EU member states and market access agreements. The main shipments consist of live lambs to southern Europe, led by Italy, to meet seasonal demand (Easter and Christmas). The main suppliers are Hungary and Poland. However, with falling production in the region, shipments have been declining; in 1999 Hungary exported 783000 sheep (mainly to the EU) and Poland only 189000. Bulgaria is a small exporter of sheep meat to the EU but total exports have amounted to less than 5000 tonnes per annum during the second half of the 1990s.

4.2.4 European Union Export activity of sheep meat in the EU amounts to about 300000 tonnes (cwe) annually, equating to around one-quarter of production. This includes all member states’ exports, both to other EU and non-EU countries, although it should be noted that exports to countries outside the Community are negligible. No export refunds or other incentives are available on exports to non-EU destinations and traditionally hardly any trade has ever taken place in this direction. Of the total export activity in the EU, about one-third is in the form of live sheep and the remaining two-thirds in sheep meat. The United Kingdom is by far the largest exporter, followed a long way behind by Ireland and Spain. Otherwise, only France, the Netherlands and Belgium feature as exporters of any size, although the quantities involved are nevertheless quite small. In 1990, the United Kingdom accounted for 44% of the EU’s export activity but by 2000 this had risen to 50%. Exports of live animals are an important feature of this trade, although the numbers involved fluctuate enormously from year to year. In 2000, totalling about threequarters of a million animals, they accounted for about one-third of the UK’s export activity in the sheep meat sector. They are comprised primarily of slaughter sheep, although there has been some interest in breeding stock. Table 4.15 shows UK exports of sheep meat from 1990 to 2000. The main destination for both live animals and meat is France, which took around 70% of the total in 2000. Exports of sheep meat rose quickly from

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Exports

Table 4.15 United Kingdom – sheep meat exports (000 tonnes)

Sheep meat of which to: France Belgium/Lux Germany Italy

1990

1995

1996

1997

1998

1999

2000

79.7

137.2

108.9

107.3

97.9

109.1

95.8

55.2 9.1 3.0 3.5

97.8 9.4 7.8 5.4

75.5 8.9 7.8 3.3

76.8 8.1 8.2 2.1

69.8 7.8 7.4 3.1

76.9 8.5 6.9 5.4

68.3 8.4 6.9 3.9

Source: Customs & Excise, Intrastat.

Table 4.16 Ireland – sheep meat exports (000 tonnes)

Sheep meat of which to: France

1990

1995

1996

1997

1998

1999

2000

54.6

48.7

61.8

47.1

49.4

54.0

52.6

50.9

31.3

42.9

33.6

35.1

40.5

40.5

Source: CSO.

1990 to 1995 but since then have fallen back a little, mainly because the strength of the pound has been a disincentive for exporters. There has also been a gradual decline in consumption of sheep meat on the Continent, while in France there has been an increased degree of nationalism towards meat purchases, which has affected the way British lamb is positioned in the market. Table 4.16 sets out Irish exports of sheep meat since 1990. Ireland is a significant exporter of sheep meat, but has failed to increase its exports over the past ten years, despite a rise in the mid-1990s. The majority is destined for the French market where it competes directly with product from the UK and, increasingly, New Zealand. Table 4.17 gives details of Spanish exports of live sheep, which have risen considerably since 1990. These are mainly to other Mediterranean European countries; Italy, Greece, France and Portugal, as Spain produces the lightweight animals favoured throughout the Mediterranean region. The same is true for its exports of sheep meat, which have quadrupled in volume since 1990, again with the other Mediterranean countries being the main customers for the small carcasses. In 2000, Spain exported 15200 tonnes of sheep meat, a third of which was to France. Both France and the Netherlands are important exporters of live sheep. In 2000, France exported 689000 head, which were split fairly

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The international meat trade

Table 4.17 Spain – live sheep exports (000 head)

Live sheep of which to: Italy Greece France Portugal

1990

1995

1996

1997

1998

1999

2000

154.7

295.0

278.0

287.6

333.4

331.5

433.8

0 0 81.0 24.3

27.4 84.5 90.0 53.7

23.2 71.1 63.2 84.6

44.2 69.3 83.6 43.8

85.6 70.1 81.0 56.7

99.8 89.8 55.2 52.7

190.9 99.4 68.2 47.3

Source: Eurostat.

evenly between Spain and Italy. In the same year, Dutch exports totalled 532000 head, which were sent to the French and Italian markets. In both cases, it is possible that some of the animals involved originated in the UK and were then exported onwards. French and Dutch exports of sheep meat are relatively small, about 8000 tonnes from France and less than 3000 tonnes from the Netherlands in 2000.

4.3 Pig meat Only three regions are strategically important on the world market as pig meat exporters. They are the EU, Canada and the United States, and the number of important destinations they deal with are also limited. The main restrictions to world trade are the lack of markets (e.g. consumers not eating pig meat because of religious reasons), disease problems, namely incidence of swine fever and Foot and Mouth Disease (FMD) and the fact that in some areas domestic production is sufficient to meet market requirements. Disease has prevented some potential exporters, notably China and Brazil, from entering the world market to any significant degree. This problem can be partly overcome by further processing into cooked products (e.g. canned pig meat) but world trade in this is not substantial. Most of the trade is in frozen pork because of its longer shelf life. While the EU has remained the dominant exporter during the 1990s, the emergence of the United States and Canada has been significant. Both of these countries have expanded their exports primarily because of the growing demand on the lucrative Japanese market.

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Exports

4.3.1 European Union In terms of pig meat exports, Denmark and the Netherlands are by far the most important countries in the EU, with France and Spain also relatively large. All member states, with the exception of the Netherlands, have increased exports substantially since 1990. This is seen most dramatically in the case of Spain. EU exports to non-EU countries are an important part of the market. Table 4.18 gives member states’ pig meat exports to non-EU countries in 2000, broken down by the different categories of product. Total EU exports in 2000 represented about eight per cent of total EU production. EU exports have grown throughout the 1990s despite the introduction of the current WTO arrangement introduced in mid-1995, to limit the quantity of exports that can benefit from export refunds. Denmark is by far the largest exporter to countries outside the Community, followed by France, the Netherlands and Germany. Nearly 80% of exports are of fresh, chilled and frozen pig meat, with most of the rest being prepared pig meat and sausages. Denmark and France between them accounted for half of the EU’s exports of prepared pig meat and sausages. Exports of live pigs are insignificant. Table 4.19 shows EU exports to its main non-EU markets between 1990 and 2000. In 1999, Russia accounted for more than one-third of the EU’s exports. Although the volume exported to Russia fell in 2000, this Table 4.18 EU member states – pig meat exports to non-EU countries by product, 2000 (000 tonnes)

Denmark France Netherlands Germany Austria Belgium/Lux Spain UK Italy Ireland other countries EU-15

Live animals

Fresh/ chilled/ frozen

Salted/ smoked/ dried

Prepared/ sausages

Total

0 0.1 0.1 .. 0.3 .. .. .. 0 0 .. 0.6

431.1 130.2 99.8 88.2 38.1 19.4 19.9 31.1 15.4 17.8 22.5 913.6

1.5 0.9 1.0 0.8 0.5 1.2 3.8 0.5 6.6 0.2 1.0 18.2

61.3 47.6 14.9 4.9 11.0 25.4 20.6 3.5 7.7 0.8 22.5 220.1

493.9 178.9 115.7 94.0 50.0 46.1 44.4 35.1 29.7 18.8 46.0 1152.5

Source: EU Commission.

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The international meat trade

Table 4.19 EU – pig meat exports* to non-EU countries (000 tonnes cwe)

Total of which to: Russia Japan United States South Korea Hong Kong Poland Hungary

1990

1995

1996

1997

1998

1999

2000

578.5

866.7

940.6

1062.4

1234.0

1550.0

1140.9

66.0 119.2 119.0 .. 8.4 .. ..

217.1 157.2 69.3 24.6 38.0 40.7 27.6

260.1 188.9 63.2 37.0 44.9 30.0 10.6

340.9 200.7 70.2 43.6 71.3 32.8 22.0

335.0 173.3 77.9 45.7 100.8 60.7 31.0

591.2 258.2 76.3 99.5 91.1 32.3 16.3

292.1 275.4 82.7 61.5 36.2 30.7 26.6

* includes the meat equivalent for live animals and processed pig meat. Source: EU Commission.

market nevertheless accounted for more than one-quarter of the EU’s exports. Russia has become an important destination for the EU, with a rapidly growing demand for imported meat of all sorts during the decade while its own production potential has been falling. In the late 1990s, EU exports to Russia were mostly in the form of frozen pig meat, although the quantities of processed pig meat it imported were also significant (189000 tonnes in 1997 and 68000 tonnes in 2000). There has also been a significant increase in demand from countries in the Far East, particularly Japan, South Korea, Hong Kong and even China. In contrast, exports to the United States have declined since 1990, although they did show a rise in 2000. Table 4.20 shows Danish pig meat exports. Denmark is the EU’s largest exporter, accounting for about one-quarter of exporting activity in the pig meat sector. Its exports of live pigs have grown substantially in recent years, with most going to Germany. Exports of chilled and frozen pig meat doubled between 1990 and 1999, with rapid growth to other EU countries early in the decade and then significant growth to non-EU countries in the late 1990s. Within the Community, Germany, Italy and the UK have all taken progressively more. Denmark is by far the EU’s largest exporter to non-EU countries, and it now exports almost as much outside the EU as within it. Trade with Japan and Russia has continued to expand, and Denmark is the only EU country to export significant quantities to the US market. Exports of bacon and ham are of course an important element of Denmark’s exports, although these have fallen slightly as the

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Exports

Table 4.20 Denmark – pig meat exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Pig meat of which to: EU Germany UK Italy France non-EU Japan Russia United States

478.2

760.9

738.7

845.3

859.0

956.2

972.0

299.2 81.7 50.3 63.3 83.2 179.0 107.5 – 49.0

497.1 184.1 66.6 87.7 101.8 263.4 122.5 43.6 30.1

482.7 181.2 74.9 87.2 85.8 256.0 124.8 44.5 23.7

533.7 210.6 64.7 92.9 100.0 311.6 144.8 67.1 27.5

510.9 179.4 71.2 104.3 81.4 348.1 128.0 78.5 32.4

506.5 173.3 82.0 105.2 74.8 449.7 192.4 88.6 32.5

520.0 180.2 104.6 104.0 61.5 452.0 205.2 84.8 43.4

Processed

272.0

243.4

238.7

248.3

238.1

211.3

199.5

Source: Danske Slagterier. Table 4.21 Netherlands – pig meat exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Pig meat of which to: EU Germany Italy France UK

956.8*

821.3

769.6

646.4

772.4

858.9

802.2

943.6* 312.0* 234.8* 115.4* 144.6*

776.4 336.5 220.2 77.1 14.8

707.8 279.9 198.8 76.0 26.1

611.6 238.1 151.8 67.4 24.5

719.2 289.3 189.8 70.8 24.5

753.6 263.2 208.6 87.8 35.5

688.8 210.9 182.9 78.2 54.9

Processed

107.5

197.5

207.3

185.7

188.5

194.3

198.2

Live pigs**

4437.5

5452.4

5860.5

975.1

1818.7

3080.7

3130.0

* includes bacon for 1990, which is not included in processed figures. For all other years, bacon is included in the processed figures. ** figures in 000 head. Source: PVE.

Netherlands has been a formidable competitor. The United Kingdom has remained the main destination throughout this period. Other processed products, which include a high proportion of canned hams, have declined, however, with both the UK and US markets taking much less than in 1990. Table 4.21 gives Dutch pig meat exports since 1990. The Netherlands is almost as big an exporter as Denmark. Although it exports more live pigs and similar amounts of bacon, its exports of pig meat and processed products are generally lower. Exports were severely disrupted in early 1997 as a result of swine fever. This led to a ban on

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Table 4.22 Belgium – pig meat exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Pig meat of which to: EU Germany France Italy

275.0

468.2

475.9

465.0

518.0

488.8

440.5

271.8 100.5 74.4 74.1

463.7 284.5 62.7 65.0

471.3 277.6 56.0 70.9

453.7 266.9 45.6 65.6

503.7 288.8 53.9 84.3

465.0 281.0 49.0 60.5

417.8 258.8 42.9 23.0

Processed

82.7

61.0

64.6

74.7

71.6

54.2

61.6

Live pigs*

536.0

631.3

617.9

561.4

659.0

1101.8

974.3

* figures in 000 head. Source: OBCE.

exports until May 1998. Although exports of pig meat have since recovered, exports of live pigs have not. This is because there has also been legislation to reduce the number of pigs in the country, for environmental reasons. About half of live pigs exported are weaners. The main market is now Germany. Many of these weaners are then re-exported to the Netherlands after fattening for slaughter and processing. The Spanish market has also grown in importance since 1990, while all others have fallen. Dutch exports are mainly concentrated on other EU markets, with Italy and Germany most important for pig meat and the United Kingdom for bacon. Its exports of processed products, other than bacon, have declined in the last ten years but nevertheless remain significant. Only small quantities are sent to non-EU countries. Table 4.22 details Belgian exports of pig meat. Belgium has markedly expanded its export activity since 1990. Live pig exports have virtually doubled since 1990, over 90% of which are slaughter pigs. The Netherlands has rapidly become the main recipient, while the German market has also expanded. Exports of pig meat have also risen overall, although these have declined in the last two years. Most of the growth has been to other EU markets, particularly Germany. As with most of the rest of the Community, Belgian exports of processed pig meat products have declined. Exports of both fresh and processed pig meat declined in 1999, after dioxin residues were found in samples of meat. This affected demand for Belgian products both at home and abroad. Table 4.23 shows French pig meat exports. France is a fairly modest exporter of live pigs, although in 1998 there was a sudden large increase in exports to Spain. These were primarily of weaners, destined for the

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Exports

Table 4.23 France – pig meat exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Pig meat of which to: EU Italy UK Greece Germany non-EU Russia Japan

128.5

308.3

301.5

341.3

346.5

416.7

397.1

117.5 69.1 13.3 1.2 14.7 11.0 – –

271.1 129.4 30.7 17.1 45.2 37.2 5.8 2.5

268.2 126.7 26.9 20.7 33.9 33.3 5.2 5.4

303.7 134.8 33.2 29.7 46.0 37.6 12.0 6.0

277.4 144.2 33.9 18.7 27.5 69.1 19.9 8.6

251.2 125.1 33.0 19.2 23.7 165.5 105.1 11.3

266.9 132.5 31.8 24.7 24.4 130.2 46.8 22.6

Processed

43.4

98.3

122.4

118.0

106.6

110.4

116.0

Source: CFCE.

herd re-building that was then taking place there. In 2000, live pig exports totalled 244000 head. Exports of pig meat have expanded in the ten years to 2000 and are now comparatively significant. Exports to both EU and non-EU countries have grown. In the EU, Italy has become the principal destination. Outside the EU, France has taken advantage of the increased demand in Russia under the food aid scheme. It has also made attempts to expand its share of the lucrative Japanese market, although it is still sending only modest amounts. France is the EU’s major exporter of processed products and, unlike many other member states, it has grown this aspect of its exports since 1990. Of the total exported, about 42% is cooked sausages, and around ten per cent each for cooked hams, uncooked sausages, dried/smoked pig meat and salted pig meat. Russia is its single most important customer, taking nearly 30000 tonnes in 2000; three-quarters of what it takes is in the form of cooked sausages. Table 4.24 gives German exports of pig meat. Germany exports large numbers of live pigs. Although these fell back in the mid-1990s, numbers have expanded again in recent years. Neighbouring Austria has become an important market, accounting for 30% of total volumes in 2000. Exports of fresh, chilled and frozen pig meat have also increased rapidly since 1997, when the restrictions on Dutch exports coincided with increased production in Germany. Table 4.25 gives Spanish exports of pig meat. The increase in Spain’s importance as an exporter has been significant since 1990. Spain is now an important exporter of both live pigs and pig meat. In the case of

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Table 4.24 Germany – pig meat exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Pig meat of which to: EU Italy non-EU Russia

163.4

127.9

122.2

141.8

225.3

392.6

325.4

92.0 51.5 71.4 58.1

102.9 64.1 25.0 15.8

110.3 69.2 11.9 7.4

126.6 71.7 15.3 8.4

171.1 94.8 54.2 19.2

237.0 120.3 155.6 125.3

236.4 104.7 89.0 44.1

Processed

53.7

78.5

79.6

74.0

74.3

69.9

72.6

1440.3

675.0

593.4

647.2

1066.6

1073.2

1086.8

Live pigs*

* figures in 000 head. Source: Statistisches Bundesamt. Table 4.25 Spain – pig meat exports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Pig meat of which to: EU France Portugal

11.3

124.9

178.1

168.8

196.4

282.0

285.6

4.2 1.2 0.7

107.2 33.6 36.2

159.7 46.6 49.6

165.4 48.6 42.3

192.0 60.1 56.9

240.0 82.1 69.0

265.5 99.4 74.4

Processed

19.4

51.8

63.3

56.8

55.7

52.7

46.6

Live pigs*

68.7

666.2

945.2

708.1

532.3

949.2

1235.9

* figures in 000 head. Source: Eurostat.

live pigs, about 80% are destined for neighbouring Portugal. Portugal and France are the main markets for pig meat. Russia was an important destination in 1999, but not a permanent feature of the export market. Italy is not normally thought of as an exporter, but it does export a sizeable quantity of processed pig meat. In 1999, 73700 tonnes were exported. Apart from 4800 tonnes, the remainder was sent to other EU countries, notably France (20700 tonnes), Germany (17400 tonnes), Belgium (5600 tonnes) and Spain (4700 tonnes).

4.3.2 Canada Table 4.26 gives details of Canadian exports of pig meat between 1990 and 2000. The pig meat industry in Canada has always been export orientated although most of this has only been cross-border trade with the United States. Traditionally, the majority of these exports were of live

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Exports

Table 4.26 Canada – pig meat exports (000 tonnes)

Total of which to: United States Japan Mexico

1995

1996

1997

1998

1999

2000

235.7

247.7

279.3

289.2

370.4

439.8

161.0 32.3 1.4

156.1 36.3 0.5

156.8 57.9 1.0

181.4 46.2 1.4

226.5 61.4 10.3

272.8 84.4 11.6

Source: Statistics Canada.

Table 4.27 United States – pig meat exports (000 tonnes)

Pig meat of which to: Japan Mexico Canada Russia EU

1990

1995

1996

1997

1998

1999

2000

66.8

228.2

267.4

285.8

355.2

386.4

399.4

42.1 10.9 3.6 na na

122.3 14.0 13.5 44.5 na

170.9 13.7 23.8 23.4 na

156.7 24.2 34.3 24.3 na

167.5 43.8 32.3 37.7 na

180.2 51.5 29.7 41.7 4.1

192.5 94.8 33.6 8.8 2.6

Source: USDA.

pigs but in recent years there has been a steady switch to exports of meat instead as a result of the establishment of additional processing facilities in western Canada. This has helped to boost Canadian exports to its nearest neighbour considerably. Trade with Japan has also increased steadily and Canadian product, especially chilled, enjoys a good reputation on this market. Canada has also benefited from the establishment of NAFTA and the rise in exports to Mexico that this has entailed.

4.3.3 United States The pig meat processing industry of the United States has become increasingly export orientated. The industry recognised the increased opportunities presented by overseas markets at a time when its own domestic demand became more stable. It has the ability to supply large quantities of individual cuts to the Japanese market, especially in chilled form, for which demand has been growing strongly. The proximity of the United States (on its Pacific Coast side) to Japan gives it shorter shipping times in comparison with EU exporters. Table 4.27 shows United States pig meat exports since 1990 and the huge increase in exports to Japan is clear. In the case of the growing

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Mexican market, United States and Canadian exporters have benefited from the preferential treatment given by the establishment of the North American Free Trade Agreement (NAFTA). US exports to Mexico have risen sharply since the introduction of NAFTA. The majority of United States exports go to price premium markets and there is only a small trade in low value commodity pork to countries such as Russia. In this market, US product is in strong competition with subsidised EU pig meat. This trade is also somewhat dependent upon the availability of food aid schemes from the US Government. The United States exports very little processed pig meat, despite an increase in volumes in the late 1990s. By 2000, its exports of processed product, including bacon, totalled 45000 tonnes.

4.3.4 China China is not recognised as being free of either FMD or swine fever. This represents a major obstacle to its ability to make inroads on the world export market as many countries, including Japan, do not allow the entry of product from China. China’s export performance in fact deteriorated during the 1990s. In 1990, its exports of chilled and frozen product totalled 124000 tonnes, while processed pig meat added a further 90000 tonnes (a very small volume in relation to its overall production). Around half of its exports went to Russia with most of the rest going to Hong Kong. By 1999, its exports of chilled and frozen exports had fallen to 54000 tonnes and its processed pig meat to 55000 tonnes. On the Russian market it has suffered strong competition from other exporters, notably the European Union which was encouraged by generous credit terms and low-priced subsidised product. Other factors include the poorer quality of Chinese pig meat (Chinese pigs generally have a poor lean to fat ratio) and payment problems (associated with foreign exchange problems in Russia).

4.3.5 Other countries South Korea and Taiwan had taken advantage of the proximity of the Japanese market to achieve growth in exports; shipments to other markets are negligible. A short distribution chain enabled price

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Exports

Table 4.28 Brazil – pig meat exports (000 tonnes)

Pig meat of which to: Hong Kong Argentina Russia

1990

1995

1996

1997

1998

1999

2000

12.5

31.9

55.7

56.5

73.0

75.4

116.0

8.5 – –

19.0 8.1 –

25.7 22.9 –

26.7 20.6 –

37.0 28.0 –

36.6 27.4 –

45.3 31.6 22.4

Source: United Nations.

premium, chilled product as well as frozen to be shipped. Japanese companies had also invested in processing and exportation facilities in these two countries. However, the demanding requirements of the Japanese authorities in relation to FMD (vaccination is not allowed) has now seen a termination of this trade, representing a major blow to the pig meat sectors of both Taiwan and South Korea. Trade now seems unlikely to be resumed until 2002 at the earliest; both countries have to be free from FMD without vaccination for at least one year before it can be permitted again. At their peak, South Korean pig meat exports totalled 93000 tonnes in 1998 (of which 88000 tonnes were sent to Japan) and Taiwanese exports were 49000 tonnes in 1997 (of which 45000 tonnes were for Japan). Unlike for beef and poultry meat, South America has yet to emerge as a major exporter of pig meat despite the competitive advantage that many of these countries enjoy. Table 4.28 shows Brazilian exports of pig meat, as Brazil is the only country in the region with any significant degree of exports. If the animal health situation in Brazil could be improved the country could be a major competitor on the world market as it already is in the beef and poultry meat sectors. So far there is no trade with the main western industrialised markets; trade is regional, mainly with Argentina and Hong Kong where animal health requirements are less strict. However, 2000 saw the emergence of Russia as a major buyer of Brazilian product.

4.4 Poultry meat The world’s dominant poultry meat exporters are the United States, the European Union and Brazil, followed by China, Thailand and

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Hungary. World trade in poultry meat has expanded rapidly since 1990, and all these countries have seen rapid growth in their trade.

4.4.1 United States Table 4.29 shows the expansion in United States exports of poultry meat since 1990. By 2000, the United States accounted for around 40% of world trade in poultry meat. This growth has been fuelled by demand in Hong Kong, Russia, Mexico and Latvia. Exports are mainly in the form of frozen broiler parts plus a smaller quantity of turkey parts; trade in whole birds is very small. Exports are very dependent upon low-priced commodity markets, predominantly Hong Kong and Russia, which, combined, account for over 50% of US exports. The only significant price premium markets are Japan and Canada. US exports grew by almost 25% annually between 1990 and 1997. There was then some reduction in 1998 with a downturn in demand from Russia. Much of the growth in the 1990s focused on the markets of Russia and Hong Kong, although there was a sharp fall in Russian demand in 1998 because of economic difficulties. Exporters have also managed to increase their penetration in Latvia and Mexico. Most of the rise in trade in recent years has been in exports of dark meat, including legs, wings, feet and mechanically deboned meat. This is partly because domestic US demand is focused primarily on the white breast meat and partly because there is greater demand for the dark meat in Hong Kong and other Far Eastern markets. This means that exports perform an important function in terms of maximising the value from the whole bird.

Table 4.29 United States – poultry meat exports (000 tonnes)

Poultry meat of which to: Hong Kong Russia Mexico Latvia Japan Canada

1990

1995

1996

1997

1998

1999

2000

567.3

2027.7

2374.8

2565.4

2532.2

2588.9

2832.08

82.0 0 40.0 na 95.0 na

469.1 727.8 154.2 1.3 127.0 58.4

506.2 933.6 178.0 68.7 127.5 64.9

536.9 982.5 204.2 114.8 105.5 76.8

533.8 729.3 240.9 134.7 107.9 94.0

660.7 328.2 238.2 314.3 107.2 94.0

679.3 643.0 281.2 141.1 107.8 107.4

Source: USDA.

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Exports

4.4.2 European Union Table 4.30 shows poultry meat exports by each member state in the period 1995–2000. The figures shown give country totals for exports to both other EU countries and non-EU countries. They also cover exports of all poultry meat categories. The EU member states most involved in exporting activity are France and the Netherlands followed quite a long way behind by Belgium, Germany and Denmark. In the case of France, exports to non-EU countries account for well over half of the total, whereas in the case of the Netherlands they form only around one-third. Table 4.31 shows how total EU exports to non-EU countries were broken down by product in 2000. In the late 1990s turkey meat formed an increasing share of exports. Chicken accounted for 68% of trade, split in a ratio of 40:60 of whole birds to chicken parts. Turkey accounted for a further 27%, almost entirely parts, mainly legs, thighs, wings and mechanically deboned meat. The ‘other’ category mainly consists of offal, which includes feet (a delicacy in China and Hong Kong) and a small amount of duck meat. Exports of processed products are insignificant compared with chilled and frozen products and accounted for less than two per cent of the total. Table 4.30 EU member states – poultry meat exports to other EU and non-EU countries (000 tonnes)

France Netherlands Belgium/Lux Germany Denmark Italy Spain other countries

1995

1996

1997

1998

1999

2000

871.0 469.0 182.0 111.2 117.0 76.0 22.6 57.7

858.0 487.0 217.0 110.5 114.0 81.0 34.9 39.7

905.0 523.0 253.0 124.2 109.0 95.0 46.1 40.6

938.0 624.0 312.0 157.8 122.0 117.0 48.2 51.9

911.0 692.0 285.1 160.3 127.0 106.0 56.3 51.6

894.8 na 327.2 179.3 127.0 76.0 67.8 na

Source: EU Commission.

Table 4.31 EU – poultry meat exports to non-EU countries by product, 2000 (000 tonnes)

EU-15

Whole chicken

Chicken pieces

Whole turkey

Turkey pieces

Duck, geese and other

Total

327.1

477.8

3.3

312.0

50.3

1170.4

Source: EU Commission.

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Table 4.32 EU – poultry meat exports* to non-EU countries (000 tonnes cwe)

Total of which to: E Europe M East Africa Far East C Europe

1995

1996

1997

1998

1999

2000

821.7

899.1

1033.1

1111.4

1130.8

1170.4

263.3 287.7 116.0 123.5 30.6

285.5 269.3 108.0 129.1 38.0

424.0 253.9 132.9 141.4 52.2

414.8 303.3 158.8 31.7 56.6

417.3 286.3 179.4 152.2 54.9

495.6 245.6 201.9 116.6 66.3

* includes the meat equivalent for live birds and processed poultry meat. Source: EU Commission.

Table 4.32 shows EU poultry meat exports by destination zones. Total EU exports increased considerably from 1991 to 1995 helped by the emergence of Russia as a major buyer. The restrictions on export licence availability from July 1995 (because of restrictions under the current GATT agreement) then put a brake on this trade before it expanded again from 1997. This renewed expansion was in response to both strong demand in Russia and, increasingly, the ability of the industry to export without refunds. By 1998 only 35% of exports were subsidised compared with about 90% during the 1991–1994 period. Competition from Brazil since the late 1990s has, however, made it almost impossible for the EU to expand its trade in poultry meat without the benefit of export refunds and in particular this has prevented further growth in chicken exports to the Middle East. Besides the former Soviet Union countries (Russia and the Ukraine), demand for lower valued chicken parts has continued to increase in Hong Kong and China. Chicken exports have also increased to Poland, Bosnia-Herzegovina and South Africa. Table 4.33 details poultry meat exports from France between 1990 and 2000. France is the EU’s main exporter to non-EU countries but is also important in terms of intra-Community trade. Within the EU, Germany and the UK are the key markets for French exporters. Chicken meat accounts for about 60% of total exports and turkey meat for a further 33%. France also has a substantial trade in frozen whole birds to the Middle and Near East and in parts and mechanically deboned meat (MDM) to Russia. This is largely so-called ‘commodity’ trade, that is product exported at the lowest price with quality specifications being less important. It has been facilitated by availability of export refunds

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Exports

Table 4.33 France – poultry meat exports (000 tonnes)

Poultry meat of which to: EU Germany UK Belgium/Lux Spain non-EU Mid/N East (S Arabia) Russia

1990

1995

1996

1997

1998

1999

2000

518.9

737.0

750.0

773.5

794.3

753.8

738.8

229.6 68.0 74.2 30.2 24.6 289.3 165.5 108.4 0.0

334.5 90.7 103.2 47.9 34.0 403.0 221.3 123.0 47.0

384.8 100.2 110.3 59.0 46.8 365.2 215.9 114.6 55.3

387.2 104.0 101.5 61.3 48.7 386.4 211.2 101.5 80.5

354.5 86.6 94.1 53.8 51.6 439.8 256.6 105.9 70.4

328.1 84.9 64.1 51.7 44.1 425.7 233.4 126.5 74.0

350.6 83.0 71.1 55.1 41.8 388.2 207.7 112.7 58.4

Source: CFCE.

Table 4.34 Brazil – poultry meat exports (000 tonnes)

Poultry meat of which to: EU Germany UK Spain non-EU Saudi Arabia China/HK Japan C/S America Russia

1990

1995

1996

1997

1998

1999

2000

305.2

445.6

581.8

672.8

612.5

770.6

906.7

23.2 6.0 .. 7.2 282.0 92.0 16.6 41.0 30.7 15.3

64.7 19.1 1.7 13.1 380.9 142.3 68.9 98.4 39.9 ..

84.1 27.4 12.6 19.5 497.7 160.7 59.3 120.4 32.4 14.7

91.8 26.0 15.2 22.6 581.0 185.5 83.5 93.7 49.0 33.8

69.9 16.9 9.2 21.8 542.6 168.0 73.4 73.4 89.8 16.6

88.5 19.3 16.3 20.7 682.1 217.2 110.8 100.5 60.6 9.9

132.3 30.4 24.5 23.0 774.4 207.6 131.5 109.3 50.8 20.8

Source: United Nations.

(although these are now restricted) and EU surpluses of dark meat and offals of chicken (both broiler and hen) and, increasingly, turkey. Without export refunds, the EU would not be able to compete on the world market given higher production and processing costs and high demand for breast meat in the EU.

4.4.3 Brazil Table 4.34 shows Brazilian exports of poultry meat between 1990 and 2000. Exports from Brazil are quite diversified, comprising whole birds and both dark and light meat broiler parts. In fact, there is a surplus

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The international meat trade

of white meat cuts in Brazil because of stronger demand for dark meat. There are significant exports to the EU (15% of the total) in frozen chicken parts, mainly breast meat that can attract a price premium in the EU. Also, a large quantity of frozen whole chickens is exported to the Middle East. Brazil is an important supplier to Far East markets, including Japan and Hong Kong, but exports little to Russia. Growth in Brazilian exports has been less marked than for the United States, but nevertheless exports more or less trebled between 1990 and 2000. Growth has been fairly balanced for the various cuts and types of poultry meat, as there has been increased penetration in the EU (four-fold between 1990 and 1997), the Gulf States and the Far East.

4.4.4 China and Thailand Table 4.35 gives exports from China in the period between 1990 and 2000. Chinese penetration of the world export market is helped by its low production costs. It is mainly an exporter of frozen chicken parts, with Japan being a key market accounting for about 70% of its trade. China also experienced a large growth in exports during the 1990s until it received a setback on its shipments to the EU with a ban from August 1996. The ban was lifted in mid-2001 and Chinese poultry meat was allowed back on the EU market. The profile of the smaller exporter of Thailand is somewhat similar, with Japan accounting for 63% of its trade. Thai exports from 1997 to 2000 are shown in Table 4.36. Thailand also exports smaller quantities of cooked products (32000 tonnes in 1997 not included on the table) but exports of these products are almost entirely confined to Japan. Both China and Thailand concentrate on exporting higher priced breast meat rather than dark meat, partly because there is less demand for white meat on the domestic market. Table 4.35 China – poultry meat exports (000 tonnes)

Poultry meat of which to: Japan Hong Kong

1990

1995

1996

1997

1998

1999

2000

43.9

282.1

326.9

324.3

354.0

345.1

404.6

35.0 5.7

206.5 22.0

220.3 26.0

224.7 32.2

259.0 45.9

236.9 29.1

270.9 35.0

Source: United Nations.

Chapter 4 / page 30

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Exports

Table 4.36 Thailand – poultry meat exports (000 tonnes)

Poultry meat of which to: Japan Netherlands Germany UK

1997

1998

1999

2000

192.2

274.8

273.6

332.8

128.9 19.3 17.0 15.5

163.7 30.5 29.9 16.1

162.7 25.7 28.3 21.4

178.8 36.9 35.2 29.2

Source: Thai Broiler Processing Exporters Association.

Chilled/frozen exports from Thailand have been fairly stable during most of the 1990s. Thailand has become less competitive on export markets, especially compared with China on its key Japanese market. Nevertheless, it has managed to steadily increase its penetration on the EU market. Thailand has made a further shift to value-added products, especially cooked. In 1997 and 1998, however, the lower value of the Thai currency, the baht, boosted exports by over 50% over the two year period, at a time when domestic demand was constrained by economic crisis. This was mainly achieved at the expense of Brazil and China, especially on the Japanese and EU markets. In contrast, the converse has been occurring since 1999 especially in view of the devaluation of the Brazilian currency, the real, and a stronger baht.

4.4.5 Hungary For Hungary, the EU poultry meat market is of most importance, accounting for 60% of its exports in 1997. Main trade is in frozen parts and whole birds followed by chilled parts; this includes waterfowl. However, Hungary has to subsidise its exports, even to the EU, in order to make it competitive on the world market. There has been some growth in exports from 1994 onwards, although they have remained well below those of the early 1990s. Trade has not increased with the EU in the last three years, unlike the situation for most other supplying countries.

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5 Imports

5.1

Beef 5.1.1 United States 5.1.2 Japan 5.1.3 European Union 5.1.4 Russia 5.1.5 South Korea 5.1.6 Middle East 5.1.7 Taiwan 5.1.8 China

5.2

Sheep meat 5.2.1 European Union 5.2.2 Near/Middle East 5.2.3 United States 5.2.4 Other countries

5.3

Pig meat 5.3.1 Japan 5.3.2 Russia 5.3.3 United States 5.3.4 European Union 5.3.5 Other countries

5.4

Poultry meat 5.4.1 Russia 5.4.2 Japan 5.4.3 China 5.4.4 European Union

© Woodhead Publishing Ltd

5.1 Beef The major trading zones for beef have already been outlined in Chapter 4 and of course these are just as relevant when looking at the main import patterns. The United States, as well as being a major exporter, is also the world’s largest importer of beef. The Far East is also important in terms of imports, particularly as increasing affluence for many consumers in these regions is leading to higher demand for imported beef. The introduction of the current trade agreement under the WTO, introduced in 1995, facilitated the liberalisation of several important import markets. The agreement called for a reduction in import tariffs and increased market access. One of the most important areas where this had effect was in the Far East, and particularly Japan and South Korea. In both these countries, import prices fell and this made way for increased demand for cheaper beef imports.

5.1.1 United States Despite the high level of beef production in the United States and its large export trade, it is also the biggest importer in the world. While its exports are mostly of high quality beef for the retail and catering market, its imports are overwhelmingly of product needed by the United States’ huge manufacturing industry. Neighbouring Canada, Australia and then New Zealand supply most of the imported beef. Only small quantities are imported from Central and South America because of restrictions imposed on beef coming in from areas affected by Foot and Mouth Disease. However, the United States has established import tariff quotas for Argentina and Uruguay and this should result in some higher, albeit still limited, quantities from these two countries. Table 5.1 shows the United States’ considerable growth in imports between 1990 and 2000. The main beneficiary has been Canada, which has enjoyed preferential treatment under the North American Free Trade Agreement (NAFTA). Although most of the beef from Canada is destined for the processing industry, shipments of higher quality beef have risen. In contrast, imports from Australia, almost all of which are for processing, have fallen markedly since 1990.

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The international meat trade

Table 5.1 United States – beef and veal imports (000 tonnes)

Beef and veal of which from: Australia Canada New Zealand

1990

1995

1996

1997

1998

1999

2000

767.8

707.5

707.7

796.5

892.1

963.5

1019.0

361.8 81.1 192.9

223.6 177.4 193.1

181.7 233.8 167.9

213.2 272.8 192.0

285.2 306.0 197.7

288.8 345.1 186.9

342.1 335.4 213.1

Source: USDA.

5.1.2 Japan The Japanese market for imported beef is almost entirely dominated by the United States and Australia. Imports are divided quite evenly between chilled and frozen beef, with Australia stronger in the chilled sector and the United States in the frozen sector. Canada and New Zealand are the only other suppliers of note, supplying mainly chilled beef. Most of the imported product is for the high quality retail and catering sector, as beef is not widely used in processed products. Therefore, the main import is hindquarter cuts of grain-fed beef. The Japanese market grew quickly in the 1990s, virtually doubling in size between 1990 and 1999. Food consumption patterns have changed dramatically in recent decades because of a number of factors: rising incomes; increased participation of women in the work force; changing market conditions and free trade commitments that have brought about changes in relative prices for different food products. As a result the traditional diet, which was dominated by rice and fish, has included an increasing proportion of meat. Perhaps because meat is not traditionally an important part of the national diet, consumer confidence is easily affected by health concerns. In 1996, an outbreak of E. coli (not related to meat) and the BSE cases in Europe led to a short-term decline in demand for imported beef. The economic downturn in the Far East in the last few years of the twentieth century also served to limit growth. Table 5.2 shows the rise in Japanese imports since 1990 and particularly the increase in shipments from both the United States and Australia.

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Imports

Table 5.2 Japan – beef and veal imports (000 tonnes)

Beef and veal of which from: United States Australia Canada New Zealand

1990

1995

1996

1997

1998

1999

2000

365.9

658.4

611.2

659.0

681.8

682.6

738.4

157.9 191.2 1.5 10.3

307.9 314.5 5.4 26.9

296.1 277.4 6.8 27.4

315.5 307.3 11.2 22.1

327.8 319.0 14.3 18.5

331.6 314.1 18.4 14.0

358.6 338.0 20.8 14.4

Source: ALIC.

5.1.3 European Union Total EU importing activity in beef and veal and live cattle and calves amounts to around 2.4 million tonnes (cwe) annually. This takes account of member states’ imports both from other EU and non-EU countries. Of this, imports of live cattle and calves account for only about 20%, so the bulk of the importing activity, 80%, is in beef and veal. In the case of live cattle, only ten per cent are imported from outside the EU, so trade within the EU-15 is obviously far more important. In the case of beef and veal, around 20% are imported from non-EU countries. European Union imports of both chilled and frozen beef and live animals are mostly carried out under one of several import tariff quotas or multilateral trade agreements. These generally allow fixed quantities to be imported at reduced or zero import duties. However, imports outside these schemes, subject to the full import duties, have been growing, and amounted to over 25000 tonnes (product weight) in the twelve months from July 1999 to June 2000. Many of these were from Brazil, which is able to produce beef at a low cost and has been expanding its export business. There is also a significant quantity of prepared and preserved beef (e.g. corned and other cooked beef) products imported from South America; these imports are not subject to any quantitative restriction. Table 5.3 shows EU beef sector imports (including the meat equivalent of live cattle) between 1990 and 2000 and the main supplying countries. In terms of individual suppliers, by far the bulk of the imports are from South America, although the mix of these imports has changed over time. For both Brazil and Argentina, the development of their exports in general, and to the EU in particular, has been dependant on

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The international meat trade

Table 5.3 EU – beef and veal imports* from non-EU countries (000 tonnes cwe)

Total of which from: Brazil Argentina Poland Uruguay Botswana Namibia Zimbabwe Australia

1990

1995

1996

1997

1998

1999

2000

501.3

422.3

395.8

429.0

386.7

423.9

416.0

98.0 133.8 45.4 23.8 15.0 .. 1.2 8.4

104.9 126.1 29.0 29.9 16.6 13.2 18.5 9.1

102.7 112.1 23.4 32.4 13.9 10.8 10.7 12.7

109.6 114.9 23.7 45.4 16.0 9.3 12.8 13.2

129.7 79.2 31.8 40.6 17.5 11.5 12.1 13.8

175.5 85.1 29.7 33.8 15.7 13.5 10.8 11.9

196.3 79.2 29.4 27.1 14.8 11.2 9.9 8.2

* includes the meat equivalent for live animals and processed beef. Source: EU Commission.

their volatile economies and the effect in turn on producer incomes, domestic consumer demand, prices and exchange rates. A devaluation of its currency since 1998 has allowed Brazil to increase its share of the EU market, concentrating particularly on competitively priced frozen and processed beef. This has been at the expense of Argentina, which has concentrated instead on developing the higher quality end of the market. Although forming only a small proportion of the Community’s supply of beef, imports from non-EU countries are important for two reasons. Firstly, they are financially attractive to importers because of the relatively lower world price for beef. Secondly, they provide an additional source of specialist product, such as high quality chilled cuts for the catering sector and beef specifically for the processing sector. Since mid-1995, imports into the Community have been relatively stable and lower than in previous years, as they have largely reflected the quantities allowed under the various import schemes. Imports were a little lower in both 1996 and 1998. In 1996, EU demand for beef was severely dented by the crisis over BSE and in 1998 the large release of beef from EU intervention stores reduced the need for imported supplies. The pattern of imports follows closely the various import schemes. Most live cattle and calves are imported from Eastern European countries. Chilled beef is mainly imported from South America and Australia under the High Quality Beef scheme and from certain African states under the ACP schemes. Much of the frozen beef is imported from South

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Imports

Table 5.4 EU member states – beef and veal imports from non-EU countries by product, 2000 (000 tonnes cwe)

UK Germany Italy Netherlands Spain France Greece other countries EU-15

Live animals

Chilled

Frozen

Salted/Dried

Prepared

Total

.. 7.6 18.3 0.2 0.1 .. 5.1 .. 31.5

39.3 41.4 14.8 14.8 5.4 5.1 0.2 8.6 129.6

23.0 15.4 26.8 21.1 18.9 4.9 4.6 13.4 128.3

0.4 0.4 0 0.6 0 1.1 0 .. 2.5

77.5 17.7 7.5 11.3 1.0 5.4 0.3 3.4 124.2

140.2 82.5 67.4 47.9 25.6 16.6 10.2 25.6 416.0

Source: EU Commission.

America for the processing industry. There are no import schemes applying to imports of prepared and preserved beef and traditionally Brazil and Argentina supply the majority. Table 5.4 gives EU member states’ imports from non-EU countries by product for 2000. In terms of total imports of beef from outside the EU, taking into account imports of live cattle, fresh, chilled, frozen, salted, dried and prepared beef, the UK is the largest importer by far, followed by Germany, Italy and the Netherlands. The make-up of their imports differs widely, however, with the UK importing a large quantity of prepared beef (i.e. cooked and corned beef), Italy importing the most live animals, Germany importing the highest quantity of chilled beef and the Netherlands importing mostly frozen beef. Import data by individual member states, given in Tables 5.8–5.12, are generally drawn from national sources. They include trade with other member countries of the European Union. Once this intraCommunity trade is taken into account, the league table of importers changes considerably, with Italy as the major importer followed by France and the Netherlands. Table 5.5 gives details of imports into Italy from 1990 to 2000. The country is the EU’s largest importer, important for both live animals and meat. Since 1990, annual imports of live cattle and calves have been in the region of 1.5–2.0 million live cattle. About one-quarter of these are calves, while the remainder are store cattle for further fattening. Eastern European countries are the major source of calves, supplying under Association Agreements which came into effect in 1992 to allow imports at reduced import tariffs. Italy is allocated the majority of the live cattle

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The international meat trade

Table 5.5 Italy – beef and veal imports (000 tonnes) 1990 Beef and veal of which from: EU Germany France Netherlands Ireland Spain Brazil Live cattle* of which from: EU France non-EU Poland

1995

1996

1997

1998

1999

2000

459.6

355.7

300.0

348.2

389.0

397.4

386.6

na 120.5 87.6 84.5 na na na

332.5 55.8 88.7 69.1 15.0 9.5 5.5

274.6 50.5 69.9 65.1 12.2 15.2 9.5

321.3 70.9 79.0 77.0 14.0 22.2 11.3

261.1 83.6 88.7 78.4 20.3 28.7 12.1

363.2 83.1 81.4 78.2 30.9 25.6 17.1

351.8 86.3 81.4 75.7 22.5 20.1 18.7

1938.6

1461.5

1451.9

1578.4

1886.9

1563.1

1487.6

1197.8 1038.0 740.6 522.8

1141.0 888.7 320.5 234.4

1122.6 899.2 329.4 260.3

1182.2 952.0 396.2 306.1

1527.8 1283.6 359.1 300.0

1207.1 915.9 356.0 290.0

1156.9 869.7 330.6 236.9

* figures in 000 head. Source: Eurostat. Table 5.6 France – beef and veal imports (000 tonnes)

Beef and veal of which from: EU Netherlands Germany Ireland Spain Italy Belgium UK Argentina

1990

1995

1996

1997

1998

1999

2000

347.2

399.9

270.3

246.1

269.6

298.1

282.0

338.8 66.2 116.7 34.9 12.1 5.5 38.7 58.2 5.2

392.4 66.9 79.8 55.6 21.6 22.6 36.6 102.3 3.6

263.0 60.1 64.0 34.7 21.3 24.6 30.4 19.6 4.6

237.3 60.1 61.2 28.5 26.6 25.1 27.9 0 5.0

261.9 65.8 58.5 42.5 28.3 34.0 26.1 0 0.1

288.3 73.6 65.3 48.5 32.5 35.9 22.2 0.1 3.0

271.7 74.6 61.5 36.9 35.7 31.1 22.6 0 2.4

Source: CFCE.

brought into the EU under these Agreements. France is the largest supplier of live store cattle and also supplies a small number of calves. Italian imports of beef and veal are mainly from other EU countries, with Germany, France and the Netherlands about equal in importance. Most of the beef is supplied in chilled, bone-in form, mainly carcasses from young bulls. Table 5.6 shows French imports since 1990. France is also a major importer of beef and veal, although imports declined sharply in 1996 and 1997 at the height of the BSE crisis. Although they partially

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Imports

Table 5.7 Netherlands – beef and veal imports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Beef and veal of which from: Germany Belgium Brazil Ireland

72.6

127.6

132.6

140.1

141.8

162.0

139.1

4.6 26.9 6.1 6.7

21.4 25.2 6.7 19.6

36.7 32.1 10.5 13.6

47.5 30.7 11.5 13.5

61.1 18.4 14.1 16.3

62.2 19.3 18.5 23.3

47.6 22.3 21.8 15.1

Live cattle* of which from: Germany Belgium France UK

601.9

533.8

509.0

530.3

438.2

475.4

448.1

145.8 110.8 115.0 184.6

249.1 133.9 20.1 96.2

253.9 176.0 28.7 16.3

300.1 137.5 30.8 0

206.4 124.8 33.9 0

243.6 129.9 18.9 0

203.0 136.5 16.9 0

* figures in 000 head. Source: PVE.

recovered in 1998 and 1999, they are unlikely to regain their previous high levels, because it is believed that there is a strong consumer preference for domestically produced beef. Main suppliers to the French market are the Netherlands, Germany and Ireland, although Germany has lost significant market share in the past ten years. Imports are overwhelmingly in chilled form: in 1999, from the Netherlands, 40% were boneless cuts and 27% bone-in forequarters; from Germany, 41% were forequarters and 28% boneless cuts; from Ireland 63% were bone-in hindquarters. The majority of this trade is female beef, and especially from cows. Very little is imported from outside the EU. Table 5.7 shows imports into the Netherlands. The Netherlands imports a significant number of live cattle, around half a million each year. In 1999, four-fifths were live calves that would be fattened before slaughter to satisfy the very high demand for veal. Almost all live cattle and calves are from other EU countries, especially Germany and Belgium. In the early 1990s the major supplier to the Dutch market was the United Kingdom, but this trade declined in 1995 because of the high cost of British calves at that time and then finally stopped when the export ban was applied to the UK in March 1996. The Netherlands also imports a sizeable quantity of beef and veal each year and its import requirement has grown considerably since 1990. Germany in particular has increased its position on the Dutch market. Imports from non-EU countries have also increased in the last ten years, with Brazil now supplying three times as much as in 1990.

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The international meat trade

Table 5.8 gives figures for UK imports of beef and veal between 1990 and 2000. The United Kingdom is unusual among EU importing countries, as a relatively high proportion of imports is from non-EU countries (32% in 1999). Also, a significant quantity of frozen beef is imported (also 32%). Within the EU, Ireland is the major supplier and so changes in imports from this country are clearly reflected in the overall total. The key factor in these changes is the level of sterling; in both recent years of particularly high imports, 1997 and 1999, a strong sterling encouraged a sharp rise in imports from Ireland. In 1999, imports comprised of 36% chilled bone-in beef, 34% chilled boneless beef and 28% frozen boneless beef. Of all EU countries, the United Kingdom takes the largest share of imports from outside the EU. As well as imports of chilled and frozen beef from South America, African States and Australia under the various import schemes, two-thirds of the EU’s import of prepared and preserved beef is destined for the UK. In 1999, Brazil supplied 40400 tonnes of corned beef and 7500 tonnes of cooked beef (including tongue) to the UK market. Table 5.9 shows the development of Greek imports of beef and veal from 1990 to 1999. Greece became increasingly important as an importing country in the 1990s, although along with the rest of the EU the pattern was disrupted in 1996. Almost all of the imports are from other EU countries, with France by far the largest, and fastest growing, supplier. In Table 5.8 United Kingdom – beef and veal imports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Beef and veal of which from: EU Ireland Netherlands non-EU Brazil Australia Namibia

146.1

129.6

116.6

151.7

117.2

144.1

156.7

117.5 78.7 11.7 28.6 3.1 5.0 0

83.3 50.0 7.8 46.3 3.0 5.7 5.3

63.5 37.5 11.0 53.1 3.5 8.0 5.4

93.5 60.0 16.7 58.2 4.7 8.9 5.4

70.6 53.6 8.8 46.6 4.9 9.0 5.8

98.8 78.1 10.1 45.4 11.3 7.8 6.6

107.4 86.8 9.4 49.2 18.6 5.8 5.7

Processed of which from: Brazil Ireland Argentina Uruguay

85.1

99.0

70.9

78.8

67.2

85.0

88.4

36.5 11.0 24.5 3.7

42.2 16.1 20.1 4.4

32.2 12.2 14.8 3.9

36.9 13.6 15.2 4.7

35.0 11.5 8.8 4.5

47.9 16.1 7.7 4.5

47.4 20.6 7.6 3.9

Source: Customs & Excise, Intrastat.

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Imports

Table 5.9 Greece – beef and veal imports (000 tonnes)

Beef and veal of which from: France Netherlands Germany Italy

1990

1995

1996

1997

1998

1999

134.1

158.8

107.0

124.1

145.9

176.1

13.0 39.1 48.2 16.7

61.0 39.6 31.4 9.3

57.1 18.3 11.2 7.0

68.5 18.6 8.7 10.5

81.6 16.7 18.2 8.5

117.1 15.5 14.5 12.7

Source: Greek Ministry of Agriculture.

1999, France accounted for around two-thirds of Greek imports, supplying mostly chilled bone-in carcasses and forequarters. The majority of imports into Spain are of live cattle and calves weighing less than 300kg from other EU countries and this trade has grown considerably in the last ten years. In 1990, live imports totalled 102700 head but by 2000 the number had grown to 514800 head. France is the main supplier, providing 270300 animals in 2000, although Ireland, Germany and Italy have also increased in importance. Only a modest volume of beef and veal is imported (68000 tonnes in 2000), with the Netherlands, France, Denmark and Brazil all supplying around 12000 tonnes each.

5.1.4 Russia The run-down of the Russian cattle sector following the collapse of the Communist regime resulted in a large rise in import demand. The EU dominates trade and accounts for about 50% of Russian imports. These imports are facilitated by EU ‘food aid’ arrangements, which mean that beef from the EU (mostly beef held in intervention stores) can be sold at subsidised prices and exported with the aid of export refunds. As a result, those EU member states that have traditionally been heavy users of intervention have been most involved in exporting to Russia. The Russian market is characterised by low purchasing power and a preference for processed products; imports are mainly for manufacturing purposes. It is believed that the official import data considerably understate the true level of trade, because if official channels are avoided then import tariffs can also be avoided. Regional trade, notably from the Ukraine, is the other main supply source although some of this may represent beef in transit (e.g. from the EU). Table 5.10 gives Russian beef imports for the period 1996–2000.

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The international meat trade

Table 5.10 Russia – beef and veal imports (000 tonnes)

Beef and veal of which from: EU Germany Italy Ireland France Netherlands Ukraine China Poland Australia Kazakhstan

1996

1997

1998

2000

448.9

618.1

419.6

282.3

211.6 63.6 13.3 66.0 22.5 12.2 175.6 17.6 4.0 1.8 17.9

338.7 107.1 29.8 74.6 28.4 36.3 161.4 20.4 10.3 5.0 33.2

200.1 87.8 15.0 42.4 11.0 18.5 94.1 32.4 26.9 24.5 11.5

na 41.3 8.5 8.0 5.5 5.2 135.6 na na na na

Source: United Nations.

5.1.5 South Korea The South Korean import market is mainly for frozen beef, including a large quantity of grass-fed beef. Australia and the United States again dominate. However, while the United States has increased its share of the import trade since 1990, Australia has seen its share fall. Until 2001, South Korea operated a system of international tenders for prospective suppliers to its market, thus restricting both the overall level of imports and the number of countries that were able to compete. In addition, South Korea traditionally discriminated against imported beef by restricting the type of retail outlet through which it could be sold and by requiring that it should be labelled, stored and displayed separately. Following complaints by Australia and the United States, this dual system was repealed in late 2001. It is likely that South Korean beef imports will rise as a result. Table 5.11 gives imports into South Korea between 1990 and 2000. After growth between the years 1990 and 1997, the economic downturn in the region caused the growth to falter in 1998. However, since then, imports have increased considerably because of an increasing relaxation of the rules related to imported meat.

5.1.6 Middle East Another major import region for beef is the Middle East. The Gulf States, led by Saudi Arabia, generally buy high quality beef (including

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Imports

Table 5.11 South Korea – beef and veal imports (000 tonnes)

Beef and veal of which from: United States Australia Canada New Zealand

1990

1995

1996

1997

1998

1999

2000

106.5

168.4

162.5

166.1

92.0

157.9

237.9

26.8 72.5 0.9 6.3

76.7 61.2 2.3 28.1

76.8 56.6 3.8 25.1

83.4 61.6 5.2 15.5

32.7 31.6 3.8 3.9

77.4 65.8 7.1 7.5

133.2 70.0 18.8 11.0

Source: South Korean Customs Service.

Table 5.12 Egypt – beef and veal imports (000 tonnes)

Beef and veal of which from: Ireland Netherlands Germany France United States

1990

1995

1996

1997

1998

1999

2000

154.2

113.4

90.7

102.4

102.6

113.0

144.8

12.3 8.2 36.8 12.8 38.7

14.3 20.0 24.1 20.3 0.1

13.5 24.0 12.5 25.4 0.3

40.3 18.3 9.2 22.6 0.1

65.8 16.0 1.3 4.8 5.2

78.8 19.9 4.9 1.4 –

82.1 23.7 3.9 2.5 –

Source: United Nations.

chilled). In contrast, commodity beef markets, such as Egypt, take mainly low priced beef, much of which would be destined for further processing. Other major importers include the United Arab Emirates and Iran. The EU is an important supplier to the Middle East because the payment of export refunds has made it economically possible for it to compete well against other suppliers in that region. Table 5.12 shows imports into Egypt. Demand has been variable in the years shown, with an overall decline between 1990 and 1998. In 1990, less than half was supplied by EU countries, although almost a quarter was from Germany. By 1998, over 85% of imports were from EU countries, with 64% from Ireland, which is also an important supplier of live cattle to the Egyptian market. Both 1999 and 2000 have seen an increase in beef and veal imports, mostly as a result of a rise in imports from Ireland. Saudi Arabia imported over 51000 tonnes of beef in 1999. Of this, almost 20000 tonnes were from Ireland and another 20000 tonnes from the United Arab Emirates.

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The international meat trade

5.1.7 Taiwan Taiwan is another growing Far East beef import market, although quantities involved are still fairly modest. In 1990 its imports totalled 38000 tonnes, with over three-quarters supplied by Australia. By 1999, imports had risen to 68700 tonnes. About half was imported from Australia, representing a small rise, with most of the rest coming from New Zealand and the United States.

5.1.8 China Mainland China has yet to emerge as a major importer of beef because of the low purchasing power of consumers, a preference for pig and poultry meat and a system of high import tariffs (China only became a member of the WTO in 2001). In 1999, imports totalled only 4600 tonnes, of which 2700 tonnes were from Australia, 1400 tonnes from the United States and 300 tonnes from New Zealand. So far, imports have been mainly confined to the upmarket hotel sector and the small number of premium supermarkets meeting demand from high-income consumers, including foreigners. Membership of the WTO will require China to reduce its tariffs. As consumer incomes continue to rise some increase in import demand is expected to occur in coming years.

5.2 Sheep meat Sheep meat is not widely traded throughout the world, because it is not a meat with universal appeal. Trade is confined to only a few countries where there is a tradition of sheep meat consumption, with the main importing areas being the EU (although sheep meat features in only some member states) and the Near/Middle East. The main source of imports is Australia for mutton and New Zealand for lamb.

5.2.1 European Union Total EU-15 importing activity in live sheep and sheep meat amounts to over half a million tonnes (cwe) annually. This takes account of member states imports both from other EU and non-EU countries. Of this, imports of live sheep account for only about 10–12%, so most of the

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Imports

importing activity is in sheep meat. EU imports from outside the Community are relatively large compared with the overall size of the market, representing almost 40% of total consumption. France imports the largest amount in the sheep meat sector, followed by the United Kingdom and then, a long way behind, Germany, Italy and Belgium. Import quantities for all other member states, including the southern European countries of Greece, Spain and Portugal, are much more modest. The main changes since 1990 are that France, Greece and the Netherlands have increased their import requirements quite significantly, while Spain, the United Kingdom and, to a lesser extent, Italy have reduced theirs. Unlike the other meat sectors, imports in the sheep meat sector from non-EU countries account for a high proportion of overall imports. About 20% of live sheep and 55% of sheep meat is imported from outside the Community. Table 5.13 shows how much sheep meat is imported from outside the EU by product. The United Kingdom imports by far the largest share from outside the Community, all of which is in meat form from New Zealand. Although France is overall the largest importer in the EU, most of this comes from other EU countries (principally the UK and Ireland) with only a relatively small amount from third countries. All EU countries import sheep meat from outside the Community but only a handful import live sheep. Most significant in this respect are Italy and Greece, whose proximity to Eastern Europe makes them the favoured destination for live sheep from Hungary, Poland, Bulgaria and Romania.

Table 5.13 EU member states – sheep meat imports from non-EU countries by product, 2000 (000 tonnes cwe)

UK Germany France Italy Belgium/Lux Greece Spain other countries EU-15

Live animals

Chilled

Frozen

Total

0 0.1 .. 13.2 0 4.5 0.2 1.6 19.6

10.7 5.8 9.5 5.3 5.4 5.0 .. 1.2 43.0

97.5 38.1 23.9 5.5 16.9 9.9 6.4 11.1 209.4

108.2 44.0 33.4 24.0 22.4 19.4 6.7 13.9 272.0

Source: EU Commission.

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The international meat trade

In the case of live animal imports, those into France, Italy and Belgium, all traditionally large importers of live sheep, have declined significantly since 1990, while imports into the Netherlands and Greece have increased sharply. With regard to sheep meat, the import requirements of most countries have grown since 1990 and this demand has been satisfied largely by increased supplies from the United Kingdom and Spain. New Zealand has also increased exports to many northern Continental member states, as it has pursued a policy of diversification, although its exports to the southern countries have diminished. Imports from non-EU countries are carried out under the import tariff quotas agreed under the World Trade Organisation (WTO). These tariff quotas allow a fixed quantity of product to come in from specified countries (mostly in Australasia, South America and Eastern Europe) without the payment of customs duty. In most cases the tariff quota specifies the quantity of sheep meat involved, although in the case of Eastern European countries the quantities specified can be imported as live animals or meat. There have been only minor changes to these tariff quotas (formerly known as Voluntary Restraint Agreements) since 1990 and therefore the total quantity imported and the relative shares of the supplying countries have altered very little over the last ten years. Table 5.14 gives the share of EU imports by main supplying country since 1990. New Zealand is by far the most important supplying country and consistently supplies 210000–225000 tonnes annually of sheep meat, approximately 80% of all imports from non-EU countries in the sheep meat sector. In the early- to mid-1990s the agreements on imports into the Community also specified the proportion that could be importTable 5.14 EU – sheep meat imports* from non-EU countries (000 tonnes cwe)

Total of which from: New Zealand Australia Hungary Bulgaria Uruguay Poland

1990

1995

1996

1997

1998

1999

2000

282.0

225.8

266.8

268.7

268.0

262.9

272.0

213.3 20.4 13.6 3.5 na 10.2

210.8 18.2 9.6 na 4.3 3.4

220.8 18.0 9.3 3.5 5.6 2.4

223.5 18.7 8.9 3.0 5.4 2.2

224.7 18.7 7.7 3.7 5.2 2.2

213.7 18.1 8.9 5.8 5.6 4.5

215.1 18.4 10.4 5.9 5.1 4.8

* includes the meat equivalent for live animals. Source: EU Commission.

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Imports

ed in fresh/chilled form but this is no longer the case. Although the total imported from New Zealand has hardly changed, the proportion supplied in chilled form has grown substantially. In 1990, this amounted to just over 3000 tonnes but by 2000 it had increased to 27500 tonnes. At the same time there has been a corresponding decline in the quantity imported in frozen form. The same is broadly true of imports from Australia and Eastern Europe although the total quantities involved are much lower. Table 5.15 shows imports to the EU’s largest importer, France, between 1990 and 2000. France is important both in terms of live sheep and sheep meat. About 60% of consumption is now imported. Imports of live sheep in the last ten years have been overwhelmingly from other member states. In 1990, France imported over a million and a half head of live sheep, with nearly 60% coming from the UK and the Netherlands. Belgium and Germany also supplied significant numbers, 179000 and 241000 head respectively. By 2000, the total number more or less halved. Only the Netherlands maintained its position, and despite some fluctuations in the late 1990s, the number supplied in 2000 was very similar to that in 1990. Imports from the United Kingdom suffered a sharp downturn from 1997. This was partly because of the difficulties caused by a strong pound and the introduction of stricter documentation (relating to Transmissible Spongiform Encephalopathies). Also, the ending of the calf trade, as a result of the ban on all exports from the bovine sector because of BSE, made exports of live sheep economically less viable. Table 5.15 France – sheep meat imports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Sheep meat of which from: UK Ireland New Zealand Spain

124.6

174.0

160.9

153.7

159.5

167.3

169.4

55.1 51.3 7.6 1.2

95.2 45.0 16.8 1.6

88.0 44.0 17.6 4.1

77.8 38.6 22.7 6.2

79.9 42.7 22.9 6.6

83.7 44.8 25.9 4.6

83.5 41.8 28.4 6.8

Live sheep* of which from: Netherlands Spain UK

1525.2

921.6

940.3

675.9

698.5

759.4

757.9

409.8 57.3 472.1

367.9 96.5 410.6

456.5 76.5 347.6

320.1 109.3 198.0

263.9 119.7 243.0

360.2 105.0 232.1

406.5 139.7 129.4

* figures in 000 head. Source: CFCE.

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Table 5.16 United Kingdom – sheep meat imports (000 tonnes)

Sheep meat of which from: New Zealand Australia EU

1990

1995

1996

1997

1998

1999

2000

128.7

128.4

130.2

125.6

114.9

113.1

109.2

117.2 8.3 2.3

107.2 9.2 10.8

103.7 10.0 14.8

97.5 11.6 14.7

90.0 11.4 11.3

88.1 12.8 10.9

85.4 12.1 10.4

Source: Customs and Excise, Intrastat.

Spain has become much more important as an exporter of live sheep to France, benefiting from an expansion in its sheep sector and its geographical proximity to France, and in 2000 became the secondranked supplier to France. France’s own sheep industry has been declining during the last decade, with falling production producing an ever-widening shortfall in supplies. Imports have therefore increased to compensate, particularly from the United Kingdom, despite a strong pound. Imports from New Zealand and Spain have also increased, with an increasing proportion of chilled lamb coming from New Zealand. Although Ireland remains the second most important supplier of lamb to the French market, its share has slipped considerably over the past ten years. Table 5.16 gives details of UK imports of sheep meat from 1990 to 2000. After France, the United Kingdom is the second largest importer, but the most important in terms of imports from outside the Community. Imported sheep meat accounts for almost one-third of consumption. Over 90% comes from non-EU countries, mainly New Zealand but also Australia. Imports from New Zealand have in fact declined since 1990 as the country has diversified its exports to other markets in the EU and elsewhere. The form in which sheep meat is imported has changed gradually over the years. In 1990, 52% was imported in whole carcass form; by 2000, only 16% was imported this way. Exporters, adding value to their product and marketing only the cuts that are required to satisfy the UK market, have instigated the move from whole carcasses to cuts. Also, transporting smaller cuts that have a market value, rather than a bulky carcass, of which not all is required, can reduce transport costs for the exporter. Germany is a relatively small market for mutton and lamb, importing 40500 tonnes in 2000. However, imports account for almost

Chapter 5 / page 16

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Imports

Table 5.17 Italy – sheep meat imports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Sheep meat of which from: EU New Zealand

22.1

22.4

21.9

22.7

23.2

23.0

23.4

9.6 7.5

14.8 5.7

13.1 5.8

12.7 7.6

14.3 6.7

15.1 5.7

13.8 6.0

Live sheep* of which from: EU France Spain Netherlands non-EU Hungary

2386.4

1965.1

2077.2

1887.3

1884.0

1909.6

1772.9

501.0 198.4 1.6 11.1 1885.4 1044.3

550.5 354.3 27.6 46.7 1414.6 923.4

812.5 469.1 28.4 116.0 1264.6 884.0

669.0 324.4 65.8 193.9 1218.3 817.9

828.8 369.4 107.3 241.2 1055.2 704.9

929.8 338.8 136.4 297.2 979.8 678.7

720.9 270.2 205.4 134.0 1052.0 743.9

Source: Eurostat.

two-thirds of consumption, so the quantity imported is significant. Imports have risen over the last ten years and although imports from other EU countries have increased a little, those from New Zealand have doubled to total 31700 tonnes in 2000. An increasing proportion is chilled lamb. Both Belgium and the Netherlands are fairly small in terms of imports, although there have been some significant changes in the ten years to 2000. In 1990, imports of live sheep into Belgium amounted to 577000 head, with neighbouring Netherlands supplying almost half. Over the ten year period, however, these imports declined rapidly and by 2000 totalled only 51600 head. Imports of sheep meat on the other hand have increased during the past ten years as a result of higher imports from New Zealand, and amounted to 68000 tonnes in 2000. In contrast, Dutch imports of live sheep have risen since 1990, mostly as the result of increased numbers from the United Kingdom. In 2000, the Netherlands imported 332000 live sheep, with 280000 supplied by the UK. Some of this increase has occurred since 1997, despite the strong pound and the overall decline in the UK’s total exports. The southern Mediterranean countries’ requirements are rather different from northern member states, as demand is for lighter weight lambs. The average carcass weight of lambs produced in Italy, Greece, Spain and Portugal is typically around 10kg compared with around 19kg in the UK and France. Table 5.17 shows Italian imports of sheep meat between 1990 and 2000. Unlike other member states, imports into Italy are primarily of live

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The international meat trade

Table 5.18 Greece – sheep meat imports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

Sheep meat of which from: New Zealand EU

15.0

10.8

13.8

13.5

14.5

40.4

66.2

12.8 0.3

5.1 4.6

7.7 3.2

8.9 2.7

8.0 3.8

6.9 30.0

40.8 20.8

Live sheep* of which from: EU non-EU

99.1

518.4

296.6

222.2

329.4

578.9

575.0

6.6 92.4

287.2 231.2

224.2 72.3

107.7 114.5

145.2 184.1

200.4 378.5

117.0 458.0

* figures in 000 head. Source: Eurostat.

sheep (55% of the total in carcass weight equivalent terms). Also, imports are predominantly from non-EU countries, although numbers have fallen over the last ten years. As the number of live sheep imported from other EU countries has been increasing over the same period, the balance is gradually shifting but still lies in favour of Eastern Europe. Hungary is the main supplier from outside the EU, with Romania and Poland important too. Within the EU, all supplying countries have increased market share except Germany. The rise in imports from Spain has been particularly marked. In comparison to live sheep, imports of mutton and lamb are modest and have shown little change since 1990. Again, Spain has made the greatest inroads in market share. Table 5.18 gives imports of sheep meat to Greece from 1990 to 2000. Greek imports of live sheep and sheep meat have risen markedly in the last ten years. Like Italy, imports of live sheep from non-EU countries are much more important than those from other EU partners, although, unlike Italy, they have risen quickly since 1990, especially from Romania. Spain has also gained market share. In contrast, imports of both live sheep and sheep meat into Spain have fallen since 1990 as the country has increased its own production capacity and export business. Spain imported 1.24 million sheep and 18900 tonnes of sheep meat in 1990, but by 2000 these figures had fallen to 340000 head and 11000 tonnes. Neighbouring France and Portugal were the main suppliers, but in both cases supplies have declined. Only the UK has increased its share, although numbers involved are small.

Chapter 5 / page 18

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Imports

5.2.2 Near/Middle East The Near/Middle East region, especially the Gulf States, is a major importer of sheep meat. It represents the world’s largest import market for live sheep and the second largest for sheep meat, after the EU. Total imports of live sheep and goats amounted to 11.4 million head in 1999 while the quantity of sheep and goat meat amounted to 94000 tonnes (product weight). Australia has the largest market share for live sheep, at about 45%, with New Zealand and Australia being the main suppliers of sheep meat. The key import market in the region is Saudi Arabia, accounting for 41% of all Near/Middle East imports in 1999. Table 5.19 shows import data for Saudi Arabia since 1990. In 1999, nearly five million sheep were imported into Saudi Arabia. The demand for live sheep is boosted by ritual slaughter at Haj and this means that there is a strong seasonal pattern to the trade. The Horn of Africa (especially Somalia and Sudan) plus major producing countries within the region such as Syria and, to lesser extent, Jordan are the major suppliers (although some of the total represents re-exports). Sheep meat imports are also required to meet the strong consumer demand, as sheep meat forms an important component of the Arab diet. This trade, both lamb and mutton, is dominated by Australia and New Zealand as a result of their competitive price advantage, and there are also smaller shipments from India and Sudan.

Table 5.19 Saudi Arabia – sheep meat imports (000 tonnes) 1990

1995

1996

1997

1998

1999

Sheep meat of which from: Australia New Zealand

22.6

48.8

49.1

51.8

53.2

52.0

na na

24.1 14.5

23.0 10.3

19.9 15.4

19.6 13.9

21.0 14.6

Live sheep* of which from: Sudan Somalia Syria Jordan

5006.4

6346.7

6335.6

5479.2

3736.1

4814.9

326.9 596.5 611.7 15.7

587.3 3065.9 438.1 471.2

790.0 2792.3 346.4 838.2

829.3 2781.9 335.9 718.6

1363.8 756.8 387.2 370.9

1460.2 1027.6 984.8 434.2

* figures in 000 head. Source: Central Department of Statistics.

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The international meat trade

The United Arab Emirates (UAE) is the second largest importer of sheep meat in the region, accounting for over 17% of total Near/Middle East trade in 1999 with shipments of 16500 tonnes. This reflects its role as a re-exporter within the region. Live imports are also important for this market but are of lower importance than in Kuwait (1.86 million head imported in 1999) and Oman (1.4 million head).

5.2.3 United States Table 5.20 gives imports of sheep meat into the United States. The US imports a relatively small quantity of lamb and some mutton from Australia and New Zealand. Import demand increased during the 1990s in response to the decline in domestic production, and a reduction in import tariffs has made imported product cheaper. However, imports remain small because although there is steady demand from the ethnic minorities, it is a specialist product for most consumers. The United States has attempted to reduce imports from both New Zealand and Australia, arguing that imports were harming its domestic industry (which is in any case very small) but this complaint was not upheld by the WTO.

5.2.4 Other countries Japan also imports a small quantity of lamb and mutton but demand has fallen in recent years partly reflecting reduced usage of mutton in processed products and a switch to pig meat products instead. Again, Australia and New Zealand are the main suppliers. In 2000, a total of 27200 tonnes were imported (compared with 52 600 tonnes in 1990) of which 16 200 tonnes were from Australia and 10 700 tonnes from New Zealand.

Table 5.20 United States – sheep meat imports (000 tonnes)

Sheep meat of which from: Australia New Zealand

1990

1995

1996

1997

1998

1999

2000

19.0

29.8

33.0

37.8

51.6

50.4

60.7

14.0 5.0

20.0 9.6

21.4 11.4

25.5 11.9

35.7 15.7

35.0 15.1

44.6 15.5

Source: USDA.

Chapter 5 / page 20

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Imports

China is not a major importer of sheep meat as there is little tradition of including lamb in the everyday diet of the indigenous population. The little requirement there is can be satisfied by the small volume of imports. In 2000, imports were just 17800 tonnes (compared with less than a thousand tonnes in 1990) with practically all of it from New Zealand.

5.3 Pig meat For the same reason that there are few major pig meat exporters (most importantly religious sensibilities) there are also only a few major import markets. Japan alone accounts for about 50% of world trade in chilled and frozen pork (excluding trade within the EU). Otherwise, main importers are Russia, South Korea, the United States and Mexico, although generally the quantities involved are small relative to the size of the population. The European Union imports only small quantities from non-EU countries.

5.3.1 Japan Table 5.21 shows the rise in imports of pig meat into Japan in the ten years to 2000. For Japan, domestic production constraints have fuelled import demand, and imports virtually doubled between 1990 and 2000. By the year 2000, the United States, the EU and Canada accounted for 90% of Japan’s imports; in 1996 it was only 47%. Because of the way the gate price system operates, a range of cuts is supplied even though demand is more important for the high valued cuts.

Table 5.21 Japan – pig meat imports (000 tonnes)

Pig meat of which from: Denmark United States Canada Taiwan South Korea

1990

1995

1996

1997

1998

1999

2000

342.8

580.2

652.9

511.5

504.5

599.8

650.9

108.1 45.3 23.0 6.3 153.4

134.3 108.5 31.4 13.8 266.4

118.7 141.8 39.2 34.9 266.0

144.9 137.0 54.3 48.5 67.4

124.7 160.1 61.8 90.1 –

171.9 167.8 90.8 80.5 –

212.2 189.2 110.9 16.8 –

Source: ALIC.

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The international meat trade

Growth has occurred especially for chilled product that competes with domestically produced pig meat. Despite this growth for chilled pig meat, frozen pig meat still accounts for the majority of imports (about 70% of the total). This is mostly used as raw material for the processing industry. For this market segment, Danish product enjoys a good reputation for meeting Japanese specifications. This contributes to the strong presence of Danish, and increasingly of other EU, suppliers on this price premium market. Both the United States and Canada have also increased market share during the 1990s. These countries, along with Denmark, have been given a boost from the ban on Taiwanese product (from March 1997) and South Korean product (from March 2000) because of their problems with FMD. Before the bans were imposed, both of these countries had enjoyed a strong and growing presence in Japan.

5.3.2 Russia The collapse of Russia’s pig industry in the early 1990s resulted in a large rise in import demand. However, because of the generally poor economic situation, trade has been dependent upon food aid sales and product that could be purchased at the lowest possible price. In the case of imports from the EU, a production surplus and generous export refunds (at one stage EU export refunds amounted to €700 per tonne) enabled product to be offered at prices that Russia could afford. Thus, the EU has become the dominant supplier of chilled/frozen pork and processed products. Table 5.22 gives Russian import data from 1996 to 2000. In fact, official figures are thought to considerably understate the real situation. It is understood that substantial quantities are imported unofficially in order to avoid import tariffs and taxes, and there is also a problem with mis-classification of data. Given consumer preference for processed pig meat products in Russia, imports are mainly used by domestic manufacturers and then consumed in the main cities, especially St Petersburg and Moscow. However, some processed products based on salted, dried or smoked meat and sausages are imported. Imports from Eastern Europe have been declining in importance as the region finds it difficult to compete with EU product. China has

Chapter 5 / page 22

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Imports

Table 5.22 Russia – pig meat imports (000 tonnes)

Pig meat of which from: EU Denmark France Germany Eastern Europe United States China

1996

1997

1998

1999

2000

303.9

308.9

282.0

444.4

212.8

66.1 34.9 6.5 9.0 94.5 20.3 108.4

64.0 39.2 8.2 6.3 94.3 41.6 53.7

89.1 42.2 15.1 18.0 31.3 56.7 74.3

332.3 49.8 77.7 103.7 37.2 31.0 13.2

116.6 34.8 26.7 22.4 31.5 29.7 1.5

Source: United Nations.

Table 5.23 United States – pig meat imports (000 tonnes) 1990

1995

1996

1997

1998

1999

Pig meat of which from: Canada EU

136.5

133.7

132.7

134.1

158.2

197.1

84.0 44.2

103.3 30.3

108.3 24.5

106.5 27.6

128.9 29.2

160.3 36.8

Bacon and ham of which from: Canada EU

198.7

126.1

109.8

118.4

124.0

135.7

98.9 59.8

79.2 38.6

68.3 34.4

71.8 37.9

74.3 40.0

92.3 33.9

Source: USDA.

been the main loser from the emergence of the EU, with trade becoming negligible.

5.3.3 United States Historically, the United States has had a limited import demand for pig meat, with most of its needs being satisfied by domestic production. The majority of imports are cross-border trade with Canada (e.g. in the western United States). This showed some growth during the 1990s with the establishment of the additional Canadian processing capacity and some switch from trade in live pigs. Table 5.23 gives the United States’ imports between 1990 and 1999 (the presentation of data changed in 2000 and this has meant that it is not possible to compare directly). In terms of suppliers outside Canada, this has mainly involved the EU, and specifically Denmark. The US has a deficit in some cuts (notably spare ribs and bellies) and a good market

© Woodhead Publishing Ltd

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The international meat trade

for canned hams. However, this trade has been falling due to the expansion in United States production throughout the 1990s.

5.3.4 European Union EU imports of pig meat from outside the Community are relatively small when compared with the overall size of the market. Taking account of live animals, fresh, chilled, frozen, salted, smoked and dried pig meat, and prepared products and sausages, total EU imports in 2000 represented less than one per cent of total consumption. Table 5.24 shows imports from outside the EU, split by the various types of product. About three-quarters is in the form of fresh, chilled and frozen pig meat, with most of the remainder in the form of prepared meat and sausages. Very few live pigs, or salted, dried and smoked products are imported. Italy and Spain are the largest importers of non-EU pig meat, almost all of which is fresh, chilled or frozen. In the case of Germany, the UK and Austria, imports of prepared pig meat and sausages make up a significant proportion of the total, although fresh, chilled and frozen pig meat are nevertheless still important. Most imports are carried out under one of the import tariff quotas or multilateral trade agreements, which generally allow fixed quantities of pig meat from specific non-EU countries at reduced or zero import duties. However, imports are also allowed outside one of these schemes, as long as the full import duty is paid. Table 5.25 gives imports into the EU from its main non-EU suppliers from 1990 to 2000. Since 1996, the total quantity imported from outside the Community has been relatively stable. Hungary and the Table 5.24 EU member states – pig meat imports from non-EU countries by product, 2000 (000 tonnes)

Italy Spain Germany UK France other countries EU-15

Live animals

Fresh/chilled/ frozen

Processed/sausages

Total

.. 0.3 0.2 0 0 0.1 0.7

11.2 9.8 2.3 4.1 3.8 3.6 34.8

1.2 0.1 4.9 1.7 0.8 2.7 11.1

12.5 10.3 7.3 5.8 4.6 6.5 46.9

Source: EU Commission.

Chapter 5 / page 24

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Imports

Table 5.25 EU – pig meat imports* from non-EU countries (000 tonnes cwe)

Total of which from: Hungary United States Poland

1990

1995

1996

1997

1998

1999

2000

51.5

21.6

42.2

58.0

43.6

53.5

47.0

20.4 0.2 9.9

16.0 0.5 2.8

35.7 1.3 2.0

38.3 6.4 2.3

31.2 5.9 2.6

41.3 5.3 3.2

35.3 4.9 3.7

* includes the meat equivalent for live animals and processed pig meat. Source: EU Commission.

United States supply most of the EU’s imports of fresh, chilled and frozen pig meat, while Hungary and Poland dominate imports of processed pig meat products. Although there are import tariff quotas for other Eastern European countries and the Baltic States, the quantity imported from these countries is quite insignificant. By far the majority of EU trade in the pig meat sector is between the various member states. Data for individual EU members states show effectively how changeable the pattern of live pig and pig meat trade is throughout Europe, with much more marked variations from year to year than generally seen in either the beef or lamb sectors. There are a number of reasons for this, including the fluctuating supply of pigs in importing and exporting countries, particularly the Netherlands and Denmark. One of the main factors affecting the export supply of live pigs and pig meat in the Netherlands in recent years was the incidence of Classical Swine Fever in 1997/98 and a ban on exports which lasted more than a year. During this period, Denmark was able to step up its own exports. The change in relative prices between two member states, which can occur quite quickly, can also influence trade movements on a shortterm basis and this is responsible for many of the variations seen in member states’ trade figures from year to year. The EU’s largest single importer is Germany, although most comes from other member states. Germany imports significant quantities of both live animals and meat. Germany also imports some processed pig meat but in fairly modest amounts. The number of live pigs imported since 1990 appears to have increased considerably, even if account is taken of the fact that the figures for 1990 relate to imports into West Germany only. The dismantling of the border between East and West promoted an increase in overall demand for pigs.

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Chapter 5 / page 25

The international meat trade

Table 5.26 Germany – pig meat imports (000 tonnes) 1990 Pig meat of which from: Belgium Netherlands Denmark UK Processed Live pigs* of which from: Netherlands Denmark Germany

1995

1996

1997

1998

1999

2000

544.1

770.5

766.9

746.3

844.4

775.4

709.7

99.8 286.4 90.0 35.7

232.3 267.9 151.2 38.2

236.5 251.2 157.0 35.6

214.4 193.0 182.3 43.3

241.8 274.1 174.5 58.2

219.2 239.0 155.5 58.0

242.7 191.5 144.6 46.3

69.3

82.7

74.1

75.6

79.7

68.9

75.8

879.1

2243.7

3163.0

1557.6

2522.2

2811.0

3188.1

792.0 9.1 57.9

1715.6 269.7 193.8

2464.0 499.9 122.5

539.8 794.8 109.0

962.9 1349.3 88.0

1714.7 790.4 171.7

1973.9 901.3 225.0

* figures in 000 head. Source: Statistisches Bundesamt.

There is also quite a wide variation each year in the number of pigs imported. The Netherlands and Denmark are the main suppliers and again the quantities imported from each of these countries have fluctuated in recent years. Of total live pig imports in 2000, over 60% were weaners and 40% were slaughter pigs. Table 5.26 shows German imports between 1990 and 2000. Imports of pig meat have also increased since 1990 and the re-unification of Germany. Since 1995 they have been relatively stable, although a large rise was recorded in 1998. At that time domestic prices were historically low, while export supplies in both Denmark and the Netherlands were high because of poor third country demand. The United Kingdom has also become an important supplier in recent years. The second most important importer behind Germany is Italy. While it imports as much fresh, chilled and frozen pig meat, imports of live pigs are much lower (although high in comparison with other EU countries) and imports of processed products are negligible. Table 5.27 gives imports into Italy from 1990 to 2000. Live pigs are almost exclusively from other EU countries, led by the Netherlands and Belgium, so the quantities involved have varied considerably during the 1990s. Most fresh, chilled and frozen pig meat also originates from other EU countries, with the Netherlands, Germany, France and Denmark all playing an important part. Germany, in particular, has increased its market share in the past ten years.

Chapter 5 / page 26

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Imports

Table 5.27 Italy – pig meat imports (000 tonnes) 1990 Pig meat of which from: Netherlands Germany France Denmark Belgium Live pigs* of which from: Netherlands Belgium Spain

1995

1996

1997

1998

1999

2000

503.2

610.2

667.8

667.8

776.7

707.4

728.4

232.5 50.7 68.5 64.0 74.6

224.5 65.7 121.2 88.9 59.9

234.9 71.8 126.9 89.8 68.1

192.2 84.6 132.3 98.6 64.7

235.1 116.9 143.4 108.4 76.3

219.4 125.9 121.2 100.1 53.2

220.3 135.2 130.9 99.4 49.4

1879.5

1022.0

1032.4

594.6

1128.6

1166.4

714.4

1231.8 308.4 0.5

663.2 154.2 82.6

726.7 133.5 71.1

194.8 158.2 81.7

404.3 301.2 79.8

606.3 250.2 107.7

319.7 152.0 126.9

* figures in 000 head. Source: Eurostat. Table 5.28 France – pig meat imports (000 tonnes) 1990 Pig meat of which from: Spain Netherlands Denmark Belgium Processed Live pigs* of which from: Netherlands Germany Spain

1995

1996

1997

1998

1999

2000

290.4

282.5

279.3

277.0

315.8

318.1

311.3

1.0 109.1 83.6 73.3

24.7 70.4 99.0 53.3

33.2 76.4 82.8 52.8

39.6 55.4 97.5 42.9

54.0 82.5 78.3 51.9

73.7 87.3 66.7 43.0

93.0 79.2 55.8 47.1

68.8

72.9

67.5

73.8

74.6

75.4

80.7

1296.9

607.1

702.2

368.0

398.7

461.7

525.9

657.7 429.7 43.3

286.1 217.0 57.3

332.9 248.1 54.7

70.8 166.9 38.5

139.2 123.6 47.8

231.9 106.4 61.8

218.8 130.4 122.1

* figures in 000 head. Source: CFCE.

Table 5.28 shows French imports between 1990 and 2000. As well as live pigs and pig meat a significant quantity of processed product is imported annually. The main change that has occurred since 1990 is that the number of live pigs imported has fallen drastically. Most of this decline occurred in 1993, when trade restrictions were imposed on both Germany and the Netherlands to prevent the spread of swine fever. Imports of pig meat have been more stable over the last ten years. The main change has been that some imports from the traditional suppliers of the Netherlands, Denmark and Belgium have been displaced by

© Woodhead Publishing Ltd

Chapter 5 / page 27

The international meat trade

Table 5.29 United Kingdom – pig meat imports (000 tonnes) 1990

1995

1996

1997

1998

1999

2000

76.8

123.0

150.1

139.2

151.4

200.8

243.1

38.9 6.9 9.9 13.4

44.1 15.6 29.5 20.9

50.3 20.1 30.9 27.1

46.1 16.5 29.3 28.5

55.9 21.0 32.0 24.7

71.9 39.9 33.7 24.9

88.4 43.9 37.2 25.1

Bacon and ham of which from: Netherlands Denmark

259.9

224.5

264.5

236.8

232.6

231.5

265.3

112.4 116.4

86.8 111.6

127.7 110.6

98.5 117.0

107.2 106.4

113.5 96.4

145.2 95.5

Processed

114.6

93.5

88.4

85.1

90.5

91.3

113.0

Pig meat of which from: Denmark Netherlands Ireland France

Source: Customs & Excise, Intrastat.

Spain, which has become an important new source as its own industry has expanded. Processed pig meat product imports have also been stable since 1990, although the relative importance of the various sources has changed over time. Of the total imported, about 30% is in the form of dried and smoked pig meat, 14% is uncooked sausage and 10% is cooked sausage. Table 5.29 shows imports into the United Kingdom from 1990 to 2000. The UK is unusual among EU importing countries as a large proportion of its imports in the pig meat sector is imported in processed form. In 2000, imports of bacon totalled 265000 tonnes, imports of prepared and preserved pig meat (comprising cooked hams, loins and shoulders) totalled a further 43700 tonnes and cooked sausages 59500 tonnes. Denmark and the Netherlands were the main sources. However, an increasing quantity of fresh, chilled and frozen pig meat has also been imported in the last ten years. Denmark and the Netherlands are again important, but France, Ireland and, to a lesser extent, Germany and Belgium, all supply the UK market. Table 5.30 gives Spanish imports between 1990 and 2000. Spain is a big importer of live pigs, with over 80% supplied by the Netherlands in 2000. In 1998, however, when the Netherlands was unable to export for much of the period, France stepped up its share of the market significantly. Imports of fresh, chilled and frozen pig meat have grown modestly since 1990, but remain relatively small. Again, the Netherlands is the main supplier.

Chapter 5 / page 28

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Imports

Table 5.30 Spain – pig meat imports (000 tonnes) 1990 Pig meat of which from: Netherlands France Live pigs* of which from: Netherlands

1995

1996

1997

1998

1999

2000

50.0

37.4

44.0

61.9

66.8

70.0

66.4

33.5 6.3

10.3 11.1

9.8 10.7

12.3 11.8

16.9 9.4

21.1 7.6

11.5 8.2

1079.4

1692.0

1761.5

487.4

1111.0

1288.9

1123.3

806.8

1420.1

1497.5

627.3

834.2

813.4

253.4

* figures in 000 head. Source: Eurostat.

Although a net exporter in the pig meat sector, the Netherlands now also imports live pigs and processed products in significant quantities. This trade has increased in recent years as domestic production capacity has been reduced. In 1990, its imports totalled just 67000 head but by 2000 the figure had risen to 480000. Almost all of the live pigs imported are for slaughter rather than breeding. It appears that many Dutch producers, faced with legislation designed to limit production capacity and the production of manure because of environmental considerations, have set up holdings in neighbouring countries (namely Belgium and Germany). Dutch weaners are then exported to these countries to stock the holdings, and the pigs are then re-exported for slaughter in the Netherlands. Imports of both fresh and processed pig meat have also increased since 1990, reaching 78000 and 90000 tonnes respectively in 2000, with Belgium taking an increased market share in both cases. The import requirement in Greece has grown considerably since 1990, driven by imports of fresh, chilled and frozen pig meat from the Netherlands, which almost quadrupled in the period from 1990 to 1999. By 1999, total Greek imports were over 190000 tonnes, with 130000 supplied by the Netherlands. The Netherlands managed to maintain and even increase its supply to the Greek market during 1997/98 when otherwise its exports were severely reduced. France has also become an important supplier, accounting for nearly 26000 tonnes in 1999. Portugal is a fairly significant importer of live pigs, but imports of pig meat are modest. In 2000, 590000 live pigs and 90000 tonnes of pig meat were imported. In both cases, neighbouring Spain was overwhelmingly the predominant supplier.

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5.3.5 Other countries The South Korean pig meat market has experienced a strong increase in import demand as a result of the high economic growth during much of the last decade, and the fact that exports have risen. In 1990, South Korea imported only 2300 tonnes but by 2000 imports had risen to 138000 tonnes. Of this total, 80000 tonnes were imported from the EU (nearly 34000 tonnes from Denmark alone) and 26000 tonnes from Canada. The market has been growing for lower valued frozen cuts (exports consisted more of higher valued cuts). It is likely that imports will now fall again because the ban on exports introduced in 2000 will mean that product will be diverted onto the domestic market. Mainland China has yet to emerge as a major importer. Despite a huge demand for pig meat in the Chinese diet, it is difficult for other countries, which generally produce a better quality product, to compete on the Chinese market against lower-priced home-produced pig meat. China’s membership of the WTO will hopefully bring greater access to this large market for many potential suppliers. It is likely that most of the imports will continue to be higher quality pig meat to satisfy the top end of the market. In Mexico, the growing market for pig meat provoked a sharp expansion in import demand during the late 1990s. In 1990 imports totalled 29800 tonnes but by 2000 they had risen to 202000 tonnes. Virtually all imports are from the United States, and, to a lesser extent, Canada, as both of these countries enjoy preferential treatment under the terms of the North American Free Trade Agreement (NAFTA).

5.4 Poultry meat World import activity in poultry meat is concentrated in Russia, Japan, China and the European Union; all are large markets.

5.4.1 Russia Table 5.31 shows the extent of Russia’s import requirements of poultry meat, despite limited availability of data (data for 1998 to 2000 are estimated). Data for 1997, which are certainly too low (as some

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Imports

Table 5.31 Russia – poultry meat imports (000 tonnes)

Poultry meat of which from: EU France Netherlands UK Belgium United States Brazil

1996

1997

1998

1999

2000

754.4

1146.6

820

865

750

136.6 45.8 54.2 12.7 13.6 588.9 3.0

224.9 80.1 61.2 24.6 42.9 848.5 24.3

na 70 22 20 35 640 12

na 80 55 15 10 608 8

na 50 15 14 8 600 19

Source: United Nations. Table 5.32 Japan – poultry meat imports (000 tonnes)

Poultry meat of which from: China Thailand Brazil United States

1995

1996

1997

1998

1999

2000

477.3

551.7

497.9

509.9

552.9

555.3

148.8 116.6 79.9 126.8

217.1 94.5 113.3 123.2

201.5 96.2 94.2 102.9

208.3 122.6 70.1 104.0

218.5 130.3 105.3 96.2

235.2 125.2 108.0 85.0

Source: ALIC.

product does not enter through official channels), indicate a level of 1.15 million tonnes. It is quite possible that the data for 1998–2000 are also underestimated, although it is probable that there has been a decline in overall imports since 1997. Trade is dominated by the United States, mainly in the form of ‘Bush’ legs (President George Bush had arranged the original food aid package). The market share for the EU is only 20% and mainly in the form of turkey parts (from France, the Netherlands and Belgium) plus smaller quantities of frozen whole birds. Average import prices in 1997 were low at only US$736 per tonne for frozen chicken parts and US$653 for frozen turkey parts. Import prices are understood to have dropped even lower in 1998 as a result of the Russian economic crisis.

5.4.2 Japan Table 5.32 gives imports of poultry meat into Japan between 1995 and 2000 (quantities shown are for broiler meat). Japan imported around half a million tonnes annually during this period. Almost all of it

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is frozen poultry meat, with a very small quantity of chilled meat coming from China (18000 tonnes in 2000). Boneless poultry cuts make up by far the largest share, around 80% of all imports, with whole birds amounting to less than 5000 tonnes annually. China has increased its import share during the period shown, as have both Thailand and Brazil, although to a lesser extent, mainly at the expense of the United States. Both China and Thailand have the advantage of physical proximity while Brazil has increased its position because of its low prices.

5.4.3 China Although it exports significant quantities, China (now including Hong Kong) is also a major importer of poultry meat. It has a domestic market imbalance with a surplus of breast meat (which is exported) but a deficit in wings, feet, heads and necks, which generally have a low demand on the world market. Combined imports for China and Hong Kong amounted to 1.07 million tonnes (product weight) of fresh, chilled and frozen product in 1997. It is an important market for both the EU and the United States.

5.4.4 European Union Table 5.33 shows that poultry meat import markets in the European Union are relatively concentrated. Germany is by far the largest market of any EU country accounting for 40% of the total (this covers imports

Table 5.33 EU member states – poultry meat imports from other EU and non-EU countries (000 tonnes)

Germany UK France Belgium/Lux Spain Italy Netherlands Greece other countries

1995

1996

1997

1998

1999

2000

554.5 282.4 110.0 110.0 56.7 32.0 133.0 31.2 82.5

625.8 311.7 118.8 113.0 77.0 30.0 126.0 35.0 86.1

659.5 313.0 125.7 148.0 106.8 25.0 123.0 39.7 100.8

688.1 352.9 145.0 156.0 111.3 25.0 223.0 47.2 107.1

655.3 359.9 169.5 140.5 116.3 26.0 244.0 45.6 110.8

662.9 366.5 183.0 117.9 110.2 82.0 na na na

Source: EU Commission.

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Imports

Table 5.34 EU – poultry meat imports from non-EU countries by product, 2000 (000 tonnes cwe)

EU-15

Whole chicken

Chicken pieces

Whole turkey

Turkey pieces

Duck, geese and other

Total

7.5

346.5

0.5

69.1

63.6

487.2

Source: EU Commission.

Table 5.35 EU – poultry meat imports* from non-EU countries (000 tonnes cwe)

Total of which from: Brazil Hungary Thailand Poland Chile China

1995

1998

1999

209.3

292.8

305.4

37.9 74.1 19.0 15.7 2.0 26.9

84.1 83.3 71.9 24.9 6.2 0.4

88.8 86.5 72.7 29.1 6.0 ..

* includes the meat equivalent for live birds and processed poultry meat. Source: EU Commission.

from both EU and non-EU sources). German self-sufficiency (production as a proportion of consumption) is little more than 50% and therefore it has to import large quantities to satisfy demand. The UK is the second largest import market accounting for a further 20%. No other country accounts for more than ten per cent of total EU imports. Some of the product imported into Belgium/Luxembourg and the Netherlands is for subsequent re-export. Table 5.34 shows the breakdown of EU poultry meat imports in 2000 by product. Over 71% was in the form of chicken pieces and within this over half is frozen, boneless cuts, mainly breast meat. The majority of this is utilised as raw material in further processing industries of the EU as the market for value-added poultry meat cuts has expanded rapidly in the past ten years. Most of the rest of the import trade is made up of turkey pieces and other types of birds. Whole chickens and turkeys play a minor part. Table 5.35 gives the source of EU imports in 1995, 1998 and 1999. Hungary, Brazil and Thailand are now dominant suppliers and Poland and Chile are the only other suppliers of any significance. China was

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Table 5.36 Germany – poultry meat imports (000 tonnes)

Poultry meat of which from: EU Netherlands France non-EU Hungary Thailand Brazil

1995

1996

1997

1998

1999

2000

394.0

420.3

470.1

421.2

392.1

344.5

308.6 181.1 76.8 85.4 40.0 8.5 7.8

326.5 191.1 85.7 93.8 38.6 9.8 9.5

382.7 200.2 114.0 87.4 35.4 13.6 12.1

334.1 180.9 76.1 87.1 40.8 15.1 7.6

304.8 170.7 66.9 87.3 43.5 11.7 6.6

261.4 150.3 66.4 83.1 42.8 9.1 4.8

Source: ZMP.

Table 5.37 United Kingdom – poultry meat imports (000 tonnes)

Poultry meat of which from: Netherlands France non-EU Brazil Thailand

1995

1996

1997

1998

1999

2000

208.6

225.3

233.3

268.7

267.9

292.3

39.2 111.2 1.3 0.8 0.2

57.1 93.5 10.1 7.4 2.4

68.0 91.5 13.1 8.9 3.9

108.4 84.2 16.9 9.2 7.1

100.9 75.8 22.5 10.7 9.8

130.6 65.2 24.9 17.0 7.2

Source: Customs & Excise, Intrastat.

developing its trade with the EU in the early 1990s but a ban on imports from China was introduced in August 1996 because of problems over sanitation standards at abattoirs. The United States has been subject to a ban for similar reasons. Table 5.36 shows the changes in German imports between 1995 and 2000. Although imports had been increasing until 1997, growth in domestic consumption has meant that imports have fallen in more recent years. Germany takes the full range of poultry meat products, including ducks and geese for seasonal, Christmas demand. Main suppliers are other EU countries, although most of the decline has been in this area. Imports from non-EU countries have been much more stable, with Hungary the most significant supplier. Table 5.37 gives imports into the United Kingdom from 1995 to 2000, showing the gradual growth that has taken place during this period. Chicken accounts for 70% of imports, with turkey accounting for a further ten per cent. Most of the rest comprises processed products,

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Imports

although problems with the categorisation of imports means that this can include uncooked meat so long as it is ‘lightly seasoned’. (This type of mis-categorisation has occurred because imports can attract lower import tariffs if supplied by non-EU countries. The issue is being addressed at EU level.) Most imports are still provided by other EU countries, with the Netherlands and France accounting for two-thirds between them, although non-EU countries have increased their market share. In the case of France, many of the imports are in the form of whole birds.

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6 Prices

6.1

Beef

6.2

Sheep meat

6.3

Pig meat

6.4

Poultry meat

© Woodhead Publishing Ltd

6.1 Beef There are considerable differences in the level of cattle and beef prices on various markets throughout the world. The extent to which the European Union is a high cost producer is illustrated by the fact that prices of male slaughter cattle are often double those in major exporting countries such as Australia, New Zealand and South America. This means that the EU cannot compete on the world market without support. This also explains the importance of EU border protection measures such as import tariffs and quotas and export subsidies to protect and also support the EU beef industry. Figure 6.1 shows producer prices for steers/young bulls in major producing countries. There was some convergence in world cattle prices during the 1990s when successive reforms of the Common Agricultural Policy for beef in the EU brought lower support prices. Another important factor was the fall in the value of the euro (or the ECU prior to 1999) in comparison with the US dollar during much of the period. The BSE crisis affected cattle prices in most EU countries and generally they have not recovered to pre-1996 levels. On the whole, cattle prices throughout the European Union have fallen over the last ten years. The decline has come about as a result of a combination of reduced feed costs, reduced levels of support, high intervention stocks, WTO trading constraints and the effects of the BSE crisis. The decline in price has been most notable in the northern European member states with those in the south generally enjoying some firming in prices over the period. Figure 6.2 shows trends in EU producer beef prices from 1990 to 2000. In 1996, at the time of the BSE crisis in the UK, prices dropped in all member states as both world and domestic demand was affected by high EU-wide media interest in the possible link between BSE and CJD in humans. The impact was, of course, most pronounced in the United Kingdom, where consumption declined markedly and export trade was halted. In 1997, prices in most member states, with the exception of the UK, started to recover in many instances to a position close to where they were pre-BSE. Over the period 1998 to mid-2000 prices generally started to edge down once again in response to the high level of intervention sales activity combined with the continued effects of the WTO restrictions on subsidised exports. At the end of 2000 prices in mainland

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US$ per tonne dw

1991

1992

1993

1994

1995

1996

6.1 Producer prices for steers/young bulls in selected countries, 1990–2000.

0 1990

500

1000

1500

2000

2500

3000

3500

4000

4500

1997

1998

1999

2000

Australia

Argentina

United States

EU-15

The international meat trade

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1991

1992

1993

1994

6.2 Indices of EU producer prices for cattle, 1990–2000.

70 1990

80

90

100

110

1999 = 100 120

1995

1996

1997

1998

1999

2000

UK Ireland France Spain EU

Prices

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The international meat trade

Europe had declined again due to the confirmation of BSE in a number of Continental member states. The discovery of BSE in Japan in 2001 had a knock-on effect on the prices in those countries that are Japan’s main suppliers, in particular the USA and Australia. These countries found that the fall in export demand meant that their own producer prices became weaker. Foot and Mouth Disease has been a widespread problem in many of the important exporting countries of South America and in parts of Europe. Where the outbreaks have occurred the prices for cattle have declined. However, these countries have generally seen producer prices rise because of the overall recovery in supplies. There is a degree of seasonality in cattle and beef prices that is probably most pronounced in those countries where the finishing systems are grass based. In these countries prices tend to decline over the autumn period when supplies pick up as cattle are finished off grass. In these and most other countries as well, a lift in prices might normally be expected in advance of increased demand at important holiday periods. This is particularly noticeable in EU member states such as Greece where tourism plays an important role.

6.2 Sheep meat Figure 6.3 shows the considerable differences in the level of sheep meat prices on the world market. The extent to which the EU is a higher cost producer is illustrated by the fact that at various times since 1990 lamb prices have been up to four times higher compared with New Zealand. This explains why the EU is a major importer and its exports to the world market are negligible. Border protection measures, namely import quotas and high tariffs outside of these quotas, are important in supporting the EU sheep industry, which in turn keeps prices higher than elsewhere in the world. There was some limited convergence in lamb prices during the 1990s between the EU and New Zealand. The EU is not only the main market for New Zealand lamb but is also a price premium market with an increased proportion of trade consigned to it. As New Zealand has increased the share of its exports made up of higher quality, chilled product, its prices have benefited. Also, the relative weakness of the New Zealand dollar has made it competitive on the global market.

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0 1990

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1991

1992

1993

1994

1995

6.3 Producer prices for sheep in selected countries, 1990–2000.

US$ per tonne dw

1996

1997

1998

1999

2000

Australia: wethers

New Zealand: lambs

EU-15: lambs

The international meat trade

Figure 6.4 shows trends in EU producer sheep meat prices between 1990 and 2000. For the most part, the EU sheep meat reference price has increased over the decade. This increase in price is mainly the result of the decline in sheep numbers and the protectionist policies of the EU with regard to imports. Prices were particularly improved following the BSE crisis of 1996 as consumers switched preference away from beef to lamb. Confidence in the sheep sector grew throughout the EU in 1997 as strong demand created exceptionally high prices. The EU sheep meat reference price increased by 21% between 1995 and 1997. This increase in price was experienced across the EU but was most pronounced in Spain and the United Kingdom where the sheep meat reference price increased by 20% and 26% respectively. Disparity in EU prices has on the whole closed since the early 1990s though it does still exist. Irish prices in particular failed to converge toward the EU average throughout the 1990s and this has caused severe disadvantage to Irish producers. Until the end of 2001, the main form of support to EU sheep farmers was the payment of the annual ewe premium. The premium represented the average loss of income throughout the EU, measured on the basis of the EU average representative market price. As a result, the average loss of income was less than if it had been measured on the basis of the Irish price alone. Prices peaked in 1997 at 376.625 euro per 100kg dw. However, as beef demand recovered prices dipped quite significantly. In 1998 they fell to 326.390 euro per 100kg dw. Since 1998 prices have improved again. The more recent price improvements are the result of the discovery of BSE in cattle in Europe, which once again switched demand from beef to lamb. There is seasonality in sheep demand and sheep meat prices, which is probably most pronounced in those countries within the temperate zone. In these countries, where there is only one lamb crop per calendar year, prices tend to increase for the early spring market as new season lambs are scarce. Prices decline quickly over the summer as more lambs become available and then increase again over the winter period as supply drops off. In these and most other countries as well, an increase in price might normally be expected in advance of important holiday periods. In many countries, lamb demand peaks during the Easter holidays.

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1991

1992

1993

1994

6.4 Indices of EU producer prices for sheep, 1990–2000.

75 1990

95

115

135

155

175

195

1990 = 100

1995

1996

1997

1998

1999

2000

Greece

Spain

EU

UK

France

Ireland

The international meat trade

6.3 Pig meat The differences in the level of pig meat prices on the world market are much less than those in either the beef or sheep sectors. Nevertheless, the EU is a higher cost producer than the United States because the application of the Common Agricultural Policy for cereals results in more expensive feed. Also, there are higher housing costs and fewer economies of scale because of smaller farms in the EU. Yet the price differentials can be small enough for EU pig meat to compete on some parts of the world market (notably in the Far East) without the need for export refunds. Figure 6.5 shows producer prices for finished pigs in the United States, the EU and Poland. There was some convergence in world pig prices during the 1990s partly due to the reforms of the CAP lowering feed prices in the EU, but also because of the fall in the value of the euro against the US dollar, especially since 1996. In the year 2000, the euro was so weak that, in terms of dollars, EU market prices were below those of the United States (probably for the first time). Yet there is extreme volatility of pig prices in response to the supply situation and clearly this is not just a phenomena in the EU. The price changes in the EU and the United States show that from 1996 onwards they have been somewhat similar because both have become large exporters on the world market, their production cycles have become similar and there has been increased transparency of the world market. Pig prices in Poland, the key producer in Central/Eastern Europe, have been lower than in the EU but with a considerable narrowing of the gap during the 1990s (but note there will also be quality differences). In terms of world production developments during the 1990s, account must also be taken of feed prices, particularly in the United States, which to a large extent dictate world prices. These are based on the pig/feed price ratio since feed is by far the most important production cost accounting for 50% of the total. Feed prices were basically stable during the first half of the 1990s but there was then a sharp rise in 1995/96 because of reduced world cereal production. Since then there has been a steady decline. This has helped the US pig industry to remain competitive on the world market. Nevertheless, given the sharp volatility of pig prices, the profitability of production in the United States was under severe pressure in 1998 but has since recovered to levels similar to the early 1990s.

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US $ per tonne dw

1991

1992

1993

1994

1995

6.5 Producer prices for finished pigs in selected countries, 1990–2000.

0 1990

500

1000

1500

2000

2500

1996

1997

1998

1999

2000

Poland

EU-15

United States

Prices

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1991

1992

1993

1994

6.6 Indices of EU producer prices for pigs, 1990–2000.

0 1990

20

40

60

80

100

120

140

1990 = 100 160

1995

1996

1997

1998

1999

2000

Netherlands

Germany

UK

France

Italy

The international meat trade

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Prices

Figure 6.6 shows trends in EU pig prices between 1990 and 2000. Pig price trends throughout the European Union are illustrated as a series of peaks and troughs. In April 1996, at the time that the issue of BSE in the UK’s cattle herd was reaching crisis point, there was some switch away from beef to pig meat. The price effects were of course most marked in the United Kingdom but other member states saw price rises as well. By the second half of 1996, however, prices began to decline as a result of both a recovery in beef demand and a continued increase in pig meat production. The outbreak of swine fever in the Netherlands in early 1997 resulted in a sharp, but short-lived, hike in prices across the EU. The disease situation in the Netherlands sparked fears about pig meat shortages, which in the end proved to be unfounded as production rose rapidly elsewhere. This rapid rise in production precipitated the subsequent collapse in pig meat values that occurred throughout 1998 and the majority of 1999. Only in 2000 did prices start to show any significant signs of recovery. Fluctuations in pig prices throughout the EU tend to be related more to the different stages of the production cycle rather than any seasonal changes in demand. Within a 12 month period, unlike grass based enterprises, production tends not to be influenced by external factors such as the season. However, there are some seasonal increases in demand centred around the various holiday periods.

6.4 Poultry meat Poultry prices tend to follow a similar trend to feed prices and in some instances they are actually linked through contracts. At world level, the poultry meat industry has not benefited from the overall fall in feed prices during the 1990s although in 1998 and the first half of 1999 they were at their lowest level (in US dollar terms) of the decade. World feed prices have also been very volatile on a year-to-year basis, much more so than in the EU. There have therefore been pressures on producer profitability, as poultry prices have not generally increased markedly. There was some upward trend during the 1990s as a result of increasing domestic demand. Producers have had to continue to make gains in productivity in order to maintain profitability; feed conversion has been the key technical parameter where improvements have been made.

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Developments in the EU producer broiler price indicate some small rise in the period 1990–1994, but since then it has tended to fall, other than when there were EU-wide benefits to the poultry industry from the BSE crisis of March 1996. To some extent, the trends in feed and liveweight broiler prices have been similar, with consequently no major change in profitability for broiler production during the 1990s; contract broiler prices can even sometimes be linked to the price of feed. As might be expected, feed prices have shown contrasting trends in the major EU producing countries. The feed price indices (expressed in national currency) have tended to fall in line with overall EU developments in France, the Netherlands and Germany but have generally increased in Italy and the UK. This can be mainly attributed to the weaker currencies of Italy and the UK (at least until 1997) and higher inflation so that intervention buying-in prices for cereals and import prices have tended to be higher in national currency terms. Figure 6.7 shows the development of producer broiler prices in the main EU countries between 1990 and 2000. For many EU countries, liveweight broiler price trends are somewhat similar to those of feed prices. There was some downward trend in feed prices for the EU as a whole between mid-1997 and 1999. Prior to that, prices also fell in 1994 and the first half of 1995, as a result of the lowering of EU cereal price support through the intervention arrangements. Because of improvements in productivity, such as better feed conversion and increasing weights, the unit cost of producing birds has fallen during the 1990s. Therefore, the broiler/feed price ratio suggests that profitability has been under the greatest pressure during the 1990s. In other countries, profitability would appear to have been maintained somewhat better although there has been a general trend downwards. The difficulties of selling to the Russian market with the devaluation of the rouble in August 1998 contributed to the marked price decline, a situation made worse by the collapse in the pig meat market and a change in price relativity. Since then the market has shown a small upturn, reflecting some improvement in the supply/demand balance, until the dioxin crisis broke in Belgium in mid-1999. The collapse of the US market hit the US poultry industry particularly hard, depressing prices throughout 1999, due to increased production for anticipated demand. Prices recovered in 2000 as market share was gained in China, Hong Kong and Mexico. Later in the year Russia also increased its imports again. However, despite the increase in export

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1992

1993

1994

6.7 Indices of EU producer prices for poultry, 1990–2000.

65 1990

75

85

95

105

115

125

1990 = 100 135

1995

1996

1997

1998

1999

2000

Denmark Germany Spain EU

Netherlands

UK

Prices

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The international meat trade

demand, US prices have not strengthened as dramatically due to the composition of the products exported to China and Hong Kong. These are products that would have otherwise gone into pet food. Generally, as poultry is a ‘light’ meat, demand is at a seasonal peak during the summer months (so especially popular in the hotter southern Europe) with demand also boosted by tourists and the popularity of barbecues.

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Appendices

Appendix 1 Common Agricultural Policy Appendix 2 World Trade Organisation agricultural negotiations Appendix 3 Glossary of terms

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Appendix 1: Common Agricultural Policy The overall objectives of the Common Agricultural Policy (CAP) of the European Union were laid out in Article 39 of the Treaty of Rome, published in 1957. The specific arrangements applied since then have changed periodically to respond to changing market conditions. One of the most fundamental changes in recent years was the adoption of guidelines for international trade which were introduced for all GATT signatory countries in 1995, under the Uruguay Round Agreement on Agriculture (URAA). The specifics of the current arrangements for market support in the meat sectors were agreed under the Agenda 2000 reforms. In July 2002, the EU Commission published its Mid-Term Review of the Common Agricultural Policy which, if agreed, will lead to further adjustments in arrangements (see Chapter 1). The financing of the various regimes is provided through the Guarantee sections of the European Agricultural Guarantee and Guidance Fund (EAGGF although often known by its French acronym FEOGA). Total EU expenditure on the Guarantee section in 2002 is budgeted at around €44 480 million, of which around one-fifth is to support the meat sectors. The level of support on the beef and veal regime is relatively high compared with the other meats as shown in Table A1.1. The type and extent of market support arrangements varies between the different meat sectors, and not all tools are used for every meat. Table A1.2 summarises the main types of support used for the different sectors. It is important to note that the detailed arrangements for application of each measure can vary depending upon which meat it applies to and the specific conditions under which it is needed. Table A1.1 Guarantee section expenditure in the meat sectors* (million euro)

Total of which for: Export refunds Premiums

Beef and veal

Sheep meat

Pig meat

Poultry meat

8095

672

70

70

488 6230

0 665

70 70

70 70

* budget appropriations for 2002. Source: Official Journal of the European Communities.

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Appendix 1 / page 1

Appendix 1: Common Agricultural Policy

Table A1.2 Main types of market support

Private storage aid Premiums Export refunds Import tariffs Market access agreements

Beef and veal

Sheep meat

Pig meat

Poultry meat

Yes Yes Yes Yes Yes

Yes Yes No Yes Yes

Yes No Yes Yes Yes

No No Yes Yes Yes

Source: European Commission.

A1.1 Private storage aid Private storage aid is a means of support that works by removing, on a temporary basis, volumes of meat from the market. Such schemes are introduced when market prices are deemed to be particularly low. A subsidy is paid to the owner of the meat who agrees to store it in frozen form for a specified period of time whilst complying with certain detailed conditions. Rates of aid can be either fixed in advance or established through a tender procedure. At the end of the agreed storage period the owner can sell the meat in the normal way.

A1.2 Premium payments Various direct producer premium payments are paid in the beef and sheep sectors. In all cases there are strict criteria on what types of animals are eligible. In the beef sector, many of the premiums are aimed at giving support to specialist beef producers. In the sheep sector, payment is more generally available to producers. In both sectors, producers must adhere to limits on stocking densities. A summary of some of the principal premium payment schemes is shown in Table A1.3. Since 2001, all premium payments have been ‘modulated’. This means that before payment to the producer a small percentage of the premium is diverted to a fund that pays for rural development measures.

A1.3 Export refunds To enable exporters to compete on world markets, support may be given to EU traders exporting to non-EU countries, where market prices are generally lower than in the EU, through a system of payments known as export refunds (or export restitutions).

Appendix 1/ page 2

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Appendix 1: Common Agricultural Policy

Table A1.3 Main premium payment in the livestock sectors Type of premium

Criteria

Limits imposed

Payable on male animals only.

Each member state sets a maximum number of claims for each holding. There are also national ceilings.

Suckler cow premium (SCP)

Payable on suckler cows of a beef breed forming part of a breeding herd rearing calves for meat.

Claims are subject to a maximum stocking density and a national ceiling.

Extensification premium

Payable as an additional amount on BSP and SCP.

Only payable if tighter stocking density limits are observed.

Slaughter premium

Payable on adult cattle and calves.

Claims within member states are subject to national ceilings.

Payable on female animals which have lambed at least once or are aged at least 12 months.

Producers hold individual quota rights within a national ceiling.

Beef Beef special premium (BSP)

Sheep Sheep annual premium (SAP)

Source: European Commission.

Under the URAA, the level of export refund on EU exports had to be reduced progressively over the six-year period from July 1995 to June 2001, 36% in value terms and 21% in volume terms. As a result, the payment of export refunds has become more restricted. Now they are only available on certain products in the beef, pig meat and poultry meat sectors (none at all are paid in the sheep meat sector because the level of exports to non-EU countries is negligible). They can also vary depending on the destination of the product.

A1.4 Market access and import tariffs Under the terms of the URAA, since July 1995 there has been a schedule of import tariffs, which are applicable to imports of live animals, meat and meat products into the EU from non-EU countries. The import tariff rates were reduced gradually each year from 1995 to 2001.

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Appendix 1: Common Agricultural Policy

Table A1.4 Major EU market access agreements 2001/2 Quantity

Concession granted

Beef 53000 tonnes (boneless equivalent) of frozen beef from any non-EU country

No import tariff paid

58100 tonnes (boneless equivalent) of high quality beef allocated between North America, Argentina, Uruguay, Brazil, Australia and New Zealand

No import tariff paid

50700 tonnes (cwe) of frozen forequarters and boneless cuts from any non-EU country, to be processed

No/reduced import tariff paid, depending on the type of end product

52100 tonnes of boneless beef allocated between Botswana, Namibia, Zimbabwe, Madagascar, Swaziland and Kenya

8% of import tariff paid

Sheep About 323000 tonnes (cwe) of sheep meat or live animals allocated between specific non-EU countries, including 226700 tonnes allocated to New Zealand Pig 75600 tonnes of chilled, frozen or processed pig meat from any non-EU country About 156000 tonnes of chilled, frozen or processed meat from specified Eastern European and Baltic countries Poultry 29900 tonnes of chilled, frozen or processed poultry meat

No import tariff paid

No/reduced import tariff paid No/reduced import tariff paid

No/reduced import tariff paid

Source: European Commission.

Because the URAA also required the EU to make concessions to non-EU countries on the quantities that could be imported, without the restriction of import tariff rates, there are also a number of so-called import tariff quotas (ITQs) and multilateral trade agreements. These allow concessions on imports of set quantities of specific products (sometimes from particular countries too), so that the import tariff is either waived completely or significantly reduced. A large proportion of the meat imported into the EU from non-EU countries comes in under one of the market access agreements. Table A1.4 gives details of some of the most important market access agreements (although it should be noted that this list is not exhaustive).

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Appendix 2: World Trade Organisation agricultural negotiations The Uruguay Round Agreement set up a framework of rules to start reductions in protection and trade-distorting support. The agreement, summarised in Table A2.1, was implemented from July 1995 and changes in developed countries were gradually applied over the following six years (ten years in developing countries). However, this was only the first stage of the reform. Article 20 of the Agriculture Agreement, summarised in Table A2.2, committed members to start negotiations at the end of 1999 with a view to continuing reform. The direction that this further reform has to take is clearly set out in Article 20 when it refers to ‘substantial progressive reductions in support and protection resulting in fundamental reform’. The aim of the latest round of negotiations under the WTO is to achieve further liberalisation of agricultural trade. This will benefit those countries that can compete on quality and price rather than on the size of their subsidies. Table A2.1 Numerical targets agreed in the Uruguay Round Agreement on Agriculture Developed countries 6 years: 1995–2000

Developing countries 10 years: 1995–2004

Tariffs Average cut for all products Minimum cut per product

-36% -15%

-24% -10%

Domestic support Average cut in support

-20%

-13%

Export refunds Cut in value of refunds Cut in subsidised quantities

-36% -21%

-24% -14%

Notes: least-developed countries do not have to reduce tariffs or export refunds. The base level for tariff cuts was the bound rate before January 1995; or, for unbound tariffs, the actual rate charged in September 1986 when the Uruguay Round began. Only the figures for cutting export refunds appear in the agreement. The other figures were targets used to calculate countries’ legally binding ‘schedules’ of commitments. Each country’s specific commitments vary according to the outcome of the negotiations. As a result of those negotiations, several developing countries chose to set fixed bound tariff ceilings that do not decline over the years. Source: Uruguay Round Agreement on Agriculture.

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Appendix 2: World Trade Organisation agricultural negotiations

Table A2.2 Article 20 of the Agreement on Agriculture Recognising that the long-term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process, members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period, taking into account: (a) the experience to that date from implementing the reduction commitments; (b) the effects of the reduction commitments on world trade in agriculture; (c) non-trade concerns, special and differential treatment to developing-country Members, and the objective to establish a fair and market-oriented agricultural trading system, and the other objectives and concerns mentioned in the preamble to this Agreement; and (d) what further commitments are necessary to achieve the above mentioned long-term objectives. Source: Uruguay Round Agreement on Agriculture.

The first stage of WTO free trade negotiations (which encompassed agriculture along with several other areas) began in early 2000 and consisted of countries submitting papers on their starting positions for the negotiations. It was not until November 2001, when representatives from 142 countries met in Doha, that the broad agenda for the more detailed negotiations was agreed. A declaration approved at the end of the six-day conference called for talks in seven specified areas, including agriculture, to be supervised by a special Trade Negotiating Committee. Because of the location of this meeting the current discussions are dubbed ‘The Doha Round’. The Declaration also states that formulas and other ‘modalities’ for commitments must be set by 31 March 2003. This means that member countries agreed to work to a programme which would set out by that date the key negotiating principles for a final comprehensive farm trade deal. Representatives also agreed on a 1 January 2005 deadline for reaching a final agreement on agriculture. This provides a relatively tight schedule for the most critical stage of the talks. It means that by March 2003, targets (including numerical targets) must be published for achieving the objectives set out in the Doha Declaration: ‘substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support’. A few months after 31 March 2003, member countries must produce their first offers or ‘comprehensive draft commitments’ when they

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Appendix 2: World Trade Organisation agricultural negotiations

meet in Mexico, so that implementation can start in 2005. The main areas covered by the Declaration are outlined below.

A2.1 Export refunds and competition In the Uruguay Round, developed countries committed that within six years they would reduce their expenditure on export refunds by 36% and the volume of subsidised exports by 21%. During the current negotiations, there have been calls from certain, although not all, members for the elimination of all export subsidies on agricultural commodities. The Cairns Group, the US and many developing countries have all called for the eventual elimination of export refunds. However, there are conflicting views on how this should be achieved. One view involves a significant reduction in export subsidies as an immediate down payment followed by complete elimination within three years of the end of negotiations, with a longer deadline for developing countries. Some smaller developing countries suggest that a longer period than three years prior to elimination will help them adjust to higher food import bills. An alternative is for more moderate reductions on some products in return for steeper reductions on other products, matching measures on imports with those on exports, without eliminating export subsidies altogether. Many countries, including the European Union, want other forms of export subsidies (such as food aid, subsidised export credit and insurance, trading by state enterprises) to be disciplined as well. As subsidised export credit could be used to circumvent export subsidy commitments, it is suggested that export subsidy reductions should be negotiated as part of a package that also includes disciplines and reductions in subsidised credit.

A2.2 Market access: import tariffs and quotas Under the rules of the Uruguay Round, certain countries operate import tariff quotas to allow a degree of market access. This means that if

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Appendix 2: World Trade Organisation agricultural negotiations

imports are made within the quotas they attract a lower rate of import tariff than those quantities imported outside the quotas. Since the Uruguay Round, the discussion has focused on two issues: the high levels of tariffs outside the quotas and the quotas themselves, for example their size, the way they are administered and the tariffs charged within the quota volumes. Two suggestions have emerged for import tariff reductions in general. One is to allow an average reduction over all products, allowing some variation for individual products, providing a minimum reduction is met. Another envisages a flat rate percentage reduction for all products, with additional non-linear reductions on higher tariffs, expanding quotas, and special treatment for developing countries. It is generally accepted that there is no single ‘best’ method for administering quotas. Some countries are looking to the negotiations to sort out which methods of allocation are allowed and which are not. Others want broad principles such as transparency and access for all to be discussed. A number of methods have been examined, including auctioning, first-come first-served, historical allocation, bilateral agreements, and administering through state trading enterprises, and their pros and cons debated. There are also proposals to reduce unused quota, including carrying unused portions over to subsequent periods, preventing imports at out-of-quota tariff rates until the quotas are filled, and closer monitoring.

A2.3 Market access: special agricultural safeguards Safeguards, put into place following the Uruguay Round, are contingency restrictions on imports taken temporarily to deal with special circumstances such as a sudden surge in imports. Due to the number of restrictions in place, the special agricultural safeguard has only been used in relatively few cases. Proposals range from continuing with the provision in its current form, to its abolition, or its revision to prevent its use on products from developing countries. The right to use the special agricultural safeguard would lapse if there was no agreement in the negotiations to continue the reform process.

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Appendix 2: World Trade Organisation agricultural negotiations

A2.4 Domestic support In WTO terminology, subsidies are identified by boxes which are given colours to denote their meaning: green (permitted), amber (to be reduced) and blue (for subsidies that are tied to programmes that limit production).

A2.4.1 Green box Green box subsidies must not distort trade, have to be government funded and must not involve price support. They tend to be programmes that are not directed at particular products, and include direct income supports for farmers that are not related to current production levels or prices. They also include environmental protection and regional development programmes. Proposals include a review of green box subsidies as it is argued some should be moved into the amber box as they distort trade. Among the additions to the green box would be programmes that reimburse additional costs arising from the protection of animal welfare, and special flexibility for developing countries tackling food security and poverty alleviation.

A2.4.2 Amber box All domestic support measures considered to distort production and trade fall into the amber box. Proposals have been put forward for steeper cuts on higher levels of support and limits set for specific products rather than having overall aggregate limits. Some countries want amber box subsidies to be eventually eliminated. There is a general willingness to look at higher levels of domestic subsidies for developing countries and possibly transition economies.

A2.4.3 Blue box The blue box covers payments directly linked to acreage or animal numbers, but under schemes that will also limit production by imposing quotas or requiring farmers to set aside their land. A number of countries favour getting rid of the blue box and moving the subsidies within it into the amber box or they suggest

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Appendix 2: World Trade Organisation agricultural negotiations

commitments to reduce the use of these subsidies. Some argue that the blue box distorts trade less than the amber box and it helps make reforms easier to undertake, although they are prepared to discuss modifications.

A2.5 Animal welfare and food quality Three new issues, not written into the Uruguay Round Agreement on Agriculture have been the subject of debate. The first issue is animal welfare, and includes the idea of compensating farmers (as green box support) for the extra costs they bear when they are required to meet higher standards of animal welfare. A separate issue on food quality deals with reserving the right to produce food of specific characteristics associated with specific localities, currently given to wines and spirits. At the moment it is being debated whether this topic should be included in the negotiations. Developments in food safety issues since the end of the Uruguay Round negotiations mean the current talks need to deal with food safety as well. Examples include new consumer concerns on Genetically Modified Organisms, recent disease outbreaks such as BSE and toxic substances such as dioxin. All countries agree that consumers must be protected, but there is a need to avoid protectionism in disguise. There is therefore a need to maintain the balance appropriately between consumer protection and protectionism.

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Appendix 3: Glossary of terms

Agenda 2000

Bovine Spongiform Encephalopathy (BSE) Cairns Group

Classical swine fever

Common Agricultural Policy (CAP) De-coupled payments

Euro

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A CAP reform package introduced in 2000. The general thrust of the package was to reduce generalised price support arrangements, such as intervention, in the beef sector and to increase direct payments to specialist producers. A fatal disease of the central nervous system of cattle, first identified in the United Kingdom in 1986. A grouping of 18 countries (including Australia, New Zealand, South Africa and several in South America and South East Asia) which has established itself as the ‘third force’ in WTO negotiations (the other two being the EU and the United States). A highly contagious disease that affects pigs and which normally results in the slaughtering of affected herds. The European Union’s agricultural policy, first defined in Article 39 of the Treaty of Rome signed in 1957. Budgetary payments paid to eligible recipients which are not linked to current production of specific commodities or livestock numbers or the use of specific factors of production. The single currency of the twelve EU countries participating in the European Economic and Monetary Union introduced on 1 January 1999 (the UK, Denmark and Sweden are outside the euro-zone).

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Appendix 3: Glossary of terms

European Agricultural Guidance and Guarantee Fund (EAGGF)

Export refunds (restitutions)

FEOGA Food and Agriculture Organisation (FAO)

Foot and Mouth Disease (FMD)

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A fund within the overall EU budget for the financing of the CAP. It has two sections: the Guarantee section and the Guidance section. The Guarantee section finances the expenditure of the common organisations of the market. The Guidance section finances rural development measures. The EAGGF fund is often referred to by its French abbreviation, FEOGA. Subsidies given to traders to cover the difference between internal market prices and world market prices. They are paid on certain products exported from the EU and the USA. Since 1995, export refunds have been subject to value and volume restrictions under the Uruguay Round Agreement on Agriculture. See European Agricultural Guidance and Guarantee Fund. A United Nations agency, founded in 1945, whose remit is to monitor and improve the distribution and production of food and agricultural products throughout the world. Foot and Mouth Disease is a highly contagious virus, which chiefly affects cloven-hoofed animals (cattle, sheep, goats and pigs). Its symptoms are the appearance of vesicles on the feet and mouths of the animals, and a reduction in appetite. Although the mortality rate in adult animals from this disease is generally low and the disease presents no risk for humans, its highly contagious nature often means that infected animals are culled. Exports of live animals and fresh, chilled or frozen meat are

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Appendix 3: Glossary of terms

General Agreement on Tariffs and Trade (GATT)

Import tariff

Import tariff quota (ITQ)

Intervention stocks

Market access

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banned from the country or region of infection. A multilateral agreement, originally negotiated in 1947 in Geneva among 23 countries, to reduce trade barriers. Since then there have been periodic multilateral negotiations on trade liberalisation, most recently the Uruguay Round. The World Trade Organisation replaced the GATT on 1 January 1995. A duty (or tax) imposed on imports. A tariff may be a specific rate per unit of product imported (specific-rate tariff), a fixed percentage of value (ad valorem tariff), or a combination of both. Quantitative limit or quota on imported goods. A lower tariff rate (or no tariffs at all) applies to any imports below the quota amount. Imports above this specified quantity face a higher tariff rate. Stocks of beef held by national intervention agencies in the European Union as a result of intervention buying as a means of market price support. Intervention stocks could be released onto the internal markets or sold on the world market with the aid of export refunds. Intervention buying on beef ceased from 2002. The conditions under which a country permits imports. The market access provisions of the Uruguay Round Agreement on Agriculture (URAA) relate to bindings and reductions of tariffs, tariffication and special safeguard provisions. The URAA maintained and opened new access to markets for agricultural products.

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Appendix 3: Glossary of terms

Mercosur

An agreement on trade (including agricultural trade) between Argentina, Brazil, Paraguay and Uruguay. The agreement was signed in 1991 and came into effect on 1 January 1995 with the aim of creating a customs union between the four countries by 2006. Mid-Term Review Under the EU’s Agenda 2000 reform measures, there was a commitment to produce a Mid-Term Review of measures to further reform the CAP. Milk quota scheme A supply control measure in the EU to limit the volume of milk produced or supplied. Modulation Reduction of EU premiums by a set percentage before payment to the producer. The money thus collected is used for rural development schemes. North American Free An agreement on trade (including Trade Agreement agricultural trade) between Canada, (NAFTA) Mexico and the United States, phasing out tariffs and revising other trade rules between the three countries over a 15 year period. The agreement was signed in December 1992 and came into effect on 1 January 1994. Organisation for Economic The OECD came into operation in 1961 Co-operation and and now comprises 30 member counDevelopment (OECD) tries. Its aims are to achieve sustainable economic growth and employment, financial stability and an expansion of world trade on a multilateral, nondiscriminatory basis. Producer Support An indicator of the value of support given Estimate (PSE) to individual agricultural producers, measured at farm gate level, arising from policy measures that support agriculture, regardless of their nature, objectives or impacts on farm production or

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Appendix 3: Glossary of terms

Support prices

Tariffication

Total Support Estimate (TSE)

Uruguay Round

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income. The PSE measures support arising from policies targeted to agriculture relative to a situation without such policies, i.e. when producers are subject only to general policies (including economic, social, environmental and tax policies) of the country. Prices fixed by government policy makers in order to determine, directly or indirectly, minimum guaranteed support prices or a target price for a commodity. The support price would be maintained by policy measures, such as quantitative restrictions on production and imports, levies and tariffs on imports, export refunds and intervention buying. The process of converting non-tariff trade barriers to tariffs that took place in the Uruguay Round Agreement on Agriculture. This was done to improve the transparency of existing agricultural trade barriers and facilitate their proposed reduction. An indicator of the annual monetary value to all agricultural producers of policy measures to support agriculture, regardless of their objectives and impacts. When expressed as a percentage of Gross Domestic Production it gives an indication of the burden that this overall support represents for the economy, irrespective of the size and structure of the country’s agricultural sector. The eighth round of multilateral trade negotiations conducted within the framework of the GATT. Launched in Punta del Este, Uruguay, in 1986 and

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Appendix 3: Glossary of terms

Uruguay Round Agreement on Agriculture (URAA)

World Trade Organisation (WTO)

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concluded in December 1993, the final Uruguay Round Agreement came into effect in 1995, covering 136 participating countries. The Agreement on Agriculture that was negotiated in the Uruguay Round. The URAA contains commitments in the areas of market access, domestic support and export refunds. Participating countries were committed to reducing barriers in these areas over the period 1995–2000 for developed countries and 1995–2004 for developing countries. The successor body to the General Agreement on Tariffs and Trade (GATT), established formally on 1 January 1995 as part of the final agreement of the Uruguay Round of multilateral trade negotiations. It administers trade agreements, acts as a forum for trade negotiations, settles trade disputes and assists developing countries in trade policy issues.

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Appendices

Appendix 1 Common Agricultural Policy Appendix 2 World Trade Organisation agricultural negotiations Appendix 3 Glossary of terms References

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Contents

5.3 Pig meat 5.4 Poultry meat 6 6.1 6.2 6.3 6.4

Prices Beef Sheep meat Pig meat Poultry meat

Appendices Appendix 1 Common Agricultural Policy Appendix 2 World Trade Organisation negotiations Appendix 3 Glossary of terms References

Contents / page ii

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References

A wide range of sources was used in the compilation of the data for this publication. Most of the sources listed below are periodicals or information services, which give various data series. They have been listed country by country for ease of reference, giving, firstly, the name of the publishing organisation and, secondly, the title(s) of the publication(s) or service(s). Argentina SAGPyA: Noticias de los Mercados de la Carne Australia Meat and Livestock Australia: Meat the Market; Monthly trade statistics Belgium Office Belge du Commerce Extérieur: Quarterly trade statistics Canada Agriculture and Agri-Food Canada: Livestock Market Review; Statistics Canada Denmark Danske Slagterier: Markedsnyt European Union Eurostat Agricultural Statistics Quarterly Bulletin; Comext CD-ROM Intra- and Extra-EU trade, from SOEC (Statistical Office of the European Communities); Official Journal of the European Communities France CFCE: Marché International du Bétail et des Viandes Germany Statistisches Bundesamt: Monthly trade statistics ZMP: Geflügel Greece Greek Ministry of Agriculture: Annual trade statistics Ireland Central Statistics Office: Monthly trade statistics Japan ALIC: Monthly Statistics Netherlands Produktschappen Vee, Vlees en Eieren: Cijferinfo Pluimveesector; Vee-en Vleessector Cijferinfo

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References

New Zealand Meat NZ: Annual Reports Saudi Arabia Central Department of Statistics: Annual trade statistics South Korea South Korean Customs Service: Quarterly trade statistics Thailand Thai Broiler Processing Exporters Association: Quarterly trade statistics UK Meat and Livestock Commission – UK Weekly Market Survey Customs and Excise, Intrastat: Monthly trade statistics Uruguay INC: Instituto Nacional de Faena y Exportación USA USDA: Livestock and Poultry – World markets and Trade; Monthly trade statistics General Meat and Livestock Commission – European Weekly Market Survey OECD: Agricultural Policies in OECD Countries – Monitoring and Evaluation, 2001 OECD: Agricultural Policies in OECD Countries – Monitoring and Evaluation, 2002 Borthwicks: A Century in the Meat Trade 1863–1963, Geoffrey Harrison, London 1963 Golden Jubilee: The Story of the First Fifty Years of the New Zealand Meat Producers Board 1922–1972, Dai Hayward (ed), Wellington, New Zealand 1972 The Book of the Meat Trade, Frank Gerrard (ed), Caxton Publishing Co. Ltd 1949 A number of websites and online databases were also used in the collection of the data. The references are as follows: United Nations: Global Trade Atlas Annual database FAO: http://www.fao.org/ USDA: http://www.fas.usda.gov/ http://www.agriculture.senate.gov EU Commission: http://www.europa.EU.int/comm/eurostat WTO: http://www.wto.org/

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