EU's beef production to decline for the first time in five years
Last year, EU's beef production rose for the fourth successive year, despite the fact that official slaughter statistics reported a reduction of slaughter in the first ten months. The elevated slaughter of dairy cows in the last two months of the year has influenced the beef production in EU, mentioned a USDA report.
Nevertheless, for 2018, USDA predicts a reduction of slaughter in EU, which will result in a decline of beef production for this year.
The only countries that will report an increase of beef production for this year are to be Ireland and Poland.
In terms of volume, in 2017 EU beef exports reached the highest level since 2011, 367,000 MT CW due to a strong demand from Hong Kong, Turkey and Philippines. Due to strong demand from foreign markets, and the stockpiled volumes, EU beef exports are expected to remain high in 2018. A political agreement reached between the EU and Japan in December 2017 established that for a period of 15 years European beef exports in Japan will benefit from a tariff of 9% instead of 38.5%. Japan's beef market is expected to grow by 4% this year, according to a note released by Steve Burak, Kathy Baylis, Jonathan Coppess And Qianting Xie from the University Of Illinois.
On the other hand, internal consumption in the EU is favouring high-quality beef to the detriment of dairy cow beef, especially in Germany. Still, the supply is limited to quotas agreed in the last decade.
As an example, USA has a zero duty quota for 48,200 MT high-quality grain-fed beef since 2009, but only 40% are fully used as other producers became eligible. This level could decrease sharply as the CETA agreement allows EU duty-free access for about 53,000 MT of Canadian beef and the European Commision/Mercosur negotiations on free trade could lead to a duty-free access quota for South American beef between 99,000 MT and 130,000 MT.
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