Summary
EU poultry meat production and consumption continues to increase, with this generating a 12% growth in exports in the first half of 2019 and the prospect of continued growth in exports up to 2021. EU poultry meat exports are once again taking off to South Africa as the December 2016 AI based import restrictions are progressively removed. The expansion of EU poultry meat exports to sub-Saharan Africa is unlikely to ease in the coming years with this posing policy dilemmas for governments where local poultry industries exist. Given current trends in EU policy, African government are likely to come under increased pressure to remove all existing non-tariff measures which inhibit EU poultry meat exports, where these are in technical violation of EPA commitments. These pressures would be intensified by a ‘No-Deal’ of ‘Hard’ Brexit from 1st January 2021.
According to the EC’s latest short term market prospects report in from January to July 2019 ‘EU poultry meat exports grew by 12% year-on-year’. It was highlighted how while exports increased to most destinations, there was particularly strong growth in exports to South Africa (+145%) and other sub-Saharan African countries (1).
In the case of South Africa this was in large part a result if the removal of SPS restrictions on poultry meat exports from Poland and Spain (2) This saw Poland re-enter the South African market in August 2018, becoming the leading EU poultry meat exporter to South Africa in 2019. It also saw Spain renew poultry meat exports to South Africa from September 2018, becoming by August 2019 the second largest EU poultry meat exporter to South Africa (3).
In the first 8 months of 2019 some 6 EU member states dominated EU exports of poultry meat to South Africa, with only four having exported more than 1,000 tonnes in 2018. In 2016 fully 9 EU member states had been exporting more than 1,000 tonnes.
In terms of the exports to other sub-Saharan African countries, from January to August the EC reports a 12% growth in exports to Ghana, with Ghana taking almost 1 in 10 of all extra-EU poultry meat exports over this period (124,233 tonnes) (3).
Overall 5 sub-Saharan Africa countries were amongst the top 11 export destinations for EU poultry meat exports from January to August 2019, accounting for 28.1% of total extra-EU poultry meat exports from January to August 2019. Meanwhile the main 11 destination in total took almost 63% of total extra-EU poultry meat exports.
From January to August 2019 EU poultry meat imports rose 7.4% compared to the corresponding period in 2018, with this being led by imports from Brazil. Over this period imports from Ukraine also increased, but by a modest 4% given the 191% increase which took place between 2015 and 2018 (3).
Increased imports of fresh whole birds from Ukraine (1) are a particular source of concern, since these birds are cut and deboned in the EU, with poultry parts then being exported to 3rd country markets as EU poultry meat, with the benefit of a EU quality label and the preferential market access the EU has secured under certain FTAs (e.g. with South Africa).
Over the January to August 2019 period the EU had a net export position in the poultry meat sector of 688,000 tonnes, exporting 119% more poultry meat than it imported. However the EU’s large net trade surplus in volume terms in the poultry sector is not reflected in the EU’s value surplus, with the value of EU poultry meat exports being only 4.9% higher than the value of EU poultry meat imports (3).
This reflects the much lower unit value of EU poultry exports compared to the value of EU poultry meat imports (€1.18 per kg compared to € 2.46 per kg). Sub-Saharan Africa is the main market for these low priced poultry meat exports. Between 2012 and January to August 2019 the average export cost of EU poultry meat exports fell 18% (3).
This heavy concentration of EU exports of poultry parts on sub-Saharan African markets needs to be seen in the context of the ongoing expansion of EU poultry meat production which grew 2% on a year on year basis in the first half of 2019, with production growth expected to reach 2.5% by the end of the year. This is in part driven by the rising prices in the pork sector given the impact of African swine flu on pork production (1).
Average cost of EU Poultry Meat Exports 2011 to January to August 2019
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | J-A 2019 | + % 2012-2019 | |
| €/kg | 1.44 | 1.40 | 1.37 | 1.41 | 1.19 | 1.20 | 1.178 | 1.1179 | -18% |
Source: EC Market Access Data Base and EC, EU Market Situation for Poultry Committee for the Common Organisation of the Agricultural Markets’, 17 October 2019
Domestically within the EU, ‘broiler prices moved around the 5-year average until August’ but with price rises expected by the end of the year if the growth in supply fails to match the growth in demand (1). This needs to be seen in a context where per capita consumption of poultry meat in the EU continues to grow, having now reached 25.3 kg per capita (1).
The potential for rising prices has seen a halt in the trend towards lower average prices for EU poultry meat exports with average EU export prices for January to August 2019 up 0.13% (3).
Trends EU Poultry Meat Production, Consumption, Exports and Imports (‘000 tonnes c.w.e.)
| 2015 | 2016 | 2017 | 2018 | 2019(f) | 2020(f) | + % 2018-20 | |
| Production | 13 788 | 14 495 | 14 557 | 15 252 | 15 628 | 15 856 | +4.0% |
| Consumption | 13 254 | 13 831 | 13 814 | 14 462 | 14 813 | 15 013 | +3.8% |
| Exports | 1 388 | 1 546 | 1 532 | 1 593 | 1 665 | 1 710 | +7.3% |
| Imports | 855 | 882 | 789 | 802 | 850 | 867 | +8.1% |
Source: EC, ‘Short-term outlook for EU agricultural markets in 2019 and 2020’, Autumn 2019 – Statistical Annex
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/short-term-outlook-statistical-annex_en.pdf
| Comment and Analysis The continued growth in EU production alongside the continued growth in per capita consumption means in the coming years the EU poultry sector will generate a growing volume of poultry parts. Thee poultry parts need to be disposed of in non-EU markets, mainly in sub-Saharan Africa. Between 2015 and 2020 overall EU poultry exports are projected to have increased 23% in volume terms.The impact of continued EU poultry production expansion will be compounded by growing volumes of imports from Ukraine which includes whole chickens, which are cut and de-boned in the EU, with the breast being retained in the EU and the residual poultry parts being exported. While this growth in low priced EU poultry meat will provide an increasingly cheap source of protein for the rapidly expanding population in sub-Saharan Africa, in some countries this will pose a policy dilemma. These sub-Saharan African governments where established poultry sector industries exist will be faced with the difficulty of reconciling growing consumer needs with the commercial interests of established poultry producers; the market position of which is being undercut by increasingly cheap exports of poultry parts which matches well with patterns of poultry meat consumption in sub-Saharan Africa. There have been long standing calls for the EU to take on board and accommodate this dilemma which is faced in certain sub-Saharan African countries. It is unclear whether in the coming period this call to address the problem of cheap residual poultry parts will receive a more sympathetic hearing than it has to date. Indeed, with the EC increasingly taking ‘a number of unprecedented steps to enforce the commitments made by our trade partners’(4) (see companion epamonitoring.net article ‘EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports’, 21 November 2019), this could begin to impinge on EU-sub-Saharan Africa poultry sector trade relations, given a number of sub-Saharan African governments which make use of trade policy measures to defend the market space for local poultry producer could be deemed in technical violation of their EPA commitments. The EU could potentially insist on the removal of such measures on imports from the EU in line with commitments made in concluded traded agreements. This is going to be an area where Trade Commissioner Hogan, the former Agriculture Commissioner, will need to make some critical policy choices. Thus is particularly the case since export growth rates for EU poultry meat to these markets are much lower than for sub-Saharan African countries where these non-tariff measures are not used. In this context in the coming period those African governments which make use of non-tariff trade policy measures in the poultry sector could come under increased pressure to abandon these measures. This is particularly likely in the event of a ‘No-Deal’ or ‘Hard’ Brexit from 1st January 2021, which would be likely to result in a disruption of the current EU-UK poultry meat trade. Use of Contentious Trade Policy Tools in Sub-Saharan Africa Poultry Sectors
The progressive removal of avian influenza linked restrictions on imports of poultry meat into South Africa from the affected EU member states was always going to lead to a dramatic resumption of EU poultry meat exports. This process is now underway. However, with the Netherlands, Belgium, Germany, Hungary and the UK still to return as major exporters to the South Africa market, the scope for an ongoing expansion of poultry exports in the remainder of 2019, into 2020 and through to 2021 remains substantial. This in part will hinge on the success achieved by the EC in securing the removal of safeguard duties on EU poultry meat exports which have been set in place through a process initiated under the EU-South Africa TDCA and completed once the successor agreement, the EU-SADC EPA (see companion epamonitoring.net article ‘EU Formally Challenges Application of SACU Safeguard Duties in the Poultry Sector’, 27 June 2019). The prospects of securing the removal of these safeguard measures, which have been challenged by the EC on a technicality (not on the basis of the absence of substantive trade effects arising from the dismantling of tariffs on imports from the EU and other trade provisions under the EU-South Africa trade agreement), could well become connected to calls from Spanish citrus producers for the application of safeguard measures on citrus imports from South Africa (see companion epamonitoring.net article ‘Spanish Citrus Producers Intensify Pressure for More Controls on Citrus Imports from South Africa’, 11 November 2019). Given the value of South Africa’s citrus exports to the EU (over €700 million in 2018) the threat of any such move could well change the context of ongoing discussions around safeguard issues in the poultry meat sector. Any removal of the safeguard duties imposed on poultry meat imports from the EU as a result of a EC challenge to this measure would however fundamentally undermine the value of such provisions in all EU trade agreements with ACP countries, since it would clearly give priority to EU export interests rather than the interests of local agricultural producers in ACP countries. In terms of UK poultry meat exports an additional factor which will have a bearing on future volumes of exports to South Africa will be the basis on which the UK finally leaves the EU. A ‘No-Deal’ or ‘Hard’ Brexit by 1st January 2021, would be likely to require requiring the UK to find alternative markets for poultry meat currently exported to the EU27. The UK’s current poultry meat exports to EU27 markets largely consist of poultry parts, with the volumes involved being equivalent to more than double (+136%) current UK extra-EU poultry meat exports. These current exports to EU27 markets would fit well with sub-Saharan African patterns of poultry meat consumption. |
Sources
(1) EC, ‘Short-term outlook for EU agricultural markets in 2019 and 2020’, Autumn 2019
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/short-term-outlook-autumn-2019_en.pdf
(2) EC, ‘EU trade agreements: delivering new opportunities in time of global economic uncertainties’, 14 October 2019
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2071
(3) EC, EU Market Situation for Poultry Committee for the Common Organisation of the Agricultural Markets’, 17 October 2019
https://circabc.europa.eu/sd/a/cdd4ea97-73c6-4dce-9b01-ec4fdf4027f9/24.08.2017-Poultry.pptfinal.pdf
(4) EC, ‘EU trade agreements: delivering new opportunities in time of global economic uncertainties’, 14 October 2019
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2071