Summary
The export of chicken parts (particularly bone- in quarters and halves) is driven by expanding EU poultry meat production, given the EU consumer preference for breast meat. This is greatly assisted by a protective trade policy which carefully manages imports of poultry meat to allow EU producers to fully benefit from growing EU consumer demand, despite their production cost disadvantages compared to competitive 3rd country poultry meat exporters. This enables the maintenance of higher EU market prices which allows a cross subsidisation of exports of residual poultry parts. Against this background across a growing number of sub-Saharan African countries, the strong growth in EU poultry meat exports which stifles local poultry sector development in the face of growing African consumer demand is set to continue.
The EC claims, ‘EU poultry meat production is driven by EU consumer demand’. EU consumer demand for poultry meat has risen consistently in recent years based on affordability, convenience, health considerations and a deepening of public concern over climate change. The EC analysis highlights the preference of EU consumers for breast meat which means ‘cheaper cuts are often exported to markets where they are most valorised’. This see’s African markets being targeted for exports of chicken halves and quarters (1).
Indeed, in 2018 fully 82% of EU exports of frozen bone-in poultry halves and quarters were destined for Sub-Saharan Africa African markets, with the volume of EU exports to sub-Saharan African markets between 2008 and 2018 more than tripling (+ 253% or +106,517 tonnes). This needs to be seen in a context where overall EU poultry meat exports increased only 84.5% over this period (+723,455 tonnes) (3).
Since 2008 the number of ACP countries to which the EU exports frozen bone-in chicken halves and quarters has increased from 15 to 33 countries, with these entirely new markets taking over 27,700 tonnes of EU exports of bone in chicken halves and quarters (3).
According to the EC, ‘poultry meat consumption should continue growing in the EU’, with this being particularly strong in the first years of the 2020s. By 2030 per capita EU poultry meat consumption is projected to reach 26.6 kg per annum, up from 25.7 kg per capita in 2020 (+3.5%) and a mere 20.6 kg per capita in 2010 (a huge 29.1% increase in EU per capita consumption of poultry meat between 2010 and 2030).
Projected Changes in EU Exports, Imports, Net Production, Consumption and Per Capita Consumption (‘000 tonnes)
| Exports | Imports | Net Production | Consumption | EU Price €/t | World price €/t | |
| 2018 | 1,593 | 802 | 15,252 | 14,462 | €1,909/t | €1,314 |
| 2019 | 1,665 | 850 | 15,628 | 14,813 | €1,917/t | €1,385 |
| 2020 | 1,650 | 858 | 15,844 | 15,052 | €1,920/t | €1,375 |
| 2021 | 1,682 | 871 | 15,965 | 15,154 | €1,898/t | €1,398 |
| 2022 | 1,685 | 884 | 16,014 | 15,213 | €1,916/t | €1,428 |
| 2023 | 1,716 | 911 | 16,064 | 15,259 | €1,920/t | €1,434 |
| 2024 | 1,713 | 914 | 16,112 | 15,313 | €1,923/t | €1,466 |
| 2025 | 1,699 | 941 | 16,170 | 15,412 | €1,929/t | €1,501 |
| 2026 | 1,703 | 944 | 16,218 | 15,458 | €1,926/t | €1,529 |
| 2027 | 1,722 | 943 | 16,264 | 15,485 | €1,927/t | €1,552 |
| 2028 | 1,731 | 947 | 16,320 | 15,535 | €1,934/t | €1,576 |
| 2029 | 1,749 | 952 | 16,378 | 15,581 | €1,938/t | €1,593 |
| 2030 | 1,784 | 949 | 16,430 | 15,596 | €1,938/t | €1,610 |
| % change | +12% | +18.3% | +7.7% | +7.8% | +1.5% | +22.5% |
Source: EC, Agricultural Outlook for Markets and Income 2019-2030’, 19 December 2019
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/medium-term-outlook-tables_en.pdf
While the rate of increase in EU per capita consumption of poultry meat is now slowing down, it is still projected to give rise to 1,178,000 tonnes increase in production between 2018 and 2030 and a 191,000 tonne increase in overall EU poultry meat exports. According to the EC this will occur against a background of stable EU poultry meat prices, as EU production rapidly evolves in response to changes in EU demand (1).
According to the EC in the past 10 years ‘EU poultry production grew at a yearly average of 3%’ with this growth expected to continue into the early 2020s. The EC see’s production growth in the EU being focussed in eastern European member states ‘where significant investments keep taking place’, to capitalise on lower production costs. According to the EC by 2030 ‘EU poultry production should reach 16.43 million t’ (1) (+7.7 compared to 2018).
Poland is now the EU’s leading poultry producer, with Polish companies playing a growing role in the extra-EU poultry meat trade (see epamonitoring.net article ‘Polish Poultry Sector Expansion Suggests Increased Exports to Africa Can be Expected’ 19 July 2018) (2).
Whereas in 2008 Poland accounted for only 5.7% of total EU exports of poultry frozen bone-in halves and quarters (02071420) by 2018 the Polish poultry sector was accounting for 22.7% of total EU exports of frozen bone-in poultry halves and quarters (3) (for developments in wider Polish poultry exports to Africa see epamonitoring.net, Declining Prices of Dark Meat Intensify Competition for African Poultry Producers’ 1 February 2018)
At the global level ‘world import demand for poultry meat is expected to grow strongly in the first years of the outlook period, as poultry replaces less abundant and expensive pigmeat‘, in the face of African Swine Flu affected pork production. Strong growth in demand for poultry meat is anticipated in Africa, as well as elsewhere, with the EU poultry sector being seen as being well placed to capitalise on this growing demand.
Against this background by 2030 total EU poultry meat exports are projected to reach 1.784 million tonnes, some 12% above 2018 levels (and some 103% above 2008 levels of EU poultry meat exports).
In terms of EU poultry meat imports in the last two years ‘EU poultry imports have been falling…due to sanitary restrictions on shipments from Brazil,’ but EU imports began to recover in the course of 2019. Over the coming period total EU poultry meat imports are seen as gradually expanding to reach ‘the total volume of TRQs opened by the EU (around 1 million t as of 2019)’.
This is significant, since it demonstrates the centrality of the EU’s managed poultry trade regime to actual trade flows in poultry meat, with as the EC acknowledges a situation existing where ‘out-of-quota tariffs effectively restrict imports’.
The EC poultry meat trade regime is thus vital to the development of EU production in response to rising EU consumer demand. As the EC points out there are four basic trade measures in place in the poultry sector:
- Import licences
Under which imports of poultry products produced outside of the EU are subject to licenses, with imports only being allowed ‘if they comply with EU animal health and food safety standards’. This provides and important mechanism for monitoring trade flows, providing a basis on which other trade policy measures can be deployed
- Import duties
According to the EC ‘poultry imports from non-EU countries are subject to import duties’, with by means of the import duties, the EU ensuring ‘its economic operators in the sector are able compete on the EU internal market with non-EU countries’ (4).
- Tariff quotas
According to the EC ‘imports are organised by a system of tariff rate quotas; these can be based on specific country allocations or open for all countries (erga omnes). Quota volumes may change per year due to programmed increase, new negotiations or accessions to the EU’.
- Additional import duties
In addition, further ‘import duties may be applied to poultry meat imports in order to counterbalance any unfavourable effects on the EU market. According to the EC ‘these duties apply if the imported products have a lower price than the level notified by the EU to the WTO (the trigger price)’ (4).
This latter instrument is almost constantly in use.
In addition, the poultry meat sector ‘is part of the common market organisation between EU countries’. The organisation of this market has a number of functions primarily to provide a ‘safety net to agricultural markets’ and establish ‘minimum quality requirements’. As the EC acknowledges ‘poultry farmers can also get income support in the form of direct payments’ (4).
| Comment and Analysis Growth in EU poultry meat production is only driven so strongly by rising EU consumer demand because of the strict and carefully managed trade regime the EU applies to poultry meat imports. No imports take place outside of these strictly managed TRQ arrangements. Without this carefully managed trade regime domestic EU poultry meat production would be rapidly substituted by chicken breast imports from more price competitive 3rd country poultry producers (e.g. Brazil and Thailand). This would result in EU producers being restricted to certain quality differentiated components of the market where price was not the primary consideration in consumer purchasing choices (see epamonitoring.net article ‘Report highlights vulnerability of EU poultry sector to liberalisation of trade in poultry meat’, 5 September 2017). This would then result in a much slower growth in EU poultry meat production than has been experienced over the past 10 years and which is projected to continue over the coming 10 years. Given the EU poultry meat export trade into Africa is dominated by exports of residual poultry parts (particularly frozen bone in chicken halves and quarters) it is this growth in EU poultry meat production not overall export growth which is the important factor in trends in EU poultry meat exports to African markets. Without an import trade regime which effectively protects EU poultry producers from unlimited international competition, EU production growth would be more limited, with this then having an important bearing on the level of EU exports of poultry parts to African markets. In this context while overall EU poultry meat exports are projected to peak for a time in 2023, with sustained export growth only renewing after 2026, this trend will not necessarily apply to EU poultry meat exports to Africa, which consist largely of residual poultry parts – such as frozen bone-in halves and quarter chicken pieces – the trends in export of which are tied to the trends in EU poultry meat production not overall export levels. EU projections suggest sustained growth in EU poultry production throughout the projection period to 2030. There may thus be no respite for African poultry producers from the constant rise in EU exports of poultry parts which would be implied by the hiatus in overall export growth projected for the idle of the 2020s. Indeed, against this background, across a growing number of sub-Saharan African countries, the strong growth in EU poultry meat exports which stifles local poultry sector development in the face of growing African consumer demand is set to continue. |
Sources:
(1) EC, ‘EU Agricultural Outlook for Markets and Income 2019-2030’, 19 December 2019
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/agricultural-outlook-2019-report_en.pdf
(2) EC, Poultry Dashboard
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/poultry-meat-dashboard_en.pdf
(3) EC Market Access Data Base
https://madb.europa.eu/madb/statistical_form.htm
(4) EC, ‘Poultry: Overview’
https://ec.europa.eu/info/food-farming-fisheries/animals-and-animal-products/animal-products/poultry-meat_en