Summary
EU demand for poultry meat continues to grow, with the strong preference for breast meat generating increased exports of poultry parts, as the EU’s managed trade regime ensure an expansion of domestic production above demand growth. Sub-Saharan African markets are seen as important destinations for expanded EU exports. New EU13 members are playing a growing role in EU poultry meat production and an increasingly important role in exports to ACP countries.
The rate of expansion of EU poultry meat exports to ACP countries will be critically determined by how EPA commitments are the elimination of non-tariff barriers to EU exports and associated safeguard measures are interpreted and applied in practice. The SADC-EU EPA will provide an important test case in this regard.
According to the EC, in the EU ‘poultry meat is the only meat for which both production and consumption are expected to expand over the 2016-2026 outlook period (by 5.1 % and 4.5 % respectively)’. EU production is projected to increase 728,000 tonnes, reaching 15.043 million tonnes in 2026. The EC analysis suggests on the basis of recent investments in Hungary, Poland and Romania that poultry production in the EU will grow fastest in the new EU13 member states (+1.3% per annum compared to 0.5% per annum for the EU as whole).
This comes on the back of an 12% expansion in EU poultry meat production over the 2013-15 period, which was largely a product of investments in production expansion in new EU members states (see companion article ‘The increasing importance of exports to Polish poultry sector growth’).
EU consumption meanwhile is projected to grow 619,000 tonnes between 2016 and 2026. The slower rate of consumption growth in the EU compared to production growth will generate a growing EU poultry meat surplus for export.
Projected EU poultry meat production, consumption, export and imports 2016-2026 (1‘000 tonnes)
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 16-26 | |
| Production | 14,315 | 14,494 | 14,580 | 14,656 | 14,727 | 17,780 | 14,832 | 14,883 | 14,935 | 14,990 | 15,043 | +5.1% |
| Consumption | 13,730 | 13,897 | 13,967 | 14,052 | 14,124 | 14,164 | 14,203 | 14,241 | 14,278 | 14,314 | 14,349 | +4.5% |
| Exports | 1,480 | 1,509 | 1,544 | 1,539 | 1,545 | 1,565 | 1,589 | 1,614 | 1,640 | 1,666 | 1,695 | +14.5% |
| Imports | 895 | 913 | 931 | 934 | 942 | 950 | 961 | 972 | 983 | 990 | 1,000 | +11.2% |
Source: Extracted from, ‘EU agricultural outlook: Prospects for EU agricultural markets and income 2016-2026’,Table 9.29, December 2016
The expansion of EU poultry meat production will be supported by continued growth in global demand, though be it at a slower rate than in the past ten years (2.4% per annum compared to 4.4% per annum). Nevertheless according to the EC, between 2016 and 2026 ‘world import demand for poultry meat is expected to increase by 3 million tonnes’, reaching 17 million tonnes. The most important growth markets are seen as being in Asia, sub-Saharan Africa and the Middle East, with the additional demand being shared equally across these regions. (1)
EU poultry meat exports are projected to increase 14.5% or some 215,000 tonnes between 2016 and 2026, taking total EU exports to 1,695,000 tonnes. This comes on the back of a 14.5% increase in EU poultry meat exports between 2013 and 2016 (+187,000 tonnes). Thus while export growth will slow down in the coming decade proportionally, exports of EU poultry meat in 2026 are projected to be 80% higher than in 2009 (+935,000 tonnes).
The EC envisages the value of EU exports increasing faster than the volume, as EU poultry companies seek to fully valorize the marketing of individual cuts of poultry meat and offal. (1) This is consistent with one of the ten golden rules for a successful EU poultry business identified by Rabobank in June 2015 namely to ‘optimise the value of individual cuts and offal streams to increase revenues and profitability’. (2)
In the coming years the EC projects some loss of market share for EU poultry meat exporters on the South African market given the new TRQ access granted US exporters in 2016. (1) However to date there is no evidence that the new access granted US poultry exporters is impacting on the EU market share, with EU poultry meat exports to South Africa from January to October 2016 being up 35% compared to the corresponding period in 2015. (3)
Exports of poultry meat to Benin continued to fall in 2016, (3) reflecting the impact of the decline in Nigerian oil revenues and a strengthening of Nigerian import controls along its borders with Benin. (4) However EU exports continued to grow to other top sub-Saharan African destinations for EU poultry meat. Overall these 4 ACP destinations took 31.9% of total EU poultry meat exports from January to October 2016, up from a 30.5% share in 2015. This increased share occurred in the context of a 9.7% increase in overall extra-EU poultry meat exports in the January to October 2016 period. (3)
Exports of Poultry Meat to Selected Destinations
| 2012
Tonnes % |
2013
Tonnes % |
2014
Tonnes % |
2015
Tonnes % |
Jan-Oct 2016
Tonnes % |
Compared to Jan-Oct 2015 | |
| South Africa | 131,832 9.2% | 158,548 11.1% | 203,412 14.3% | 213,413 14.3% | 234,270 17.4% | +35% |
| Benin | 139,817 9.8% | 139,247 9.7% | 163,844 10.9% | 136,601 9.2% | 99,141 7.4% | -21% |
| Ghana | 69,156 4.8% | 75,252 5.3% | 56,900 3.8% | 68 799 4.6% | 63,259 4.7% | +7% |
| DRC | 34,231 2.4% | 28,625 2.0% | 33,697 2.2% | 36,061 2.4% | 31,754 2.4% | +6% |
| Extra-EU | 1,431,125 | 1,428,457 | 1,503,984 | 1,491,007 | 1,346,428 | +9.7% |
Source: ‘Exports of Poultry Meat to Selected Destinations’, December 2016
EU imports are also projected to increase in the next decade, by 105,000 tonnes by 2026. As is currently the case these increased imports will mainly come from Thailand and Brazil (which in the first 10 months of 2016 accounted for 88.2% of EU poultry meat imports) (3). Overall EU imports are ‘expected to grow gradually from the 2013-14 lows to fairly close to the quota level (around 1 million tonnes) by 2026’. (1)
These rising imports, despite surplus EU domestic production, reflect the structure of EU demand and extra-EU trade in poultry meat. The EU imports higher value cuts (breast meat) and processed poultry meat products and exports lower quality and cheaper cuts (such as legs and wings). (1)
Sources:
(1) EC, ‘EU agricultural outlook: Prospects for EU agricultural markets and income 2016-2026’, December 2016
https://ec.europa.eu/agriculture/sites/agriculture/files/mp-mto-2016-fullrep_en.pdf
(2) Rabobank, ‘10 rules for thriving in the EU poultry industry’, 15 June 2015
https://www.rabobank.com/en/press/search/2015/poultry_tenrules.html
(3) EC, ‘EU Market Situation for Poultry’, Committee for the Common Organisation of the Agricultural Markets, 15 December 2016
https://ec.europa.eu/agriculture/sites/agriculture/files/pm-pp-15.12.2016-poultry_en.pdf
(4) New Telegraph , ‘Nigeria’s ban on ‘tokunbo’ cars, rice cripples Benin economy’, 11 December 2016
https://newtelegraphonline.com/nigerias-ban-tokunbo-cars-rice-cripples-benin-economy/
| Comment and Analysis Strong demand growth in sub-Saharan Africa is likely to see the continued expansion of EU poultry meat exports to sub-Saharan Africa. Despite a decline in poultry meat imports to oil dependent economies in the face of the oil price slump, the overall share of the top sub-Saharan Africa markets in total extra-EU poultry meat exports continued to grow from January to October 2016.The major cloud hanging over EU poultry meat exports to South Africa is not the introduction of the new US quota for poultry exports, free of anti-dumping duties, but rather the prospects of South Africa invoking the safeguard provisions under the SADC-EU EPA. South Africa had initiated the safeguard process under the pre-existing TDCA, which was superseded in October 2016 by the provisions of the SADC-EU EPA. How the provisions of the SADC-EU EPA are interpreted and applied in the poultry sector will be an important test case of the value of such EPA provisions in sensitive agricultural sectors in ACP countries in general. Patterns of EU poultry sector investment suggest that trade between new EU13 member states and African countries is likely to grow in importance in the coming decade as more and more EU poultry meat is exported to sub-Saharan Africa to meet rising demand for low cost protein. This is an important consideration to bear in mind as new EU13 member states look at the benefits they gain from their relationship with the ACP, in the context of the discussions on EC’s negotiating instructions for the post-Cotonou ACP-EU cooperation framework. Trends in EU imports confirm the on-going significance of the EU’s managed trade regime for poultry meat This depends heavily on TRQs in the context of the maintenance of high MFN duties. The fact that EU poultry meat imports are expected to remain within these quota ceiling limits up to 2026 highlights the effectiveness of this policy tool in protecting and nurturing the expansion of EU poultry meat production in the context of evolving EU consumer demand for meat. |
| Key Words: Poultry, EU, Poland, South Africa, Benin, Nigeria, Ghana, DRC, Post-Cotonou Tags: Poultry, Southern Africa, West Africa |