Slower Growth in EU Feed Market, but Chicken Saves the Day

The European compound feed market is expected to show growth again in 2017. Total production is expected to increase by +0.3%. Both poultry and cattle feed contribute to the uptick. Pork feed production may decrease slightly. Looking through the numbers, we expect protein feedstuffs, other feed ingredients and further consolidation of the sector to determine next year’s discussion agenda.

The European livestock sector continues to face challenging market fundamentals. Production is slowly growing, while consumption remains stable, meaning exports need to rise. For the coming year, Rabobank expects EU production of poultry and beef meat to increase. Poultry is likely to see most growth, at +1.5% YOY, although the Avian Influenza outbreak is a wildcard. Pork production on the other hand is set to decrease, by -1.5%. Read more in our Animal Protein Outlook for 2017.

Higher poultry and cattle feed production expected

Converting these expectations into compound feed production, we forecast the total European compound feed market to increase by +0.3% YOY (see Figure 1). This is slightly below market growth in 2016, estimated at +0.9%, when production actually grew across all livestock species. Poultry feed will continue its upward trajectory in 2017, at +0.8%. Cattle feed is expected to grow at +0.2%, despite lower dairy production forecasts. Continuous modernisation and higher usage rates of compound feed in dairy herd diets will result in higher demand for industrial cattle feed. Finally, looking at the pork sector, we are forecasting a decline in feed demand across the European Union, albeit marginal: -0.1%. France, Germany and the Netherlands are among those pork feed markets anticipated to decline. This outlook is based on the assumptions that animal protein production will develop along the lines described above, Feed Conversion Ratios (FCR) will continue to improve, and a larger share of farming will take place in a modernised system.

Figure 1: Indexed compound feed production EU-28

Local protein feedstuff supplies hampered

As poultry feed continues to be the key growth engine of the European feed market, this also implies that relatively high-protein feeds are becoming more important. Europe is not self-sufficient in the domestic supply of such protein feedstuffs. And as the 2016/2017 harvests of European oilseeds (especially rapeseed) and protein crops (peas, lupins, etc.) have been lower due to challenging weather conditions, the region’s feed manufacturers will see increased dependency on imported oilseed meals to satisfy protein demand. The European Commission expects oilseed meal imports to increase by 7% YOY. This includes both soybean meals and sunflower meals. 

Other topics to watch in 2017

Finally, beside the statistics, there are a few other interesting topics to keep an eye on in 2017. This year is likely to bring the first large-scale EU authorisation of insect proteins in aquafeed. We also expect more action in the feed additives market: products such as prebiotics and probiotics are building a track record. Lastly, stagnating growth for certain feed markets may drive further consolidation of the compound feed industry. 

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