Outlook brightens for EU meat industry

by Meat&Poultry Staff
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UTRECHT, The Netherlands – The economic outlook for the EU's meat industry is improving but shifts in feed prices, the economy, export markets and exchange rates could pose a significant risk to the industry’s margins at both the primary and processing levels, according to a Rabobank report.

Overall the meat industry is expected to benefit from slightly improved market conditions in both poultry and pork in 2012 and an ongoing favorable market situation for the beef sector, according to the report.

Supply discipline will be a major factor in the industry's performance, according to Rabobank. At the primary level, the improved outlook will relieve some cost-price pressure, although average prices need to remain high to cover historically high feed prices. Supply discipline would better prepare the industry to deal with unexpected market developments, such as cost-price increases or market changes caused the by the fragile economic environment, the report stated.

Conditions at the processing level, such as increasing over-capacity in pork and beef, will sharpen the fight for raw materials. Rabobank forecasts that market position, sufficient sourcing, efficiency and client dependency will be key to each company’s success. Finally, the integrated structure and opportunities to easily adjust production in the poultry sector will support 2012 margins, according to the report.

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