Required Report - public distribution

**Date:** 1/30/2007

**GAIN Report Number:** E47009

E47009

**EU-27**

**Poultry and Products**

**Semi-Annual**

**2007**

**Approved by:**

![](media/image1.wmf)Debra Henke

USEU

**Prepared by:**

Yvan Polet

**Report Highlights:**

The Avian Flu (AI) scare in the spring of 2006 faded by the summer,
although initial consumer reaction led to short-lived poultry
consumption drops of up to seventy percent in European Mediterranean
countries. As a result, EU broiler production in 2006 fell by 2.3
percent and consumption by 2.7 percent. While EU broiler exports were
sustained through increased export refunds, poultry imports decreased
significantly and some 300,000 MT of stocks were built temporarily. By
2007, European broiler markets recovered to the pre-AI situation,
although tight production planning keeps pushing broiler prices up.
Poultry imports are forecast to increase again in 2007, as new TRQ\'s
for Brazil and Thailand are opened.

EU turkey markets are not forecast to recover in 2007, but rather
continue their pre-AI longtime decline, as EU competitiveness continues
to erode.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E4\]

Table of Contents

[Executive Summary 4](#executive-summary)

[Broilers 5](#broilers)

[2005 5](#section-1)

[2006 5](#section-2)

[2007 6](#section-3)

[Turkey 7](#turkey)

[2005 7](#section-5)

[2006 8](#section-6)

[2007 8](#section-7)

[Related reports from FAS EU 9](#related-reports-from-fas-eu)

This report is the result of active collaboration with the following EU
FAS colleagues in the member states:

Xavier Audran from FAS Paris covering France

Bob Flach from FAS The Hague covering the Benelux

Michael Hanley from FAS Dublin covering Ireland

Petra Hrdlickova from FAS Prague covering the Czech Republic

Andrew Jessen from FAS Madrid covering Portugal and Spain

Steve Knight from FAS London covering the United Kingdom

Roswitha Krautgartner from FAS Vienna covering Austria

Hasse Kristensen from FAS Copenhagen covering Denmark

Asa Lexmon from FAS Stockholm covering Finland and Sweden

Sabine Lieberz from FAS Berlin covering Germany

Jana Mikulasova from FAS Prague covering the Slovak Republic

Andreja Misir, from FAS Zagreb covering Slovenia

Ferenc Nemes from FAS Budapest covering Hungary

Piotr Rucinski from FAS Warsaw covering Estonia, Latvia, Lithuania and
Poland

Stamatis Sekliziotis from FAS Athens covering Greece

# 

NOTE

For this report, trade with Bulgaria and Romania is still considered
extra-EU trade because this report is covering the EU-25 market, even if
Bulgaria and Romania have joined the EU on January 1, 2007 to form the
EU-27. However, even if trade with these latest two new EU member states
is still considered extra-EU trade, this report will describe expected
impacts on the EU-25 market from this latest EU enlargement.

# Executive Summary

The arrival of Avian Influenza (AI) H5N1 in Europe in the autumn of 2005
was the beginning of a turbulent period for EU poultry markets and, by
the same token, world poultry markets. Early in 2006, alarming press
reports about decreased poultry consumption in Greece and Italy were
circulated. An outbreak of AI in February 2006 in a turkey flock in
France set off an AI scare with Southern European consumers. However, in
the rest of Europe consumer reaction was less prominent and the decrease
in poultry prices even fueled poultry purchases in the United Kingdom
and Poland. Because the AI impact didn't last past the summer holiday
period, the impact of the AI crisis on EU broiler production and
consumption was only about a two percent decrease, or only half of the
decrease that was anticipated before. Much of the brunt was carried on
reduced imports, while broiler exports maintained their level because of
increased export refunds and support at Member State (MS) level. Some
300,000 MT of stocks had been built, which were released on the market
again for consumption, both private and institutional, for exports and
even as food aid to Iraq from Greece.

By 2007, EU poultry markets returned to the pre-AI situation, although
producing companies are forecast to holding production tight because of
continued vigilance for new AI outbreaks and low profitability as a
result of high feed costs. Broiler imports are forecast to increase with
the opening of the new TRQ's for Brazil and Thailand, which resulted
from the WTO "salted poultry" case. Exports are forecast to remain
stable because more EU broiler exports are expected to Romania and
Bulgaria after their EU accession in January 2007 in replacement of lost
imports from the United States mainly.

EU turkey markets suffered in a similar way from the AI crisis in the
spring of 2006. However, turkey markets did not recover during the
summer, but rather continued their longtime decline. The same decrease
in EU turkey production and consumption is forecast in 2007, without
much impact from the EU enlargement with Romania and Bulgaria on EU
exports.

# Broilers

  --------------------- ----------- ----------- ----------- ----------- ----------- -----------
  **Country:**          **EU25**                                                    

  **Commodity:**        **Meat,                                                     
                        Broiler**                                                   
                        (1000MT                                                     
                        CWE)                                                        

  **Year**              **2005**                **2006**                **2007**    

                        USDA        Posts       USDA        Posts       USDA        Posts
                        Official    estimates   Official    estimates   Official    estimates
                        \[old\]     \[new\]     \[old\]     \[new\]     \[old\]     \[new\]

  Beginning Stocks      0           0           0           0           0           0

  Production            7,736       7,804       7,425       7,625       7,530       7,700

  Imports               522         549         600         500         645         600

  **TOTAL SUPPLY**      **8,258**   **8,353**   **8,025**   **8,125**   **8,175**   **8,300**

  Exports               755         757         620         730         685         730

  TOTAL Dom.            7,503       7,596       7,405       7,395       7,490       7,570
  Consumption                                                                       

  Ending Stocks         0           0           0           0           0           0

  **TOTAL               **8,258**   **8,353**   **8,025**   **8,125**   **8,175**   **8,300**
  DISTRIBUTION**                                                                    

  Source: EU FAS                                                                    
  Offices                                                                           
  --------------------- ----------- ----------- ----------- ----------- ----------- -----------

Note: "Ending stocks" refer to EU intervention stocks only. Commercial
stocks are included in "Total domestic use".

## 2005

Final EU broiler production in 2005 was about one percent higher than
previously reported. Broiler imports were also reviewed higher. As a
result, EU broiler consumption in 2005 was 1.3 percent above the
previous estimate.

## 2006

EU broiler production was previously expected to decrease by four
percent as a result of the Avian Influenza (AI) epidemic and an AI
outbreak in a French turkey farm in February of 2006, which led to
immediate fall of broiler consumption in southern countries (France,
Italy, Greece). At the peak of the crisis, household consumption was
reported to down by more than 50 percent for a short period. AI
outbreaks in commercial flocks in Hungary affected mainly the important
duck and geese farming sectors, with more than 1 million ducks and geese
being destroyed, and only indirectly broiler production. As anticipated,
the impact of AI faded during the summertime, as no further AI outbreaks
with any significance occurred on EU poultry farms. The recovery of the
broiler market in the second half of 2006 was strong enough to limit the
total damage to the EU-25 2006 broiler production to an estimated 2.3
percent. Broiler production in many EU MS, like the United Kingdom, was
reduced only marginally as supplies to supermarkets is bound by delivery
contracts. Broiler imports were the victim of this development, as total
EU broiler imports in 2006 ended an estimated ten percent below the 2005
level, despite the reopening of EU markets for low tariff salted poultry
imports from Brazil at the end of June 2006 as a result of the WTO
decision in the "salted poultry" case[^1],[^2] won by Brazil and
Thailand.

EU broiler exports were only marginally below 2005 exports with the
support of increased export refunds and efforts to limit the build up of
poultry stocks. Shifts in broiler exports from the Middle East to
Russia, Hong Kong, and Southern Africa were significant, partly because
of the AI scare and partly as a reaction to the Danish cartoon row. This
overall stable figure hides a significant decrease in French broiler
exports, as France was not declared free of AI again before June 2006;
compensated by higher exports from other MS. EU broiler consumption for
CY2006 is estimated to have ended 2.7 percent below the CY2005 level. In
the North and West of Europe, broiler consumption was less affected by a
consumer scare for AI. On the contrary, cheap poultry imports, from
Italy mainly, increased poultry consumption in the United Kingdom, while
consumers in Poland too took advantage of reduced poultry prices to eat
more chicken. As expected, during the summer holiday period consumer
attention to AI faded and poultry consumption recovered to pre-AI levels
because of the low poultry prices, even in the most worried MS like
Italy and Greece. At the end of 2006, rationing of new broiler
production set up led to below normal commercial stocks in several EU
MS, which kept pushing poultry prices up.

During the 2006 spring AI crisis, some 300,000 MT of poultry stocks were
built up in different EU MS. Most stocks seem to have re-entered the EU
market for consumption and export. In Greece, stocks were also channeled
to institutional usage (military forces, hospitals & other), and in
December 2006, another 2.650 MT of frozen broiler meat was going to be
shipped to Iraq as food aid. The contract was signed between the
Hellenic Poultry Meat Producers Association (HPMPA) and the NGO
\"Solidarity\". Some remaining stocks are still included in the 2006
broiler consumption number, particularly in France, but these are
expected to rapidly disappear in early 2007.

## 2007

EU broiler production in 2007 is not forecast to fully recover to pre-AI
levels, as producers remain wary of the consequences of new AI outbreaks
and export forecasts remain gloomy, particularly in France. An outbreak
of AI on a commercial geese farm in the South-East of Hungary in January
2007 is not expected to have a significant impact. In early 2007,
hatching egg numbers remain limited and broiler producer margins are low
as a result of high feed costs and despite mild and favorable
temperatures and high broiler prices. However, the EU poultry production
climate can be regarded as favorable after the EC proposal[^3] to
regulate animal welfare for broilers was recently shelved for an
indefinite period. Broiler imports are forecast to increase, as the new
poultry TRQ's for Brazil and Thailand[^4],[^5], which were decided as a
result of the WTO poultry case, are being opened. EU broiler exports are
forecast to be stable as export refunds were lowered again after the AI
crisis. EU-25 broiler meat consumption is forecast to recover to pre-AI
levels. A new AI scare could eventually drive EU consumers away from
poultry again if new severe AI incidents, like AI casualties, occurred.
Otherwise it can be expected that consumers have learned to live with
the latent threat of AI outbreaks.

Romania and Bulgaria are forecast to import more poultry from the EU
after their EU accession in January 2007, as it can be expected that
their imports of poultry from the United States will be greatly reduced.
Although Romanian and Bulgarian poultry statistics are not included in
this report, their increased dependence on the EU explains why EU
broiler exports are not forecast down. However, the overall impact of
Romania and Bulgaria on EU markets will be limited because their
accession is not expected to impact the quota administration,
additionally, the EU poultry industry is not highly regulated in the
CAP.

  ---------------------------- -------------- -------------- --------------
  Broiler production (Top 5                                  
  member states) 1000MT                                      

                               **2005**       **2006**       **2007**

  United Kingdom               1,281          1,265          1,280

  Benelux                      1,076          1,070          1,065

  Spain                        1,048          1,000          1,000

  France                       923            820            790

  Poland                       640            690            700

  Italy closely follows Poland                               

                                                             

  Broiler consumption (Top 5                                 
  member states) 1000MT                                      

                               **2005**       **2006**       **2007**

  United Kingdom               1,557          1,573          1,590

  Spain                        1,074          1,021          1,020

  France                       765            768            759

  Germany                      729            700            730

  Poland                       571            600            600

                                                             

  Broiler exports (Top 5                                     
  member states) 1000MT                                      

                               **2005**       **2006**       **2007**

  Benelux                      204            215            215

  France                       235            160            150

  Germany                      86             80             85

  United Kingdom               46             67             70

  Denmark                      41             40             50
  ---------------------------- -------------- -------------- --------------

# 

# Turkey

  ---------------------- ----------- ----------- ----------- ----------- ----------- -----------
  **Country:**           **EU25**                                                    

  **Commodity:**         **Meat,                                                     
                         Turkey**                                                    
                         (1000MT                                                     
                         CWE)                                                        

  **Year**               **2004**                **2005**                **2006**    

                         USDA        Posts       USDA        Posts       USDA        Posts
                         Official    estimates   Official    estimates   Official    estimates
                         \[old\]     \[new\]     \[old\]     \[new\]     \[old\]     \[new\]

  Beginning Stocks       0           0           0           0           0           0

  Production             1,917       1,918       1,810       1,850       1,790       1,820

  Imports                103         106         110         100         115         110

  **TOTAL SUPPLY**       **2,020**   **2,024**   **1,920**   **1,950**   **1,905**   **1,930**

  Exports                188         188         150         165         150         150

  TOTAL Dom. Consumption 1,832       1,836       1,770       1,785       1,755       1,780

  Ending Stocks          0           0           0           0           0           0

  **TOTAL DISTRIBUTION** **2,020**   **2,024**   **1,920**   **1,950**   **1,905**   **1,930**

  Source: EU FAS Offices                                                             
  ---------------------- ----------- ----------- ----------- ----------- ----------- -----------

## 2005

A review of EU turkey final production, trade and consumption didn't
result in any significant changes from past estimates.

## 2006

The impact on EU CY2006 turkey production from the spring AI crisis led
to a 3.5 percent decrease compared to 2005, much less than the
previously 5.5 percent decrease anticipated. Hungary and Poland were the
exceptions with increases in turkey production. The impact of AI
accelerated the decrease in turkey production in France and the United
Kingdom. Higher exports and increased consumption, as well building some
temporary stocks, supported EU production in 2006. Deviation of turkey
export destinations was hardly noticeable (with the exception of France,
which lost its AI free status from February to June 2006). EU turkey
consumption decreased by 2.8 percent compared to 2005 instead of the
anticipated 3.5 percent.

## 2007

EU turkey production in 2007 is not forecast to recover from the AI
crisis, but rather continue its longtime decrease at a more moderate
rate, except in Hungary and Poland again. The new AI outbreak in Hungary
is not expected to impact the turkey market as most of the production is
used for further processing into value-added products for which
consumers don't make the link with AI. Turkey imports are forecast to
increase as a result of the opening of the new quota TRQ for Brazil[^6].
In Greece, importers still signal an appetite for U.S. turkey meat and
products for an estimated 7,000 - 8,000 MT per year, although no turkey
meat imports took place from the United States since 1997. EU turkey
exports are forecast to further decrease as the EU turkey sector further
looses competitiveness. EU turkey consumption in 2007 is forecast to
decrease moderately.

The accession of Romania and Bulgaria to the EU in January 2007 is not
expected to have significant impacts for EU turkey markets because
Romania and Bulgaria are much less dependant on imports for turkey from
the United States. Turkey imports from the United States will be greatly
cut off as a result of the adoption of EU import standards. As a result,
increased imports from the EU-25 to Bulgaria and Romania are also
expected to be negligible.

  ----------------------------- ------------- ------------- -------------
  Turkey production (Top 5                                  
  member states) 1000MT                                     

                                **2005**      **2006**      **2007**

  France                        614           536           490

  Germany                       397           391           375

  Italy                         279           293           288

  United Kingdom                228           206           190

  Poland                        190           205           220

                                                            

  Turkey consumption (Top 5                                 
  member states) 1000MT                                     

                                **2005**      **2006**      **2007**

  Germany                       450           436           426

  France                        366           337           334

  Italy                         245           236           220

  United Kingdom                229           194           201

  Poland                        180           179           187

                                                            

                                                            

                                                            

                                                            

  Turkey exports (Top 5 member                              
  states) 1000MT                                            

                                **2005**      **2006**      **2007**

  France                        75            60            50

  Germany                       45            25            35

  Benelux                       19            19            19

  United Kingdom                12            7             7

  Italy                         8             8             8
  ----------------------------- ------------- ------------- -------------

**Visit our website:** our website
[**http://useu.usmission.gov/agri/**](http://useu.usmission.gov/agri/)
provides a broad range of useful information on EU import rules and food
laws and allows easy access to USEU reports, trade information and other
practical information.

**E-mail**: <AgUSEUBrussels@usda.gov>

# Related reports from FAS EU

+------------+------------------------------------------------+-------+
| **Report   | **Title**                                      | ###   |
| number**   |                                                | ##### |
|            |                                                |  Date |
+------------+------------------------------------------------+-------+
| E36143     | [Thailand and EU agree on poultry import       | 12/   |
|            | quota](http://ww                               | 04/06 |
|            | w.fas.usda.gov/gainfiles/200612/146249678.pdf) |       |
+------------+------------------------------------------------+-------+
| E36137     | [EU and Brazil agree on new EU poultrymeat     | 11/   |
|            | import                                         | 08/06 |
|            | regime](http://ww                              |       |
|            | w.fas.usda.gov/gainfiles/200611/146249445.pdf) |       |
+------------+------------------------------------------------+-------+
| E36117     | [EC market support measures in the poultry     | 09/   |
|            | sector](http://ww                              | 01/06 |
|            | w.fas.usda.gov/gainfiles/200608/146208791.pdf) |       |
+------------+------------------------------------------------+-------+
| E36108     | [Poultry                                       | 08/   |
|            | -Annual](http://ww                             | 29/06 |
|            | w.fas.usda.gov/gainfiles/200608/146208763.pdf) |       |
+------------+------------------------------------------------+-------+
| E36106     | [EC market support measures in the poultry     | 07/   |
|            | sector](http://ww                              | 17/06 |
|            | w.fas.usda.gov/gainfiles/200607/146208310.pdf) |       |
+------------+------------------------------------------------+-------+
| NL6029     | [H5N1 Avian Influenza Suspected in Dutch       | 08/   |
|            | Zoo](http://ww                                 | 19/06 |
|            | w.fas.usda.gov/gainfiles/200608/146208657.pdf) |       |
+------------+------------------------------------------------+-------+
| NL6028     | [Import bans on Dutch                          | 08/   |
|            | poultry](http://ww                             | 10/06 |
|            | w.fas.usda.gov/gainfiles/200608/146208632.pdf) |       |
+------------+------------------------------------------------+-------+
| NL6027     | [Low Pathogenic AI suspected on Dutch poultry  | 08/   |
|            | farm](http://ww                                | 01/06 |
|            | w.fas.usda.gov/gainfiles/200608/146208542.pdf) |       |
+------------+------------------------------------------------+-------+
| NL6019     | [Dutch Product Boards ask EC to ban Brazilian  | 07/   |
|            | meat                                           | 05/06 |
|            | imports](http://ww                             |       |
|            | w.fas.usda.gov/gainfiles/200607/146208159.pdf) |       |
+------------+------------------------------------------------+-------+
| HU7002     | [Hungary Announces Suspected Case of Avian     | 01/   |
|            | Influenza in Commercial                        | 25/07 |
|            | Poultry](http://ww                             |       |
|            | w.fas.usda.gov/gainfiles/200701/146280022.pdf) |       |
+------------+------------------------------------------------+-------+
| RO6024     | [Export                                        | 01/   |
|            | Certificates](http://ww                        | 30/07 |
|            | w.fas.usda.gov/gainfiles/200701/146280012.pdf) |       |
+------------+------------------------------------------------+-------+
| RO6017     | [Poultry -                                     | 09/   |
|            | Annual](http://ww                              | 01/06 |
|            | w.fas.usda.gov/gainfiles/200608/146208770.pdf) |       |
+------------+------------------------------------------------+-------+
| BU6014     | [Avian Influenza -                             | 07/   |
|            | Update](http://ww                              | 10/06 |
|            | w.fas.usda.gov/gainfiles/200607/146208176.pdf) |       |
+------------+------------------------------------------------+-------+

  -----------------------------------------------------------------------
  These reports can be accessed through our website
  <http://useu.usmission.gov/agri/> or through the FAS website
  <http://www.fas.usda.gov/scriptsw/attacherep/default.asp>.

  -----------------------------------------------------------------------

[^1]: <http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds269_e.htm>

[^2]: E35185 - WTO Appellate Body rejects EU appeal in broiler cuts
    classification dispute

[^3]: E35108 - The EC proposes the legislation for its new Broiler
    Welfare Directive

[^4]: E36137 - EU and Brazil agree on new EU poultrymeat import regime

[^5]: E36143 - Thailand and EU agree on poultry import quota

[^6]: E36137 - EU and Brazil agree on new EU poultrymeat import regime