Required Report - public distribution

**Date:** 2/27/2009

**GAIN Report Number:** E49019

E49019

**EU-27**

**Livestock and Products**

**Semi-Annual Report**

**2009**

**Approved by:**

Steve Huete![](media/image1.wmf), U.S. Embassy The Hague

**Prepared by:**

Bob Flach, U.S. Embassy The Hague

**Report Highlights:** As a result of high milk and beef prices and
restricted slaughter, the EU cattle herd expanded during 2007 and 2008.
This year, declining milk prices and relatively high carcass prices are
expected to increase slaughter. As a consequence, the EU cattle herd is
forecast to resume its long term trend of contraction during 2009. The
elevated supply of pork in 2007, in combination with EC funding, boosted
EU pork exports in 2008 to a record level of 1.7 MMT. As a result of
tight margins, pork production declined in 2008 and is not expected to
recover in 2009.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Semi-Annual Report

The Hague \[NL1\]

\[E4\]

DISCLAIMER

The numbers in the PSDs in this report are not official USDA numbers,
but they result from a collaborative effort by FAS EU offices to
consolidate PSDs from all 27 EU member states.

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

Xavier Audran from FAS Paris covering France

Dana Biasetti from FAS Rome covering Italy

Mila Boshnakova from FAS Sofia covering Bulgaria

Ioana Ionescu from FAS Bucharest covering Romania

Bob Flach from FAS The Hague covering the Benelux

Michael Hanley from FAS Dublin covering Ireland

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

Marta Guerrero from FAS Madrid covering Portugal and Spain

Jana Mikulasova from FAS Prague covering the Czech Republic and Slovak
Republic

Ferenc Nemes from FAS Budapest covering Hungary and Slovenia

Yvan Polet from FAS Brussels / U.S. Mission to the EU

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

Stamatis Sekliziotis from FAS Athens covering Greece

NOTE

In this report the following HS codes and conversion factors are used:

+----+---------------------------------------------+------------------+
|    | **HS codes**                                | **Conversion     |
|    |                                             | factors**        |
+----+---------------------------------------------+------------------+
| ** | 0201, 0202                                  | PWE X 1.40 = CWE |
| Be |                                             |                  |
| ef | 021020, 160250                              | PWE X 1.79 = CWE |
| ** |                                             |                  |
+----+---------------------------------------------+------------------+
| ** | 0203, 021011, 021012, 021019, 160241,       | PWE X 1.30 = CWE |
| Po | 160242, 160249                              |                  |
| rk |                                             |                  |
| ** |                                             |                  |
+----+---------------------------------------------+------------------+

PWE = Product Weight CWE = Carcass Weight

ABBREVIATIONS

EU: All twenty-seven Member States of the European Union.

EU-25: All Member States of the European Union, except NMS-2.

NMS: The twelve New Member States which joined the EU in May 2004 and

January 2007.

NMS-2: Romania and Bulgaria, which joined the EU in January 2007.

**TABLE OF CONTENTS**

[Executive Summary 4](#__RefHeading___Toc223493663)

[**Cattle 5**](#__RefHeading___Toc223493664)

[**Beef 7**](#__RefHeading___Toc223493665)

[**Swine 9**](#__RefHeading___Toc223493666)

[**Pork 11**](#__RefHeading___Toc223493667)

[**Policy 13**](#__RefHeading___Toc223493668)

[]{#__RefHeading___Toc223493663 .anchor}**Executive Summary**

**Cattle & Beef:**

Induced by the high milk and beef prices, the EU cattle herd increased
during 2007 and 2008. The herd is expected to have reached its peak size
by the end of 2008. Due to reduced slaughtering and restricted imports
from Brazil, EU beef supply tightened during 2008. Despite the limited
supply, EU exports rose, fulfilling the increased demand in Russia and
Switzerland. This year, slaughtering is expected to increase as a result
of declining milk prices and relatively high carcass prices. As a
consequence, the EU cattle herd is forecast to resume its long term
trend of contraction during 2009. Due to the increased slaughtering and
to a lesser extent, recovering imports, beef supply on the EU market is
expected to expand, benefitting domestic consumption. As a result of the
financial crisis, EU beef exports are expected to decline in 2009.

**Swine & Pork:**

During 2007 and the beginning of 2008, margins in the swine sector
shrunk due to the high feed prices and oversupply of pork. Lower pig
production and slaughtering during the course of 2008 eventually lead to
higher carcass prices. As margins are expected to increase only
moderately, a recovery of pork production is not expected in 2009. The
elevated production of pork in 2007, in combination with EC funding,
boosted EU pork exports in 2008 to a record level of 1.7 MMT. With a
lower supply of pork and the financial crisis affecting demand on the
main export markets, EU exports are anticipated to fall in 2009.

[]{#__RefHeading___Toc223493664 .anchor}**Cattle**

  ------------------ ----------- ----------- ----------- ----------- ----------- -----------
  **Country**        **EU-27**                                                   

  **Commodity**      **Animal                                                    
                     Numbers,                                                    
                     Cattle                                                      
                     (1,000                                                      
                     Head)**                                                     

                     USDA        Posts       USDA        Posts       USDA        Posts
                     Official    estimates   Official    estimates   Official    estimates
                     \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]

  Market Year        **2007**                **2008**                **2009**    

  Total Cattle Beg.  88,463      88,463      88,300      89,042      88,000      89,200
  Stocks                                                                         

  Dairy Cows Beg.    24,305      24,305      24,176      24,177      24,000      24,250
  Stocks                                                                         

  Beef Cows Beg.     12,075      12,075      12,488      12,448      12,400      12,450
  Stocks                                                                         

  Production (Calf   30,927      31,500      30,700      31,050      30,500      31,050
  Crop)                                                                          

  Extra EU27 imports 4           4           3           4           3           4

  TOTAL SUPPLY       119,394     119,967     119,003     120,096     118,503     120,254

  Extra EU27 exports 388         388         300         460         300         450

  Cow Slaughter      7,554       7,539       7,550       7,715       7,550       7,850

  Calf Slaughter     5,985       5,986       5,900       5,675       5,900       5,850

  Total Slaughter    28,871      28,818      28,950      28,750      28,800      29,150

  Loss               1,835       1,719       1,753       1,686       1,703       1,654

  Ending Inventories 88,300      89,042      88,000      89,200      87,700      89,000

  TOTAL DISTRIBUTION 119,394     119,967     119,003     120,096     118,503     120,254

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

[2007 The EU cattle herd recovered due to elevated beef and milk
prices.]{.underline}

Three factors had a distinct effect on the cattle sector in 2007; the
high beef and milk prices, the reduced profitability of veal production,
and the spread of Blue Tongue Disease (BTD). As a result of the elevated
beef and milk prices, the EU calf crop recovered by nearly three
percent. The effect of BTD on fertility is believed to have been
limited. The high milk prices during 2007 also induced farmers to hold
on to their cattle, mostly dairy cows, but also young calves and heifers
destined for dairy production. As farmers were holding their cattle, cow
slaughter as well as calf slaughter declined. Calf slaughter also
declined as veal production became less profitable. BTD had also a
negative effect on calf slaughter as it hampered intra-EU trade of veal
calves. In the Annual Livestock Report (E48094) it was anticipated that
the contraction of cattle herd would slow down. The official EU December
census figure, however, reports a slight expansion of the cattle herd in
the EU (the beginning stock of 2008, see graph below).

[2008 & 2009 The EU cattle herd is expected to shrink slightly during
2009.]{.underline}

The EU cattle herd is expected to have expanded further during 2008. One
reason for this expansion is the high milk price, another factor is the
reduced slaughter of calves. After the temporary peak in 2008, the EU
cattle herd is forecast to resume its long term trend of contraction
during 2009. Increased slaughtering is anticipated in mainly France, the
Iberian Peninsula, and the NMS. The farmers' consideration to slaughter
is supported by the high carcass prices in combination with a
significant reduction of the milk prices. The average slaughter weight
is expected to be lower than in 2008 due to the relative high number of
calves and cows being slaughtered relative to steers. The good grain
crop in Central Europe in 2008 is expected to have a positive effect on
the calf crop in this region during 2009, in particular in Romania.

![](media/image2.wmf){width="5.997916666666667in" height="2.70625in"}

  --------------------------- -------------- -------------- --------------
  Calf crop production (Top 5                               
  EU member states) 1,000                                   
  Head                                                      

                              **2007**       **2008**       **2009**

  France                      6,450          6,400          6,420

  Germany                     4,423          4,690          4,350

  Italy                       3,100          3,200          3,250

  United Kingdom              2,959          2,843          2,750

  Benelux                     2,213          2,293          2,214

  Benelux: Belgium, the                                     
  Netherlands and Luxembourg                                
  are treated as one market                                 
  --------------------------- -------------- -------------- --------------

  --------------------------- -------------- -------------- --------------
  Cattle slaughter (Top 5 EU                                
  member states) 1,000 Head                                 

                              **2007**       **2008**       **2009**

  France                      5,024          5,060          5,101

  Italy                       3,979          3,850          3,800

  Germany                     3,713          3,850          3,770

  Benelux                     2,747          2,711          2,705

  United Kingdom              2,616          2,589          2,550
  --------------------------- -------------- -------------- --------------

[]{#__RefHeading___Toc223493665 .anchor}**Beef**

  -------------------- --------------- ----------- ----------- ----------- ----------- -----------
  **Country**          **EU-27**                                                       

  **Commodity**        **Meat, Beef                                                    
                       and Veal (1,000                                                 
                       Head)(1,000MT                                                   
                       CW)**                                                           

                       USDA Official   Posts       USDA        Posts       USDA        Posts
                       \[EU-27\]       estimates   Official    estimates   Official    estimates
                                       \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]

                       **2007**                    **2008**                **2009**    

  Slaughter            28,871          28,818      28,950      28,750      28,800      29,150
  (Reference)                                                                          

  Beginning Stocks     0               0           0           0           0           0

  Production           8,203           8,188       8,220       8,100       8,170       8,200

  Extra EU27 imports   641             642         400         465         420         500

  TOTAL SUPPLY         8,844           8,830       8,620       8,565       8,590       8,700

  Extra EU27 Exports   140             140         100         205         100         180

  TOTAL Domestic Use   8,704           8,690       8,520       8,360       8,490       8,520

  Ending Stocks        0               0           0           0           0           0

  TOTAL DISTRIBUTION   8,844           8,830       8,620       8,565       8,590       8,700

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

[2007 The EU enlargement cut out 140,000 MT of beef imports in the
NMS-2.]{.underline}

While slaughtering was reduced by 1.5 percent, beef production increased
by 0.5 percent during 2007. This recovery is a consequence of increased
slaughter weight in mainly France and the UK (see Annual Livestock
Report
[E48094](http://www.fas.usda.gov/scriptsw/attacherep/default.asp)). The
upturn in beef production only partly relieved the tight supply in the
EU. The EU enlargement cut out 140,000 MT of beef imports into Bulgaria
and Romania, as these NMS enforced the EU import regime. Due to the
tight supply combined with the high Euro/US\$ exchange rate and cuts of
export refunds, EU beef exports decreased by a third to 140,000 MT (see
graph below). The rise in beef consumption can mainly be explained by
commercial stock building during the end of 2007 (Commercial stocks are
part of Domestic Use. In this report, only stocks funded by the European
Commission are reported as stocks.)

[2008 Unsecure import supply further tightened domestic availability of
beef.]{.underline}

As a result of reduced production and imports, the domestic EU beef
supply is expected to have fallen by about 265,000 MT in 2008. The
limited imports are due to restrictions laid down by the European
Commission (EC) on EU beef imports from Brazil. On January 31, 2008, the
EC imposed stricter traceability requirements for Brazilian beef
imports, which in practice banned Brazilian beef from the EU market (see
GAIN Report
[E48016](http://www.fas.usda.gov/scriptsw/attacherep/default.asp)).
Currently, the Food and Veterinary Office (FVO) relisted about seven
hundred farms as being eligible to produce for the EU market. This is,
however, only a fraction of the 6,780 Brazilian farms which had been
certified during 2007. Importers report that none of these beef products
can be supplied by another producer in a sufficient volume. The elevated
beef prices are expected to have significantly reduced beef consumption
throughout the entire EU. Despite the limited availability of beef, EU
beef exports are expected to have increased from 140,000 MT in 2007 to
about 200,000 MT in 2008. EU exporters benefitted from the limited
supply of Brazilian fresh beef to Switzerland and the increased demand
for frozen beef in Russia.

[2009 Availability of beef on the EU domestic market is forecast to
increase.]{.underline}

The EU Food and Veterinary Office (FVO) executed a new audit in Brazil
in January of 2009. If the FVO will approve more Brazilian farms for
export to the EU, EU beef imports may recover. Importers are, however,
uncertain if the supply from Brazil will increase but comment imports
are not likely to decline further. In line with increased slaughtering,
domestic beef production is expected to increase while EU exports are
expected to fall due to the financial crisis. As a result of the
increased supply of beef on the EU domestic market, prices are forecast
to relax, benefitting domestic beef consumption.

![](media/image3.wmf){width="5.99375in" height="3.0597222222222222in"}

  ---------------------------- ------------- -------------- -------------
  Beef production (Top 5 EU                                 
  member states) 1,000 MT                                   

                               **2007**      **2008**       **2009**

  France                       1,496         1,480          1,490

  Germany                      1,185         1,220          1,195

  Italy                        1,123         1,065          1,050

  United Kingdom               882           867            850

  Spain                        643           670            650
  ---------------------------- ------------- -------------- -------------

  ---------------------------- ------------- -------------- -------------
  Beef consumption (Top 5 EU                                
  member states) 1,000 MT                                   

                               **2007**      **2008**       **2009**

  France                       1,629         1,593          1,585

  Italy                        1,452         1,380          1,370

  United Kingdom               1,371         1,334          1,310

  Germany                      1,016         1,010          1,000

  Spain                        670           660            650
  ---------------------------- ------------- -------------- -------------

[]{#__RefHeading___Toc223493666 .anchor}**Swine**

  -------------------- ----------- ----------- ----------- ----------- ----------- -----------
  **Country**          **EU-27**                                                   

  **Commodity**        **Animal                                                    
                       Numbers,                                                    
                       Swine                                                       
                       (1,000                                                      
                       Head)**                                                     

                       USDA        Posts       USDA        Posts       USDA        Posts
                       official    estimates   official    estimates   official    estimates
                       \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]

                                                                                   

  Market Year Begin    **2007**                **2008**                **2009**    

  TOTAL Beginning      161,526     161,526     160,006     159,732     158,000     156,250
  Stocks                                                                           

  Sow Beginning Stocks 15,570      15,569      14,947      14,922      14,600      14,500

  Production (Pig      266,000     265,100     259,000     261,000     257,000     257,000
  Crop)                                                                            

  Extra EU27 imports   2           2           1           2           1           2

  TOTAL SUPPLY         427,528     426,628     419,007     420,734     415,001     413,252

  Extra EU27 exports   901         901         1,000       1,560       1,000       1,200

  Sow Slaughter (a)    3,580       5,175       3,520       4,970       3,500       4,840

  Total Slaughter      257,971     257,308     251,850     254,650     248,500     250,000

  Loss                 8,650       8,687       8,157       8,274       8,051       8,052

  Ending Inventories   160,006     159,732     158,000     156,250     157,450     154,000

  TOTAL DISTRIBUTION   427,528     426,628     419,007     420,734     415,001     413,252

  Source: EU FAS                                                                   
  Offices (a) The 2007                                                             
  sow slaughter figure                                                             
  is a new FAS                                                                     
  estimate based on                                                                
  the beginning stock                                                              
  of gilts and sows                                                                
  and ending stocks of                                                             
  sows during that                                                                 
  year.                                                                            
  -------------------- ----------- ----------- ----------- ----------- ----------- -----------

[2007 Return of the pig cycle induced by high feed prices.]{.underline}

Profitable pig market conditions in 2006 were stimulating further pig
production increases in 2007. During the course of 2007, the EU pig crop
increased by 2.3 percent to 265 million, the highest production since
2002. This increase is attributable to growth of the crop in the EU-15,
in particular Spain, Germany, Denmark and the Benelux countries. Because
of rising feed costs (see graph below) and falling carcass prices,
profitability in pork production became gradually depressed during the
end of 2007. These unfavorable market conditions were most pronounced in
Central Europe. The total EU swine stock fell from 161.5 million head to
159.7 million head, still above the average 2000-2006 stock of 159
million. The swine stock shrunk most significantly in Poland, by 1.2
million head, a reduction of more than six percent.

![](media/image4.wmf){width="5.997916666666667in"
height="2.8715277777777777in"}

[2008 Margins on swine fattening improved during the second half
2008]{.underline}

As anticipated in the Annual Livestock Report
([E48094](http://www.fas.usda.gov/scriptsw/attacherep/default.asp)), the
EU pig crop declined significantly (see graph below). The tight margins
forced the most inefficient farmers to quit throughout the entire EU.
With a reduction of about ten percent, pig production shrunk most
significantly in the NMS. As a result of the shrinking production and
thus increased import demand of pork in mainly the NMS, the price for
slaughter hogs increased to the highest level in seven years. As a
result of the high carcass prices, and a reduction of feed prices (see
graph above), profitability of fattening improved in most EU Member
States during the second half of 2008. As a result of the dioxin crisis
in Ireland, the 2008 loss number was increased by more than 100,000 head
(see for more info the Policy section of this report).

[2009 EU pig production is not expected to recover.]{.underline}

Partly driven by the financial crisis, carcass prices declined to the
five-years average during the first two months of 2009. Due to these dim
market conditions and the expectation that feed prices will not return
to the lower level of before 2007, margins on fattening are expected to
remain tight. As a consequence, the restructuring of the intensive pig
sector is expected to continue in the NMS. To a lesser extent, this
process will also take place in the EU-15. Restructuring will imply
termination of the most inefficient farms, and thus an increase in the
number of piglets per sow, but overall a cutback of the EU pig crop. As
a result, EU pig production and slaughter will decline further (see
graph below). Possible exceptions to this trend are the sectors in
Romania and Bulgaria. In the NMS-2, farmers could be stimulated to
rebuild their pig stocks as a result of a good corn crop in 2008. In
Denmark, the most efficient farmers strive for expansion but are
hampered by environmental regulations. Only after 2009 is Danish
production expected to increase.

![](media/image5.wmf){width="5.99375in" height="2.8631944444444444in"}

  --------------------------- -------------- --------------- --------------
  Pig crop production (Top 5                                 
  EU member states) 1,000                                    
  Head                                                       

                              **2007**       **2008**        **2009**

  Germany                     47,260         47,335          47,000

  Spain                       41,913         40,000          39,900

  Benelux                     34,100         34,100          32,950

  Denmark                     28,474         27,350          27,200

  Poland                      25,786         22,200          21,400
  --------------------------- -------------- --------------- --------------

  --------------------------- -------------- --------------- --------------
  Swine slaughter (Top 5 EU                                  
  member states) 1,000 Head                                  

                              **2007**       **2008**        **2009**

  Germany                     53,308         54,600          54,400

  Spain                       42,459         40,500          40,000

  Benelux                     25,556         25,850          25,300

  France                      25,260         25,430          25,042

  Poland                      24,677         22,300          20,000
  --------------------------- -------------- --------------- --------------

[]{#__RefHeading___Toc223493667 .anchor}**Pork**

  -------------------- ------------- ----------- ----------- ----------- ----------- -----------
  **Country**          **EU-27**                                                     

  **Commodity**        **Pigmeat                                                     
                       (1,000                                                        
                       Head)(1,000                                                   
                       MT CW)**                                                      

                       USDA Official Posts       USDA        Posts       USDA        Posts
                       \[EU-27\]     estimates   Official    estimates   Official    estimates
                                     \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]   \[EU-27\]

  Market Year Begin    **2007**                  **2008**                **2009**    

  Slaughter            257,971       257,308     251,850     254,650     248,500     250,000
  (Reference)                                                                        

  Beginning Stocks     0             0           95          99          0           0

  Production           22,858        22,858      22,300      22,530      22,100      22,100

  Extra EU27 imports   34            34          50          55          55          55

  TOTAL SUPPLY         22,892        22,892      22,445      22,684      22,155      22,155

  Extra EU27 exports   1,285         1,287       1,525       1,720       1,475       1,250

  TOTAL Domestic Use   21,508        21,506      20,924      20,964      20,680      20,905

  Ending Stocks        99            99          0           0           0           0

  TOTAL DISTRIBUTION   22,892        22,892      22,449      22,684      22,155      22,155

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

[2007 EU pork production reached a record level.]{.underline}

In 2007, EU pork production increased by nearly five percent to a record
production of 22.9 MMT. The increased supply of pork was tempered by the
EU enlargement, which terminated about 100,000 MT of pork imports by
Romania and Bulgaria. During 2007, EU pork exports experienced strong
competition on the world market. In order to support the EU pork sector,
the European Commission (EC) opened a Private Storage Aid (PSA) scheme,
and increased export refunds (see GAIN Report
[E47104](http://www.fas.usda.gov/scriptsw/attacherep/default.asp)). The
stocks in the PSA scheme reached 99,000 MT, before the EC stopped this
measure in December 2007. The pork consumption figure in this report is
inflated due to increased commercial stocks.

[2008 & 2009 EU pork supply is expected to tighten.]{.underline}

Due to reduced slaughtering, EU pork production is expected to have
fallen from 22.9 MMT in 2007 to 22.5 MMT in 2008, and is expected to
decline further to 22.1 MMT in 2009, which is still well above the
average 2000-2006 level. Significant reductions are anticipated in
Poland, Spain, Hungary and Denmark. The elevated supply of pork in 2007,
in combination with EC funding, boosted EU pork exports in 2008, to a
record level of 1.7 MMT. Exports increased most significantly to Russia,
the Ukraine and China. The export refunds, for most fresh/frozen
products 100 Euro/MT, were terminated on August 8, 2008. With the lower
slaughter and diminished PSA stocks, EU pork supply tightened during
2008, and is expected to decline further in 2009. Due to the tight
supply of pork, it is unlikely that the EC will impose support measures
such as intervention or export restitutions (see Policy section of this
report). At the same time, demand from the main export markets is
expected to fall due to the financial crisis. Exports to Russia are in
particular uncertain due to veterinary issues and new import quotas (see
Policy section). As a result of the lower supply and deteriorating
export opportunities, 2009 exports are forecast to fall below the level
of 2007. The main net pork exporting countries, mainly the Benelux
countries, Denmark and Germany, are increasingly focusing on the
European market, in particular Central Europe. Due to increased domestic
prices, pork consumption is, however, expected to decline, mainly in the
NMS. In Northwestern Europe an important factor for the stagnating pork
consumption is the increasing popularity of poultry meat for its low
price, leanness and convenience.

During 2008, U.S. pork meat exports to the EU more than doubled to
48,000 MT (U.S. Customs data) with France and UK doubling their imports
of U.S. pork meat to almost 10,000 MT each. Most of the U.S. pork meat
is exported to the EU by Smithfield which purchased several EU pork
processors in recent years. While most of the U.S. pork meat is sold to
the processing industry and to the HRI sector, the giant retailer
Carrefour advertized low price U.S. pork meat (shoulders) processed in
Poland in its French hypermarkets in the summer of 2008. Facing a
violent reaction by the French pork meat producers, the retailer
withdrawn the U.S. pork meat from its shelves. U.S. pork exports are,
however, expected to remain at a high level during 2009.

![](media/image6.wmf){width="5.995138888888889in"
height="2.966666666666667in"}

  --------------------------- ------------- -------------- ---------------
  Pig meat production (Top 5                               
  EU member states) 1,000 MT                               

                              **2007**      **2008**       **2009**

  Germany                     4,985         5,090          5,060

  Spain                       3,439         3,250          3,250

  Benelux                     2,363         2,385          2,335

  France                      2,031         2,040          2,015

  Poland                      2,091         1,880          1,710
  --------------------------- ------------- -------------- ---------------

  --------------------------- ------------- -------------- ---------------
  Pig meat consumption (Top 5                              
  EU member states) 1,000 MT                               

                              **2007**      **2008**       **2009**

  Germany                     4,686         4,580          4,596

  Italy                       2,458         2,360          2,320

  Spain                       2,650         2,640          2,640

  Poland                      2,081         1,900          1,880

  France                      1,928         1,895          1,870
  --------------------------- ------------- -------------- ---------------

[]{#__RefHeading___Toc223493668 .anchor}**Policy**

**EU pig sector is lobbying for subsidies again**

EU pig prices decreased at the end of 2008 and decreased further during
the first two months of 2009. EU pig producers have been asking the EC
to provide support for the EU pig sector by means of renewed export
subsidies, but it is unlikely that the EC will grant export subsidies,
unless prices will not recover during the summer of 2009.

**Problems with EU exports to Russia**

EU exports of pork to Russia are suffering from Russian import
restrictions, after they had soared in 2008. Due to alleged violations
of strict new Russian residue limits, a majority of EU exporters were
delisted for exports to Russia. Exporters of EU beef and dairy were also
delisted. Export plants in several EU MS are struggling to gain Russian
export eligibility again. Russia has decreased its import quota for
2009, in a bid to boost domestic production.

**Doha and the WTO**

WTO members have failed to conclude the Doha round of negotiations on
trade liberalization at the end of 2008. EC and industry officials are
vowing to resort to using export subsidies again to tackle the economic
crisis in EU agricultural sectors, as they believe that the stalling of
the Doha negotiations is relieving them from their pledge to end the
practice of export refunds.

**Impact from the Health Check**

The approval of the Health Check in December of 2008 is expected to have
only a moderate impact on EU meat sectors. For beef, the expansion of
dairy quota is expected to slow down cow slaughter, while the decoupling
of slaughter premiums for male bovines may also decrease steer and bull
keeping in certain areas in the EU. A larger impact, especially for
pork, may occur if the abolition of mandatory set aside leads to
increased grain production and therefore lower feed prices, although the
new eligibility of potato and vegetable crops for the activation of
decoupled area premiums could result in a decrease in grain production.

**Dioxin in Ireland**

In December 2008, Irish swine and pork production was rocked by a dioxin
crisis which effectively closed the industry for over a week. As a
result in excess of 100,000 pigs were slaughtered and removed from the
food chain. On December 6, 2008, the Irish government announced a recall
of all pig meat slaughtered after September 1, 2008. The recall resulted
in EU markets sourcing pork products from suppliers other than Irish.
Later, it became clear that some cattle farms in Ireland, as well as
Northern Ireland, were contaminated, triggering further export bans and
recalls for beef. While the full extent of this Irish dioxin
contamination is still unclear, it would appear that Irish pig meat
product exports are slowly returning to normal.

**Disease situation**

In 2008, the EU has been spared from major animal disease outbreaks,
although the various Bluetongue disease (BT) virus types have continued
their geographical spread in Europe. BT-8 extended into the United
Kingdom, Sweden, Hungary and into the North of Spain. In The
Netherlands, a new virus type BT-6 was discovered, but its genetic
resemblance to a known laboratory strain, suggested that the accidental
contamination was provoked through vaccination with a vaccine against
BT-8.

The BSE situation in the EU further improved in 2008 to a level that the
EC agreed to lift the mandatory age for BSE testing at slaughter to 48
months in the old Member States of the EU-15.

Related reports from FAS Post in the European Union:

  ------------- -------------------------------------------- ---------- ----------
  **Country**   **Title**                                    **Date**   **Report
                                                                        Number**

  EU-27         EC Orientation Debate on Animal Cloning      02/06/09   E41010

  Spain         BSE Update for Spain and Portugal            02/05/09   SP9002

  EU-27         Animal Genetic Markets in EU Member States   12/17/08   E48143

  Germany       German Efforts to Open Pork Exports to China 12/15/08   GM8052
                Show Progress                                           

  Austria       First Case of Blue Tongue Disease in Austria 11/12/08   AU8011

  EU-27         EU-15 increases age for mandatory BSE        10/23/08   E48117
                testing                                                 

  EU-27         EC launches new proposal for Animal Welfare  10/13/08   E48113
                at slaughter or killing                                 

  Germany       Germany to take Advantage of Increasing      09/29/08   GM8042
                Demand for Pork in China                                

  EU-27         Update on the EU BSE situation in 2007       09/17/08   E48101

  Poland        Pork Industry Continues to Suffer            09/16/08   PL8028

  Sweden        First Case of Bluetongue Disease in Sweden   09/11/08   SW8008

  EU-27         Annual Livestock Report                      08/27/08   E48094

  EU-27         Review of the animal cloning situation in    07/30/08   E48084
                the EU                                                  

  Bulgaria      Removal of pork export ban                   07/18/08   BU8009

  EU-27         EU Council asked to consider vectors of      07/14/08   E48076
                Bluetongue disease transmission                         

  EU-27         European Council further relaxes BSE rules   07/14/08   E48074

  Poland        Biotechnology Feed Ban Consequences for Pork 06/19/08   PL8020
                and Poultry                                             

  Poland        Poland May Benefit from Pork Import Quota    04/24/08   PL8015
                offered by Ukraine                                      

  Slovakia      Classical Swine Fever Outbreak               04/23/08   LO8001

  EU-27         Semi-Annual Livestock Report                 02/29/08   E48025

  Germany       China about to lift import restrictions for  02/13/08   GM8010
                German pork                                             

  EU-27         EU suspends Brazil beef imports; at least    02/06/08   E48016
                temporary                                               

  Finland       First Case of PMWS in Finland                01/30/08   FI8001

  EU-27         EFSA releases Draft Opinion on Animal        01/18/08   E48006
                Cloning                                                 

  EU-27         Update on the European animal disease        01/16/08   E48004
                situation                                               

  EU-27         EC Standing Committee approves restrictions  12/25/07   E47112
                on beef imports from Brazil                             

  EU-27         European Commission approves €187 million to 12/24/07   E47110
                fight animal diseases in 2008                           

  Netherlands   Opportunities on the EU Meat Market          12/21/07   NL7032

  EU-27         Export subsidies for raw pork reinstituted   12/07/07   E47104

  EU-27         U.S. pork exports to the EU increasing       12/04/07   E47102
                despite EU oversupply situation                         

  Hungary       Soaring Feed Prices Cause Swine Farm Crisis  11/30/07   HU7011
  ------------- -------------------------------------------- ---------- ----------

The GAIN Reports can be downloaded from the following FAS website:

[USDA Foreign Agricultural Service (FAS) --- Attache
Reports](http://www.fas.usda.gov/scriptsw/attacherep/default.asp)

-For additional livestock market related information, please contact:

Bob Flach (FAS The Hague)

Phone: ++31 70 310 2303

E-mail: bob.flach@fas.usda.gov

-For additional livestock policy related information, please contact:

Yvan Polet (FAS Brussels U.S. Mission to the EU)

Phone: ++32 2 508 2440

E-mail: yvan.polet@fas.usda.gov