EU agri-food: Dairy market and livestock market crushed
17 April 2020
The outbreak and spread of COVID-19 and the subsequent measures implemented by governments to contain it have resulted in the abrupt closure of the majority of the continent’s food services. This, in turn, is having a devastating impact on a multitude of sectors hit hard by the sudden and steep decline in demand. And now, Europe’s dairy and livestock sectors have spoken out about “deteriorating” market conditions. Producers and their cooperatives are demanding urgent action from the European Commission including calls for extraordinary measures to mitigate the crisis emerging within the agri-food industry.
Copa-Cogeca warns a negative sentiment on the dairy market is weighing prices down at a time of year that represents peak season. It also flags how the beef market is suffering and wants to see “storage aid” for prime cuts of meat that currently have no markets. On top of this, sheep and goat, which would usually be eaten during Easter festivities, is being hampered. Because of the seasonal nature of this, it cannot be pushed back to another time of the year.
“We have seen the deterioration of several sectors’ market situation across EU agriculture. We need more action from the EC, particularly on fruits, vegetables, dairy, beef, veal, sheep and goat meat – and most probably a number of other sectors soon The EU agri-food sector has been able to keep up the supply of goods to the consumer market, but changes in consumer behavior and shortages for instance in seasonal labor make it increasingly difficult to cope with. So far, no major EU market management measures have been activated during the crisis,” Pekka Pesonen, Secretary General of Copa-Cogeca, tells FoodIngredientsFirst.
During yesterday’s Special Committee on Agriculture (SCA) meeting, there was no decision to offer help to the EU agri-sector, a major blow for industry. “While we recognize the EC’s and Member States’ efforts to ensure that the internal market functions smoothly, we reiterate the need for additional targeted market measures for the livestock sector, including exceptional measures, financed outside of the CAP budget,” urges Pesonen.
Copa Cogeca has gathered data from their members showing the impact that the pandemic has on the dairy, beef, sheep and goat sector. Based on this information, several letters have been sent to the European Commission (EC) urging that specific measures to be put in place and to be financed outside the Common Agricultural Policy (CAP) budget.
Dairy prices sharply fall
At present, Copa-Cogeca flags a negative sentiment on the dairy market, which is weighing prices down at a time of year that represents peak season. The prices of several dairy products have dramatically decreased, with Skim Milk Powder (SMP) prices sharply falling to the intervention level. This is already creating a huge amount of pressure on farm prices.
Europe’s dairy producers have been going through another kind of crisis recently and coronavirus exacerbates what has already been a very tough time for the sector. As previously covered on FoodIngredientsFirst, the sector has been faced with a pull back of demand as a result of recession headwinds and the rise of plant-based alternatives.
“We cannot allow the EU dairy market to deteriorate any further. Dairy farmers and their cooperatives cannot bear the consequences of another crisis so soon after the previous crisis and they cannot be left alone. The EC and the Member States have the responsibility to act now,” stresses Thierry Roquefeuil, Chair of the Copa-Cogeca Working Party on Milk and Dairy Products.
“Ensuring private storage for SMP, all types of cheeses, butter, including for frozen storage of buffalo milk and/or buffalo curd would have a beneficial impact on ensuring year-round food security. It is also important to assess the impact that the closure of schools has had on the delivery of milk and dairy products to children in schools and to avoid unnecessary restrictions stemming from competition law in this force majeure situation,” he urges.
Beef market hit hard
The European beef and veal sector has also been severely hit by the COVID-19 crisis. With the loss of the food service and catering channels, the EU high-value cuts, including veal, have lost their market outlets and have experienced serious drops in demand. This has led to increases in costs and inevitable detrimental consequences for prices, Copa-Cogeca emphasizes.
“The beef and veal sector is currently facing exceptional circumstances as a result of the outbreak of COVID-19. The high-value cuts represent 30 percent of the total carcass value, particularly those carcasses coming from EU specialized herds. Despite these extreme difficulties, cheap cuts are still imported from Mercosur countries. Copa and Cogeca believe that exceptional circumstances require exceptional measures,” says Jean-Pierre Fleury, Chair of the Copa-Cogeca Working Party on Beef and Veal.
“We are therefore calling upon the EC to immediately decide on a more targeted tariff-rate quota (TRQ) management. EU imports of high-value cuts need to be reviewed, without any penalties. Moreover, the activation of market measures needs to be examined, including private storage aid for specific high-value cuts and veal, as well as exceptional measures permitted under the CMO regulation. The next Agricultural Council of Ministers needs to be decisive. This is urgent,” he underscores.
Sheep and goat consumption drops
Traditionally, sheep and goat meat have been consumed seasonally during festivities in Europe, such as Easter. Unfortunately, due to the outbreak, consumption has already been severely hampered. A downward trend for prices has been noticed at a time when there would usually be an upward trend. There are also major difficulties in the sheep and goat milk sector at a time of year when sheep and goat milk production traditionally increases, notes Copa-Cogeca.
Michèle Boudoin, Chair of the Copa-Cogeca Working Party on Sheep, outlines the difficult situation, explaining, “The Easter period is approaching and we are seeing a severe impact on the consumption of sheep, goat meat and milk following the closure of the hotel and catering sector because of COVID-19. The seasonal nature of this production means that this cannot be pushed back to another time of the year.”
“At the same time, imported products are coming onto the EU market at the only time of the year when the market can generate a revenue for sheep and goat producers. The EU retail sector should be encouraged to promote EU lamb and goat meat to support the EU sheep and goat sector in these difficult times,” she concludes.
In relevant developments from last week, potato growers across Europe are currently facing huge losses and a dire forecast of a one million metric ton surplus of French fries. For more of these coronavirus-related updates, readers may visit our new daily news feed entitled “COVID-19 updates,” for relevant insights needed to guide your business through this challenging period.
Published by foodingredientsfirst.com on April 8, 2020
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