EU milk supply is expected to remain stable in 2024, while beef production is set to drop, according to a new report.
The report warns that the evolution of “geopolitical crises”, particularly in the Middle East, could impact on trade, prices and the overall economy which would place even more pressure on farmers.
The expectation of real economic growth in 2024 has been revised downwards due to falling household purchasing power, lower external demand and a partial withdrawal of fiscal support in 2023.
On the other hand, the commission said that inflation is expected to decline faster than previously predicted.
In terms of inputs, the report notes that energy costs dropped by 6% in the first three months of 2024 (Q1) compared to the previous quarter.
The cost of feed is down 1.5% and fertiliser prices were down 1%.
However, overall input prices remain largely above pre-Covid levels (32%) and up to 65% in the case of fertiliser.
The affordability of fertilisers has been improving as EU fertiliser production continues to recover.
Imports of nitrogen (N) fertiliser remain at historically high levels, but imports of phosphorus (P) and potassium (K) decreased significantly, which could negatively impact overall soil fertility.
Dairy
The EU Commission is currently forecasting a slight increase (0.4%) in milk supply across the bloc, despite a continuing decline in the number of cows (-0.5% in 2024).
This assumption is based on “normal weather conditions”, raw milk prices remaining above historic levels (above 46 c/kg) and an increasing trend in EU milk yields.
The report noted that pasture conditions became “exceptionally difficult” in Ireland earlier this year.
The report states that EU cheese and whey production is likely to continue benefitting from higher milk solids availability and competitive prices, which could translate into a
further increase in exports.
A rise in milk powder exports is unlikely because of limited further growth potential in north Africa and the Middle East, while global competition may also increase.
Production of skim milk powder (SMP) is expected to remain stable, however domestic use could be impacted by the current surge in cocoa prices.
The report stated that butter exports could remain positive (+1.5%) based on competitive export prices.
The commission said that stabilising input and output prices could improve margins for dairy farmers in 2024, and EU dairy consumption could benefit from easing food inflation and remain stable overall.
Beef
EU beef production is expected to decrease by a further 2.3% in 2024, mainly due to “a continuing structural adjustment in the beef and dairy sector”.
EU beef production decreased in 2023 by 3.9%, which supported high prices. At the same time, the average carcass weight decreased by -0.6%.
Last year, beef production in Italy dropped by 17% (127,000t), while Ireland was back by 3.5%.
The December 2023 livestock survey, showed that the number of suckler cows in the EU declined for the fourth year in a row, by additional 160,000 head (-1.6%). Dairy cows recorded a decline of 344,000 head (-1.7%).
The number of male bovine cattle for slaughtering between 1 and 2 years, and above 2 years also decreased by -0.4% and -1.2% respectively.
However, the reported noted that “this lower beef supply could continue supporting EU beef producer prices”.
The expectation is that per capita beef consumption across the EU will drop by up to 3% this year.
Meanwhile, despite a slightly bigger sow herd, EU pigmeat production could go down slightly by -0.4% in 2024.
EU poultry production could benefit from a 1.7% growth this year, driven by positive market signals on both the supply and demand side.
The report said that the historically low EU sheep flock will reduce slaughterings by 4.9% in 2024.
Consumption is expected to suffer again this year (-3.5%) because of low availability and pressures from higher prices.
Crops
The report stated that 2024/25 EU cereal production could reach 278.5 million t (+3% year-on-year), which is 0.9% below the 5-year average.
This will be driven mainly by an expected increase in the area under maize, along with increasing yields of barley and durum wheat.
EU oilseed production in 2024/25 is expected to be at 33.2 million tonnes (+1.2% year-on-year), due to more cultivated area of soy beans, and an increase of rapeseed and sunflower yields.
The report noted that the the availability of protein crops in the EU could be historically high.
EU cereal prices continue to decline and are currently below the 5-year average, which will put additional strain on farmers’ margins.
2023/24 EU sugar production is estimated at 15.6 million tonnes, rebounding from the previous season and in line with the five-year average.
