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Tougher Times Loom For EU Livestock Farmers

Cattle and pig farmers in the European Union, squeezed by rising feed costs and low prices, face real prospects of herd cuts and more restructuring.

Soaring grain prices, fuelled by a drought in Russia that has led to a grain export ban, have triggered hikes in animal-feed prices that mean many producers are operating at a loss, farm groups say.

“We’re going to have a terrible scissors effect,” said Paul Auffray, general secretary of French pork producers’ union FNP, who estimates producers are losing 10 cents on every kilo they produce.

French livestock farmers have been protesting in supermarkets and recently won a series of measures from the government, including some direct aid.

Pig farmers, for whom grain-based feed represents two-thirds of production costs, have seen feed prices rise by 50 euros (US$66) to 230 euros a tonne since July, the FNP says, while the price they receive for pork has declined by 5.2 per cent this year even though there has been a pickup in world meat prices.

FALLING PIG HERDS IN SPAIN

Pork producers in the U.K. and Spain cited a similar squeeze. “We’ve not only got feed costs going up but we’ve got the pig

price under pressure and coming down, probably because of imports,” said Stewart Houston, executive director of the National Pig Association in the U.K.

British farmers were currently losing nearly US$8 per pig, according to pig meat industry group BPEX.

In Spain, the EU’s second-biggest pork producer behind Germany, pig breeders said a decline in herd numbers this year could accelerate. Alberto Herranz, manager of producers’ association Ancoporc, estimates herd numbers have already fallen by about five per cent this year.

Cattle breeders in France and the U.K. also pointed to a pinch from weak prices and higher costs. In France, which leads cattle production in the EU, producers’ union the FNB has called for a 20 per cent rise in farmgate prices, which it says are now the same as in 1997. Retail beef prices rose by 40 per cent over the same period.

Like their counterparts in the pork sector, cattle producers say they are operating at a loss, estimated at about 60 cents a kilo.

While EU breeders partly blame imports from South America for pressuring beef prices, some see growing German output as reining in pork prices within the 27-member bloc.

Germany, the EU’s top pork producer and No. 2 in cattle, may also enjoy an edge in animal feed this season after a rain-plagued harvest produced a glut of feed-quality wheat.

Producers in France also continue to point at pricing by food manufacturers and retailers, and back a government push for supply contracts and more co-ordinated selling by producers.

A recent FrenchFarm Ministry study found vertically integrated poultry producers fared better than pig producers. It also found that while poultry producers passed on nearly all feed costs in 2006-08, pork producers saw their prices rise only one per cent in the face of a 39 per cent rise in feed costs.

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