Market context of the conventional feed market segment

The demand for PRPs in the conventional feed sector is driven by meat demand and the type of PRP needed is strongly related to the type of animals (cf. 4.1.2). As it is difficult to get consolidated data at EU level, the following graphs (figures 37, 38 and 39), based on EUROSTAT data, highlight the main trends for Member States studied for this report.

Figure 37: Past trends of meat and milk production indices, base 100 in 2003.

84 This is clearly less the case in Eastern Europe

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Figure 38: Meat production trends by case-study country, from 2003 to 2017.

Figure 39: Cow milk production trends by case-study country, from 2003 to 2017.

Between 2003 and 2017, total meat production increased by 12 % in these seven countries studied.

75% of this growth happened in the last five years. In the same period, poultry meat production expanded by 37% and pig meat by 12%, while bovine meat production decreased by 12%. Cow milk is more stable with a 3% increase.

If more recent trends are analysed (last five years), total meat production has decreased by 4 and 3%, respectively, in Italy and Austria, while it has grown by 33% in Poland and 21% in Romania and Spain.

Among the seven countries, 49% of this five-year growth happened in Poland (of which 56% is poultry meat and 25% pig meat). Regarding poultry meat, 67% of the production in the last five years took place in Poland, where poultry meat production has multiplied by 1.7 in five years.

For pig meat, growth was driven by Germany up to 2012 and is now driven by Spain and Poland (both countries account for 96% of the growth in the last five years).

Growth is more limited for milk production. Poland and Germany drive 37 and 39%, respectively, of the last five years’ growth while production is steady in other countries.

This quick analysis of Eurostat data shows that Poland is becoming a major player in meat and milk production. This MS absorbs most of the poultry meat growth and plays a big role in supplying additional demand for other meats and milk. According to experts met during case studies, this growth reflects a more competitive context and the absence of barriers to increasing farm size or to building new animal farm buildings compared to western EU, where civil society and neighbours are more reluctant to accept new livestock farms, especially large-scale units. As a result, part of the production to sustain additional market demand is transferred to Poland and other EU-N13. This growth mostly concerns standard meat, while poultry premium meat and eggs are expanding in EU-15.

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4 MAIN MARKET SEGMENTS, ECONOMIC DRIVERS AND OUTLOOK

This chapter analyses the sizes and the economic drivers of the main PRP market segments (see figure 40 below). A short outlook is also provided. Factors driving PRP crop producer levels are addressed at the end of the chapter as they are at the end of a demand-driven process. PRP producers also face specific risks that cannot be compared to other economic agents of the supply chains, thereby addressed in a specific sub-chapter.

Figure 40: Main market segments using PRPs treated in this study

The chapters below deal successively with:

‐ FEED markets, with an initial brief presentation of the global context, and then the three main categories of market segments studied, namely: commodity/conventional, organic and GM-Free markets.

‐ FOOD markets, with also a brief presentation of the global context, and then the three main market segments studied, namely: pulses, processed plant protein products and functional ingredients. For these products and contrary to what has been decided for the feed sector, organic products are not considered as a specific market segment, as markets are developed for each category of products.

‐ PRP PRODUCERS, for which main drivers are described, with an emphasis on PRP crop competitiveness vs competitive crops.

For all these markets (except for functional proteins), various premiums (designations of origin, private/retail/NGO branding, etc.) can exist. As there exists little or no quantitative data on these markets, we have studied the impact of these premiums on the base of examples coming from the case studies carried out during the present study. They are more often presented in boxes.

4.1 Main feed market segments for PRPs

The feed market is dedicated to animal feed, namely: the main ruminants (cattle, sheep, goats), the main granivorous animals (poultry, pigs, etc.). Other animals, which account for a smaller share of the market (e.g. aquaculture, horses, pets, etc.), are included in the analysis for this study. According to our estimates, it represents 97% of the market of PRPs in volume while food accounts for the remaining 3% (6% if bulky fodders dedicated to herbivore feeding are not counted). It is noteworthy that although it cannot be estimated, food markets probably generate much more value in relative terms.

In the chapters below, we analyse the main drivers of PRP uses for the feed sector and for three market segments (cf. diagram 41 below), starting from animal farmers (end users initiating the demand) to collectors.

Figure 41: The three feed market segments studied and their main economic agents.

Before coming to the description of the drivers of each of the three markets studied in this study, some general context needed to start the analysis of drivers is provided.

4.1.1 Context of the feed market segments for PRPs