The increasing need for animal proteins increases the need for compound feed. This need is also an important factor affecting the growth of the market in Europe. However, animal diseases, the Russia-Ukraine war and the raw material and energy crises experienced as a part of the war significantly disrupted the compound feed production in Europe. According to reports, this decrease is around 5%.
By Derya Yildiz
Europe is the second largest compound feed producer in the world after the Asia-Pacific region. According to the Agri-Food Outlook 2023 report by Alltech, 263 million tons (20.7%) of world compound feed production, which was 1.266 billion tons in 2022, was realized by European countries. In fact, this is a much lower figure than the previous year.
There are several key factors affecting compound feed production in Europe in 2022. One of them, of course, is Ukraine-Russia war. According to Alltech’s report, the direct impact of the war was reported in Moldova and in Ukraine, where feed production fell by over 35%. The invasion of Ukraine also indirectly affected feed production throughout the rest of the world.
Another factor is animal diseases. According to Alltech’s report, animal diseases have disrupted feed production in more than 80% of countries. Avian influenza affected all regions’ feed production in 2022. In Europe, this disease manifested most significantly in Belgium, Bosnia and Herzegovina, Bulgaria, France, Ireland, Moldova, the Netherlands, Poland, Russia, Serbia, Turkey, the U.K. and Ukraine. In Europe, African swine fever (ASF) has most significantly affected Ireland and countries in the East. Also, swine flu was an issue in Belgium.
Similarly, the data announced by The European Feed Manufacturers’ Federation (FEFAC) for 2022 draws attention to the decrease in European compound feed production. According to the EU Compound Feed Production Forecast 2022 announced by FEFAC, compound feed production (EU27) for farmed animals in 2022 is estimated to decrease by 5 million tonnes to a level of 145 million tonnes compare to the 2021 level of 150 million tonnes (decrease of 3.5% y/y). Large producer countries are forecasting a production decrease ranging between -8.8 to -1.5 % y/y reflecting supply chain disruptions and the spread of animal diseases in 2022. Only feed manufacturers in the Baltics, Ireland, Poland, Bulgaria and Slovenia are expected to keep feed production at a similar level to the last year. At the EU level, all of the major feed sectors will face a reduction.
FEED PRODUCTION BY COUNTRY
On a national basis, Spain and Germany are the two largest compound feed producers in Europe. According to the Alltech report, Spain, which produced 35.8 million tons of compound feed in 2021, experienced a decrease of 12.8% in 2022 and produced 31.2 million tons. Despite the decline, the country managed to rank 7th in the world compound feed production in 2022. Germany, the other major producer of the region, ranked 10th in the world with a production of 24 million metric tons in 2021 and 2022.
These countries are followed by France with approximately 17 million tons, Poland with approximately 15 million tons, Italy with approximately 14 million tons and the Netherlands with approximately 12 million tons.
FEED PRODUCTION BASED ON TYPE
Pig feeds are in the first place in feed production in Europe on a species basis. According to the Alltech report, Europe’s pig feed production, which was 81.9 million tons in 2021, decreased by 8.25% to 75.1 million tons in 2022. It is stated that the biggest factor in this decline is African swine fever (ASF). According to the Alltech report, ASF affected the Eastern European countries and Ireland, where feed tonnage was down 2.16%. Germany reported an 8% reduction in feed tonnage due to a ban on exports to Asia. High production costs and low pork prices affected pig producers, but prices are showing signs of recovery.
Broiler feeds rank second in Europe’s feed production. The broiler feed production of Europe, which was 54.9 million tons in 2021, decreased by 1.4% in 2022 to 54.2 million tons. Europe’s broiler feed production was hit hardest by Avian influenza and high raw material and energy prices in 2022.
Dairy feeds rank third in feed production in Europe. According to the Alltech report, Europe’s dairy feed production, which was 43.4 million tons in 2021, decreased by 2.8 percent in 2022 to 42.2 million tons.
In most countries, there was a decline in commercial feed production for dairy, mainly due to the high cost of feed combined with low milk prices, which caused farmers to reduce their numbers of cows and/or rely more on non-commercial feed sources.
In Europe, many countries saw reductions in dairy feed tonnage, including the Netherlands, Turkey, Spain, Poland, Sweden, Belgium, Ukraine and Bulgaria, among others. There were some exceptions, such as Ireland, where drought caused farmers to rely more on commercial feeds. There was a 6% increase in feed production in Ireland, where summer droughts necessitated the need for supplementary feed. Increases also were reported in Portugal, the Czech Republic, Austria, Lithuania, Hungary and others.
Another important item on the basis of species is layer feeds. According to the Alltech report, European layer feed production, which was 30.9 million tons in 2021, decreased by 1% in 2022 to 30.6 million tons. In 2022, Avian influenza, other diseases and the high costs of raw materials affected the layer sector in many markets in Europe. The region witnessed a tight poultry market with a strong price. Poultry production is expected to drop, keeping prices high, because of ongoing avian influenza pressure and high input cost. For UK poultry, declining self-sufficiency is expected to continue in 2023, with a slight increase in imports from the Netherlands, Poland and Thailand.
In 2022 compared to the previous year, Europe, which reported a decrease in almost all of the feed types that ranked first on the basis of quantity, experienced the biggest decline in beef feed. According to the Alltech report, beef feed production in Europe, which was 17.5 million tons in 2021, decreased in 2022 to 15.7 million tons. According to the report, in the region, though several countries reported significant increases, overall feed production was down over 10%. Bulgaria reported a small shift from dairy to beef production because of low milk prices. In many cases, drought and higher beef prices incentivized feed supplementation.
The only feed types reported to increase in Europe in 2022 were pet, aquaculture and equine feeds.
COMMERCIAL VALUE OF THE MARKET AND EXPECTATIONS
According to the European Feed Manufacturers’ Federation (FEFAC), turnover of the EU27 compound feed industry in 2020 is estimated at €50 billion (USD 54 billion).
Research companies, on the other hand, estimate this value between US$80 and 100 billion. For example; according to the report of Market Data Forecast, Europe compound feed market was worth US$98.9 billion in 2021 and estimated to be growing at a CAGR of 1.40%, to reach US$106.02 billion by 2026.
The most important factors affecting the market in the region are consumer trends and legal regulations. According to some research, the consumption of meat has been rising steadily across the region. The increasing population, urbanization, demographics, incomes, prices, and environmental and health concerns are key factors that influence the level and type of meat consumption. This is increasing the market’s need for compound feed in Europe.
According to the report of Market Data Forecast, complex regulatory bodies in the European Union and increasing cost of operations are the main factors hindering the growth of this regional market. The European governments have imposed a ban on the use of antibiotics as a growth promoter. The ban has led livestock producers in these regions to identify new ways to stimulate production and deliver the same benefits provided by antibiotic growth promoters at an affordable price.
Some of the major players:
AB Agri
Adisseo
Agribusiness Holding Miratorg
Alltech
Archer Daniels Midland
Avril SCA
Ballance Agri-Nutrients
Cargill
Charoen Pokphand Foods
De Heus
DeKalb Feeds
Deutsche Tiernahrung Cremer
Ewos Group
Feed One
ForFarmers
Guangdong Haid Group
J.D. Heiskell
Kent Nutrition Group
Kester, Evonik Industries
Kyodo Shiryo
Land o’ Lakes
New Hope Group
Nutreco N.V
Perdue Farms
Royal Agrifirm Group
Sodrugestvo Group
Solvay Feeds
Wen’s Group
Weston Milling Animal Nutrition
The ‘European Animal Feed Market Outlook, 2027’ research report prepared by Research and Markets draws attention to similar factors. According to the report, the animal feed market in Europe is expected to grow with the CAGR of more than 3.1% during the forecasted period of 2027. The highest growth for meat consumption is expected from major countries of Europe such as Germany, France, Spain and United Kingdom. More consumption gives rise to more production because of changing diet patterns and lifestyles. The growth in Europe animal feed market is mainly due to growth in meat consumption and even increasing urbanization. Also, increase in consumer awareness regarding benefits of protein rich foods which led to increase the consumption of meat and increase in population. Since, the European government has imposed ban on use of anti-biotic as a growth promoter. This ban is letting livestock producers in those regions to identify new ways by which they can stimulate production and deliver the same benefits provided by antibiotic growth promoters at a completely affordable price.
EUROPEAN FEED INDUSTRY
In terms of the presence of feed mills, Europe has an important place in the world. According to the Alltech report, 6,553 of the 28,156 feed mills worldwide are located in Europe in 2022. However, the consolidation process in Europe is progressing very quickly.
As consolidation continues, the number of feed mills continues to decrease and output by large feed mills continues to rise. The number of world total feed mills in 2022 was down slightly, about one half of one percent, from 2021. The biggest reductions in feed mill numbers were seen in Europe, specifically in Spain, Poland, Ukraine, Russia and Hungary.
COMPETITOR ANALYSIS
The European compound feed market is concentrated, with a few large players capturing a major market share. Leading companies have been focusing on acquiring feed mills and small manufacturing to expand their business in local and foreign markets. Some players have expanded their European presence by acquiring or merging with manufacturers in foreign markets.
References:
1. Market Data Forecast, Europe Compound Feed Market Research Report – 2022 to 2027, January 2022, https://www.marketdataforecast.com/market-reports/europe-compound-feed-market
2. Research and Markets, Europe Animal Feed Market Outlook 2027, February 2022, https://www.researchandmarkets.com/reports/5544230/europe-animal-feed-market-outlook-2027
3. Mordor Intelligence, The European Compound Feed Market (2023 – 2028), https://www.mordorintelligence.com/industry-reports/european-compound-feed-market-industry
4. The European Feed Manufacturers’ Federation (FEFAC), https://fefac.eu/statistics/
5. 2022 Alltech Agri-Food Outlook, https://www.alltech.com/agri-food-outlook
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