While much of the speculation surrounding April’s abolishment of European Union (EU) milk quotas has focused on dairy production, liberalization of the dairy sector is also impacting EU beef production, according to a semi-annual report from USDA’s Foreign Agricultural Service (FAS). The report, “EU Meat Sector Withstands Russian Ban,” was released through the Global Agricultural Information Network (GAIN).

Based on the expansion of the EU dairy herd, the calf crop, slaughter and beef production are forecast to increase through 2015, although at a slower pace than previously anticipated. And, with the upcoming abolishment of milk quotas, dairy farmers are turning over their herds, keeping younger heifers while sending older cows to slaughter. Cow slaughter is expected to fall after April, but could be sustained at a higher level if milk prices drop further.

Regional increases in dairy calf numbers to fuel dairy herd expansion are expected mainly in Northern Europe: the United Kingdom, Ireland, Germany, the Benelux, the Nordic Countries, Poland and France. In most other EU Member States, the dairy herd is shrinking, mainly due to the phasing out of government support programs and increased competition on the EU domestic market.

Based on this increased availability of animals, EU slaughter is estimated to increase during 2015. December census statistics from 24 EU Member States (representing 85% of the total beef herd) indicated the EU beef cow herd increased during 2014. The main expansion is reported in Spain and France.

During the first 11 months of 2014, beef production in official slaughterhouses rose by 0.23%, while “backyard” production of beef also increased. Elevated beef production was also reported in Poland, Ireland, the United Kingdom and Germany. Beef production was supported by higher slaughter weights, due to the good availability of fodders and low prices of compound feed.

The tight global beef supply has allowed EU beef exporters to find alternative markets following Russia's import ban last August, and exports are forecast to increase further in 2015, with a boost from favorable currency exchange rates.

On Aug. 7, 2014, Russia banned EU fresh and frozen beef as part of sanctions on a wide range of agricultural and food products. However, according to the report, the EU easily found alternatives for the Russian market. Beef exports to Russia were mainly redirected to the Balkan. Hong Kong increased its beef imports from the EU, mainly from the United Kingdom and Ireland.

The outlook for EU beef exports looks promising. On Dec. 30, 2014, Ireland became the first EU Member State to achieve USDA approved equivalence status for their beef inspection system. This opens the way for beef exports to the United States for the first time in nearly 20 years. The United States will likely be a high-value, low-volume, niche market for Irish beef. However, access to the U.S. beef market could improve the reputation of Ireland’s beef, and could lead to increased market access in other markets.

Live cattle exports are projected to recover in 2015, with increased breeding cattle exports to Russia, and exports of both breeding cattle and animals for halal slaughter to Turkey.

Meanwhile, the tight global supplies are restricting EU beef imports, especially from the main suppliers, Brazil, Uruguay and Argentina. However, imports through the High Quality Beef (HQB) quota from Australia are gearing up.

Limited availability of non-dairy beef has suppressed domestic consumption. Despite the increased availability, EU beef consumption is forecast to stagnate. Current domestic beef consumption in the highest quality segment is constrained by limited availability, while the use of the lower qualities is also stagnating due to the dwindling consumption of processed beef and snacks.

Veal calf slaughter continues to decline due to the suppressed demand in the main markets, France and Italy.

Read: EU-28: Livestock and Products Semi-Annual