European Union Beef Situation

The sudden drop in demand for beef stymies EU production and imports.

2020 EU beef production is now anticipated to decline more significantly than previously forecast in the Semi-Annual. As outlined in the Cattle section, production fell because of the COVID-19 outbreak, which affected both demand and slaughter. Considering the widespread closure of restaurants across the EU, as social distancing rules were imposed, it can safely be assumed that the consumption of veal3 and high-quality beef cuts took the biggest hit when compared to all meat products. Industry sources report that some of the EU’s high value beef supply was minced and sold at a lower value by retail (where demand was still strong).

The suppressed demand for high value beef is also reflected by lower import volumes, particularly under the High Quality Beef (HQB) quota and Hilton quotas. 76 percent of the second quarter Hilton quota (mainly supplied by Uruguay, Argentina, and the United States) was utilized, while 70 percent was used in the third quarter -- utilization is normally close to 100 percent. The new HQB quota for beef from non-hormone treated cattle from the United States was forecast to lift imports, albeit by a limited volume (see the Policy section for more information). However, due to the COVID-19 crisis, the second quarter of the quota was only filled by forty percent. Elevated sales are reported for minced beef, burgers, and sausages, as their demand was further supported by the good BBQ weather throughout the summer. On May 4, 2020, the European Commission (EC) opened a Private Storage Aid (PSA) program for beef.4 However, as the utilization was limited, the program was terminated on July 15. Looking at the total EU bee  balance, the abnormal trend of imports (declining) and exports (increasing) made the EU a net beef exporter for the first time since 2011 (see the EU beef balance graph further below).

In 2021, EU beef production and consumption are expected to continue to decline.

Based on reduced slaughter, beef production is forecast to further decline in 2021, reinforced by a lower carcass weight (as it is expected that animals will be kept for a shorter period on the farm next year, and relatively more calves and young cattle will be slaughtered). With production declining, given the closed nature of the EU beef market, total consumption will also inevitably fall in 2021. However, imports of high-quality beef are forecast to recover in 2021, assuming a gradual tamping out of COVID- 19 and the re-opening of the EU-wide food service sector. Despite a decline in production, EU beef exports to third countries are steadily increasing. During the first half of 2020, EU frozen boneless beef exports increased (mainly to China, the Philippines, Japan, Israel, and Ghana) and chilled bone-in beef exports increased to Northern Africa (Algeria and Morocco). Ireland and the United Kingdom are the leading suppliers to Asia, while Spain is the main supplier to Northern Africa. However, the Spanish sector is increasingly focusing on the Asian markets and Canada. With shrinking demand in the EU, the EU meat sector is looking for alternative markets, particularly since the closure of the Russian market in 2014.