View From Europe


By Colin Ley


European Protein Plan - taking shape despite the global background The development this year of a European protein plan is an important and valuable advance for the feed compound industry, especially as it’s a plan which we’re promised will be based on solid input from sector stakeholders. Coming up with a strategy that means something and committing to


it long term is going to be a challenge, however, given the current global background of trade tariff wars, Brexit adjustments, free trade ambitions and proposals, which seem to come and go with increasing regularity, and a demand base which keeps changing. It doesn’t mean we should stop trying, of course, just that maybe


treating the creation of such a plan as an evolving process may be preferable to expecting it to be the perfect once and for all solution. Maybe, for example, we should call it PP1 when it emerges at the end 2018, an approach which means we can happily look forward to starting work on PP2 from mid-2019 onwards. There’s a certain freedom attached to developing policies which


have a number in their title. You can be a bit more relaxed about agreeing plan 1 if you know plan 2 will soon be along to take its place, accommodating all necessary corrections and adjustments in the process. It’s the way Brexit appears to be working, after all, with the UK’s 21 months of transition already being seen by many as the time when the real ‘nuts & bolts’ of Britain’s separation from the EU will actually get sorted. In similar vein, viewing the EU’s protein plan as a first step towards


managing future feed sector needs and opportunities, avoids the pressure of waiting for a more settled period of global trade in order to finalise European protein policy. Currently, for instance, we have free trade deals being written


or re-written in response to Brexit, a trade war between the US and China, shifting consumer demand and spending power across Asia and continued uncertainties over how Russia will react commercially to what is being said about it by governments around the world.


China and US Starting with the US/China trade dispute, Scottish agricultural economist, Iain Macdonald, warned recently that farm products are most definitely not immune to spill-overs from the conflict. “It all began in February with President Trump imposing tariffs on


imports of steel and aluminium into the US,” he said. “In retaliation, Chinese authorities announced increased tariffs on a list of 128 US products with an annual import value similar to the value of US steel and aluminium imports from China. “Since then, 120 of these products have faced an additional 15% tariff on top of the current tariff, while 8 products are now subject to an additional 25% tariff.


PAGE 10 MAY/JUNE 2018 FEED COMPOUNDER


China and pork “US pork falls under the latter category, meaning that Chinese importers now have to pay a 37% or 45% tariff on top of the price charged by the US exporter, compared to 12% or 20% previously. It should be noted that the 12% and 20% tariff rates apply to pork from all countries without a preferential access trade deal with China, including the UK.” There are ups and downs for UK & EU producers in all this, especially


as whenever a trade door closes in one part of the world, it tends to open somewhere else, usually to the benefit of other producers. Selling compound feed into this environment of opening and closing


doors is probably not that different to normal, but it’s always a challenge to keep pace, ensuring you have the right raw materials in the right place and at the right time. In addition, the level of challenge this year is almost certainly above


average for feed suppliers who now find themselves looking at different EU producer fortunes than seemed likely just a few months ago. “If the US finds it harder to sell pork into China as a result of the


additional tariff, EU exporters will be well-placed to compete,” said McDonald, adding that if EU exporters can regain market share in China from the US, this would be likely to place some upwards pressure on farmgate pig prices across the EU. “Given that the European Commission has forecast EU pigmeat


production will be 0.8% above 2017 levels and 2.6% ahead of its 2013-17 average, this trade dispute could come at a good time for EU pig producers.”


China and aquaculture Staying with China and its impact on global food, farming and feed markets, a recent report from Rabobank makes interesting reading. Released under the title ‘Riding New Waves of Change in Aquaculture’ and written by the bank’s senior analyst for seafood, Gorjan Nikolik, the report has a compelling section on the possibility of China moving from being the world’s largest exporter of seafood to becoming one of the leading importers. This would have major feed business impact, given that aquaculture is the joint fastest growing animal production sector at a global level, alongside poultry. “Accounting for 62% of global aquaculture production, China has


become the undisputed global leader in this industry,” he wrote, “not only (until now) being able to feed its own population with a per-capita supply of seafood similar to that of the EU or the US but also becoming the world’s leading exporter of seafood, exporting over USD 20 billion of marine products per year.” That could all be about to change, however, with Nikolik expressing


the view that China’s strong growth of seafood production over the past two decades is unlikely to continue. This is due largely to surface areas of clean fresh water and coastal marine water becoming increasingly difficult to find in China, alongside labour becoming scarce and expensive. Although further modernisation of China’s aquaculture production


systems will help, the Rabobank view is that the country will find it very difficult to repeat the output growth of recent decades. “With the Chinese government embarking on a decommissioning


scheme to reduce its large coastal and domestic fleet,” added Nikolik, “it’s highly possible that China’s domestic seafood production will start to decline, or at least stabilise, after years of growth.”


Comment section is sponsored by Compound Feed Engineering Ltd www.cfegroup.com


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