Solid feed ratio, antibiotic reduction and export push: the veal market is undergoing change
“There is potential for growth in US veal consumption, with stepwise re-opening of that country to EU beef, and there is also optimism about the Asian markets, particularly China, with their growing middle classes, in terms of widening the reach for veal exports,” said chairman of FEFAC’s milk replacers committee, Geert Kleinhout.
He is also director general of the French division of Dutch owned feed producer and veal integrator, Denkavit Group.
The FEFAC committee that Kleinhout chairs looks to foster coordination and information sharing among national veal calves associations.
He said any push into new markets will require investment in marketing by the EU veal sector.
The industry, which is highly integrated, is an important outlet for EU milk replacer producers and provides a market for their industrial dairy products and young calves.
But, in the context of the severe crisis faced by the dairy sector, the Committee is concerned about the resilience of EU dairy farming. “So marketing action to also stimulate greater interest in veal meat in countries like France and Italy and other markets could bolster the EU dairy sector,” said Kleinhout.
Solid feed in formulations
Consumers in certain EU countries have shown resistance to veal on welfare grounds, but he noted huge changes in veal production since 2000 that have addressed such concerns.
From both a welfare and economic perspective, there has been a strong incentive to replace a considerable portion of the milk replacer by solid feeds, comprising roughages and concentrates, as sources of nutrients in veal rations, particularly in the past six to seven years, he said.
Veal calf milk replacer formulations in the EU now incorporate much less feed materials of dairy origin, such as skimmed milk powder, than 10 years ago.
“And that trend will continue, investments based on lower use of milk replacers have been made by veal producers over the past few years so they will not now scale back on the solid feed ratio despite recent low prices for skimmed milk powder,” said Kleinhout.
Along with welfare of dairy calves, the FEFAC committee monitors impact of disease outbreaks on markets and biosecurity measures.
Kleinhout said investment in production facilities has to be a priority to ensure the stables meet both welfare and sanitary requirements to further reduce reliance on antibiotics.
Antibiotic use in EU veal production has reduced considerably in the past few years, he said.
With growing anxiety about antimicrobial resistance, there is increasingly prudent use of veterinary medicine: “If you look back 10 to 15 years ago, veal producers would have typically engaged in preventative collective antibiotic treatment. Now there is a much more holistic approach.”
But such migration away from antibiotics is “challenging the professional skills of producers”, and there is a need, he said, for an education drive on the topic within the sector.
“Veal production can’t rely on the same genetic homogeneity you get with EU poultry and pig production. Producers take in young calves from multiple sources on a weekly basis. The calves all have diverse histories in terms of the quantity of colostrum they have consumed prior to entering the fattening stables, so their health status varies. One solution, then, is the whole veal value chain works together in a transparent manner to prevent disease problems, improve biosecurity and, thus, limit the need for antibiotics,” said Kleinhout.
The age profile of veal producers, though, is, currently, another hurdle for the sector: “We have to reform the sector in terms of working hours, modernize infrastructure, and adapt installations to allow for greater use of information technology in order to attract a younger farmer base to the industry and secure its future.”
Concentration of EU veal production
The veal market is a segment of the bovine meat market accounting for around 8% of the total beef demand in the EU, according to a report, released late 2014, from DG Agri.
It noted the veal market in the EU is estimated at over 600,000 tons carcass weight equivalent (cwe) per year and concentrated in a few countries. France, Italy and Germany account for over 80% of the volume consumed. On the other hand, France, the Netherlands and Italy account for 80% of production and slaughter. Thus, the Netherlands is exporting massively to Italy, France and Germany.
The French veal market is among the largest in the EU, with over 80% of it comprising white veal, from animals bred through the integration system: calves belong to a company and are given to farmers to be raised with industrial food made from milk powder, whey and cereals.
The consolidation trend has been evident: The top four integrators in France account for nearly 55% of national veal production, with, in fact, Dutch owned companies like Sobeval, Denkavit, and Tendriade, dominating.
Veal consumption in France has been steadily decreasing in the last few years, according to the DG Agri publication.
In 2012, average consumption was 3.8 kg (carcass weight) per capita, 27% less than in 2000.
The decline, noted the authors, is due to a decrease in purchasing power and changing purchasing habits as new generations of consumers did not grow up eating veal. Veal is one of the most expensive meats in France, alongside with lamb meat. In retail stores, prices have increased by 51% in 22 years, and by 7% between 2008 and 2013.
EU price and trend tracking initiative
Last month saw EU Agriculture Commissioner Phil Hogan launch a new Meat Market Observatory aimed at improving market transparency for the beef, veal and pig meat sectors.
He said the initiative would help operators to read market signals and to cope better with market volatility.
Hogan explained that the Observatory is an online portal and is set to provide regular and timely reporting of prices, production and trade, with some short-term analysis, complemented by an Economic Board comprising representatives from different parts of the chain that will meet a few times a year.