COVID-19: EU dairy and beef sectors suffering under food service sector closure

By Jane Byrne contact

- Last updated on GMT

© GettyImages/z_wei
© GettyImages/z_wei

Related tags: Dairy, covid-19, food service

The outbreak of COVID-19 and the subsequent measures implemented by EU governments to contain it have resulted in an abrupt closure of most of the continent’s food services, negatively impacting suppliers to these services from across the agricultural sector, says the EU farm lobby.

Copa and Cogeca said it has gathered data from its members showing the impact that the COVID-19 crisis has on the dairy, beef, sheep and goat sectors.

In that context, it is calling on the EU Commission for specific measures to be put in place for producers in those sectors:

“While we recognise the European Commission's and member states’ efforts to ensure that the internal market functions smoothly, we reiterate the need for additional targeted market measures for the livestock sector, including exceptional measures, financed outside of the CAP budget​,” said Pekka Pesonen, secretary general, Copa and Cogeca.

He expressed disappointment that no decision in support of the agricultural sector was taken at the EU’s Special Committee on Agriculture (SCA) meeting yesterday [April 7].

“In these times that are trying for all of us, the agricultural sector is ensuring food security for every EU citizen,” ​he added.

The farming organization is calling for public financing for private storage to deal with supply gluts of dairy and beef products, among other measures.

Ensuring that private storage is activated for all dairy products - SMP, all types of cheeses, butter, including for frozen storage of buffalo milk and/or buffalo curd would have a beneficial impact on ensuring year-round food security, said Copa and Cogeca. It is also important, it continued, to assess the impact that the closure of schools has had on the delivery of milk and dairy products and to avoid unnecessary restrictions stemming from competition law in such a force majeure situation.

Rabobank in its latest industry note assessing coronavirus impact on the dairy sector said, in relation to lower food service demand, that certain EU countries and products such as cheese, and especially processed cheeses and Mozzarella, are more exposed than others. 

“Some large dairy companies can reallocate milk to products in retail channels and products with a longer shelf life.

"A number of smaller dairy companies with limited product portfolios, as well as distributors and wholesalers who specialize in the foodservice segment will be under more pressure.”

Jean-Pierre Fleury, chair of the Copa and Cogeca working party on beef and veal said those two segments have also been severely hit by the COVID-19 crisis. With the loss of the food service and catering channels, the EU high-value cuts, including veal, have lost their market outlets and have experienced serious drops in demand. This has led to increases in costs and inevitable detrimental consequences for prices, he said.  

"The activation of market measures needs to be examined, including private storage aid for specific high-value cuts and veal, as well as exceptional measures permitted under the CMO regulation. The next Agricultural Council of Ministers needs to be decisive. This is urgent," ​stressed Fleury.

EU agriculture - a sector under pressure

The near complete shuttering of fast food chains has left French and Irish beef farmers with far fewer buyers, noted the USDA in its review​ of current EU market challenges.  Spain, the top pork producing country in the EU, has also reported demand for young pigs has fallen due to decreased intra-EU trade.

Despite an increase in appreciation for the contributions of food and agricultural workers during the COVID-19 crisis, the EU agricultural sector was, and remains, under pressure to do more with less government support, said the US agency.

The EU’s Multiannual Financial Framework for the 2021-2027 budget cycle remains under negotiation, with the funding of agricultural likely to face cuts, said the USDA. The Common Agricultural Policy (CAP), which includes cash transfer payments to farmers and rural development initiatives, currently represents about 40% of the total budget.

“In addition to shrinking budgets, many expected that the future CAP and the Commission’s forthcoming agricultural policies embedded in the new Green Deal would require farmers to ramp up their investments to improve environmental performance.

“In response to the pandemic, the Commission announced a one-month delay for the release of the Green Deal’s Farm to Fork and Biodiversity Strategies from March 25 to April 29. Since the crisis began, factions within the European Parliament continue to pen letters calling on the Commission to further delay and/or scale back these Green Deal strategies, yet others have urged the Commission stay the course. “

On April 3, Copa and Cogeca called for EU policy makers to reassess agri-food strategies of the Green Deal, but the USDA noted that some commentators called that request COVID-19 opportunism.

The COVID-19 pandemic has reminded policy makers and the public of the primacy and vitalness of EU farmers, truckers, and food workers. This appreciation may re-shape the terms of the debate for both the ongoing EU budget negotiations and the Commission’s COVID-19 responses, as well as the timing of and new requirements for farmers in the Commission’s forthcoming Farm to Fork Strategy. With the possibility of some produce disruptions, we expect agri-food supply chains to continue to perform well in the coming weeks,”​ concluded the USDA report.

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