The German Farmers’ Association (DBV) and other German agricultural industry bodies are very concerned about the expected economic as well as political insecurities caused by Brexit negotiations (or lack of) and Britain’s decision to leave the EU.

The funding gap that Britain’s departure will leave in the Common Agricultural Policy (CAP) budget is also cause for concern and DBV is now calling for remaining member states to find a solution sooner rather than later.

Bernhard Krüsken, Secretary General of DBV said: “The negotiations about the future relationship of the UK with the EU are of highest priority to DBV and should begin as soon as possible. Certainty about the future relationship with the UK is so important that negotiations about it cannot be delayed.”

The UK’s Importance for the EU Agriculture Sector

The UK constitutes one of the most important export markets for European as well as German foodstuffs. In 2016, exports of the EU agri-food sector to the UK amounted to EUR36.4 billion with a share of EUR4.78 billion from Germany (6% of total German exports).

At the same time, the UK exported approximately EUR15.0 billion worth of agricultural products to the EU, including EUR1.54 billion to Germany (Source: UK Parliamentary Library).

Thus, the UK is one of the countries with the highest negative agri-food trade balances in the EU. Net-imports from the EU amount to EUR21.4 billion and from Germany to EUR3.2 billion.

Not surprisingly, German farmers are concerned and want to make sure their markets are open for future trade.

Krüsken from DBV added: “Brexit negotiations should not be concluded without providing customs freedom between the EU and the UK. Negotiating customs freedom is crucial to avoiding an application of restrictive WTO-customs duties to EU/UK trade”.

WTO Rules

According to a briefing paper by the UK Parliamentary Commons Library, while on average EU tariffs are low, they are high for some produce, especially agricultural products. The EU’s average tariff for animal and dairy products is 15% and 33.5%, respectively, to protect the group’s agriculture sector.

As long as the UK is a member of the EU, there are no tariffs on trade with other member states. The WTO tariffs will kick in if the UK and EU divorce without a settlement. The table titled “Average EU tariff by product type” at the end of this article gives a breakdown of the potential tariffs.

Already, even though the UK is technically still a member of the EU, the German Chamber of Commerce and Industry (DIHK) reports that trade between the two countries has dropped.

“Brexit will seriously harm the business of German companies with the UK. Remarkably, four out of 10 German companies expect poorer business,” DIHK President Eric Schweitzer told the Frankfurter Allgemeine Zeitung.

Germany’s Livestock Population

How this will directly impact the German feed industry remains to be seen but some animal numbers are already declining even without Brexit and if there are trade barriers with the UK it might further reduce animal numbers.

Swine figures have declined by one million since 2013, although they still maintain Germany’s top position as the largest pork meat producer in the EU.

Germany is the UK’s second largest pork meat supplier. According to the UK’s Agricultural and Horticultural Board, Germany supplied a sixth of the UK’s 439,000 tonne pork meat imports in 2016. The UK’s largest pork meat supplier is currently Denmark at 170,000 tonnes, three times the volume Germany supplied in 2016.

Peter Radewahn, Managing Director of the German Association for Animal Nutrition (DVT) said that one reason for the lower swine population is the lower price of pork meat.

Radewahn said: “since 2014 the price of pork collapsed but now it seems we have left the bottom of the latest “pig cycle” because prices are slowly increasing again. The “pig cycle” has been very intensive lately and this has hit the farmers hard – hopefully we are now recovering”.

The DVT represents the interests of the companies which produce, store and trade feedstuffs, such as compound feed, mineral feed, single feed and premixes as well as additives for livestock and pets.

Cattle Population

German cattle numbers have also reduced, although not as sharply as swine. The country’s cattle population declined by 300,000 heads to reach 12.4 million in May 2017.

Radewahn said that the cattle population has dropped because of unfavourable global market prices.

On the contrary, poultry slaughter figures have increased from 1.38 million tonnes in 2010 to 1.53 million tonnes in 2016.

Feed Mills

According to Alltech, there are 330 feed mills in Germany, producing 24.5 million tonnes of compound feed in 2016. The largest consumer is the swine industry (9.5 million tonnes), followed by dairy (3.5 million tonnes), beef (3.0 million tonnes), broilers (2.5 million tonnes) and layers (2.3 million tonnes).

The decrease in the swine population hasn’t been reflected in Germany’s compound feed production figures. Cattle feed tonnage has declined by just over 300,000 tonnes between 2013 and 2016.

In contrast, poultry feed figures increased by nearly 400,000 tonnes to reach 6.5 million tonnes in 2016 (Source: Fefac).

In terms of premix demand, at 24.5 million tonnes compound feed production there is estimated to be demand for about 250,000 tonnes premix.

Some of the large compound feed and premix producers in the country include Cargill, Vilomix, Agravis Raiffeisen, ForFarmers, Miavit, Deutsche Tiernahrung Cremer and Bröring, among others.

The below is a non-exhaustive list of a selection of German compound feed and premix producers in alphabetical order.

This article first appeared on Feedinfo News Service, the world’s leading provider of business and financial information for global corporations serving the agribusiness, feed additives and biotechnology sectors, with special insight into the animal nutrition and animal health industries.

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FEED ADDITIVES ASIA 2018