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Double Hit to Force Shake-up in Spanish Livestock

Published on 10 December, 2010, Last updated at 00:07 GMT

Spain -- Livestock farmers in Portugal and Spain face a fresh round of shutdowns and mergers, a situation provoking uncertainty among feed mills, as high grain costs add to the pressures forced by a "dire" economic situation. The beef sector faces shrinkage of about 10% in Spain, in line with that three years ago when grain prices last soared, a "high number for a sector characterized by its long production cycle", as farmers slaughter cattle at younger ages to save on feed bills.

In Portugal, where cattle are typically slaughtered at 300 kilogrammes, "now they are slaughtering veal with 140 kilogrammes live weight", US Department of Agriculture officials in Madrid said in a report.

And among hog farmers, "hundreds" of smaller producers are "to quit business" due to the squeeze on margins forced by feed bills, which in Portugal are up by some 35-60%, compared with a rise of some 10-15% expected for consumer prices, reports .

The impact of the double whammy of setbacks is being felt by the dairy industry too, which is finding that the dire economic situation is not allowing consumer prices to be increased without a fall in consumption.

The two countries are at the centre of jitters about eurozone sovereign debt, and face poor economic prospects as austerity measures taken to balance government books takes its toll on growth. Spanish unemployment will hit 19% next year, according to official forecasts.


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