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Central and Eastern European Feed Additives Market
Frost & Sullivan, March 2005
European Union Accession Boosts Confidence in the CEE Feed Additives Market
The transition from centralised economies to free market states has led to significant changes in many of the central and eastern European (CEE) feed additives markets. Farmers in the CEE states have become better informed regarding animal husbandry and the merits of improvements in animal nutrition and hygiene. Accession to the European Union (EU) has enabled the benefits of new and improved inputs in the feed sector and has increased overall market stability and confidence. This has resulted in an influx of products from outside the region, primarily Western Europe, and the uptake of these products has stimulated considerable market growth in the short term.
This Frost & Sullivan research analyses the CEE feed additives market, profiling the scope of key feed additives in the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. It further looks at key market drivers and restraints and forecasts growth opportunities.
Increased Competition Threatens Local Supplier
With the removal of entry barriers across the CEE states, local suppliers have to compete with highly sophisticated, market-oriented overseas vendors. Access to a greater choice of products and services has fuelled the desire of farmers and growers to try new suppliers, stoking competition. In addition, EU regulations concerning environmental pollution, animal welfare and consumer safety have restrained the competitive ability of local suppliers across the region, leaving them with the risk of being taken over by foreign competitors.
Key sectors in the CEE animal feed additives market are those of pigs and poultry. Whilst the EU accession has opened up new export market opportunities to the CEE states, it has also resulted in an increased supply of high-quality western European meat. Similarly, cheap imports, especially of poultry meat from Brazil, have created strong price competition resulting in poor profitability in these key sectors, says the analyst of this research. Stability in these industry sectors is a major challenge to long-term market development.
A Favourable Economic Situation Offers Significant Growth Potentia
Improved meat prices, good currency exchange rates, increasing meat consumption and exports are a few of the positive trends in CEE countries after their integration into the EU. As modernisation in terms of viable farm sizes, investments in compound feed production systems and livestock production units continue agriculture across this region is undergoing changes. Since many of the feed additives segments in these areas are still at their developmental stages, market potential remains high.
Given the lower production costs, the CEE feed additives markets offer good growth opportunities. Whilst there are local participants active in the supply of animal feed additives, these are usually in the role of distributors or premixers. Manufacturers supplying products to the region are those involved on a European or global level, and a number of large organisations with compound feed and livestock production interests have entered the region. Despite the inadequate nature of much of the agricultural industry infrastructure, a lot of companies active in this industry sector believe that the CEE market will grow by over 50 per cent over the next five years, says the analyst. The market has yet to reach its full potential.
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