Although pig prices in most EU countries remained relatively stable during the first half of 2014, the market came under increasing pressure in the second half of the year. Lower feed costs helped keep most producers in profit for much of the year but the persistence of low prices in the months ahead will cause difficulties for many producers.
According to DAFC economists, the Russian ban on EU pig meat exports has been a critical factor and had resulted in prices in 2014 being DKK 2 per kg lower than would otherwise have been the case. Initially a ban was introduced on all EU pig meat in January, with the discovery that African Swine Fever had spread over the Russian border into a number of EU Member States. However, the main effects have been felt since August, when the Russians extended the ban to a wider range of food products and the demand for EU pig meat from some of the other export markets had fallen away, as US supplies began to increase again. In the early part of the year US production had been constrained by the spread of the PEDv virus (Porcine Epidemic Diarrhoea) across much of the country but this threat now appears to be receding.
A particular problem has been experienced with the market for fats and other by-products, which had which had previously made up a significant share of the products exported to the Russian market and for which no ready market was available elsewhere. Although EU pig meat exports to a number of the key markets in SE Asia improved during 2014, especially Japan and China, this proved insufficient to offset the better than expected EU pig supplies and depressed demand in the early part of the summer.
In this worsening situation, DAFC have renewed their calls to the Danish government for a more targeted application of environmental rules, which continue to put producers in Denmark at a disadvantage to their EU competitors. With little likelihood of any early resolution of the trade dispute with Russia, there have also been calls across the EU for Brussels to consider introducing market support via a ‘private storage scheme’ for certain pig meat products in order to alleviate the current market pressures.
The October pig census in Denmark showed that the breeding herd was stable but total pig numbers had increased, probably due to the fact that during 2014 farmers were encouraged to supply slightly heavier carcases in order to boost pig meat supplies at the abattoirs. However, exports of piglets have continued to rise, with Germany, and, latterly, Poland and Italy remaining the key markets. Total exports rose from 8.1 to 9.1 million head in the first 10 months of the year.
Despite the current difficulties, the medium term outlook for pig production looks promising, according to a report recently published by the EU Commission ‘Prospects for EU agricultural markets and income 2014 - 2024’ .The report forecasts a recovery in EU production in 2015 and modest increases in the ensuing years. EU pig meat exports will continue to increase in the next decade ”supported by sustained world demand and a competitive EU pigmeat sector”. The increase in exports will be driven by increased demand in China and other EU traditional trading partners.
The initial ban on EU pig meat introduced by the Russian authorities was linked to the spread of African Swine Fever over their borders into the most eastern lying EU Member States. Since the initial ASF outbreak was reported in February, further outbreaks have been reported in the wild boar populations and small ‘backyard’ producers in Estonia, Latvia, Lithuania and Poland, as indicated in this map prepared by Pig Progress magazine.
These developments have heightened biosecurity concerns within Denmark. In addition to an information campaign to highlight individual responsibilities to farmers and their employees, the Danish Pig Research Centre recently agreed to make significant investments to improve lorry-washing facilities at the Danish borders, due to the significant number of transports of piglets taking place to ‘high risk’ areas of Poland and elsewhere in Eastern Europe.
The Danish commitment to maintenance of a leading-edge research and development resource to support its agricultural industries were confirmed with news that a new organisation, SEGES, will open its doors for business in January. The new company SEGES (literally translated as ‘cornfield’ from the original Latin) will represent the combined resources of the Danish Pig Research Centre and the Knowledge Centre for Agriculture.
The Danish Meat Research Institute recently moved from its original home in Roskilde to a brand new ‘state of the art’ research facility in Taastrup near Copenhagen, which was formally opened by HM Queen Margrethe during the autumn.