1. Improving outlook?
The EU pig market has been generally sluggish in recent months mainly due to higher production in most Member States during 2015. Pundits forecast that higher Third Country exports in the second half of the year will improve market conditions and the outlook for pig meat in the longer term remains positive. It is also hoped that the new Danish government will adopt a more ‘business friendly’ approach to help the country’s farming and food industry realise its potential.
Since May, pig prices in most EU countries have fallen backs. The main factor has been a glut of pig meat on the market, coupled with low consumer demand with poor weather in the early summer.
A recently published report from the EU Commission ('Short Term Outlook') confirmed that pig production increased in most Member States in the early months of the year, especially in Spain and Poland, although exports to Third Countries remained at a good level, aided and abetted by the weakness of the €.
Lower prices will almost certainly lead to the supply of pigs falling back in the second half of the year – this was already evident in the May census in Germany, which indicated a significant decline in the breeding herd.
Russian ban on EU pig meat
There appears to be little prospect of an early re-opening of the Russian market to EU exporters and EU farming interests recently called on the EU Commission to redouble its efforts in negotiating a resumption of trade with the Russian authorities. Exports were originally banned in January 2014 following the outbreak of African Swine Fever (ASF) in the EU. Outbreaks of ASF continue to be reported in Estonia, Latvia, Lithuania and Poland, although the vast majority of cases occurred in small ‘backyard’ producers and the wild boar population.
|Outbreaks of ASF (Source: Pig Progress)
The latest Quarterly Report from Rabobank predicts that exports to China are poised to increase significantly during the second half of 2015, as prices are already moving ahead strongly as breeding numbers have consistently fallen over the last year or so.
The longer term outlook for the global pig meat industry remains positive, according to a report recently published by the FAO – OECD ('Agricultural Outlook 2015 - 2024'). The FAO predicts a more favourable feed: meat price ratio during the next decade, which will support growth in livestock production overall. Global meat consumption is forecast to grow by an average of 1.4% per annum, while pig meat consumption is expected to grow by just under 1%.
Growth in piglet exports
Exports of piglets from Denmark have continued to increase during 2015. The total export of ‘live pigs’ from Denmark reached just over 5 million head in January to May this year, compared to 4.7 million in 2014. The continuing increase in piglet exports, primarily to Germany and Poland, can be directly linked to lack of pig finishing capacity in Denmark and the relatively heavy cost burdens placed on Danish producers arising from environmental legislation.
General election in Denmark
Following the General Election in Denmark on 18th June, the Danish Agriculture and Food Council welcomed the formation of the new government by the Venstre Party, with its more ‘business friendly’ credentials than the previous Social Democrat coalition.
DAFC eagerly anticipates the government’s rapid adoption of the food and agricultural package which was agreed by Venstre before the election, which will include a more flexible approach to environmental legislation. The new Minister for the Environment and Food, Eva Kjer Hansen, has previous experience in working with the food and farming industries.
“The right-of-centre parties have presented a very clear plan for the food sector, which can really put our industry back on the path to growth. We hope that a majority of the business-friendly parties in the Danish parliament will support the plan,” says DAFC CEO, Karen Hækkerup.
| Karen Hækkerup