European pork producers facing losses

Europe’s sharp decline in pig prices since the end of 2013 has been highlighted at a UK conference that also heard warnings of a continuing oversupply on the European market due to weak demand.
A primary influence on the European Union pig scene last year was Russia’s decision to ban imports of pork from member countries. In 2013 the EU had supplied 60 percent of all pork imported into Russia, noted BPEX market intelligence manager Stephen Howarth at the Agriculture & Horticulture Development Board’s Outlook 2015 conference in London. The imposition of the Russian ban in 2014 suddenly meant that large quantities of European pig meat had to find an alternative outlet.
Pork exports by the EU are unlikely to show a substantial increase this year as the competition on the international market intensifies due to larger supplies, particularly from the United States, Brazil and Chile.
Meanwhile, latest calculations suggest that most EU-28 producers are losing money on each pig marketed after their feed costs edged higher in the first part of 2015. Stephen Howarth reported some evidence from Germany over the last 3-4 months that the country’s sow numbers are being cut back in response to the poor profitability of 2014-15, with herds downsizing or even being closed. Similar trends may be occurring in other EU member states, he commented, which could lead to a tightening of pork supplies across the European Union marketplace in the 2015-16 period.
From a British perspective the size of the national breeding herd seems to have stabilized around 425,000 sows, so that any increase in pork production this year will be driven by sow productivity and the carcass weight of pigs at slaughter. A further gain in productivity looks certain for 2015 in line with a trend over several years that has seen the number of pigs slaughtered per sow per year in the UK rising by 2-3 percent annually under the influence of better management, health feeding and genetics. The national average carcase weight may also rise in 2015, but any increase is likely to be small compared with the situation in 2014 when it trended higher every month to reach record levels as pig finishing enterprises delayed marketing in order to take advantage of cheaper feed.