EU pledges help to pig industry hit by Russian ban

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  Andrea Gantz

  The European Union has pledged assistance to the pig industry, which has been hit by a ban from Russia.

  From WATTAgNet:
  European Agriculture Commissioner Phil Hogan has announced measures to raise pork prices to help the industry hit by Russia’s ban on European Union (EU) pork products.
  The EU will provide financial aid to stockpile pork products withdrawn from the market in a bid to increase prices affected by the ban, which has been in place since January 2014, Hogan said on February 22. Russia slapped a ban last year on all pork imports from the EU after cases of African swine fever (ASF) were detected in boars in Lithuania.
  This measure described by Hogan should "remove a considerable amount of products from the market, stabilizing the financial situation of farmers" and "boost the fragile recovery in prices," Hogan said after he met with pork farmers at an agriculture fair in Paris.
  France and other European countries had requested the assistance measure.
  The EU appealed to the World Trade Organization over the embargo.
  In 2013, the 28-nation bloc raked in around EUR1.4 billion (US$1.9 billion) in pork sales to Russia.
  The assistance measure will also be helpful as EU pork exports 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, according to a report from the British Pig Executive (BPEX).

BPEX launches standard pig price

The new Great Britain standard pig price (SPP) was launched July 2 by the British Pig Executive (BPEX). The GB SPP is calculated using the same basic specification as the most recent DAPP except that it covers standard pigs only. It is based on individual pig data that includes the gross price (before deductions) and weekly paid bonus payments.
It does not include retrospective bonus payments that are dependent on achieving contract criteria. Data providers will be audited to ensure the specification is followed.
Data will be collected from a wide ranging sample of processors in Great Britain and will measure the average weekly price for standard commercial pigs.
This will cover all pigs except those that attract an explicit premium for a specific attribute such as breed, feeding regime or a production system such as Freedom Foods.
The GB SPP will be published in the week after the pigs are slaughtered. The first GB SPP was published by AHDB Market Intelligence on July 2.
Head of data and analysis Charlotte Garbutt said: “The launch of the GB SPP will provide greater insight into trends in the pig market. Adding the SPP to the range of pig price data provided by AHDB, increases the information available on the standard commercial pig market. Historic price data is vital for a well informed and efficient industry. The SPP is designed to be an accurate record of the past and not a means of fixing forward contract pig prices.”

BPEX to enhance historical pig price reporting

Following its meeting on March 12, the BPEX Board agreed to launch new historical pig price reports that will replace the DAPP (Deadweight Average Pig Price) after a six-month transition period. The all new GB All Pigs Price (GB APP) will have the same specification as the DAPP but data will be collected from sellers rather than buyers as at present.
There will be a transition period of six months when the DAPP and the GB APP will be published in parallel.
The board decided to make this change following the alterations in the DAPP sample at the start of 2014. There has been a reduction in both the sample throughput and the number of participating processing companies which presents a risk to the future sustainability of the DAPP.
The GB APP will be constructed using the same sample specification as the current DAPP. It will be based on individual pig data that includes the gross price (before deductions) and weekly paid bonus payments.
It will not include retrospective bonus payments that are dependent on achieving contract criteria. Data providers will be audited to ensure the specification is followed.
Due to the change in the data collection process, the GB APP will be reported two weeks after the week in which the pigs are killed.
It is planned that the GB APP will be published for the first time by AHDB Market Intelligence on April 16 for pigs killed in the week commencing March 31. It is also planned to expand the sample of pigs.
The weekly EU Reference Price will continue to be produced and published as at present.
BPEX will also continue to explore the feasibility of an additional price series based on standard pigs only purchased in the United Kingdom.
BPEX Director Mick Sloyan said: "Having good quality market information, including historic price data, is vital for an efficient and competitive pig production and processing industry.
"This enhancement will deliver a robust and sustainable price reporting system. It will also give those in the industry who follow the DAPP a transition period to develop an understanding of the GB APP.
"We will continue to look at additional historic price data that might be of benefit to the industry. I would strongly urge producers and processor not to use historical price reporting as a means to determine future pig prices. The purpose of historical price reporting is to provide all parties with an accurate record of past market events."

EU pig production to recover slowly, commission forecasts

After two years of declines, EU pig meat production will begin to increase again, the EU Commission forecast. However, the commission does not expect EU pig production to return to 2011 levels until around 2020.
The recent decline has been partly driven by the new welfare regulations introduced in 2013. However, the report indicates that the new rules will force out some less competitive producers, which will boost productivity going forward. Growth is only expected to be modest because of environmental constraints in some of the main producer countries, and this trend is forecast to continue over the coming years, therefore pig production is not expected to return to 2011 levels until around 2020.
Over the projection period, EU pig meat consumption is set to recover slowly, reversing the decreasing trend seen since 2007 because of the economic crisis and the limited supply. However, even by the end of the period in 2023, per capita consumption of pig meat is forecast to remain below its level in 2011 at 31.8 kilograms per head, according to a BPEX report. EU pork exports are forecast to be steady over through 2015, but then to grow slowly over the rest of the decade. Growth will be constrained by competition from the U.S. and Brazil, where production is expected to increase significantly.

EU pig prices remain stable in 2013

The average EU pig price remained relatively stable between mid-December and the end of February 2013, fluctuating around €170 per 100kg, according to BPEX.
This contrasts with the normal seasonal pattern when prices fall sharply after Christmas before recovering during February. In 2013, prices fell only marginally in January but increases in February were also modest.
Ongoing tight supplies helped to prevent a sharper decline in prices but reports of subdued demand, particularly from export markets, are keeping a lid on prices for the time being.
Nevertheless, prices have remained above 2012 levels, although the gap has narrowed from over €20 per 100kg in mid-January to around €10 at the end of February.
Although the average price across Europe has remained stable, some Member States have recorded increases in recent weeks. Over the four weeks of February, prices increased by over €8 in Spain and €6 in France and Poland.
In contrast, Danish prices were flat during the month while Italy joined the UK in recording falling prices. In euro terms, the fall in the UK reference price was exacerbated by the weakening pound so the gap between the UK price and the EU average fell from around €20 per 100kg at the turn of the year to just €2 at the end of February. When the prices get as close as this, UK prices usually start increasing.

British pig price set to fall further before recovery

The British pig price looks set to average around 164p this year, hitting its low point in the next few weeks, and then rising to about 170p at the top of the market, British Pig Executive (BPEX) chief Mick Sloyan told this week's NPA Allied Industry Group conference.
"I think that is very doable," he said. "It is possible that we might do a bit more, but I wouldn't want to bet on it."
Looking at key economic indicators for the British pig herd this year, he saw slaughterings soon starting to turn downwards.
"I would urge some caution though. We can all name people who have gone out of pigs over the last six months, but if we think about it we can probably think of people who are keeping a few more sows as well."
A far as the European Union herd was concerned there was no new data yet since the downturns reported in the summer surveys of member countries.
But as long as there was pressure to ensure countries complied with the stalls ban, further reductions would be seen, he predicted.
"The latest European Union forecast puts the fall in production this year at 3 percent. I think that is overcooking it a bit, but I do think production will be down around 2 percent."
The implications of a fall in production were improved prices this year and into 2014, he said. "However consumer resistance was very obvious when the European market took off last year and the pig price went up to 180-185 euros.
"It was too much, and consumer resistance meant they couldn't sustain it. Don't forget that in many countries pig meat is the meat of choice, so it is much more sensitive to price changes, which creates a sort of natural cap."
Looking at trends for 2013, he said that last year BPEX had forecast there would be less than enthusiastic enforcement of the partial sow stall ban, and it would take all of 2013 and probably into 2014 before the full effect was felt.
It forecast the European Union breeding herd to be down about 5 per cent and production to drop 2-3 per cent. "And we still say that is the most likely outcome."
BPEX also predicted a 10 per cent increase in the pig price. "I think that is very do-able," said Mick Sloyan, stressing the importance of maintaining the British premium of around 9p a kilo. 

US pig producers profit margins to exceed European counterparts in 2013

Projections for the U.S. average margin per pig produced to slaughter weight show a recovery from recent losses back to profitability by April 2013. After that, the U.S. margin is projected to rise above US$20 by June and to peak at almost US$27.50 in August, although a late slide down to the US$6-10 range by year-end is thought likely.
The signs in the European Union in 2013 are less positive, said speakers at the Outlook 2013 meeting organized by British agricultural development board AHDB. The average EU-27 pig price may fail to reach a general breakeven level of 2 Euros per kilogram deadweight even at the mid-year peak, despite expectations of a 1.5-2.0 percent decrease in slaughtering taking the annual total below 245 million pigs.
The main problem in Europe will be a relatively flat domestic demand combining with difficulties in competing with Brazil and the United States for valuable export sales. While European pig supplies are likely to be tight, therefore, this may not be reflected in a sufficiently large increase in the pig price to cover rising feed costs.
This year, animal feed prices have already seen another rise in the average British pig production cost so it was up to GBP 1.67 per kilogram in January 2013, according to AHDB-BPEX calculations, whereas the price received by producers in Britain had slipped back from the GBP 1.61/kg reached at the end of 2012.
The continuing lack of profitability is eroding UK sow numbers. A further 4 percent reduction, equivalent to about 20,000 sows, is believed to be occurring in the national herd inventory currently. The cutback will outweigh gains in productivity, bringing a predicted 2 percent fall in pigs marketed for slaughter by British producers in 2013. It may be December 2014 before the inventory is restored to the 425,000 sows recorded in June 2012.

UK pig producers operate on negative margins despite price increase

Although UK retail pork prices rose by 3.1% in July, according to the RPI index, compared with a year ago prices paid to pig producers have not increased and most pig producers are still operating on a negative margin, according to the latest British Pig Executive’s quarterly category report.
In addition, pig prices are falling again and will continue to be in this position for the immediate future. “British households spent on average 65p more on fresh pork compared with the same 12-week period last year," said Consumer Insight Manager Richard Cullen. “At the same time, pork continues to be the best-performing [white] meat, though the increased volumes in the latest year have been driven by promotions.”

EU pig meat prices rise on increased demand

European Union pork prices continue to rise on increased demand from China and low supplies due to high feed prices, according to reports.
Pork prices gained 10% to €1.56 (US$2.24) per kilogram through June, the most in almost three years, as corn rose 71% and wheat hit a record on April 20 in London. “Due to the high feed costs, European pig farmers have negative margins pressuring the supply of piglets down,” said Albert Vernooij, an analyst with Rabobank International. “Due to the long time before higher prices are forwarded in the supply chain the effect on consumer prices is still limited but that will slowly start to change in the coming months.”
Per-capita pork consumption in China has grown by 23% in the last ten years, while the sow herd in the UK has fallen 27% in the same time period.

UK pig producers call for fair prices

UK retailers and food service companies need to take a strategic approach to their supplies and pay a fair price to producers to reflect current costs, said British Pig Executive Director Mick Sloyan, who has called the next few months crucial for UK pig producers.
According to Sloyan, who wrote on the topic in the BPEX Pig Yearbook 2011, producers have lived through the biggest contrast in fortunes and emotions over the past year. What started as “reasonable profitability” in 2009 and the first part of 2010 had turned into major losses at the start of 2011, following steep increases in feed prices and aggressive price promotions by retailers which drove pig prices down, said Sloyan. “The pig price has started to move upwards here in and in Europe now, but feed prices look set to stay at historically high levels and the next few months will be crucial.”

European pig farmers gain end of year price boost

EU pig prices rose slightly last week for the third consecutive week, as prices paid in Germany reached their highest levels since mid-September, with the average prices at €144.10/kg, compared with €140/kg in mid-October. Prices in Sweden jumped to €162.40/kg - up more than 3% in a single week.
The average EU prices for grade E pig carcases rose to €137.31 per 100kg in the week to November 14th, up 0.2% on the previous week and more than 3% up on the average seen in November 2009.