Five factors to consider for success in EU pork industry

Competitive power and market position are pivotal to success in the changing European pork industry, Rabobank stated in its recent report The EU Pork Industry: Competitive Power is Key.
In the report, Albert Vernooij, Rabobank animal protein analyst, stated that there will be few opportunities for margin improvement in the coming years, so pork processors need to take five key success factors into account in order to strengthen their position in the industry:
1.       Cost competitiveness
2.       Sourcing
3.       Efficiency
4.       Market approach
5.       Client access

Vernooij notes that the focus of pork processors should be on reducing cost price via targeted, efficiency-improving investments in connecting activities or a merger or sale to strengthen the competitive position.
Faced with a decline in pork production in the European Union (EU) from 2017, Rabobank analysts say the decline was triggered by higher pork prices due to feed cost increases and trading down to less expensive proteins because of the economic crisis.
“The rapid growth of the discount channel across Europe has increased retail competition and resulted in strong price pressure and squeezed margins for EU pork processors,” said Vernooij. “However, not all processors have suffered; a clear difference between outperforming and underperforming companies has developed. Outperforming processors have been able to stabilize margins through highly efficient production processes and cost price leadership.”

Pig meat supply situation causes upsets in Europe

Spanish pig farmers are calling for an investigation into German pork prices, which, they say, are below the cost of production. French pig farmers are protesting in their usual way by attacking foreign trucks. These are just some examples of the indirect effects of the continuing Russian ban on imports of pig meat from the European Union (EU) and other leading exporters.
In Spain, the Valencian Farmers Association (AVA-ASAJA) has called on EU authorities to investigate the low prices at which Germany is selling its pig meat in European markets. The association says this is causing the pork market there to collapse, a situation exacerbated by protesting French farmers attacking Spanish vehicles transporting pigs and other products.
According to AVA-ASAJA, Germany is the No. 1 pig meat producer in the EU and it therefore has the main impact on prices. With the Russian ban on EU pork extended for at least another year, the loss of this important market has imbalanced the supply and demand situation in Europe, leading to lower prices for producers.
The association says Germany is offering pork at EUR1.09 (US$1.2) per kilo, compared to EUR1.26 in Spain and EUR1.25 in France, while the Dutch have lowered their prices to EUR1.04.
AVA-ASAJA President Cristóbal Aguado alleges Germany may be contravening the law because their prices are below production costs and that this is seriously distorting the functioning of the market.
German pig producers’ organization, ISN highlights the reduced supplies of slaughter pigs on the EU market in its latest weekly report, attributing this to the high summer temperatures in the south reducing feed intake and growth rates.
Of the major markets, only the French have seen an increase in prices in the last month. Spanish pork prices are among the highest in the EU at EUR1.665 per kilo, followed by France (EUR1.609), Denmark (EUR1.387), Germany (EUR1.346) and the Netherlands (EUR1.253).
At 1.796 Euros per kilo, producer prices are the highest in the UK, according to ISN. The comparison is complicated by exchange rates. The Agricultural and Horticultural Development Board (AHDB;formerly BPEX) comments the gap between UK and EU pig prices remains high by historic standards. There is no sign of an increase in pig meat imports from Europe, however, as retailers remain committed to UK sourcing.
Rather than looking to export to other EU states, UK food companies are instead taking advantage of more distant markets. Cranswick PLC, for example, reported this week its quarterly sales are up 4 percent from the same period last year, partly as the result of a 14 percent increase in sales, which include pork, to Asia.
Nevertheless, British pig prices are around 30 pence lower than they were a year ago, according to UK pig meat market analyst, Peter Crichton, in his Traffic Lights report. 

Jackie Linden is a contributing writer for WATTAgNet

Russian ban on EU pork could end soon, European ag leaders say

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  freeimages.com/morderska

  European Union leaders are optimistic Russia's ban on EU pork products will be ending soon.

  From WATTAgNet:
  Russia’s ban on pork products from the European Union (EU) may soon come to an end as a result of recent negotiations, several European agriculture leaders say.
  The ban, which was implemented in January 2014, was made as a response to the detection of African swine fever (ASF) in wild boars in Poland and Lithuania. Russia later in 2014 further limited its sources for pork when it implemented trade bans on agricultural products from the United States, Canada, Australia and Norway, a move believed by many to be mostly political.
  Stephane Le Foll, French minister of agriculture, stated on January 19 that “an agreement in principle was reached on the resumption of French exports of live pigs, offal and pig fat to Russia.”
  The European Livestock and Meat Trades Union also stated meetings between EU and Russian officials in Berlin, “should allow a resumption of some products from the pork sector to Russia.”
  While some EU leaders are optimistic about the resumption of pork trade with Russia, the U.K. National Pig Association is still skeptical and more work needs to be done to reach an agreement.
  “Contrary to various claims, Russia has not yet selectively lifted the import ban,” said Digby Scott, spokesman for the association.