BPEX Export Bulletin - January 2011: Week 1
Tuesday, January 11, 2011
The British Pig Executive's (BPEX) Export Bulletin for January 2011 reports pig industry trends from around the world.
Denmark
Market
In Europe, the markets are quiet here in the beginning of the New Year. On most markets, the trade is quiet and prices remain unchanged. There are continuing stable exports to the Far East where both China and Japan are buying fine quantities. The Russian market is slow and will remain quiet over the next couple of weeks where the turn of the year will be celebrated.
(Sources, Danish Crown, Tican, Danish Agriculture & Food Council)
Danish pig producers face a difficult year
Danish pig producers are facing a difficult year. The deficit in pig production seems to become far worse than previously expected. Price increases of feed contribute to an expected average deficit of €19 every time a farmer sends a pig to slaughter. The prospect of large deficits in 2011 will probably make many farmers decide to phase out their pig production, according to the head of department of Danish Agriculture & Food Council, Finn Udesen. Altogether the deficit of the sector is expected to reach €400 million. The sector is now entering its fifth consecutive year of crisis.
The deficit arrives at a bad time. Among other things, the price of farming land has decreased over the latest years as well, estimates market analyst of Agrocom.dk, Palle Jakobsen. The equity has disappeared from many farms and there are many reports indicating that now the banks will put a stop for further financing of deficits. So in the months following the turn of the year, farms will be closed, production will start decreasing and during 2011 pork prices will start increasing strongly is the forecast. Danish Agriculture & Food Council estimates that the crisis will also affect the farming sector in the other EU countries.
(Source, JyllandsPosten)
Increasing export of Danish breeding animals
In the shadow of the most serious crisis in Danish farming ever, Danish breeding pigs have developed into an export success within just a few years. Science Centre of Pig Production expects that Danish farmers will sell almost 200,000 breeding pigs during 2010/2011. For comparison, they sold just 70,000 in 2006/2007. 340,000 doses of boar semen are expected to be exported during 2010/2011; there were no exports in 2006/2007. Danish pigs are popular because they grow more efficiently than, for example, German pigs, according to Nicolaj Norgaard, manager of Science Centre of Pig Production. It is straightforward that Danish pigs grow more per feed unit and get more and more viable piglets than foreign pigs, he said. Farmers have evidence for this on paper since 2008 when an independent German testing found that Danish breeding pigs are in the lead globally.
(Source, Landbrugsavisen)
Scientist wants to find the genes that control boar taint with male pigs
Henrik Hornshoej, Institute for Genetics and Biotechnology of the Farming Faculty at Aarhus University, is the head of a research project designed to reduce the undesired odour and flavour in pork. The project aims at finding genetic markers that can identify pigs that are at risk of developing boar taint. Should the scientists succeed in finding one or a few genes that control the development of boar taint, it will be of benefit to male pigs and farmers. It will be possible to develop a tool to diagnose the risk of developing boar taint and to develop breeding methods to avoid the problem. Dr Hornshoej imagines that one could take blood tests with all potential breeding boars.
According to a new, voluntary agreement at EU level the European farmers must stop castrating pigs at the latest by 1 January 2018. So Dr Hornshoej’s research project is very timely. The voluntary agreement is made between a number of large actors in the European pork and pig production sector. The voluntary stop for castration is supported e.g. by Danish Agriculture & Food Council and as a first step, it introduces mandatory anaesthesia or pain relief at surgical castration as of 1 January 2012, a requirement which already has been introduced in Denmark. The EU Commission and the former Belgian EU presidency have witnessed the agreement, which has been signed by, among others, the European farming organisation COPA-COGECA and by the organisations for farming and pig slaughterhouses in Holland, Germany and Denmark.
In the coming years, the EU Commission will support the preparation of a common, European understanding of the expression boar taint, common measuring methods and regulatory acceptance of products from non castrated pigs in Europe. According to the voluntary agreement, particular regional and typical origin protected pork products are exempt from the ban against castration.
(Source, Landbrugsavisen)
Pig farmers will be strongly affected by increasing prices of grain
Previously, there was a close connection between prices of grain and of pork but it is not so any more and it will not be so in the future either, according to a survey prepared by the Science Centre for Farming. In the sector, it is a widespread opinion that there exists a close connection between grain and pork prices. Klaus Kaiser, business economic manager of Science Centre of Farming says their analysis shows that such connection barely exists any longer. Also, according, to the analysis such connection is not likely to exist in the future either. As late as 1995, there was a close connection between prices of grain and pork but since then, strong fluctuations in prices of wheat did not lead to immediate corresponding changes in prices of pork. Previously one could rely on an adjustment after a certain period but this is no longer the case and in the best case it now takes much longer time. Where previously it took approximately six months to catch up half of the loss, it will now take approximately 15 months.
Dr Kaiser mentions liberalisation as a reason for the lack of connection between prices, and as feed is the most important expense it has huge consequences for the earnings and for the sector as a whole. Without political control, the adjustment will solely take place through supply and demand where it is the strongest that will survive. Previously, farmers could lean back and wait for a political adjustment of the trading conditions. Now, the adjustment must happen the hard way through adjustment of supply, and it means that some farmers must leave the sector, according to Mr Kaiser. In general, farming enterprises will more and more look like other businesses and accordingly, the farmer must have larger financial resources in the form of improved liquidity and a larger capital buffer for downturns, says Dr Kaiser.
(Source, Landbrugsavisen)
Farmers tired of high mortality in pig stocks
In a survey conducted by Politiken Research, 56 per cent of the farmers say that the mortality among pigs is higher than it should be. According to new calculations from the Society against Cruelty to Animals, 31 per cent of all born pigs die before the age of slaughtering if piglets born dead are included. Around 24 per cent of all suckling pigs die within four weeks corresponding to 25,000 lost suckling pigs daily and nine million annually. In addition are the dead sows, piglets and slaughter pigs. This ought to make the producers consider animal welfare in the stables, says Pernille Fraas-Johnsen, animal welfare manager of the Society.
The intensive breeding work in Danish pig production has had the impact that the pigs are born with an extra rib bone so that there are more chops per carcass.
The farmers have also succeeded in increasing the size of the litter to the effect that Danish sows hold the world record in giving birth to pigs. As an average, they get 16 piglets per litter. Some get as many as 28, even if the sows have no more than between 12 and 16 teats.
But the effective breeding has a price. While increasing the size of the litter also the number of dead pigs has increased. A phenomenon that the pig farmers would like to remedy; they make a great effort to keep the animals alive, any dead pig is one too many. They want to see animals live and grow, both for ethical and economic reasons, says Henrik Mortensen, chairman of Danish Pig Producers.
The society for Animal Protection in particular criticises the large sizes of litters, which cost too many dead born, underweight and weak pigs having difficulties in surviving. But just 12 per cent of the pig producers in the survey find that the sizes of the litters are higher than they should be. And 81 per cent find that animal welfare among Danish pigs is high or very high according to the survey, which is based on answers from 181 pig farmers. But it is not consistent; even if things are progressing there are continuing problems with animal welfare in Danish pig stables, says the President of the Animal Ethical Council, Professor Peter Sandoe. In particular, he points at three imminent problems in pig production:
- Fixation of sows, while they give birth and nurse their piglets.
- Too high production pressure and
- Too little space for slaughter pigs.
(Source, Politken)
| Danish Slaughterhouses - payments Week 50 | |||
| Slaughterhouse | Danish Crown | Tican | |
|---|---|---|---|
| Slaughter pigs (70.0-86.9kg) Difference to last week |
Euro 1.229 Unchanged |
Euro 1.229 Unchanged |
|
| Sows (Above 129.9 kg) Difference to last week |
Euro 0.813 - 0,053 |
Euro 0.813 - 0,053 |
|
| Boars (Above 109.9 kg) Difference to last week |
Euro 0.680 - 0,053 |
Euro 0.680 - 0,053 |
|
France
Animal welfare: France is joining the club
At a conference organised by Coop de France Ouest, the debate was focused on animal welfare in the French pig meat industry. High quality speakers including Luc Ferry (philosopher and ex-Education Minister), Isabelle Veissier (Scientist at Inra Theix) and Louis Orenga (Director of CIV) described the evolution of consumers’ attitude to animal welfare, Louis Orenga pointed to the dangerous ambiguity between animal welfare and meat consumption exploited by strong vegetarian activists. The utilitarism concept first mentioned by the English philosopher Bentham (XVIIIth century), whose principle is that an action is good when it increases happiness for everybody, now involves animals whose welfare/happiness has become closely linked to human kind’s happiness. As the number of farmers in France decreased from six million in 1950 down to 300,000 in 2000, the French specificity in terms of animal welfare does not exist any longer as younger generations have also lost contact with the producing world. In order to release the pressure exerted simultaneously by social surveillance and by the globalisation of the pig meat market, French pig producers must adopt a proactive attitude instead of a defensive one and let consumers know about the efforts produced on their farms in terms of animal welfare.
Fleury Michon in the north?
The leader of French charcuterie is planning to open its eighth industrial site (11 hectares, 13,000 square metres building, €24.5 million investment and 250 staff) in Cambrai in the north of France. Regional authorities are prepared to support this investment, which is the first one (in France) out of the home region of the company (Pouzauges in Vendée). This new site will probably be dedicated to the production of charcuterie for the French multiples. Today, Fleury Michon owns 11 industrial sites (including one in Spain, one in Italy, one in Slovenia and one in Canada) with a turnover of €532.1 million (2009) including 86 per cent with French multiples and seven per cent abroad. The net result in 2009 was €14.8 million.
Pigs
With no Bank holidays over the last two weeks, offers are good. Slaughterings were good last week and ‘MPB’ announced that offers from livestock are lower than those of last year. Demand remains firm during this period of promotions. On the export side, activity should remain calm next week. The novelty should be on the side of China. Its imports of meat should increase, from the US, Canada, the European Union and Brazil. Maybe this will make prices rise and allow breeders to echo the rise in cost of raw materials.
Piglets
No big changes on the prices. Offers are low.
Cuts
Consumption is correct for this period of the year. The market for loins and shoulders is very good due to promotions.
| Pork prices RUNGIS week commencing 3 January 2011 | |
| Cut name | Price range (Euro/Kg) |
|---|---|
| Back fat, rind-on | 0.40 |
| Trimmings | 1.19 |
| Leg | 2.02 |
| Loin including chump | 2.81 |
| Loin excluding chump | 2.34 |
| Belly extra without trimmings | 1.71 |
Germany
Dioxin scandal
More than 4,700 agribusinesses have by now been precautionary closed due to the far reaching dioxin scandal. Mainly affected businesses are pig fattening enterprises that have possibly used contaminated feed products. The vast majority of the farms are located in the region of Lower Saxony, however, a total of 12 German federal states have now been confirmed to be affected. Apparently, high levels of dioxin in animal feed produced by feedstuff supplier, Harles and Jentzsch, were first detected as early as March 2010 but failed to be reported to the authorities – a clear violation of the law. Also, the Lower Saxony-based fattening enterprise Wulfa-Mast, that initiated the current scandal through self-denunciation on 23 December was aware of contaminated charges of fat at least a month before taking action allegedly intending to prevent the company from economic loss at the expense of both farmers and consumers.
Secretary General of the German Farmers Association DBV, Helmut Born, demanded that the company at the centre of the crisis be called to account. He stated: “The damage caused to the industry can not yet be determined but will certainly reach into millions of Euros. Those who caused the damage will need to compensate for it as well.” He also demanded the strict separation of companies producing industrial greases from those producing consignments for the feedstuff and food industry.
Allegedly examining possible insolvency, Harles and Jentzsch Sales Director, Klaus Voss, was quoted in the newspaper Westfalen-Blatt: “We are very depressed and could actually seal off the company right now.” Managing Director, Siegfried Sievert, however, denied rumours regarding insolvency claiming that the business with industrial fat would secure the company’s existence. Public prosecutors are now investigating Harles and Jentzsch's management.
According to a survey conducted by news agency, AFP, on behalf of the TV programme ARD Trend, 66 per cent of the interviewees stated that the recent scandal will not influence their shopping behaviour. Fourteen per cent stated that they will reduce their consumption of eggs, while 63 per cent saw one of the reasons for the scandal to be the often very low prices for food in Germany.
South Korea has now announced a temporary suspension of imports and sales of German pork and poultry products due to the dioxin scandal.
(Sources, afz, topagrar, BMELV, Deutsche Welle)
Market
The demand for meat has significantly decreased after the holidays. Prices for loins and fillets have decreased particularly strongly. Due to the large supplies not being met by demand and exports being subdued, products are being frozen. For pork, cheaper cuts such as shoulders, collars and bellies are the main demanded cuts.
Westfleisch slowly entering the boar fattening business
While Tönnies and Vion are already working with fattened boars on large scale, Westfleisch’s activities in this field are still very limited. According to Westfleisch purchasing manager, Josef Beuck, Germany’s largest co-operatively organised meat producer will from now on use boars within the framework of its animal welfare scheme. At the end of November 2010, Westfleisch had introduced the scheme as a practicable solution for examined animal welfare, the abandonment of piglet castration being a major component of the catalogue of requirements to farmers. The scheme is currently being presented to the retail industry and according to Mr Beuck, feedback is positive. To start with, Westfleisch aims at producing 650,000 pigs according to the welfare scheme with currently 350,000 pigs meeting the requirements. The reduction of the number of strongly smelling animals is one of the main targets on the way to the Europe-wide total abandonment of piglet castration scheduled for 2018. As of 1 January, pay-outs according to AUTOFOM commercial value has replaced the lump-sum payment for boars previously in place.
(Source, topagrar)
| Pork Prices Hamburg Market Week commencing 3 January 2011 | |
| Cut Name | Price Range (€ / kg) |
|---|---|
| Round cut leg | 2.15/2.35 |
| Leg (boneless, rindless max fat level 3mm) | 3.10/3.25 |
| Boneless Shoulder | 2.20/2.40 |
| Picnic Shoulder | 1.70/1.90 |
| Collar | 2.10/2.25 |
| Belly (bone in, ex-breast) | 1.80/2.00 |
| Sheet Boned Belly (rindless) | 1.70/1.90 |
| Jowl | 0.95/1.20 |
| Half Pig Carcasses U class. | 1.75/1.90 |
The Netherlands
Contrasting reports
The LEI economic institute reports flat net profits for pig enterprises for 2010 after a two years of limited profitability, a disastrous 2007 and high returns in the period 2004-2006. Still, according to LEI, pigs have not fared well since 2006 against other farming activities like arable, horticulture and even dairy. On the other hand, the Institute says that “a quarter of pig farms have liquidity problem”. There is a general agreement that 2011 will be a better year than 2008, 2009 or 2010. GIBO, the accountants indicate that revenues for pig farmers were up nine per cent in 2010, unlike LEI results.
Origin labelling – not for us
Obviously, the export-orientated Dutch food industry is firmly against the new regulations on country of origin labelling (COOL). There is also a lesser national preference for domestic produce than in other countries. The Dutch favour EU origin labels.
Russia
2011 import quotas
According to the decree dated 24 December 2010, import volumes on pork and beef will remain unchanged. However, poultry meat imports will be cut by 2.2 times compared to 2010. The pork quota (fresh, chilled or frozen) totals 472,100 tons consisting of 225,000 tons from the European Union, 57,500 tons from the USA and 189,600 tons from all other countries. The quota on pork trimmings (meat offal) for all countries equals 27.9 tons.
(Source, meatinfo.ru)
Russian market of pork in November-December 2010
According to the information provided by Russian State Statistics Committee as of 1 December 2010, the population of pigs totalled 18 million, which is 1.6 per cent (0.3 million) fewer than 1 December 2009. Compared to the beginning of November, the number of pigs dropped by 3.2 per cent or 0.6 million heads which is a matter of seasonal factors. The production volumes of pork in November 2010 totalled 139,900 tons in live weight (102,500 tons in slaughter weight) which is 12.8 per cent up compared to November 2009. Agricultural enterprises produced 1.432 million tons of pork in live weight (1.050 million tons in slaughter weight) in January-November 2010, which is 1.4 per cent more than the same period of 2009, 45 per cent more than 2008 and 65.2 per cent more than 2007. Leading importers of pork to Russia in 2010 were Brazil, EU, Canada and USA. In November, Brazil exported 15,900 tons of pork (exclusive of sub-products) at an average price of US$3,186 per ton. During first 11 months, Brazil exported to Russia 218,000 tons of pork (exclusive of sub-products) totally worth US$611.8 million. Export volumes dropped 11.9 per cent compared to the same period in 2009.
(Source, meatinfo.ru)
Pork without a ‘passport’
Suspicious freight was held by police in Krasnodar region. A vehicle was transporting more than 6,200 tons of pork which had no required supporting documents, and the document on the rest of the cargo did not match the marks stamped on the meat. The freight was considered dangerous due to falsified documents. In addition, the freight was of Krasnodar origin meaning a possible risk of being infected with African swine fever (ASF).
(Source, Piginfo.ru)
Ukraine
APK-Invest introduced a new pig unit
APK-Invest added another pig unit, which is now the fifth in the family of this Donetsk Oblast giant. This unit is designed to rear 50,000 fattening pigs and 2,500 sows. The company also plans to complete another similar pig unit by July 2011.
(Source, proagro.com.ua)
Bulgaria
Consumption down but...
Statistics show a fall of 14 per cent of meat consumption in Bulgaria in 2010, a logical consequence of the acute economic crisis. However, what is noticeable is the drive towards lower price items such as offal, which could have beneficial consequences for UK meat exports. The Association of Meat Processors is not unduly worried either and reports a good level of activity of its members.
USA
Nutritional labelling is coming
The US Department of Agriculture's Food Safety and Inspection Service said it will be making important nutritional information readily available to consumers on 40 of the most-popular cuts of meat and poultry products. Under a new rule, packs of ground or chopped meat and poultry will feature nutrition facts panels on their labels. Whole, raw cuts of meat and poultry will also have nutrition facts panels either on their package labels or available for consumers at the point-of-purchase. This rule is effective on 1 January 2012. The 'nutrition-facts' panels will include the number of calories and the grams of total fat and saturated fat a product contains. Additionally, any product that lists a lean percentage statement, such as "76 per cent lean," on its label also will list its fat percentage, making it easier for consumers to understand the amounts of lean protein and fat in their purchase.
Australia
Floods impact world wheat prices
Cereal production has been seriously perturbed in Australia due to the floods in Queensland and to a lesser extent, in Western Australia, New South Wales and Victoria. This is already having an impact on spot and futures wheat prices.
January 2011
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