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AHDB Pork Country Reports


04 December 2012

BPEX / AHDB Country Report - GermanyBPEX / AHDB Country Report - Germany

Germany is the largest producer of pig meat in in the EU and its people consume more pig meat than those in any other Member State. In addition it is one of the world’s leading exporters of pig meat and is also a major importer.
BPEX / AHDB Country Reports
AHDB

Pig Numbers

Latest data from the German Federal Statistical Office show a one per cent decline in breeding pig numbers in the year to May 2012, taking the number of sows and gilts to 2.17 million head. This is similar to falls seen in recent years, although the true decline may have been larger as this year’s figures cover a number of additional mixed farms, where the presence of pigs wasn’t previously recorded. This main effect has been to increase the numbers of fattening pigs recorded, although it has probably also impacted on the figures for breeding animals. The figures show that the German pig herd was nearly five per cent higher than in May 2011 but the true increase was probably more modest.

Numbers in all categories of non-breeding pigs were recorded as increasing, reflecting further increases in sow productivity, given the declining breeding herd. The increase was smaller for young pigs, partly as a result of lower weaner imports. Even with some extra farms included in the survey, the total number of holdings with pigs declined to 30,100, five per cent fewer than in 2011. Of these 13,200 had breeding pigs, a fall of 11 per cent.

German Pig Numbers, May

Source: Statistichem Bundesamt, AMI

Production

Taking account of the methodological change, the true situation in the German pig herd is probably one of stability or even slight decline. This is reflected in pig slaughterings during the first half of 2012, which were one per cent lower than in the same period of 2011 at 28.8 million head. This was the first year-on-year decline in pig slaughterings for a decade, with numbers having increased by a third in that time. Throughputs were higher than in 2011 during January, partly because numbers were lower a year before due to the dioxin crisis, but were then well below year earlier levels for the following three months. Carcase weights were marginally lower than during the same period last year, meaning pig meat production was also down by one per cent.

Sow slaughterings were down even more sharply, based on provisional weekly figures. These show throughputs down by 16 per cent during the first six months of 2012 compared with the first half of last year.

German Pig Slaughterings

Source: Eurostat

Trade

As the EU’s leading producer and consumer of pig meat, Germany is both a major importer and exporter of pork. Subdued consumer demand this year has reduced imports and increased supplies available for export.

January - June

Source: Statistics Germany, GTIS

In the first six months of 2012, Germany exported one per cent more fresh and frozen pork than in the same months of 2011. This was despite a six per cent fall in shipments to other EU Member States, which still made up nearly 80 per cent of the total. All of the main EU markets for German pork took lower volumes except for the UK and Czech Republic. This largely reflects difficult economic conditions in the Eurozone, impacting on consumer confidence.

In contrast, exports to non-EU markets increased by over 40 per cent, despite a fall in shipments to Russia, the largest such market for German pork. Instead, Germany benefitted from increased demand from China, Belarus and Ukraine, among others. It also grew shipments to South Korea, against the general trend. These increases allowed Germany to overtake Denmark as the EU’s leading exporter of pork.

Exports of most other pig meat products were also higher than a year earlier, with offal volumes up by 11 per cent, largely due to increased shipments to China.

Over the six month period, German imports of pork were down three per cent. Shipments from the three largest suppliers, Denmark, Belgium and the Netherlands, were all down although they still accounted for nearly 80 per cent of the total. This was partly offset by increased volumes from Spain, France and the UK.

Germany is also the largest importer of live pigs. The number of pigs imported in the first six months of 2012 was virtually unchanged from the same period of 2011 at 6.49 million head. Weaners accounted for around two-thirds of the total but the numbers imported were down by three per cent. Denmark remained the main supplier but numbers from breeders in the Netherlands increased. In contrast, slaughter pig imports were ten per cent higher than last year, driven by increased numbers from the Netherlands and Belgium. Live exports were up by 18 per cent to 1.45 million head, mostly due to a doubling of shipments of slaughter pigs to Poland given a shortage of pigs there.

Prices

German pig prices have remained at a relatively high level since mid-2011. Prices normally fall seasonally during the autumn before rising again in the spring. Last year, they remained stable through most of the autumn, although they did fall back briefly around the turn of the year. However, they quickly recovered and passed €170 per 100kg in early April, for the first time since October 2008. Rising prices were driven largely by tightening supplies as lower domestic consumption offset some increase in export demand from outside the EU. Prices eased back in the early summer as poor weather curtailed barbecue demand. However, with supplies remaining tight, prices increased rapidly in late July and August as better weather arrived, passing €190 per 100kg in late August, their highest level since 2001.

German Pig Reference Prices

Source: EU Commission

Weaner prices have also been at a high level for much of 2012, reaching a peak of €62.50 per head in early April, the highest weekly price ever recorded. However, the usual seasonal decline during the late spring and summer was accelerated by high feed costs, which reduced demand from finishers, leading to the average price falling below €46 per head at the end of July. This proved to be a low-point as better finished pig prices pushed weaner prices higher, reaching €51 per head in late August.

Cull sow prices rose steadily from the start of 2011 and peaked in April, with the M1 sow average hitting €1.47 per kg, its highest level since 2008 as supplies were tight. Prices then eased back as demand was subdued, in line with developments in the clean pig market. By late July, the price was down to €1.34 per kg, although this was still 16 cents higher than a year earlier. Since then, it too has followed the finished pig price upwards and the price reached a record high of €1.53 per kg at the end of August.

Outlook

The German breeding herd has declined slowly but steadily over recent years. At the same time, sow productivity has improved, which has meant that pig slaughterings have generally increased year on year. In the early part of 2012, increased live exports have impacted on this trend, leading to a small reduction in slaughterings in the first half of the year. It is likely that this situation won’t change markedly through the rest of the year, suggesting that production for the year as a whole will be slightly lower than in 2011.

Looking further ahead, the recent rise in feed prices and the implementation of group housing for sows from the start of 2013 may impact on the size of the German sow herd. Germany has already made good progress towards compliance with the partial ban on sow stalls and most producers in the major regions in the North West of Germany are expected to have converted in time. However, some smaller producers, particularly in Southern Germany, may stop breeding so some decline in the breeding herd is likely over the coming months. This may be accelerated by high feed prices impacting on producers’ margins. These declines could impact on German pig meat production in the second half of 2013.

The upward trend in pig meat exports may continue for the rest of 2012, given the strong growth in shipments to Asian markets this year. However, subdued consumer demand across Europe may limit the growth and any reductions in production could lead to a fall in exports next year. Imports are also likely to remain subdued due to low consumer confidence, which will also impact on consumption levels.

German Pig Meat Production and Consumption Forecasts

December 2012

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