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Weekly Overview: Agreement is Reached so is it All Plain Sailing Ahead?

30 September 2013

ANALYSIS - Reaching agreement over difficult issues is never easy but the challenges may not stop there, as the European Union may find over agricultural policy reform. Smithfield and Shuanghui may also experience some storm clouds on the horizon with their merger, just as World Trade Organization membership did not solve the problems of Russia's pig industry.

On the European Union Common Agricultural Policy, political agreement and Smithfield Foods' shareholders voted in favour of the companies acquisition by Shuanghui International so everything is now settled on these two issues, right? Instead of plain sailing ahead, there could still be dark clouds on the horizon, it appears.

Europe’s farmers now know where they stand on payment changes, following the completion of the political negotiations on the reform of the Common Agricultural Policy (CAP).

Having agreed the key Commission measures that aim to establish fair and practical farm subsidies through policy reform, Member States are now presented with real challenges ahead as the boundaries of the CAP extend over increasingly varied farming and political landscapes.

In order to increase payments in newer Member States such as the Baltic countries, money has to be taken from those receiving more, such as Belgium and the Netherlands, according to the EU agriculture spokesperson.

Earlier last week, US-based pig meat giant, Smithfield Foods' shareholders voted overwhelmingly to approve the proposed strategic combination with Shuanghui International Holdings Limited.

There were mixed reactions to the news. The vote was not unanimously in favour of the deal and the National Farmers Union's president commented: "It is a sad day for family farmers and consumers when the largest pork processing company in the United States is sold to a Chinese interest."

One year ago, Russia finally joined the World Trade Organization (WTO) but its pork market remains unstable, according to meat market analyst, Andrey Dalnov.

He writes that it has taken a year for Russia's pork prices to climb back after the last plunge was triggered by the admission of Russia to WTO and the rise would not have been possible without a host of events beyond purely market supply and demand interaction.

In other news, the number of new cases in the US positive for porcine epidemic diarrhoea (PED) continues to rise steadily. The number of affected states remain the same at 17 but the most recent data shows a sharp rise of North Carolina.

There has been a reported outbreak of Foot and Mouth Disease involving pigs in Zabaykalsky Krai in southern Russia.

In the UK, the pig industry is enjoying better times. However, at the risk of spoiling the good mood, it has been estimated that, should an outbreak of an exotic disease hit the sector, producers would suffer an almost immediate drop of up to £0.40. This would would plunge every commercial pig unit in the country deep into the red.

Finally, USDA has released a video on the role of vaccination and immunity in establishing and maintaining pig health.

Jackie Linden

Jackie Linden

Top image via Shutterstock

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