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Weekly Overview: Pig Sector Faces Market Challenges

23 February 2015

GLOBAL - The pork sector has not been having an easy time lately. To be sure, feed prices are well down from their peak but oversupply in the pig meat market is squeezing producer margins. In the US, a prolonged strike by dock-workers is not helping the situation. Three European retailers have been awarded top marks in an assessment of animal welfare standards.

Strong production and weak demand are conspiring to push pig prices down in the UK and the EU generally, according to a market expert speaking at the Outlook Conference in London recently.

Stephen Howarth, Market Specialist Manager for the pig sector with BPEX, identified the root cause of the problem as supply running ahead of demand in both the United Kingdom and the European Union over the last year. Prices have been in decline for the last 12 to 18 months, he said.

Comparing production costs and pig prices across Europe, Mr Howarth said UK margins are better than most. Production costs remained below prices for 18 months in the UK and although they are now approaching break-even, per-kilo prices are well below cost of production in almost all other EU countries.

This difficult financial situation is leading to an increase in sow slaughterings in a number of countries, not least in Germany.

Looking ahead, he predicted that UK pig meat supply will remain strong in the year ahead, adding that demand will need to pick up for producer prices to become firmer.

Both the United States and Canada exported less pork in 2014, as trade was disrupted by PEDv and the Russian bans, among other factors, according to a BPEX report.

Throughout 2014, pork trading in the US followed the trend of the previous year, with imports increasing by 18 per cent as exports were down one per cent, reflecting growing domestic demand.

However, with limited availability but sustained demand, unit prices for US pork were up 11 per cent on the year and by much more than this in the middle part of the year. This brought the total value of pork exports in 2014 to $4.9 billion.

In Canada, exports fell three per cent in 2014 compared to the year before, with imports down four per cent.

The situation in the US is not helped by a prolonged strike by West Coast dock workers.

Three European supermarket groups have been given top marks in an annual global farm animal welfare report published recently. Full marks were awarded to Marks & Spencer, Waitrose and Coop Group (Switzerland).

Now in its third year, the Business Benchmark on Farm Animal Welfare (BBFAW) provides an annual review of how the world’s leading food companies are managing and reporting their farm animal welfare practices.

Jackie Linden

Jackie Linden

Top image via Shutterstock

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