BPEX Export Bulletin - April 2011: Week 17

BPEX was present once again the Agrofarm exhibition in Moscow which was well attended by Russian pig producers. British breeders are now well established in the country but the stand still attracted a good level of interest.

EU pork exports are once again bucking the negative forecasts of the European Commission. They have reached 444,000 tonnes for the first two months of the year, up 15 per cent on the same period of last year. All destinations are up with the exception of Australia and the Ukraine with 122,000t shipped to Russia (+29 per cent), 71,000t to Hong Kong (+25 per cent), 37,000t to Korea (+150 per cent, see below), 36,000t to China (+25 per cent), 35,000t to Japan (+11 per cent) and 17,000t to the Philippines (+39 per cent).

Operators in the US report a narrowing of pig prices. Domestic price is US$ 67 cents, Mexico 73 cents, Brazil 68 cents, Russia $1.31, China $1.02, Spain 82 cents. Canada at 61 cents per pound has the lowest hog prices in the world.

Worrying reports from China indicate that the country is facing repeated outbreaks of foot and mouth disease that have affected no less than eight provinces so far. In addition, pig farmers are badly affected by high feed prices meaning that inventories are down three per cent. With a forecast growth of demand of two per cent in 2011, this means a shortfall of one million pigs and a potential large increase of imports for 2011-2012.

Denmark

Market

In Germany, the fine weather for barbecuing leads to a fine demand for loins, collars and shoulders, but due to ample supplies it does not result in prices going up. The market for legs is slightly weaker. The same applies for the bacon market in the UK. On third country markets the situation remains unchanged. Exports of sows remain unchanged.
(Sources, Danish Crown, Tican, Danish Agriculture & Food Council)

Decreasing use of antibiotics for pigs in Denmark

The unnecessary use of drugs in Danish pig production is decreasing according to statements from the drug database, VetSta. The threat of increased control with large consumption apparently had an effect. During the first quarter of 2010, consumption of antibiotics in Danish pig production decreased by 25 per cent compared to the same quarter the preceding year. Over the period from 2005 to late 2008, the consumption of antibiotics for pigs was quite stable until during the first quarter of 2010 consumption suddenly increased by 28 per cent. Such increase can lead to higher occurrence of bacterial resistance and there is a risk that it can be more difficult to treat some infections both with humans and animals. The Danish pig production represents 80 per cent of the consumption of antibiotics in Danish farming. The stricter control is directed towards pig farms having the highest consumption of antibiotics, and should the farmers exceed the set limit values they will be asked to reduce their consumptions within nine months. If the goal is not met the vet administration will issue an injunction requiring the farmer to reduce the number of pigs in his stables.
(Source, Ritzau)

Profit in Danish owned Polish pig company

2010 was a good year for the pig producers and shareholders behind the pig farms Poldanor and Danosha in Poland and the Ukraine. With an annual profit of DKK 107 million – out of a turnover of DKK900 million – the company succeeded for the first time in its history to have an equity exceeding one billion kroner (DKK). The company also had strong progress with its biogas activities, and now the Poldanor people also plan for strong expansions during the next years. The plans include a listing of the company. So the organisation is being streamlined in the new company Axzon with Poldanor and Danosha as subsidiaries of the same group. Since 2002, the company distributed dividends to its shareholders with one exception in 2008. As a total the company paid a dividend of 390 per cent of the paid in capital informs the management.

In connection with the pig production, Poldanor established a biogas plant, which delivers electricity to households in Poland. During 2009, Poldanor’s biogas plant delivered electricity to 6,000 houses. Last year 10,500 houses got their electricity from the Danish company. This year, Poldanor expects to deliver electricity to 18,000 households. Poldanor just inaugurated a new biogas installation after having established another plant previously this year and another two installations are being established. In 2012, the company is planning two more plants. The company will invest approximately €7 million in biogas plants this year and probably a little more next year says the management.

In 2004, the shareholders of Poldanor established the pig production Danosha in the Ukraine. Today, the company holds stocks that consist of 8,500 sows and related slaughter pig production while Poldanor has 18,500 sows. The investment in the Ukraine is starting to give good profits in the accounts of the Axzon group. The management finds that just now is a very good time to invest in pig production. The construction sector has not very much to do and so it is possible to build at low costs. Prices of food are increasing, which is according to forecasts. Therefore the company expects some good years ahead. The production is decreasing in many countries and at the same time there is an increasing consumption of pork in countries such as China. The Group also has its own training centre where it every year educates its employees, managers and executives.
(Source, Landbrugsavisen)

France

Madrange in trouble

The situation at Madrange is not improving. Demonstrations by employees on 28 April disturbed the activity of the cooked ham manufacturer. Volumes are decreasing, so is the number of staff and any project of selling the company is blocked by the Madrangeas family.

Porketto packed piglet meat

So far, JB Viande established in the north of France was very active selling piglets to (250,000 per year) wholesalers, butchers, processors and specialised grilling restaurants (rôtisseurs).

Today, JB Viande extends its activity with the launch of a new range of CPM well advertised in the trade press. This new range, named Porketto and designed for French multiples, offers attractive packaging with black trays and ping stickers showing the cooked product, each cut is clearly named and some names are very innovative: Paletine (small shoulder) Jarrotin (small knuckle), Gambinette (short leg) or Rôtissette (small joint). Piglet meat is juicy and full of flavour, all cuts have to be cooked in the oven (at high temperature to get the crispy effect). This is a promising market as today French consumers eat 40g of piglet meat per person year compared with 3kg in Portugal.

Piglets

Very little change on French markets. Exchanges are fluid in post weaning with offers adjusting easily to demands. In contrast, 25kg prices seem to be stabilising. If supplies remain moderate demand tends to be a little more conservative in some areas.

Cuts

Last week’s sales were rapid with a four-day weekly shop. Retailers are replenishing stocks especially in the Zone B départments where the Easter school holidays come to an end this weekend. Early May orders are also starting to trickle in. In the end, only a mixed weather forecast may encourage a little more caution.

Grimaud and Pen Ar Lan alliance

Grimaud, a world leader in animal genetics and owner of pig breeder Newsham in the USA has entered into an alliance with pig breeder, Pen Ar Lan, from Brittany. Under the terms of the agreement, Grimaud’s pig genetic business Choice Genetics will take a majority shareholding with Pen Ar Lan.

Germany

Market

With the first May weekend approaching, food retailers have increasingly advertised collars, chops, bellies and goulash cuts. Further, the current asparagus season is expected to benefit sales of hams of all varieties. Overall, pig meat sales volume is considered to be at a very high level. Besides large demand from the food retailers there is also ample demand from the processing industry. Prices however are not necessarily satisfying. Abattoirs and deboning companies complain about very low margins.
(Source, AMI)

VION

In 2010, VION Food Germany reached a stable turnover of €3.7 billion and slaughtered 10.7 million pigs, which was a slight increase compared to 2009 figures. However, VION now stated that the company will no longer accept a return on sales of below one per cent and will in the future focus on products with additional benefits on health or animal welfare rather than on increased turnover at all costs. Acquisitions will only be considered in case of very promising market opportunities. In an interview with the meat trade magazine, afz, Norbert Barfuss (head of VION Germany) stated that the company does not strive at reaching a market leading position but does appreciate every market participant helping to reduce unreasonable sales below cost prices.
(Source, ISN)

High pressure

The German herd book breeding associations are experiencing strong competitive pressure from both domestic and foreign competitors. According to experts, there is much to suggest that the breeding associations should pull together now because a union could lead to a significantly improved market position. Jointly, a total of more than 100.000 gilts could be sold per year which would enable a leveled competition with the Dutch or the Danes.
(Source, topagrar)

Organic pigs expensive and in short-supply

After more than two years of stable prices, prices for organic pigs for slaughter have continuously risen since the beginning of this year. According to the Federal Agency for Agriculture and Food (BLE), this is due to increase costs for feedstuffs as well as rather scarce supply. In February, slaughterhouses paid €2.92 per kg slaughter weight for E-classification pigs with a lean meat percentage of 54 per cent. Price even reached a peak of €3.06/kg.
(Source, fleischwirtschaft.de)

Netherlands

Feed research

The lowering of the mineral content of pig manure remains a research priority in the Netherlands. According to the LEI institute, the phosphorus content of pig feed could be lowered by 10 to 20 per cent. This would mean a reduction of 4,000 to 8,000 tonnes of the use of phosphate.

Spain

Pork production rising

For the first three months of 2011, 3.5 million pigs were slaughtered in Spain, a rise of 5.9 per cent on the same period of 2010. High feed prices do not seem to have the same impact as in other EU countries.

Cárnicas Serrano enters the Norwegian market

Following a rise of exports of primarily Serrano ham and chorizo of 15 per cent of 2010, Cárnicas Serrano has announced the signing of an agreement with Norwegian distribution company, NorgesGruppen. This is one of the major retailers in Norway with more than 2,685 points of sale and revenue that exceeds €6,500 million.

Russia

Efforts of Ministry of Agriculture not enough to stop African swine fever

Russia will need seven years, 10 to 12 billion rubles (RUB) and a high-level decision to overcome the African swine fever. Otherwise, the country might lose all of its pig population. Such is the forecast expressed yesterday by Chief Veterinarian of Russia, Nikolay Vlasov. Specific measures for suppressing the disease are set out in detail in the proposals by the Ministry of Agriculture.

However, in Mr Vlasov's opinion, some of them exceed the authority of the agrarian department. The extermination of wild boars, for instance, will necessarily involve defence and law enforcement agencies. As long as ministries shift responsibilities onto each other, Russia might lose all of its pig population, says the Chief Veterinarian. "What we need is a federal programme for eliminating the disease, a directive regulation from one centre,” says Mr Vlasov. This infection poses no threat to people but the industry, in mr Vlasov’s opinion, could go through a bad stretch if special measures are not taken promptly.

There have been 10 registered outbreaks of the African swine fever in the country, which resulted in 17,000 pigs having had to be killed. The list of new measures for suppressing ASF – as prepared by the Ministry of Agriculture and its subordinate agencies – deals with limiting pig raising and transportation of agricultural products in the Southern and North Caucasian Areas. It has been suggested that all contaminated territories should be divided into extermination, containment and surveillance zones. The extermination zone, which would include certain districts of Volgograd and Rostov Regions, might see the ban on animal breeding. The private farmers in these territories would probably be allowed to finish raising their current livestock for six months but after this period, neither domestic pigs nor wild boars should be left in the zone. All companies with meat storages are to be disinfected. Only after the zone is cleansed may new animals be brought in. They would serve a kind of indicator of the situation. The area closer to the south would be a contamination zone, but gradually measures to eradicate the plague would be taken there as well. On the whole, the operation would expand from south to north.

"In this manner, in about seven years, we might reach the republics of the North Caucasus, where the situation is more complicated,” said Mr Vlasov. All these planned activities would call for creating new veterinary labs, building waste treatment and disposal plants. Furthermore, there’s no vaccine for the disease so far.
(Source, Rossiyskaya Gazeta)

Russian Authorities to grant RUB9 billion to support poultry and pig breeding

The governmental authorities will appropriately RUB9 billion rubles to support poultry and pig breeding in 2011. This was announced by V.V. Putin during his report on 2010 government performance delivered in the State Duma. The Prime Minister invited the MPs to second the amendment to the Federal Budget. The total of RUB13 billion will be assigned in support of the agricultural industry. "In addition to what’s already being done!" Mr Putin specified.
(Source, meatinfo.ru)

Ukraine

Cabinet of Ministers imposes licence on lard import

The Cabinet of Ministers introduced a licence on imported poultry and lard. The resolution dated 11 April states that the import of fresh, refrigerated and frozen poultry meat and edible poultry offal is subject to licensing. According to this resolution, the import of lard without lean parts, pork fat and poultry fat is also subject to licensing. It was reported that licences are to be issued with the approval of the Ministry of Agrarian Policy and Food of Ukraine. As reported earlier, in January the Ministry of Economic Development and Trade of Ukraine initiated the introduction of licensing for meat import in 2011. Licensing for meat import was previously abolished in June 2009.
(Source, ukranews)

Italy

Campofrio takes over Fiorucci

The Spanish company now part of Smithfield Foods has completed its take-over of major Italian processor, Cesare Fiorucci. The company own four processing factories in Italy and one in the US and is one of the leaders of the dry-cured ham market.

Slovakia

Carnibona taken over

The Slovakian pork processor leader on the home market was created in 2007 with the fusion of Mecom in Slovakia and Debreceni Hungary. Hungarian processor Kasier was bought in 2010. The company recently announced the closure of its Debrecen pork plant and the relocation of its activities to its other four Hungarian plants. The ownership of the group has been passed to Madrid-based Thesan Capital managed by ex-Campofrio Directors José Luis Macho and José Garrido.
(Source, Agra Europe)

Sweden

Meat labelling pledge

The four of Swedish largest retailers – ICA, KF, Axfoods and Bergendahls – have signed an agreement to put the Swedish origin on processed meat products labels.

China

New nucleus farm for Liu Ma

Liu Ma Breeding Tech Co., a subsidiary of Active Nutrition Group has opened a third 1,200-sow nucleus farm near Beijing called Wuzi Breeding Farm, 100km away of the two other farms located in Shunyi district. Through franchising the company has opened more nucleus farms in Hebei, Henan, Shanxi and Jiangsu in 2010. Liu Ma works closely with Waldo Farms Inc. from the US and produces GPs for the Chinese market.
(Source, Asian Pork)

Agfeed is expanding

The feed producer has become the largest integrator in Southwest China with 2,000 staff and 600,000 pigs produced. The company uses genetics from Hendrix and may open its own abattoir in the next two or three years.
(Source, Porc Magazine)

Shengye alternative breeding

The company markets branded meat of wild boar, Changbaishan, Daxin, Jilin Black, Taihu, Beijing Black, Tibetan and Mangalitza crossed pigs in Beijing, Tangshan and Tianjin. The high nutritional quality and fat composition of wild boar meat is a strong selling point and pork belly is the highest prized part.
(Source, Asian Meat)

Chuying investing

The Shenzhen Stock Exchange–listed company is investing US$609 million in an integrated pig production project in Henan province. Chuying’s Chairman, Hou Jianfang, expects 600,000 pigs to be produced yearly in Sanmenxia.

India

Abattoirs’ upgrade

The country plans to upgrade its municipal abattoirs to international food hygiene standard as it hopes to boost its meat export revenues. At the moment, only 35 private plants are certified for export and the country exports 500,000t of mostly buffalo, mutton and goat meat.
(Source, Asian Meat)

Malaysia

English roast pork on the menu

The Pork Place, a specialised pork restaurant part of a small chain may have the dish on the menu but the premium pork is produced locally. Customers can also buy pork, sausages and cold meats in the restaurants.
(Source, Asian Meat)

Korea

Consequence of FMD

For the period January to March, Korea pork imports are up 143 per cent in volume and 198 per cent in value. For the first two months of this year, EU pork exports have quadrupled to 37,213 tonnes and Korea has jumped as the third largest destination for European pork. Meanwhile, the number of pigs culled is still not finalised but pork production was down between 28 and 31 per cent in February. Korean consumers have only registered a minimal negative reaction to the crisis, according to retailers and processors. Rabobank expects pork consumption to be down six per cent in 2011 due to higher prices. In February, consumption fell by 15 to 18 per cent, again due to the high prices.

Philippines

RDF Meatshop Inc. expands

The pork retailer with 70 Fresh Options butchery outlets has opened a 2,500-sow multiplication unit with PIC in Tarlac province. The British breeder has also opened a new 2,400-sow multiplication farm with Venvi-Agro in Ilocos Norte bringing the number of multiplication units to 14.

In a separate development, Topigs has signed a partnership agreement with Family Farms Inc. to develop multiplication units and raise the output from the current 250,000 to 500,000 slaughter pigs.
(Source, Asian Pork)

Thailand

CPF plans

Charoen Pokphand Foods (CPF) plans to invest US$1.33 billion over the next five year as the company benefits from the high value of the Thai baht (THB). The company, the largest pig and poultry producer in Asia, will add Tanzania to Cambodia, India, Russia, Vietnam and the Philippines as recipient of foreign investment. Turnover in 2010 increased to US$6.3 billion and profits to US$452 million. (+33 per cent).
(Source, Asian Pork)

Viet Nam

Pork growth stalling

Higher feed prices, higher input prices and the spread of blue ear and foot and mouth diseases have a negative impact on the pig sector. The Ministry of Agriculture has revised its growth prospects to 7.5 to 8.0 per cent for the period 2011-15. Meat production should rise to 4.28 million tonnes (live weight) and feed production to 12 million tonnes.

Pork imports dissuaded

Pork imports were worth US$89.8 million in 2010, down nearly 50 per cent on 2008. The government is taking an unabashed protectionist stand. For instance, we will not progress further market opening discussions at this stage.

New Zealand

Interesting commonalities

The pork sector has been going through a turgid time in the last couple of years. Night raids on piggeries by animal welfare activists assisted by a gullible television channel have been followed by new controls on farrowing conditions. They also have to deal with the threat to open the domestic market to disease-carrying imported pork (PRRS) according to the industry's public relations firm. It was clear from the footage that the activists stirred the pigs to a frenzy and made the piggery conditions look much worse than they were. But, stunned by the virulence of the attack, the industry struggled to put its side of the story and, effectively, the farmer was left to face the media barrage on his own.

Inundated with messages of public concern, the Government was forced to act. Sow stalls will eventually be banned and the use of crates after farrowing will be restricted to just four weeks. The Agriculture and Forestry Ministry has estimated this will cost farmers NZ$266 a sow and lift pork prices 4.5 per cent. A survey showed that shoppers are not prepared to pay extra for free-range pork. The alternative is to buy imported pork. Until now, pork was imported in frozen or cooked form and though it makes up 40 per cent of consumption, it has not been a serious competitor to local fresh pork but the import of fresh pork is now permitted. It is viewed as the price to pay for being a major meat exporter.

The argument that NZPork should be promoting is that the imported pork is likely to be coming from countries that have welfare standards not as rigorous as New Zealand’s as sow stalls and farrowing crates are common in many of these countries.
(Source, NZ press)

USA

Margins, margins...

Although nearly all talk is about the very good prices achieved by pig producers and strong pork exports lifting the market, the reality is that with high feed prices, margins are not exceptional and even down. Whilst pork prices are up US$27 per head, feed costs are up US$32 per head. This means that producers remain reluctant to increase production. There are also many empty pig units in the US but with owners deeply in debt, there is no capacity for repopulation either.
(Source, Genesus Inc.)