Speaking at the recent China Pig Summit at the EuroTier Exhibition in Hanover, International Director for the Danish Meat Association, Knud Buhl, said that forecasts for the coming year predict a three per cent drop in pig meat production in the EU.

However, he said that pig meat exports from the EU are expected to remain fairly stable.

And the sector is going to see little effect in the competition from the other meats such as poultry and beef.

Mr Buhl explained that pig meat production across the world had risen by around 15 million tonnes over the last decade and it is forecast to grow further.

He said the main growth areas for pig meat production are going to be in the developing world with China potentially increase output from 38.8 million tonnes in 1998 to a current production of 48 million tonnes rising to 55.1 million tonnes by 2012 - a rise of 16.3 million tonnes or 42 per cent.

Brazil has already seen production rise from 1.7 million tonnes in 1998 to 3.2 million tonnes today with a forecast rise to 3.8 million tonnes in 2012 - a rise of 2.1 million tonnes or 123 per cent.

Production in the EU-27, on the other hand, has been stable over the same period, maintaining 22.1 million tonnes.

"The global pig meat market is dominated by China, " he told the conference.

"But Europe is still a very important production and consumption area."

He said that out of the 22 million tonnes produced, Europe exports 2 million tonnes and consumes 20 million tonnes.

"Although Europe only has 10 per cent of the global population, it has 20 per cent of the global pig meat consumption."

He said that in Europe as with the rest of the world, the pig meat producers have been confronted with a series of difficulties headed by the rise in feed costs.

These feed costs have rocketed above the prices that producers are able to get for their pigs, which has created great pressure on production and as a consequence, there has been a reduction in production.

"There has been a significant reduction in the pig herd and in particular in the breeding herd," he said.

Poland and Spain have seen significant reductions in their pig breeding herds and across the EU the herd numbers have fallen by 5.5 per cent, with the breeding herd down by 8.3 per cent.

He said that in the fourth quarter of 2008 EU production is expected to be down by about four per cent and this is going to carry through into 2009 with production down by more than four per cent.

However Mr Buhl added that it was not a phenomenon restricted to the EU: both the US and Canada expect to see a significant fall in production next year.

The only countries predicted to increase production are China and Brazil with Russia and Japan maintaining present production levels.

"We might also see European exports drop next year, largely because of the economic crisis," Mr Buhl said.

However, despite a somewhat gloomy forecast on production, he said that he was hopeful that there will be an improvement in the financial situation for pig farmers.

"I thought that it would have happened already but it has been slowed down by the present economic climate," he said.

For EU exports, Japan used to be the most important market up to 2004, now the favoured destination is Russia and in the future, Mr Buhl said, it is likely to be Hong Kong and China.

China took three per cent of the EU production in the first eight months of this year and it has seen a rise of 25 per cent since 2004.

"It is a very important market for the EU," Mr Buhl said.

"The EU is cooperating with China over trade and exports and also in further processing, particularly in casings."

A Sino-Danish Porcine Genome project has been developed and there has been an increase in the export of breeding pig to China.

China has also become a complementary market for the EU because of the amount of by-products it takes.

In China, by-products such as ears, feet, heart, liver, stomach and intestines represent a relatively big share of the value of the slaughtered pig whereas in America and Europe, the value of the pig depends very much on the lean meat percentage with only marginal contribution from the by-products.

Mr Buhl said the EU and Denmark needs to build and maintain good relations with China in order to ensure that the Chinese hygiene regulations can be recognised and achieved.

He said that although China will continue to expand its own production, there will remain to be a market there for more imports and he added that he believed that while certain tariff barriers will be removed, health and hygiene barriers could still remain.

* "Although considered self-sufficient, China will become the world's most important importer of pig meat"

Knud Buhl

He said that Chinese taste and product preferences might change but the substantial differences between regions will remain.

In the short and medium term, import trade will remain focused around by-products.

China's own prospects for export of pig and poultry product will remain limited because of veterinary restrictions although there could be an increase in processed, heat-treated products to neighbouring countries.

While import tariffs will be further reduced the number of trade conflicts and technical barriers to trade might increase. He said that veterinary and sanitary barriers will remain.

Although considered self-sufficient, China will become the world's most important importer of pig meat, Mr Buhl concluded.

November 2008