Speaking at the World Pork Conference in Qingdao, China, Raimondo Serra, the agricultural counsellor for the European Commission to China said that the EU is seeing average prices 10 per cent lower than in 2008 at around €147 per 100 kg.

"In 2008, there were a lot of factors impacting on commodity prices," Mr Serra told the conference.

"This year's cycle in prices follows the 2008 pattern but is much lower."

The 2008 prices were well above the five-year average and now prices have started to fall back to the 2006 level.

However, Mr Serra said that prices and slaughtering activities do no correspond as the slaughter figures for 2008 and 2009 are similar, but the prices vary considerably.

This is because other factors have come to play in the market to skew prices.

Mr Serra said that transportation costs and feed prices, in particular the price of soybean meal, have been affecting pig prices this year.

Other influences have been the fluctuating exchange rates around the world that have impacted on all commodity prices.

And he added that the debts that the producers had built up in 2007/08 have not been covered.

"For some years to come, more and more players will be leaving the industry," Mr Serra said.

With the contraction of the industry many of the farms that are closing are the small holdings that proliferate in the new EU member states, as they find more and more difficulty in staying in business.

The EU industry is also being affected by prices in other areas of the world with both Brazil and the US having prices below those in Europe.

Mr Serra showed that global production of pig meat is being led by China, which has 44.3 per cent of the market, with the EU just over half this figure at 23.3 per cent and the US next with 10 per cent market share.

However, despite China's large production, it is still a major importer of pig meat and the EU is a major supplier.

The EU's main export market is to Russia, followed by Hong Kong, Japan and China.

However, Mr Serra said the EU's export trade is showing a clear trend by falling by 10 per cent over the last year.

"The EU and the CIS are the major exporters to China with the EU having 50 per cent market share," said Mr Serra.

Imports into the EU are also falling – by five per cent this year – although the main suppliers remain Chile and the US, with Switzerland becoming more and more important.

The outlook for pig meat consumption in the EU is stable.

"There are still opportunities in this market, and the EU can see opportunities here and the possibility for a bright horizon," Mr Serra said.

September 2009