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Pork Industry Overview, February 2003: European Union

by 5m Editor
1 March 2003, at 12:00am

By USDA, Foreign Agricultural Service - This article provides a summary of pork industry data from the USDA FAS Livestock and Products Semi-Annual 2003 reports for the EU. Links to the full report is also provided. The full report includes all the tabular data which we have omited from the summaries.

EU - Market Outlook 2003

Executive Summary

The EU pig crop increased in 2002 compared to both 2001 and previous estimates. This was due to a combination of increases in the Spanish and Danish pig crops and a less than anticipated decline in the EU sow production as older animals were carried over from 2001 following the Foot and Mouth Disease (FMD) outbreak.

Despite low prices, Spanish pig production is forecast to continue to rise in 2003 and into 2004.

Additionally, there has been some reopening of the traditional markets after the FMD crisis. In particular, Danish pork exports to Japan rose by 10 percent, despite the safeguard clause, while EU exports to Russia also showed some recovery.

Swine

The EU pig crop increased in 2002 compared to both 2001 and previous estimates. This was due to a combination of increases in the Spanish and Danish pig crops and a less than anticipated decline in the EU sow production as older animals were carried over from 2001 following the Foot and Mouth Disease (FMD) outbreak.

This overall increase from the previous forecast is despite higher 2002 sow beginning stocks. While positive market expectations and an ongoing shift towards economies of scale saw increases in sow stocks in France, Denmark and Spain. The increase was ultimately tempered by a decline in the UK sow numbers, where low market prices, disease and a lack of producer confidence have weighed heavy on the market. Also, in the Netherlands and Belgium, where environmental and animal welfare restrictions continue to have a negative impact on herd size.

In 2003 sow production is forecast to fall back to 2001 levels. This is in line with poor market expectations on the part of producers - 2002 did not see the market improving as previously anticipated due to consumers returning to beef and strong competition in export markets. As such, the EU pig output is forecast to drop by one million head. As in 2002, in contrast to most other EU Member States and despite low prices, Spanish pig production is forecast to continue to rise in 2003 and into 2004.

The poor internal EU market conditions in 2002 led to a halving of live imports as compared to 2001. In contrast, live animal exports rose sharply following the re-opening of many of the traditional EU markets which closed the previous year due to FMD related concerns. In particular, Austria resumed exports to Croatia and the former Yugoslavia; and the Netherlands to Croatia and Bosnia-Herzegovina, Germany increased exports to Romania and Croatia. While the 2003 import number is forecast to remain very low, exports are expected to continue to recover as the shadow cast by FMD continues to recede.

Although much below previous forecasts, EU total slaughter in 2002 increased compared to 2001, much of this due to increases in Denmark, Spain and, to a lesser extent, France. Smaller herds necessarily reduced slaughter volumes in Belgium, the Netherlands and the UK.

As a consequence of both this and a market led reduction in the herd renewal rate in much of the EU, a small contraction in the 2002 EU ending inventory is expected. The smaller herd size is forecast to further reduce the slaughter number in 2003. This is most notable in the UK where ongoing reductions in the breeding herd mean that the slaughter number is forecast to hit a 30 year low. Another small contraction in EU ending inventories is expected in 2003.

The average slaughter weight in the EU increased in 2002. This was largely due to increases in the UK, where animals held on farm in 2001 during the FMD outbreak entered the food chain in 2002, and in Germany due to a change in the German pricing structure. Despite this, the downward revision to the previous, albeit increased, slaughter estimates for 2002 means that EU pig meat production rose less than previously forecast in 2002. EU pig meat production in 2003 is forecast unchanged, a small decline in the slaughter number expected to be offset by a further small rise in slaughter weight. Of particular note is the expectation that production in Spain will continue to rise.

EU pig meat exports rose in 2002 compared to 2001 but to a lesser extent than previously forecast.

There has been some reopening of the traditional markets after the FMD crisis. In particular, Danish pork exports to Japan rose by 10 percent, despite the safeguard clause, while EU exports to Russia also showed some recovery.

The 2003 forecast sees a further increase in exports as a result of the anticipated ongoing improvement of trade with traditional markets. While overall EU pig meat consumption rose in 2002, human consumption fell. In Germany this was partly a result of food scandals while elsewhere in the EU, particularly in France and Belgium, consumers are returning to beef. The overall increase recorded is a consequence of a rise in private stocks, such as cured pig meat in Spain, due to low domestic prices.

EU total pig meat consumption is also forecast to rise in 2003. However, human consumption is again forecast to fall while private stocks rise. In addition to the prevailing market conditions encouraging increased storage of pig meat products, Private Storage Aid (PSA) will end in 2003 as shown in the official ending stock figure.

To view the PDF report and tables (ideal for printing) Click Here

List of Articles in this series

Pork Industry Overview, March 2003: Russian Federation
Pork Industry Overview, February 2003: Canada and Brazil
Pork Industry Overview, February 2003: Korea, Hong Kong, Japan and China
Pork Industry Overview, February 2003: Netherlands and Poland
Pork Industry Overview, February 2003: Australia
Pork Industry Overview, February 2003: European Union

Source: USDA, FAS - International Agricultural Trade Report - February 2003