Pig production in an affluent and developed society

by 5m Editor
16 June 2004, at 12:00am

UK - Ian Campbell reports from the European Pig Producers Congress at Odense, Denmark This gathering of European farmers in the European country with the most advanced pig industry - Denmark - reinforced my belief that here in Britain we have opportunities that exceed those of our continental neighbours.

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NPA is active on members' behalf in Brussels & Whitehall, and with processors, supermarkets & caterers - fighting for the growth and pros-perity of the UK pig industry.

This might seem an odd statement, for on this trip we visited some brand new, state-of-the-art breeding and finishing buildings owned by confident Danish farmers and financed by long-term, fixed-interest loans.

(It was interesting to note that two of the farms we visited were owned by former farming industry advisers; a distinct difference the pattern here, where most advisers have travelled in the opposite direction, away from earning a living in active pig production.)

I suppose the most fundamental issue that struck me was the lack of logic behind Denmark's current position. This is an industry that is having to meet extremely high standards of environmental control, being in a country that is made up of a series of low lying, high water table islands, occupied by a society increasingly separated from its agricultural roots.

The problems of manure disposal and ammonia emissions can be met by technical solutions but only at a significant cost. Add an expensive labour force into the equation and it can be seen that competing with other world players can only become more difficult.

So far, the Danes have managed to compete in the global marketplace because of excellent farm performance and sophisticated processing, sales and distribution.

The farm performance has been enhanced by continued investment and by a condensing of the industry into fewer, larger pig units run by young, professional farmers. The high level of investment is encouraged by the availability of 30-year loans that can be fixed at five percent, a planning system that works closely with the farming community and, above all else, a confidence in the industry that all will be well.

The big question left in my mind was whether all this was sustainable for an industry that exports over 80 percent of its production, probably half of which goes into markets where there is no interest in production standards other than what is required for safe, consistent quality pigmeat priced at commodity levels.

The evidence from economists would suggest that countries such as Brazil, Canada and US will have, for the next few years at least, the scale and economy of production to outbid the Danes in Asian and Russian markets, forcing Danske Slaghterie to keep producer prices at a less than optimum level if they are to maintain market share.

It is the net consequence of this inability to reflect value back for their production costs, which seems to me to be such a risk for Danish producers. As I see it the following happens…

The shake out of Danish producers accelerates; the big get bigger and the small family farm gives up.

The disparity between what consumers perceive as the right way to farm animals and the economies of intensive livestock grow, despite everyone's best endeavours. (If a large part of what constitutes 'animal welfare' is the relationship between the stockman and his pigs, then automation, a prerequisite of keeping labour costs down on the larger units, threatens that.)

The need to compete on the world market brings a constant risk that politics or disease will affect demand outside Europe. This poses a constant threat of oversupply into the internal market where consumer values are much more likely to adequately reward production standards.

Denmark's excellent quality pigmeat continues to put a bottom in our EU market affecting everyone.

In the long term it is probably true to say that places such as the US, Canada and Brazil will have to meet similar environmental costs and the same will be true for the European accession countries, so it is the short and medium term that poses the problems.

Animal welfare ideals are never likely to be equitable across the world, making a World Trade Organisation agreement that protects EU production very unlikely.

In these circumstances, I would have my doubts as to whether Danish confidence in its investments is fully justified. The situation seems to have some similarities with our own housing market in attempting to defy the laws of gravity.

In fact I left Denmark with much more confidence that even given the Danes' supporting structures in finance, planning, technical backup and marketing, Britain was better placed than Denmark for a pig production enterprise. The key issue is the undersupply of our own home market and that magic confidence factor that will see a young, hungry generation take the opportunity to earn a living from pigs.

Source: National Pig Association - 16th June 2004

5m Editor