November 8, 2012

Europe's pig meat production may decline

The entire Europe is likely to experience greater declines in pig meat production than originally expected.

That is the warning from BPEX in its latest report, which examines the consequences of the forthcoming partial sow stall ban across the EU on January 1, 2013.

The effects of the new welfare legislation, combined with rocketing feed costs, could lead to substantial price increases for pork and pork products and some supply shortages, according to the report.

The report, Market Impact of EU Regulations on Group Housing of Sows (October Update), outlines the latest state of readiness of the EU member states to implement the partial sow stall ban. It shows 18 member states say they will be ready for the new legislation, though some still have a long way to go.

The likely consequences of the introduction of the partial sow stall ban have been made worse by the financial crisis producers are facing as a result of rocketing feed costs. The report shows three possible scenarios as a result of the changes in legislation: first, a fall in pig meat production of around 5% from 2011 levels by 2014, leading to price increases, but with a fairly rapid recovery as productivity improves; second, a sharper fall in production as higher feed prices add to the impact of the stall ban, leading to shortages of pig meat and substantial price increases, resulting in pressure for political intervention; and third, realignment of production so that breeding is concentrated in north-west Europe and finishing in eastern and southern Europe, reducing overall production costs.

AHDB senior analyst and report author Stephen Howarth said, "It is difficult to say which scenario is most likely, due to the impact of huge feed price rises. Recent pig price rises in Europe have mitigated, to some extent, the feed price rise, which means scenario one remains the most likely. However, if the high level of EU pig prices is not sustained, then scenario two could easily become reality."

BPEX chairman Stewart Houston said, "The sow stall ban cannot be taken in isolation. It is happening at a time when pig producers are under considerable financial pressure, due to high feed costs."

"Most producers have been left in a loss-making position. The situation is not likely to improve markedly in the immediate future, unless recent pig price rises are sustained, since feed prices are expected to remain high."

"We are already seeing producers leave the industry both in the UK and across Europe. This will lead to a fall in production and a consequent rise in prices," he added.