March 10, 2011

 

Rising feed costs and dioxin crisis to accelerate EU hog decline

 

 

Due to more costly fodder prices and the feed contamination crisis adding pressures on margins from an animal welfare clampdown, the rate of decline in the Europe's hog herd is to double again this year.

 

USDA attaches lifted to 2.7% for the decline in EU pig numbers in 2011, an increase from a rate of 1.2% last year and 0.6% in 2009.

 

A significant number of farmers had already been expected to close due to the costs of implementing, by the start of 2013, that limit on pollutants from hog farms, and on the intensity of rearing allowed.

 

"As margins have been tight since 2007, farmers are reluctant to invest in their farms," the attaches said.

 

However, the process had been quickened by the surge in grain prices, while Germany's feed-tainting scandal in January, in which traces of dioxin were found in animal food, sapped pork prices by weakening consumer demand for pork.

 

Carcass prices had fallen more than expected in many areas, although a European Commission programme of intervention buying had succeeded in stabilising the market, the briefing said.

 

"In February, carcass prices recovered but remain under the level on which most fatteners in north western Europe could achieve positive margins."

 

At the fresh estimate of 146.3 million animals, the EU herd is set to end the year down 17.4 million animals, or more than 10%, since the turn of the century.

 

Prospects look exceptionally poor for farmers in Denmark, France, Spain and Benelux, a grouping which includes Belgium, which prioritised the industry's plight during its presidency of the EU late last year.

 

However, piglet production is expected to rise in the UK due to increased breeding efficiency and disease control, and in Germany, where costs are kept down with the use of cheap, immigrant labour.

 

Indeed, French authorities are pressing for commission action over what they deem as an unfair competitive advantage that Germany has gained from allegedly breaching limits on immigrant workers.