March 18, 2004
Pork Industry Concerned As EU Ends Export Subsidies
The European Commission has ended pork export subsidies as a result of a supply glut of pork coupled with rising prices. However, pig producers are concerned that the efforts to reduce food prices further could have harmful consequences for the industry.
Farm to retail price spread has dropped from 284% to 271% for fresh pork over the past six months. Similarly, the bacon spread has narrowed from 374 per cent to 335 per cent over the same period.
This has been caused by higher producer returns rather than price cuts at point of sale. But the pork industry is concerned that further cuts in retail margins may lead to increased imports. The Meat and Livestock Commission has calculated that the UK is now only 47 per cent self-sufficient in pig meat.
However the European Commission believes that the industry across Europe has now come out of the crisis, and as a result has lifted export subsidies. The move reverse the decision taken in January by the EU executive to subsidise exports of fresh or frozen half-carcasses and all main cuts such as hams, shoulders and bellies to help struggling producers shift their massive stockpiles and so boost EU market prices.
The refund was set at €40 per 100kg and was valid for all third countries (except the 12 acceding and candidate countries).
"Exceptional circumstances call for exceptional measures," said Franz Fischler, EU Commissioner for agriculture, rural development and fisheries. ¡°The temporary reintroduction of export refunds for pig meat is the last resort, after having exhausted all other means. This measure will help pig farmers in the EU who have been shaken by an extraordinary crisis."
At the time, the Euro was very strong against the dollar and feed prices were also high due to last summer's drought. The industry had also suffered a long period of falling prices between October and December 2003, though the decline in pig meat prices came to a halt in January and price levels remained stable at a low level of €112/ 100 kg.