June 30, 2023

 

Tight supply situation and challenges ahead for UK pork industry

 
 

 

In the first three months of 2023, the UK pork industry has been grappling with a tight supply situation both domestically and across Europe, UK Agriculture and Horticulture Development Board reported.

 

UK pork production in Q1 recorded an 11% year-on-year decline, while EU production was 8% behind compared to Q1 2022. These factors have led to significant price increases in both the UK and European markets since the beginning of the year.

 

The recent June census figures also revealed a significant decline in the UK breeding herd, particularly in the number of sows and gilts intended for breeding. This decline has directly impacted the supply of finished swine in 2023.

 

From January to April, 3.3 million clean swine were slaughtered, a 10% decrease compared to the previous year. It is projected that Q2 will experience the lowest supply availability, with a 17% year-on-year decrease in clean swine slaughter due to fertility issues caused by the previous summer's heatwave.

 

Recovery in numbers is expected to be limited in the second half of the year, resulting in only marginal growth (+7,000 head) in the breeding herd. As a result, the projected production of pork in 2023 is expected to decline by 15%, reaching approximately 890,000 tonnes, with average carcass weights at 89kg.

 

The UK's export volumes of pork experienced a 21% year-on-year decrease in the first quarter of 2023. This decline is a direct consequence of reduced production and the resulting limited availability of exportable supplies. This downward trend in export volumes is expected to continue throughout the year, with no substantial increase in production volumes. It is forecasted that the UK will export 17% less pork in 2023 compared to 2022.

 

The European Commission's outlook reports a decline in domestic meat consumption in the EU, specifically for pork, which is projected to drop to approximately 31 kg per capita by 2032. While this decline aligns with the longer-term trend of consumers adopting less meat-intensive diets, short-term factors such as increased cost of living have accelerated the decline.

 

Chinese demand remains an important factor in export volumes, but the anticipated bounce back to the market following the lifting of China's COVID-zero policy has not materialized as expected. Consumers in China are exercising caution as the economy recovers, allowing Chinese production time to catch up, despite reports of further African swine fever outbreaks. There are indications that demand for offal will remain stable as consumers and food service outlets seek more affordable cuts.

 

In the first three months of 2023, imports of pork to the UK witnessed a 17% year-on-year decline. Initially, there were expectations of import volume growth to compensate for reduced domestic supplies, despite a negative demand forecast. But challenging market conditions on the continent have affected these expectations. As the UK approaches its seasonal demand peak, it is anticipated that this situation will begin to change.

 

European producers have faced similar challenges to those in the UK over the past couple of years, resulting in a contraction of the EU herd and reduced pork production due to lower slaughter numbers.

 

This trend of lower production and slaughter is expected to continue throughout 2023, with a projected decline of 5.6% compared to 2022, which had already seen a 5% decline. The tight supply situation has led to a 3% decrease in EU export forecasts compared to the previous year, while swine reference prices have experienced robust growth in the early part of the year, reducing EU products' competitiveness in the UK market.

 

Assuming a 3% decline in domestic consumer demand and stable swine prices, it is anticipated that UK pork import volumes will decrease by 4% by the end of the year.

 

-      UK Agriculture and Horticulture Development Board

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