July 6, 2020


Germany aims to end cheap meat production and subcontracting in meat industry


Julia Kloeckner, German Agriculture Minister wants to address the issue of domestic low cost meat production and subcontracting in meat plants after a recent COVID-19 outbreak west of the country, Reuters reported.


Low cost meats such as peppered salami and traditional sausages are a German staple, but a recent COVID-19 outbreak at a domestic meat plant has raised concerns regarding the measures these meat companies take to maintain low prices.


Efforts to track down the migrant workers infected by the virus was disrupted after it was discovered that slaughterhouses are unable to provide the home address of their workers as they were hired through subcontracting companies. Some of these subcontracting firms also subcontract to find workers.


Hubertus Heil, German Labour Minister said a new law will be introduced to force meatpackers to hire workers directly.


Agriculture Minister Kloeckner said she will implement measures to address the effects of low domestic meat prices such as animal welfare concerns, abattoir working conditions and farmers' incomes, even though it might affect international businesses.


One proposal by the Agriculture Minister was an animal welfare levy, meant to compensate farmers to improve animal husbandry. In addition, she intends to propose European animal welfare labelling on meat products to prevent pushing meat processing companies away to cheaper countries.


In a meeting with the meat sector and retail representatives, Agriculture Minister Kloeckner said meat should not be a luxury commodity but it should not be a daily junk food product.


Numbeo, a living website said in Germany, a beef leg costs EUR 10.64 (~US$12.01; EUR 1 = US$1.13) It is the cheapest when compared to EUR 16.67 (~US$18.81) in France, EUR 14.58 (~US$16.45) in the Netherlands and EUR 12.32 (~US$13.91) in Denmark.


VDF, the German meat processing industry association welcomes the new changes. Heike Harstick, VDF director said the industry will start employing workers directly for slaughtering, cutting and meat packing as soon as possible.


The ZDG association said poultry meatpackers in Germany aims to end subcontracting workers by early 2021 but added that poultry meat prices will rise due to rising production costs from hiring permanent workers.


Friedrich-Otto Ripke, ZDG president said he hopes consumers and retailers are willing to bear the increased costs.

DBV, the German farmers' association supports the government's initiative on slaughterhouses.


Hubertus Gay, OECD senior agricultural policy analyst said Agriculture Minister Kloeckner's plans along with government measures to enforce labour standards in the domestic meat processing industry will increase prices of meat and reduce Germany's trade advantage compared to other west Europeatn nations.


He said the issue is how much will these changes impact domestic growth, or would it lead to a reduction.


Meat retail prices may not be affected much. Stefan Vogel, an analyst from Rabobank said the largest cost block in meat production is livestock feed, with slaughtering costs accounting for a small share of a meat's cost per kilogram.


-      Reuters