September 11, 2012

                                                                                             

BPEX Export Bulletin - September 2012 (Week 36)

 

 

This week's export news

 

Chinese AQSIQ has published a Notice requiring the registration with its Inspection and Quarantine Bureau (AQSIQ) of exporters and importers of food products to China. For this purpose, AQSIQ has published information on their web-site http://ire.eciq.cn. Please note that the new regulation will come into force on October 1, 2012. The Notice implies that any exporter shall submit a filing application to AQSIQ. Exporters shall fill and submit the Application form of Food Exporter through the registration filing management system. Information, such as the exporter and agent's name, country, area, address, contact name, telephone, food category, etc. needs to be submitted. After submitting the application, the exporter will obtain a serial number generated by the filing management system. The exporter can use the serial number to modify its registration filing information. AQSIQ will keep a file of applications of exporters who have submitted complete filing information. A list of filed exporters and agents with their names and countries/regions shall be generated by the filing management system and made public on the website of AQSIQ.

 

Following this week, Cabinet and Ministerial reshuffle and the nominations of Owen Paterson, a State Secretary and David Heath as Minister of State at Defra, Prime Minister David Cameron declared, "We want the Department of Agriculture to get into British Food".  This represents a marked departure of past policies and may signal a new urgency in supporting exports.

 

 

China

 

International expansion of Chinese food companies

 

The list of top transnational food companies does not include any Chinese enterprise. This point was discussed at a recent agro-food summit in Shanghai. Although some of them have budding international brands and in several areas, very high quality, the complexity of the food chain and its impact on quality and safety still elude many of them. The Chinese food sector has a relatively low R&D spend. Management style and culture or global mindsets are further hurdles. The use of a region of city as trademark is still unlawful with the single exception of Yunnan wine. On the plus side, Chinese companies benefit from economy of scale and scope. Pr. Fava Neves of San Paulo University sees export potential for some specific products which do not require extensive resources and where there is a surplus to export. However, China will not become a major food exporter in the future due to its huge and expanding home market. He also sees some international expansion of Chinese companies keen to secure raw material worldwide and bring them to supply their own markets. A third area consists of Chinese companies aiming to secure Western technologies in the processed food sector. This was the case with the recent buying of 60% Weetabix by Bright Food for £720 million. Bright Food has also acquired a dairy business in New Zealand and a food producer in Australia whilst giant drink concern Hangzhou Wahaha is bidding for the KP Snacks business of United Biscuits for £520 m. Wahaha recently signed a five-year agreement with Nottingham University on a programme of new product development and quality improvement. For food the meat sector, acquisitions by the large and cash-rich processors and importers should not be ruled out. As Ghislain de Mareuil, a Paris base lawyer says: "In China, you have to set an example, and then others will follow". (Source: China Daily, various)

 

China opens market to Danish pig meat

 

According to AgraEurope, China and Denmark have signed an agreement to significantly open the Chinese market to Danish pig meat, cuts and processed products. For Danish exporters, trade volume could reach 14 billion DKR (€1,88 billion) in 2013. (Source: ISN)

 

 

Denmark

 

Market

 

On the European markets, fresh legs are sold at slightly increasing prices. Other cuts are sold at an unchanged or slightly increasing price level. Exports to the British bacon market remain stable. However, it is expected that the price level will be slightly raised for the next September contracts. As to markets outside of Europe the activity continues nicely to Japan as well as to China and Russia. (Sources: Danish Crown, Tican, Danish Food Council).

 

Maximum level of antibiotics adjusted

 

The Danish Food Administration now lowers the maximum levels for farmers' use of antibiotics in cattle and pig breeding. Since the beginning of 2010, the use of antibiotics in Danish pig production dropped significantly. At the turn of the year 2011-2012 the DFA noted a slight increase in consumption. In order to maintain the otherwise positive results the DFA introduces a small reduction of maximum levels for consumption of antibiotics.  Danish pig producers are against the stricter requirements. They find that there is a limit to how much one can reduce the use of antibiotics in pig production, without compromising animal welfare. (Sources: Foedevarestyrelsen, Landbrugsavisen)

 

Quote forecast raised

 

Without mentioning specific amounts of Dollars and Cents, market analyst Karsten Flemin of Danish Food Council says that he is about to upgrade the pig quote forecast. The reason for the upward adjustment is a positive development in exchange rates and better weather conditions. This has been of benefit to the entire market. In addition, low supply of pigs has affected prices. Further, feed prices have increased, which will show an impact on pork prices in 2013. Flemin expects that this year, European pig production will show a stable development with a fairly stable production. He is expecting production to decline in Europe next year as a result of the 2013 regulations and also sky high feed prices forcing several pig farmers to give up production. On global level, the high feed prices will also put pressure on production next year, which at the next stage will support higher pork prices. Flemin states that the economy will continue to depend on feed prices. Should a drop in feed prices occur, 2013 could turn into a really good year for pig producers, he says. (Source: Landbrugsavisen).

 

Low interest rate

 

Danish Crown is the Danish cooperatively owned company that achieves the lowest possible interest rate on the companies' interest-bearing debt. From the companies' annual reports the magazine 'Machine' calculated the companies' ability to minimize their financial costs. According to the calculations, Danish Crown is doing better than Tican.  The very low interest rates over the latest years have in particular worked through with Danish Crown, which in the 2011-accounts had a net interest rate of 1.63, while in Tican it was 3.83%. (Source: Maskinbladet)

   

Danish Slaughterhouses - payments week commencing 3 September 2012
Slaughterhouse	Danish Crown	Tican
Slaughter pigs (70.0 – 86.9 kg)	Euro 1.627	Euro 1.627
Difference to last week	0.027	0.027
Sows (Above 129.9 kg)	Euro 1.211	Euro 1.211
Difference to last week	0.04	0.04
Sows (Above 129.9 kg)	Euro 1.041	Euro 1.041
Difference to last week	0.04	0.04

  

 

France

 

Price storm

 

The French Federation of charcuterie processors is asking the French government the organisation of a round table to explain the very tricky situation they are facing today. The pig price used to fix the negotiated with supermarkets for present sales was 17% below what it is today and 24% lower for cuts including legs. It is today impossible to pass on the increase to French retailers therefore the processors margin is deteriorating very dangerously.

 

Stagnating consumption

 

Although private brands strengthen their position on the charcuterie market (95.3% penetration rate), charcuterie sales are slowing down a bit even for cooked ham with a small decrease of -0.2% over the four first months of the year, -1.1% for dry ham, -4.4% for dry sausages ("saucissons") or cooking sausages, but the decrease is stronger with high value products such as "andouilles" and "andouillettes" (chitterlings sausage): -6.9%.

 

Less feed

 

In 2011 the three following factors: reduction of the number of sows, improved feeding index and better animal welfare which lead to a reduced production of feed for pigs at 1.9%. This is a frustrating situation in some regions of France where harvest has never been so good: in Poitou-Charentes, maximum stocking capacity has been reached.

 

Pigs

 

The French basic price continues to progress by + 1,2 cent. According to "Le marché du porc Breton", the demand is good for the beginning of the month due to pig meat promotions. Offers remain low. This new increase is not good news for slaughtering which has still difficulty to revalue its sale prices in their real value.

 

Piglets

 

For the beginning of the week, prices are stable or slightly increasing according to the region and the operator in question. On a national scale, offers are moderate and sufficient for the demand. From their part, FNP-FNCBV indices are going up: +11 cents for 25 kg and +1,93€ for 8 kg.

 

Cuts

 

In store promotions are starting.

  

  

Germany

 

Market

 

High prices are causing the markets to be subdued. Despite the end of the month, the end of the holiday season and better weather conditions the anticipated increase in demand on the Hamburg market has not materialised. Because of the currently very high price levels only the minimum quantities get ordered and processed. Prices for pig meat are expected to remain stable or just slightly decrease with the recent prices representing the peak in this year's prices. Supply of sow meat is limited and products are very expensive. While prices for half carcasses of German origin have remained unchanged, prices for imported product have risen by 6–8 Eurocent/kg. (Source: AMI)

 

"Sell off" criticised

 

ISN has criticised Kaufland's "sell off" of pork at €2,22/kg with producer prices having reached €1,90/kg. According to ISN, a sustainable and profitable production of German pig meat cannot be maintained on the basis of these prices. While Kaufland advertised with slogans such as "we care about people and the environment" or "responsible and sustainable trading are topics most relevant to us" the company risks the impairment of the current price level which is needed to enable German producers to work profitably, say ISN.  (Source: ISN)

 

Pork prices Hamburg Market Week commencing 3 September 2012
Cut name	Price range (Euro/Kg)
Round cut leg	2,40/2,60
Leg (boneless, rindless max fat level 3mm	3,30/3,45
Boneless Shoulder	2,85/2,95
Picnic Shoulder	2,30/2,50
Collar	2,95/3,15
Belly (bone in, ex-breast)	2,65/2,75
Sheet Boned Belly (rindless)	2,30/2,40
Jowl	1,65/1,80
Half Pig Carcasses U class.	2,30/2,40

 

 

Russia

 

New ASF outbreak in Volgogradskaya oblast

 

According to Rosslkhoznadzor Department in Voronezkaya and Volgogradskaya oblasts, the new outbreak of ASF was registered in Kotelnikovskiy region of Volgogradskaya oblast. The virus was detected in the samples of meat taken from a dead pig in a private household. (Source: Furazh Online)

 

Temporary restrictions

 

Starting from September 12, 2012, Rosselkhoznadzor introduces temporary restrictions on import of some meat products from the USA and Chile. The restrictions will be introduced as a result of the detection of  causative agents of listeriosis in the consignment of frozen pork  imported from the USA (enterprise no.: 244W, Tyson Fresh Meats), antibiotics: tetracycline and chlortetracycline in a consignment of pork imported from US company No.:31965, Triumph Foods and other violations. (Source: AK & M)

 

 

Spain

 

Exports are booming (continued)

 

Amongst the startling export results pulling forward the Spanish sector, the most spectacular is offal exports. For the first half of the year, they are up 123% to 154,000 tonnes (all species but mostly pig) against 2011 (Source: Eurocarne Digital)

 

Pork prices Barcelona Market Week commencing 3 September 2012
Cut Name	Price range (Euro/Kg)
Gerona Loin Chops	2,95/2,98
Loin Eye Muscle	--/--
Spare Ribs	3,13/3,16
Fillets	5,43/5,46
Round Cut Legs	3,06/3,09
Cooked Ham	2,50/2,53
Rindless Picnic Shoulder	1,91/1,93
Belly	2,50/2,53
Smoked Belly with Spare Rib Section Cut off	2,93/2,96
Shoulder chap or Head Jowls	1,53/1,56
Back Fat, Rindless	1,38/1,41

 

 

Ukraine

 

Big Dutchman successful

 

KSG Agro held a tender for a supplier of equipment for its pig-breeding complex in Nova Nyva, Apostolivsky region of Dnipropetrovska oblast and chose Big Dutchman Pig Equipment GmbH as the successful bidder. The two companies signed agreements according to which the German company will supply equipment and associated goods for pig breeding. The total value of the agreement is €12 million, 85% of the amount will be funded by the German bank Landesbank Baden-Wurttemberg and ensured by the German export and credit agency Euler Hermes Deutschland AG. The project includes the reconstruction of old farms built in Soviet times and the expansion of production to 240,000 pigs per year. (Source: latifundist.com)

 

Help needed

 

Ukraine has asked the FAO and EU for financial assistance to help stop the epidemic of ASF, reported the Head of State Veterinary and Phytosanitary Service of Ukraine (Gosvetfitoslujba) Vladimir Gorzheev. "The Ukrainian authorities are negotiating with the European Commission's Directorate General for Health and Consumer Protection (SANCO) and the Food and Agriculture Organization (FAO) to provide financial assistance for various measures to combat the spread of the ASF virus." Gorzheev also expressed assurance that the funds will be allocated, given the EU's and FAO's concerns of the virus spreading to the west. (Source: pigprogress)

 

 

USA

 

Difficult times

 

With producers keen to download pigs on the market to cut their losses, output is up 6.7% on last year's figures keeping prices under pressure. Weaner producers suffer the most with producers not under fixed price contract getting as low as US$7/head. (Source: Pork Network)

       

 

US$1 = EUR0.78 (September 11, 2012)