November 30, 2020

Danish Crown faces glut of animals for slaughter

Danish Crown is seeing a volume of animals for slaughter that is higher than its normal capacity as many of its member producers are offering animals to the cooperative that would have been destined for Germany.

Denmark has recently stopped exporting pigs for slaughter to Germany after African swine fever hit the country.

In order to be able to slaughter the additional large number of animals, Danish Crown is currently expanding slaughterhouse capacity and expects to have hired more than 400 new employees before the new year. It has also decided to put a night team in place at its Ringsted, Denmark slaughterhouse, so that up to 14,000 additional pigs can be slaughtered per week.

Danish Crown has also decided to set two types of prices that divide the members' deliveries into A pigs and B pigs - the latter will suffer a kr.142 (US$22.84) reduction. This price will be applied starting November 30 and is a variable deduction that will be determined once a month.

To calculate the quota for group A pigs for each member, the largest number of pigs delivered in the last two fiscal years, plus 4%, will be taken into account. For example, if a member delivered 5,000 pigs in the 2018/19 period and 4,000 pigs in the 2019/20 period, the member will be granted a quota of 5,200 A pigs for the 2020/21 period.

The need for a tiered pricing agreement is mainly due to Danish Crown's limited opportunities to export to countries outside the European Union.

Export capacity outside the EU is mainly driven by two factors: the packaging capacity of the slaughterhouses and the freezing and storage capacity of the cold stores. These capacities are already full, so a large part of the additional pigs that Danish Crown must now slaughter must be sold as fresh meat within the EU.

In the bloc, prices for most products are significantly lower than when exported to markets outside it. In addition, the European market must already absorb the 600,000 tonnes of meat that Germany cannot export from the EU after the outbreak of ASF.

- Pig333 / Danish Crown.