03/02/2004 
Export restitution and private storage are of no use really - A comment by ISN board member Franz Schulze Tenkhoff
Export restitution for pork was given green light by the EU Commission last Friday. As from January 27, exporting pig halves and parts out of the EU will be supported with 0.40 Euros per kg. For the belly, another 0.25 Euros per kg will be paid. By the end of April, all exports must have been carried out. No causes must be given for WTO complaints. According to what the Commission decided, exports to all third countries will be supported, apart from exports to the ten acceding countries, to Romania and to Bulgaria. This way, almost no major customers will be left, apart from Russia. In addition to that, the EU decided that no new applications for private storage shall be accepted because applications for the storing of 85,000 tons of pork have already been put in.
Taking these two steps was meant to relieve the EU market. However, a distinction needs to be made between the effects of private storage and those of export restitution. With private storage, the pork is taken out of the market for a few months' time only and will then be put back into the market. On a medium-term basis it will be a burden again for the European market. In comparison, pork which is supported by export restitution is in fact taken out of the market.
But, would this kind of EU policy really be useful to pig keepers on a medium- and long-term basis? By both export restitution and private storage, the current problems will be nothing else but deferred: There might be some short-term improvement to the pork market's situation, but as from spring 2004 pork will be moved out of private warehouses again for selling, burdening the market anew then. Through this, the situation will -- more or less -- remain unchanged, compared to the past weeks and months. This development is confirmed by the provisional results of the November 2003 livestock counting. Compared to the previous year's results, those results show an 0.9 percent increase which will already burden the market anyway.
So, what we do not need is the supporting of the market, but what we urgently need is the clearing up of the market, even on the producers' side. Only by relieving the EU market through a pan-European reduction of sow stocks will we be able, on a medium-term basis, to have the specialised pig keepers achieve better incomes again. In the end, it will be the warehouse owners and the exporters rather than the pig keepers who will make their profits from the current EU measures.
Taking these two steps was meant to relieve the EU market. However, a distinction needs to be made between the effects of private storage and those of export restitution. With private storage, the pork is taken out of the market for a few months' time only and will then be put back into the market. On a medium-term basis it will be a burden again for the European market. In comparison, pork which is supported by export restitution is in fact taken out of the market.
But, would this kind of EU policy really be useful to pig keepers on a medium- and long-term basis? By both export restitution and private storage, the current problems will be nothing else but deferred: There might be some short-term improvement to the pork market's situation, but as from spring 2004 pork will be moved out of private warehouses again for selling, burdening the market anew then. Through this, the situation will -- more or less -- remain unchanged, compared to the past weeks and months. This development is confirmed by the provisional results of the November 2003 livestock counting. Compared to the previous year's results, those results show an 0.9 percent increase which will already burden the market anyway.
So, what we do not need is the supporting of the market, but what we urgently need is the clearing up of the market, even on the producers' side. Only by relieving the EU market through a pan-European reduction of sow stocks will we be able, on a medium-term basis, to have the specialised pig keepers achieve better incomes again. In the end, it will be the warehouse owners and the exporters rather than the pig keepers who will make their profits from the current EU measures.
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