08/08/2003 
Future of the pig market: After the manner of Denmark? - A comment by Ansgar Tubes
With much interest I read various articles about the
Ansgar Tubes
Future with pigsin the Landwirtschaftliches Wochenblatt Westfalen-Lippe (agricultural weekly magazine), to which I very much agreed. I must, however, raise objections against the fact that the Danish pig feeders are always shown to be an example to all pig feeders. I definitely cannot get anything out of this. Thanks to the so very
modernstructure of the Danish slaughter industry -- only two slaughter companies are left in Denmark -- it is impossible that a well-working market be developed there. There are certain monopolistic traits to the trading with pigs for slaughter, which are mirrored in the price level. If North Rhine-Westphalia's pig feeders already have their backs to the wall with a pig price of 1.20 to 1.30 Euros -- because pig feeding is by no means profitable at this price --, how does the Danish pig feeder feel then who for weeks now has been forced to be satisfied with a price level of 1.08 Euros. The advantages of the so-called vertical integration, which over and over again are mentioned by certain circles, and which have ever again been emphasized in the specialist articles, do by no means seem to be the cure-all everybody wants them to be. But why look abroad to Denmark, if a concrete example can be found right here in Westphalia for what pig feeders will face who -- in the sense of a vertical integration -- bound themselves by contract to a large cooperative slaughter company. By the beginning of July, this very slaughter company did not pass on to the contractual pig feeders (oops! pardon me: it's
partners to the cooperation!) the price increase from 1.28 to 1.31 Euros. And if you imagine that this very slaughter company uses auto-FOM for classification and that for this reason -- given the non-linear price development -- an extra pay of at least 15 cents per kg slaughter weight would have had to be scheduled at a 1.30 Euro price level, one quickly realises that 4 to 5 Euros per pig were withheld from the contractual pig feeders. By this, it has once again been verified that the contractual pig feeders' pigs could be bought at low prices for the slaughter company's basic utilization -- all pigs the slaughter company needs in addition to that are being purchased at higher prices on the free market. So, if that is said to be the reward for contractual commitment (market price minus x), and if nothing is left over from this vertical integration, every entrepreneurial pig feeder should -- slowly, but surely -- begin to wonder about the term of his special cooperation contract! Friedrich Wilhelm Raiffeisen would turn in his grave if he observed this business practice!
Ansgar Tubes
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