04/12/2003 
Prices collapsing on the market for pigs for slaughter - A comment by Andreas Beckhove, ISN market expert
All over Europe, the market for pigs for slaughter is subject to the rules of market forces; i. e. that supply and demand are the most decisive factors for pricing. On the one hand, this has always caused prices to increase now and again. But on the other hand, it also resulted in long periods of having prices that were very low. The following aspects lead to the current period of rock-bottom prices, which has now been lasting for two years already.
World market:
EU market:
Germany:
Following business:
World market:
- Due to the strong euro or the weak dollar, the worldwide competitive pressure on pork has considerably increased. Thus, exporting pork out of the EU has been made by far more difficult. (US pork exports, as a comparison, have increased by 25 % since the year 2000; and in 2004, Canada will most probably be the world's largest exporter, delivering more than 1 million tons.)
- Having new competitors on the world market does increase the pressure of competition even more, because pork is then being offered at dumping prices (Brazil, for instance, calculates production costs of 0.60 to 0.70 Euros per kg slaughter weight).
- Russia and Japan introduced import restrictions. (As a consequence, EU exports to Russia are decreasing by about 40 %, compared to 2002.)
- As a result of that, exports from the EU have gone down seriously altogether (about 30 % since the year 2000).
EU market:
- It is true that the total number of pigs produced in the European Union has decreased by about 10 million pigs (about 5 %) since 1998 / 99, but owing to higher slaughter weights, the level of pork of those days has almost been reached again.
- It is true that supporting private storage stabilised the market by the end of last year, but in spring and in summer of 2003, it became an unseasonable burden on the market.
- After this year's heat wave, pan-European distortions in the system of goods on offer were observed in late summer and in autumn. On the one hand, daily growth was severely reduced in summer, thus reducing the pork on offer. On the other hand, however, the volume of goods on offer was pushed by compensatory growth in autumn.
Germany:
- In Germany as well, pig production has been expanded slowly but steadily for years now. This year, the largest pig stock ever will be achieved, compared to the past ten years.
- For the first time after many years, the number of pig keepers has increased in 2003, compared to the previous year (so far there were 7,000 less pig keepers every year). Obviously ever more bull keepers enter into pig fattening.
- Pig keepers who quit pig production leave stables of appropriate sizes which might easily be taken over by other farmers and remain in production.
- The national pork on offer is being replenished with increasing imports from Holland and Denmark (live imports from Holland have increased by 70 % in 2003, compared to the year before).
Following business:
- Due to the continuing concentration process in the slaughter industry, the balance of powers unfortunately is shifted to the farmers' disadvantage. Furthermore, it becomes ever more difficult to get through with prices.
- The German slaughter industry in particular faces increased cost pressure, because disposal costs have gone up severely for the uneatable parts of the animals within the past years. On the other hand, however, price increases can only inadequately be realized towards the almost overpowering grocery trade (competitive distortion compared to other EU slaughtery companies).
- With the discount shops entering the marketing of fresh meat, cost pressure is considerably increased.
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