In some regions in Germany, barley harvesting has already been started. At the same time, corn prices are increasing to an unexpected extent throughout Germany. Bidding for barley in Germany, for instance, amounts to more than EUR 15.00 per deci-tonne in many regions. In Brandenburg, prices are reported to even amount to up to EUR 17.00. This way, corn prices are expected to have exceeded year-ago prices by about 50 to 60 percent before long. Will that be it? I don’t dare prognosticating.

So what may be the reasons for such tremendous price increases? On the one hand, you have the still increasing world population, and on the other hand, corn consumption has for years been and still is rising above world-wide production. The stock on hand is being released ever more. Contrariwise, the bio-energy industry, which is booming throughout the world, is a price-enhancing factor with its vast demand for corn. The situation is additionally aggravated by the simple fact that a near-to 50-percent deficiency in receipts must be reckoned with as a result of the long drought we experienced in April.

Boon and bane are at close quarters in this respect. The tillers may be pleased much about the situation, but we as pig farmers have to foot the bill! For, even if feed-stuff prices have already increased severely over the past few months, they are expected to substantially go up still with a near-to 65-percent share of corn in the mixed feed. We won’t be able to avoid the problem even when concluding new contracts, because feed-stuff prices will be hardly calculably anyway and be much higher than last year. As a matter of fact, both piglet producers and pig feeders have always been in the red this year. Trend: negative!

In pig farming, the full impact of increasing feed-stuff prices takes place because of the share of feed stuff making about 40 percent of the overall cost in piglet production and more than 50 percent in pig fattening. The more mixed feed a pig farmer needs to buy, and the less corn he sells, the more will he be suffering from exploding feed-stuff prices.

The in-detail calculation for pig fattening, for instance, looks like as follows: In June 2007, the pig farmers bought and housed piglets at a piece price of EUR 44.50. As to the overall feed costs, we need to raise EUR 10.00 to 15.00 more per fattening pig this time than we had to last year. Then, the feed costs amounted to about EUR 45.00; in future, we will have to reckon with EUR 55.00 to 60.00. Looking at it from today’s point of view, we expect to be facing huge losses when selling the finished pigs in October. For about EUR 25.00 to 30.00 per fattening pig will be lost in view of a price of EUR 1.25 per kg slaughter weight, which is quoted at the Hanover commodity forward exchange for October, when the overall cost is taken into consideration. So if you raise 180 pigs that will make a loss of EUR 4,500 to 5,400! Well then …

Finding the only way out of this misery would mean to mark up pig prices which then, as a consequence, would need to be forwarded to the consumers through food retailing. But in this respect, food retailing always makes a fuss, rather beating down the purchase prices. If on medium term pig prices will not be increasing visibly, merciless cutthroat competition will be a consequence including severe structural changes in piglet production and pig fattening, as happened back in 2003. The situation will certainly last as long as until the pig stock is clearly reduced again. With feed-stuff prices being on almost the same level throughout the EU at least, pig prices however will have to go up sooner or later. But it will be a hard way for us to go, and some of us undoubtedly will get a bloody nose. For this reason, we urgently recommend that in view of changed basic conditions, all pig farmers very carefully check the cost effectiveness of their pig farming systems and optimise work, if necessary.

Picture showing: Alf Asmussen, pig farmer and ISN board member from Niesgrau / Schleswig-Holstein