05/09/2003 
Where do pig prices go? A comment by Bernhard Bonekamp
Germany continues to be Europe's most important pig producer!
Times are over long since where it was enough to look at the domestic market alone for giving a prognosis about the pig market's development. Apart from the European market, the development on the international market is of great importance for local markets. As a result of this, markets are by far more complex, and prognosticating about supply and demand as well as about price developments gets ever harder. Nevertheless, the author will try and give a view of the current market situation regarding pork.
Pork has been and still is the world's no. 1 meat. About 40 % of the world-wide demand for meat are covered by pork. This way, pork outstrips poultry (about 30 %) and beef (approximately 25 %). For both the total consumption and the per-capita consumption, further increase is being prognosticated for the years ahead. Considerable growth is predicted for the developing countries in particular.
Year after year, we are shocked by China's reports about new production records. However, at second sight this
Taking a look at the United States of America, we find that -- compared to 2002 -- a near to 3.5 % decrease in pigs is expected. This, too, goes for world-wide pig production. But this is not only a European problem: Ever less pork is being produced all over the world, because pig keepers everywhere have to cope with low pig prices.
For 2003 / 04, Europe expects a 1 % fall in pig production. By this, the record production of 1998, where about 212 million pigs had been produced, will be undercut by approximately 5 %. So the
However, we need to differentiate between the individual European countries.
Should the ZMP predictions for 2003 / 04 be correct, the Netherlands had to suffer a loss of 25 % since 1998, and Great Britain had even lost more than 40 % of the production. Compared only to the previous year, both countries had to put up with a decrease of more than 5 %. For Belgium and Ireland as well, a moderate drop is being prognosticated.
Spain, being on the point of getting Europe's no. 1 within the shortest possible time, presently suffers from putting into practice new and even stricter environmental regulations, which also were the reason for the changes that occurred in the Netherlands. For 2003 / 04, a 1.6 % decrease is expected here. As regards most of the other EU member countries, one hears that no growth is really hoped for.
Slight increases in production are only predicted for Denmark (+ 1.8 %), Germany (+ 0.5 %), Italy (+ 1.6 %) and Finland (+ 3.7 %).
Full of amazement, we look at what happens to our Danish colleagues. For a long time, pig prices in Denmark did nothing else but go down. But although Denmark's prices are the lowest found in all of Europe, production surprisingly continues to grow. The reason for this is the
On top of that, highly specialized farms, where the farmers use large amounts of outside capital, will not just be given up but will be transferred to other owners.
Nevertheless, the Danes, too, reacted in 2003. They sold more piglets to Germany and -- as a result of it -- hold by 3 % less fatteners now. This way, Germany has to cope with an increased production which no one had expected. Selling piglets is the Danes' only opportunity to escape the Danske Slagterier's price regulations. Exporting living fatteners to Germany, as had been done by the Netherlands in the first six months of 2003, does not work out in Denmark. In case a Danish farmer tried to sell his fatteners to Germany directly, he would be divested of the entire dividend claim. Which, after all, is a good 6 Euros per pig. So this seems to be the price that must be paid for integration. But that's not the issue now.
Still, one thing is for certain: The number of pigs on offer will go down in 2004.
The pig keepers, however, are itching to discuss another subject presently. The EU enlargement to the East -- which will abruptly increase pig production by a fourth as from May 2004 -- still holds quite some unpredictabilities. Nevertheless, even this won't result in the markets' being flooded with pork. The export volume of just Poland and Hungary would be worth mentioning. And even there production will most probably go down to quite some extent at first, due to the small-scale structures.
To sum it up: Germany's pig keepers will continue to be Europe's no. 1, because the other countries' agriculture is no different from Germany's. And soon, a noticeable relief on the international pig markets will be the result of the low pig prices.
Times are over long since where it was enough to look at the domestic market alone for giving a prognosis about the pig market's development. Apart from the European market, the development on the international market is of great importance for local markets. As a result of this, markets are by far more complex, and prognosticating about supply and demand as well as about price developments gets ever harder. Nevertheless, the author will try and give a view of the current market situation regarding pork.
Pork has been and still is the world's no. 1 meat. About 40 % of the world-wide demand for meat are covered by pork. This way, pork outstrips poultry (about 30 %) and beef (approximately 25 %). For both the total consumption and the per-capita consumption, further increase is being prognosticated for the years ahead. Considerable growth is predicted for the developing countries in particular.
Year after year, we are shocked by China's reports about new production records. However, at second sight this
threatrelativises if you take into consideration that -- truly! -- 50 % of all pork produced world-wide are being produced in China but are also being consumed there. As a matter of fact, it is twisting right round: Export started to decrease a few years ago, whereas pork imports began rising.
Taking a look at the United States of America, we find that -- compared to 2002 -- a near to 3.5 % decrease in pigs is expected. This, too, goes for world-wide pig production. But this is not only a European problem: Ever less pork is being produced all over the world, because pig keepers everywhere have to cope with low pig prices.
For 2003 / 04, Europe expects a 1 % fall in pig production. By this, the record production of 1998, where about 212 million pigs had been produced, will be undercut by approximately 5 %. So the
pig cyclestill is here!!
However, we need to differentiate between the individual European countries.
Should the ZMP predictions for 2003 / 04 be correct, the Netherlands had to suffer a loss of 25 % since 1998, and Great Britain had even lost more than 40 % of the production. Compared only to the previous year, both countries had to put up with a decrease of more than 5 %. For Belgium and Ireland as well, a moderate drop is being prognosticated.
Spain, being on the point of getting Europe's no. 1 within the shortest possible time, presently suffers from putting into practice new and even stricter environmental regulations, which also were the reason for the changes that occurred in the Netherlands. For 2003 / 04, a 1.6 % decrease is expected here. As regards most of the other EU member countries, one hears that no growth is really hoped for.
Slight increases in production are only predicted for Denmark (+ 1.8 %), Germany (+ 0.5 %), Italy (+ 1.6 %) and Finland (+ 3.7 %).
Full of amazement, we look at what happens to our Danish colleagues. For a long time, pig prices in Denmark did nothing else but go down. But although Denmark's prices are the lowest found in all of Europe, production surprisingly continues to grow. The reason for this is the
good structure. Investments which had been planned in 2001 and had then been realized in 2002, result in full production in 2003. Lower investments will take effect no earlier than in 2004.
On top of that, highly specialized farms, where the farmers use large amounts of outside capital, will not just be given up but will be transferred to other owners.
Nevertheless, the Danes, too, reacted in 2003. They sold more piglets to Germany and -- as a result of it -- hold by 3 % less fatteners now. This way, Germany has to cope with an increased production which no one had expected. Selling piglets is the Danes' only opportunity to escape the Danske Slagterier's price regulations. Exporting living fatteners to Germany, as had been done by the Netherlands in the first six months of 2003, does not work out in Denmark. In case a Danish farmer tried to sell his fatteners to Germany directly, he would be divested of the entire dividend claim. Which, after all, is a good 6 Euros per pig. So this seems to be the price that must be paid for integration. But that's not the issue now.
Still, one thing is for certain: The number of pigs on offer will go down in 2004.
The pig keepers, however, are itching to discuss another subject presently. The EU enlargement to the East -- which will abruptly increase pig production by a fourth as from May 2004 -- still holds quite some unpredictabilities. Nevertheless, even this won't result in the markets' being flooded with pork. The export volume of just Poland and Hungary would be worth mentioning. And even there production will most probably go down to quite some extent at first, due to the small-scale structures.
To sum it up: Germany's pig keepers will continue to be Europe's no. 1, because the other countries' agriculture is no different from Germany's. And soon, a noticeable relief on the international pig markets will be the result of the low pig prices.
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