The market has a potential capacity, if politics does its homework! – Veterinary agreements finally need to be made with Asian countries!
Despite the drifting down of prices observed on the pigs-mature-for-slaughter market at the turn of the year, 2006 may be called a successful year if looked at from the producers’ point of view. With an average price of EUR 1.51 per kg slaughter weight and with Lower-Saxony 25-kg piglets being quoted at EUR 48.31, which was clearly above average with regard to the preceding years, the pig farmers were able to realise profit.

But how will things proceed in still young 2007?
With regard to supply, we do not need to worry about the situation within the EU this year. This is because an EU committee of prospects reported to expect a moderate increase only (by about 0.9 percent) in pig production for the EU-25, although prices were good in 2006. In 2007, Poland will most likely continue to be one of the EU winners, with its reduced but nonetheless clear 5-percents’ increase in production. Experts expect Germany’s production to increase by 1.6 percent. Slovakia and Hungary will most probably be also-rans only, facing price declines by 5 and 2.5 percent respectively. Beyond that, pig production will also be reduced in Spain.

As far as consumption is concerned, no big surprises will be given in Western Europe. Consumption has remained static for years there. In those countries, however, which acceded to the EU in 2004, demand for pork will go on increasing moderately, for the need for more improved products increases if prosperity rises.

On 1st January 2007, Romania and Bulgaria entered the EU. This will have a positive bearing in particular on the intra-community consumption. Given another 30 million inhabitants, the intra-EU consumption will clearly be driven upwards. In 2006, those two countries’ inhabitants were able to provide themselves with pork just at a 65 to 70 percent grade. But the meat-processing industry there is growing by 10 percent every year. However, domestic production cannot keep pace with such development. Romania alone had to import about 220 000 tons of pork last year – most of it coming from the EU already. About 60 000 tons originated from the USA – and those will most likely be replaced by EU products now that the two countries have entered the EU.

But for 2007, too, the rule goes that quite substantial quantities of pork need to be sold on the global market. By exporting about 1.4 million tons of pork to third countries, the EU proved to be the world’s largest pork exporter last year. It’s a matter of how easily those surplus goods can be sold abroad, if pig prices are to be decided upon at last in Germany and within the EU.

The global market, however, is a hard-fought issue. Russia, for instance, imported much more pork from Brazil again over the past months. This way, export to Russia is getting much more difficult anew for the Europeans. And competition is capacious in Japan, which is known as the most important pork importer. There, the Danes no longer serve as the leading pork supplier, having lost their rank to the USA last year. In part, the weak dollar, strengthening the USA’s exports, may be blamed for this development. But all the same, 2007 will most probably face globally increasing demand for pork and bettering sales opportunities as a result of the booming world economy.

In this connexion, the German Federal Government will also be asked for its support. Exports towards third countries most often fail as a result of a lack of veterinary agreements made with the importing country. German slaughter companies, for instance, have been waiting for years now for such an agreement finally to be made with China. On this growing market, paws for example are traded at the converted value of EU 2.99 per kg while they are sold at a price of just 39 cents at the German supermarkets. So, there is a potential; it just needs to be made use of!

On the whole, advantages and disadvantages are roughly equal. Against the background of this, last year’s price level looks achievable indeed. However, having been afflicted with pig fever and a heat wave in 2006, we find that special factors might arrive at any time which we are not able to budget and do not really want to experience anew …

Although prices are expected to be comparably good in 2007, increased feed- and energy costs are factors to be reckoned with for the first six months of the year at least, possibly deteriorating economics in pig farming. The feed costs in particular, exceeding last year’s level by about 10 to 15 percent currently, will be causing the production costs to rise noticeably.

It has a lot to commend it that the feed costs will be stabilising at an increased level even until after the next harvesting season. Should this prove to be so, there would be no way past increased pig prices at medium term. The phrase is still set: High corn prices create high pig prices.