A closer look at the international pork trade

by René Maillard, What is more, dis - manager, Belgian Meat tributors and proces - Office, Koning Albert II- sors do not want to laan 35 bus 50, Belgium. increase prices and on top of that cheap ncertainty due to the poultry meat is on the financial crisis, less rise as a competitor to Udemand for pork and pork. at the same time reduced In the first six production, and a clear fall in months of 2008 the import and export of all Europe saw strong the major players. These are export thanks to the only a few of the conclusions restitutions. Export to drawn by the Belgian Meat Russia even achieved Office from the market 320,000 tonnes, which study by the Gira Meat Club is 75,000 tonnes over about the international pork the quota. In the sec - trade. Producers can also ond half year the tide expect more space in the turned, which will first half of 2009 as a result continue this year. of the recent fall in feed Export from the EU is costs and stronger dollar. under great pressure companies with little faith in the future. But and we expect a decrease of 15-20%. Here, they still can not simply cease their activities. too, the financial crisis is paying a major role. The situation in Europe Many companies are burdened by high This is strengthened by the end of the debts, which means they have to continue. restitutions and the great pressure from the 2008 was a year of two halves. During the What is more, it is impossible to restructure United States and Canada. first six months the price of pork was low these companies. In the meantime intra-European trade is and costs were soaring. In the spring and A summary of the Gira Meat Club predic - on the rise. For example the Netherlands summer the seasonal demand suddenly led tion is that, in 2009, we expect a fall in pro - and Denmark export piglets and slaughter to a price increase, which was then lost dur - duction for practically all of Europe. pigs to both Germany and Belgium. As far as ing a sharp drop in prices in the autumn. The new member states especially seem the meat trade is concerned, more than The reasons for the latter price decrease to be facing a drastic fall in production. For ever Germany is the pivot of Europe. were the financial crisis and international example Slovakia (-15%), the Czech Trade from Denmark remains stable and competition. Republic (-10%), Hungary (-6.9%) and at a high level and also the Netherlands and There are great differences in the Poland (-6.6%). France can safeguard their position. In the European pork prices. Within Europe, Of the large production companies, meantime, export from Spain to France is Germany remains the price setter; Denmark Denmark is the biggest loser with an still increasing. and France are right at the back of the expected fall of 3.3%. France (-2.6%), Spain European pack. Thanks to the north, (-2.4%) and Germany (-1.0%) are also dealt Germany achieved a new import record for a blow. Belgium follows with a limited Prospects for 2009 piglets and, as a result, is very resistant to decrease of -0.8%. the crisis. In Belgium, too, the import of To put the statistics into perspective, in Production and demand follow the same piglets is still increasing. This also benefits the long run, Belgium has already seen a evolution for pork. Since export is under domestic production. It permits the abat - greater fall in production. From 2000 to pressure and perhaps also greater competi - toirs to stay profitable and also guarantee a 2009 the production of pigs will have shrunk tion will occur between different types of constant supply for their customers, thus by 9%. The meat sector has to compensate meat, we expect a fall in the market absorp - maintaining trade relations. In Denmark we for this by importing piglets and slaughter tion of 3%. This includes both consumption can see accelerated concentration. In total pigs to keep meat production at the same and export. there are not only fewer producers but we level. The recession has an impact on pur - For 2009 we predict a further fall in pro - can also see less production. chasing power and so it also has an effect on duction, since worldwide many producers Due to the many small family businesses, the consumption of pork. In 2008 consump - will have to stop. After a sharp increase in France is facing completely different prob - tion was still reasonable, but for 2009 we do 2008 production costs will fall again and lems. They are usually mixed and closed expect a clear fall by 1.5-2.0%. Continued on page 27

International Pig Topics — Volume 24 Number 4 25 Continued from page 25 very dependent on one unpredictable prices are expected to increase again. How- export destination with all the risks that that ever caution is still required, after all we do entails! not know how the dollar exchange rate will There is great concentration occurring in evolve and what is more the export markets Brazil. Pork production is concentrated in already seem to be evolving even worse four states in the south and southwest of than expected. Brazil. Furthermore, together the five We also have to wait and see how the dis - biggest producers account for more than tributors and processors will react to the 70% of the slaughtering. recession. Finally, the animal welfare regula - Traditionally, Brazilians do not love pork, tions are also on their way. Before making preferring beef and increasingly poultry on investments for this, it must be possible to the menu. Now the industry is trying to jack first pay off the current debts. up the consumption of pork. However, in times of crisis it could be very difficult to reduce the consumption of poultry. United States and Canada

American and Canadian farmers have had Russia good years. Both countries have common trade, so that their economies are Domestic production is still growing in extremely interwoven. What is important in Russia, but it is being curbed by the crisis. In North America is the noticeable rise of the meantime, consumption remains so that ethanol production. For example more than the demand for import exceeds the quota a quarter of the corn stock was used for the and the full import duty has to be paid. production of ethanol. Naturally this com - That import largely comes from Brazil, petes directly with feed crops. although during the first half year Brazil had In the meantime Canada has had to deal to deal with sanitary restrictions. Europe with the ‘COOL’ (Country of Origin Label) then seized part of the market share label legislation, that has been in force for together with the USA and Canada. Perhaps meat since September 2008. American abat - we will soon see a new competitor on the toirs are no longer so willing to accept Russian market with the rise of China. Canadian slaughter pigs. So it means a trade In the meantime, the Russian population is barrier for Canada, with confusion and addi - consuming more and more meat, even if the tional costs as a result. preference is shifting to cheaper products. In For the United States the prospects are 2008 pork saw the greatest increase. positive. For over 20 years pork production has seen an upward trend. After all, pork consumption per person in the USA has The Far East fallen by 4% and thus has reached the low - est level since 1997. In 2008 meat export Economic growth in the Far East is domi - from the USA did achieve enormous results. nated by the continuing momentum from The booming global economy with China. China experienced a stable 2008 and increased demand for proteins and greater is developing as a stable market. Poultry urbanisation, as well as a weaker dollar led production has recovered after the avian to this enormous increase. Considerable influenza and the small family pork producer pork export from the USA is also expected can keep his costs under control vis-a-vis for 2009, although the exceptionally high large commercial systems. level of 2008 will not be matched. China is a very important market for our As far as the prices of pork are con - pork offal. After all we can still sell the parts cerned, the Gira Meat Club has calculated that are not wanted in Europe at a good that prices have been very strong in the price in China. But import remains very USA since 2000 and have not followed the marginal in China. After all, China always normal evolution. tries to be self sufficient. Consumption Recently, both supply and the price therefore closely follows the evolution of increased as a result of the booming domestic production. China does have to demand. For 2009 a price increase of 9% is stay alert for animal diseases such as PRRS, even predicted for the USA. The effect of classic swine fever and foot and mouth dis - lower production is thus curbed by less ease. export and lower domestic consumption. In Japan Denmark has clearly been losing terrain to the USA during the past few years which now accounts for 41% of the impor - Brazil tant market. Production is very stable in Japan. When demand rose during the past In Brazil the production and consumption of few years, increased import was able to pork are greatly geared to each other. So redress the balance. export stays at a relatively low level of In South Korea the high demand for pork 600,000 tonnes per year. What is more, is past its peak. Korean farmers have lost export is very vulnerable since Brazil above the battle against beef from the USA. The all focuses on the Russian market. arrival of US beef is leading to a dip in con - After all, in 2007 46% of the pork sumption and thus to a curb on the import exported went to Russia, which makes them of pork. I

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