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Competitiveness in the Pig Industry

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Competitiveness in the Pig Industry Competitiveness in the Pig industry 1993 LEI-DLO Rabobank Nederland A.F. van Gaasbeek J.A.G. Verheijen M.H. Borgstein A.G.M. Colbers J.J. de Vlieger W. Rijnsburger 2^ i(4? > Contents 1 Introduction 4 7 International competitiveness 54 1.1 Background 4 1.2 Competitiveness in the pig industry 4 8 Strategic options 57 1.3 Research methodology 4 8.1 Introduction 57 1.4 Study structure 5 8.2 Main points of the strategy 57 8.3 Cost price efficiency and quality control 58 2 Global demand 6 8.4 Product differentiation 59 2.1 Introduction 6 8.5 Market development and diversification 59 2.2 Development of pork consumption 6 8.6 Recommandations for the links in the 2.3 Summary and outlook 9 production column 60 3 Global supply 10 Rabobank International Network 63 3.1 Introduction 10 3.2 Volume of production 10 3.3 Summary and outlook 12 4 World trade 13 4.1 Introduction 13 4.2 Import developments 13 4.3 Export developments 14 4.4 Price developments 15 4.5 Trade flows 16 4.6 Summary and outlook 18 5 Competitiveness of the major exporting countries 19 5.1 Introduction 19 5.2 The Netherlands 19 5.3 Denmark 23 5.4 Belgium 26 5.5 Taiwan 28 5.6 China 30 5.7 Hungary 32 5.8 France 35 6 Major importing countries 38 6.1 Germany 38 6.2 Spain 40 6.3 Italy 43 6.4 United Kingdom 45 6.5 Japan 46 6.6 United States of America 48 6.7 CIS 51 such an understanding is essential in order to react promptly and effectively Introduction to the opportunities and threats facing the pig sector. This study wishes to make a contribution in this area. 1.1 Background The world pig sector comprises the 1.3 Research methodology production and trade in live pigs, pork Theories introduced by the and pork products. American economist Porter have been applied in determining the relative com­ In 1992, a total of more than 956 petitiveness within the international pig million pigs (1991 932,6 million) were sector. According to Porter, the compe­ slaughtered, resulting in nearly 72 mil­ titive power of a sector is not only lion tons of pork. The export value of determined by a low cost price; a num­ live pigs, pork and pork products ber of other factors also play a role. amounted to 10.7 billion dollars in 1991. This international trade was made This study investigates the follow­ up of 13.8 million live pigs, 3.0 million ing factors: tons of pork and 0.36 million tons of Basic production factors such as raw bacon and ham. materials, climate, untrained labour and capital. These factors, which almost are It can therefore be concluded that always present, have a direct influence the international trade in pigs, pork and on the cost price. pork products only accounts for a small Qualitative production factors such percentage of the total production. as infrastructure, trained labour, However, the importance of interna­ research, education, information provi­ tional trade can differ greatly from one sion, the state of animal health, tele­ country to the next. The Netherlands communications, and the like. These exports more than half its production; factors are created through human inter­ China only 2%. vention and exert an influence on quality and efficiency. 1.2 Competitiveness in the pig Domestic demand: the competitive industry power of a sector is greatly influenced The pig industry is characterized by by the nature, scale and development of a number of developments which influ­ the domestic market whereby - for ence the international competitiveness example - an increasing emphasis is of the principal countries involved. The given to aspects of animal welfare and reform of the EC agricultural policy and environmental stress. A critical domes­ the agreement in principle on the trade tic market increases the competitive in agricultural products between the power, keeps the sector on its toes and United States and the EC, have greatly lays the foundation for a high level of reduced the gap in relation to the world innovation. market. In the same vein, the potential Network of sectors: the degree to EC membership of the EFTA and which the various links in the produc­ Central and Eastern European countries tion chain make use of one another in is a factor. order to realize an effective market approach. Attention is also given to the Other important developments incorporation of ideas from other sec­ include changing consumer habits and tors. the concentration of the retail trade in Government: this involves an assess­ large chain stores. On a national level, ment of the role of the government in the slaughtering capacity, environmen­ the development (or hindrance) of com­ tal policy, quality control and the vete­ petitiveness. rinary situation all play an important The economic order: attention is given role. to the state of the entrepreneurial spirit, The number of changes make it difficult international orientation, cooperative to gain a clear understanding of the capacity, management culture, etc. prospects for the sector. Nevertheless, By subjecting the pig sector in the various countries to an analysis on the basis of these aspects, an image of its international competitiveness is for­ med. Factors can reinforce one another, but they can also work in opposite directions. The report as a whole provi­ des an insight into the strengths and weaknesses of the production chain, and suggests opportunities for improve­ ment. 1.4 Study structure Chapters 2, 3 and 4 provide a brief overview of the development of the demand, the supply and the trade in pigs and pork on an international level. Chapter 5 is devoted to the international competitiveness of countries where the export of pigs and pork is of impor­ tance. An analysis is then made in chap­ ter 6 of the international competitive­ ness of countries in which the import of pigs and pork plays a major role. The positions of the various export coun­ tries which have been looked at are compared in chapter 7. Finally chapter 8 focusses on the Dutch pig sector; stra­ tegic options are indicated which could lead to a strong competitive position. The options described may also be of interest for the pig industry in other regions in the world. Pork's share of world meat con­ sumption increased by 1 %t o 40% in the Global demand period 1985 to 1991 (see table 2.1). According to 1991 figures, beef's 2.1 Introduction share in the total consumption amoun­ As a result of religious taboos, the ted to 29%, and poultry made up 23%. production and consumption of pork Beef has seen a drop in its share since does not take place in all parts of the 1985, while poultry has seen an world. Jews and Muslims, in particular, increase. The total growth in beef do not eat pork. consumption during the period 1985 to 1991 was limited to 12%, compared to The period between 1985 and 1992 23% for pork and 32% for poultry. The saw a 23% increase in world meat growth of the poultry share is based on consumption, with population growth the relatively low price of this meat, the recorded at 13%. Per capita meat ease with which it can be prepared, its consumption is therefore on the in­ low fat content, its organoleptic quali­ crease. Both factors - population ties (taste and texture), and the success growth and higher per capita consump­ achieved by the poultry industry with tion - are roughly equal in their influ­ their marketing programmes. ence on higher global consumption. Table 2.1 World meat consumption in the period 1985 to 1991 and the share of the various kinds of meat 1985 1989 1991 Total consumption 148 171.9 178.8 (millions of tons) of which (percentage) - beef and veal 31 30 29 - pork 39 40 40 - poultry 21 22 23 - other meats 9 8 Source: FAO and USDA 2.2 Development of pork Other important consumer areas are consumption Europe, North and Central America and Total pork consumption has the CIS. However, their importance for increased from 58.1 million tons in pork consumption is declining. These 1985 to 71.8 million tons in 1992, an areas lag behind Asia in terms of increase of 23.6%. The reasons for this growth, both in population and in per increased consumption can be found in capita consumption. the relative reduction in the price of pork, the increased prosperity in impor­ Seen worldwide, the average annual tant consuming countries, and the resul­ per capita consumption totalled 13 kg in tant increase in per capita consumption, 1992. The annual figure for North and in addition to the growing world popu­ Central America is 22 kg; for Asia this lation. is 10 kg, for Europe 41 kg and for the CIS 19 kg. In the period 1985-1992, The consumption of pork is not average per capita consumption evenly divided over the world. Asia is increased by 8%. Areas with a rela­ the continent in which the largest tively low per capita consumption amount of pork is consumed. In fact, recorded the strongest increases due to Asia's share of pork consumption has increasing prosperity. In Asia, for shown a strong increase since 1985, example, per capita consumption particularly through a rise in the per increased by 32%, and in Africa by capita consumption (table 2.2). 13%. In regions which had already Table 2.2 Pork consumption by continent, 1985 - 1992 1985 1989 1990 1991 199? pre!.' Consumption 58.1 67.9 69.8 70> %l,& (millions of tons) of which (percentages) in 1 Asia 37 40 42 44 *M North and Central America 14 14 13 13 14 South America 3 3 3 3 .3 Africa 1 1 t 1 tö.9 Europe 34 31 31 29 28 Oceania I 1 1 1 ,0.6 CIS 10 10 10 9 "" 8 SOUIL.J.
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