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EU Livestock and Products Semi-Annual - February 2007

by 5m Editor
12 February 2007, at 12:00am

By USDA, Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Semi-Annual 2007 report for the EU. A link to the full report is also provided. The full report includes all the tabular data which we have omitted from this article.

Executive Summary

European pig production has been gradually increasing in the past years. After the 2004 enlargement, the ten New Member States (NMS) became net importers of pork from the EU- 15. In 2006, pork consumption further increased, because consumers in Greece and Italy also increased pork consumption in reaction to the AI scare. Increases in pork exports to Russia and South Korea in 2006 more than compensated for decreasing pork exports to Japan. As a result, pork demand outstripped pork supplies and pig and pork prices increased to high levels during the first eight months of 2006.

A stagnating pork consumption in 2007, as consumption in Greece and Italy decreases again in the post AI era, combined with increasing exports to Russia and Romania, are expected to push EU pig and pork prices up again, albeit not to 2006 levels. Pork production is however forecast to increase only marginally because increased feeding costs are expected to shave off profitability.

Swine: 2005

Final 2005 pig slaughter numbers appeared to be slightly below previously reported numbers. This resulted in a slight increase in pig loss numbers.

2006

Pig production in the EU is expected to end one and half percent higher in 2006 than in 2005, as a result of a slight increase in sow fertility. Increases in pig production are expected in Germany, Italy, the United Kingdom, the Czech Republic and Poland, while decreases are expected in Denmark, Sweden and Hungary mainly. An outbreak of Classical Swine Fever (CSF) in the west of Germany in March 2006 did not significantly impact German pig production. EU exports of live hogs, predominantly piglets from the Benelux, Germany, Hungary and Poland to Croatia, Serbia and Russia, have increased more significantly than previously anticipated. Increased exports of piglets to Balkan countries was the result of a mix of AI induced increase in demand for pork, decreased domestic pig production as a result of Classical Swine Fever (CSF) outbreaks and the end of the pig production cycle. Hog slaughter in 2006 is also expected to have increased by one and half percent compared to 2005. Hog slaughter in Germany increased by four percent. However, much of this increase is due to higher imports of piglets for fattening or hogs for slaughter. For example, Danish farmers benefit from higher German pig prices by exporting slaughter pigs to Germany. Pig slaughter also increased in Italy, Spain, the Czech Republic and Poland. Pig slaughter decreased compared to 2005 in the Benelux, Denmark, France and Hungary. EU swine inventories at the end of the year 2006 are expected to increase slightly again compared to 2005. Increasing swine numbers are anticipated in Denmark, the Benelux and Spain, while swine populations are shrinking in Poland, France and Sweden.

2007

EU pig production in 2007 is forecast to increase by another quarter percent as a result of better sow fertility. In Germany, applications for building permits for hog facilities have drastically increased in 2006, some of which go into production in 2007. Also, some former cattle farmers are converting to pig production after the decoupling of cattle premiums. Pig production is also forecast to further increase in the Benelux and Denmark for the export of piglets, while production in Italy and the UK is forecast to increase for domestic slaughter. The fattening of pigs is stagnating in Denmark and the Benelux as environmental constraints are impeding new permits for hog barns. Pig production is expected to somewhat decrease in 2007 in France, Spain and Poland as a result of increased feeding cost and hence reduced profitability. Exports of live pigs are forecast to further expand to the Balkan states and Russia. EU pig slaughter is forecast to further increase by a quarter percent, mainly in Germany, Italy, the UK and the Czech Republic. Pig slaughter is forecast to further decrease in the Benelux, France, Sweden and Hungary. Swine numbers are forecast to further expand at the end of 2007.

Pork: 2005

An update of previously reported pork numbers incurred only minor changes.

2006

EU pork production in 2006 is expected to have increased by one and a half percent compared to 2005, marginally lower than previously anticipated as a result of slightly lower carcass weights. As a result, EU pork consumption is expected to have increased by 1.2 percent compared to 2005, also ma rginally less than previously projected. Pork consumption in 2006 has also benefited from the AI scare in Greece and Italy. The European pork market has been performing very strongly in 2006 with high pork prices, which started to falter in the fall of 2006. Large imports of slaughter pigs into Germany from Denmark and the Netherlands have turned Germany into a net pork exporter for the first time in 2006. EU pork exports increased compared to 2005, despite the fact that Danish exports to Japan suffered from shrinking Japanese pork consumption and strong competition from the United States. The reason for that is the diversion of Danish pork exports from Japan to Russia and South Korea. Danish exporters reportedly increased pork sales to Russia because they received better margins on their products. The higher profitability of the Russian market above the Japanese market can be explained by the growing demand for pork in Russia in combination with the restrictions laid on Brazilian pork imports.

2007

EU pork production is forecast to increase by a further quarter percent compared to 2005. The most significant increase is forecast in the United Kingdom, as the pig sector further recovers from years of problems with Post-Weaning Multisystemic Wasting Syndrome (PMWS). EU pork exports are forecast to further increase, mainly to Romania, which for this report is still considered extra-EU trade. Pork exports to Japan are not expected to recover much in 2007 because of increased competition from Canadian and U.S. pork exports. In response to the finding of CSF in wild boar in Hungary on January 18, Japan banned imports of pork from Hungary. EU pork consumption in 2007 is not forecast to further increase as a whole, because increases in consumption in some MS is expected to be offset by a decrease in Greece and Italy in the post AI era. EU pork prices are forecast to increase again in 2007, albeit not to the 2006 level.

Pork exports to Romania have increased to 200,000 MT in past years and are forecast to reach 250,000 MT in 2007. The reason for this increase is the expected decrease in Romanian pork imports from Canada and the United States because of the increased import tariffs as a consequence of EU accession in January of 2007. Romania and Bulgaria can also apply for EU pork TRQ’s as of 2007, but this is not expected to have a significant impact on EU pork markets.

Further Information

To read the full report please click here (PDF format)

List of Articles in this series

To view our complete list of 2007 Livestock and Products Semi-Annual reports, please click here

February 2007