ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Europe feels the pain

by 5m Editor
14 September 2007, at 9:27am

EU - Eleven percent more sows were slaughtered in Germany between January and July compared to the same time last year. This indicates that a significant drop in the national herd is under way - a factor of escalating feed prices.

In the first half of this year pig slaughterings were up 6.3 percent on the previous year as result of a significant rise in imports of slaughter pigs and weaners from the Netherlands and Denmark. German finishers are now screwing down the price of imported weaners in a bid to offset their losses.

Record numbers of Danes are expected to quit the pig industry following a massive leap in production costs - from 94p last year to 125p currently. One industry representative believes Denmark will lose more producers in the next 18 months than it has in the last five years.

Danish producers have - like their counterparts - been caught out over feed prices. Most buy their grain in August and have been stunned by soaring prices during the past few weeks.

Those who have tried to lock into supplies have found compounders will only sign contracts for two or three months.

Few British producers bought their feed before the August hike. And those who did buy in March-July did not buy for a year.

The fallout in pig production will take place across Europe, and namely why producers in Britain will be selling their pigs for £2 a kilo in just over a year from now.

Eastern Europe is likely to be the first to reduce production and when it does the fall is expected to be dramatic. The Germans may be next, followed by the Dutch, who have seen their weaner price wiped out almost overnight. Last week in Holland a 23 kilo weaner was worth just £12.

Much of Holland’s production is exported these days and loss-making pig finishers are reducing their exposure as much as possible by paying well below cost of production for weaners.

Although the Danes are also expecting a big fallout among producers they are not yet predicting a big drop in their national sow herd. Although many Danish pig farmers are over-borrowed by British standards the debt is underwritten by high land values of circa £10,000 an acre.

“Don’t just look for a fall in the Danish herd. There are 1.5m sows in Europe and their number will reduce everywhere,” said BPEX chief executive Mick Sloyan. For the present, Danish prices have started to rise strongly. Pries are also rising sharply in France.

5m Editor