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Danish Producers Faced with Uncertain Future

by 5m Editor
21 May 2009, at 10:40am

DENMARK - A revolution is taking place in Denmark as Danish Crown continues the metamorphosis (common to a number of large cooperatives over the years) from food producer to food processor.

Environmental legislation and chronic poor prices are gradually making the production of finished pigs untenable in Denmark. Latest figures show that in the first three months of this year exports of piglets to Germany are a third higher than during the same period last year.

As Danish Crown makes people redundant, slashes wages, and closes slaughterhouses — and increasingly looks to investment in other countries for its survival — pig farmers have exported almost 1.7 million weaners for finishing in the first three months of this year.

Even those still finishing pigs are increasingly shunning Danish Crown abattoirs, preferring to send their pigs to German abattoirs where they will make more money. During the first three months of this year over 300,000 finishers were exported, nearly a third more than during the same period past year.

Pig-keepers are increasingly prepared to acknowledge that the Danish pig industry has hit a watershed. They have forgotten what it is like to make a profit. Their government has burdened them with expensive environmental constraints that exceed the requirements of European law and their own cooperative, Danish Crown, can’t, or won’t, pay them an acceptable price.

As more producers send their weaners and finishers to Germany in a bid to stay in business, throughput is shrinking in Danish Crown abattoirs in Denmark, which are becoming less efficient as a result.

In a bid to staunch the flow of its lifeblood, Danish Crown has put together a £175m cost cutting plan, which includes a 20 per cent reduction in labour costs, the closing of at least two production plants, a stop on investment in Danish plants and the transfer of some slaughtering to Germany where costs are lower.

Danish Crown — once treasured by the politicians and voters of Denmark as a national treasure — now finds itself friendless, the victim of heavy legislative burdens which threaten its future.

Not that pig production in Germany is without its difficulties as consumers draw their purse-strings tight. Retailers are continuing to squeeze margins and as a result pig producers are getting £126 for pigs that cost £144 to produce.

NOTE: Meat production in Germany is up 1.4 per cent this year. Pigmeat has seen a dramatic increase of nearly 5 per cent largely as a result of the growing number of pigs being exported from Denmark and Holland.