While Scottish beef and sheepmeat producers are benefiting from strong farmgate prices pig producers are experiencing prices well back on 12 months ago.
“Although by historic standards pig producer prices are firm they are currently standing some 7% lower than a year ago,” said Stuart Ashworth, Quality Meat Scotland’s Director of Economics Services.
“This is in sharp contrast to the increase of 4% for prime cattle and over 30% for prime sheep,” he added.
European pig producers are equally seeing lower market returns with prices dipping slowly at a time when historically they would be increasing seasonally. One contributory factor for these lower market returns is an increase in production.
UK slaughter data points towards an increase of almost 5% in the volume of pigmeat produced in the first quarter of 2018. In its latest review of the European pigmeat market, the European Commission is forecasting a growth of 1% in production in the first quarter of 2018 with a modest further increase as the year progresses.
This expectation is based on a reported growth of 1.5% in the European breeding herd in December 2017 and a commensurate growth in fattening pig numbers. The growth reported in the UK breeding herd is one of the more modest increases across Europe and the UK producer price remains the third highest of all EU member states.
Some of the growth in EU production is finding a market outside the EU and the EU is reporting substantial growth in exports to Ukraine, Serbia, the Philippines, and South Korea offsetting the decline in exports to China and Hong Kong at the start of 2018. The UK too has seen some growth in exports during January and February.
However, the trade dispute between the USA and China which has seen tariff rates raised on US pork exports to China may create an opportunity for the UK and the EU to regain trade with China in the medium term or a rebalancing of exports towards China as the US are forced to seeks markets elsewhere.
“The relative strength of sterling, and higher UK production, has resulted in lower pigmeat imports into the UK over the past six months,” said Mr Ashworth.
“Nevertheless, the UK market was slightly better supplied with pigmeat than last year through January and February,” he added.
Meanwhile, Kantar Worldpanel consumer research suggests UK retail fresh pork consumption over the past quarter is little changed although bacon and sausages have increased in popularity. Like other meats, the mix of retail purchases has moved towards cheaper and more versatile cuts with significant growth in purchase of pork mince being reported while loin and shoulder roasts have declined in popularity.
“This combination of changing consumer behaviour and slight increase in the volume of pork on the UK market will be the major contributors to the cooling of farmgate prices,” said Mr Ashworth.
“The prospect of continuing modest growth in production in the UK and Europe would suggest that producer prices will continue to fail to match the high prices of last year.”