Tighter European supplies of pigmeat look set to create opportunities for the British industry, according to Stuart Ashworth, Head of Economics Services, Quality Meat Scotland (QMS).
Tightening supplies should, said Mr Ashworth, mean Europe will have less product to export to the UK. It will also create opportunities for UK exports, with provisional customs data showing a decline of 5% in pigmeat imports during January and February, while UK exports increased by 4%.
European census data is giving a clear indication of the likelihood of tightening supplies.
“Although the total pig population across Europe was slightly up in December, the number of breeding sows and gilts intended for future breeding had fallen. All the major pig producing countries reported a smaller breeding herd with notably significant declines in the sow population in Spain and Italy,” observed Mr Ashworth.
“A smaller breeding herd will inevitably lead to a smaller slaughter volume in coming months after a slightly higher kill in the first quarter; as more stock is slaughtered because they are not need for future breeding.”
The exception to this trend was the UK, pointed out Mr Ashworth, where the December census revealed a small increase in the number of sows and gilts in pig and gilts intended for future breeding.
The UK census also showed a smaller number of fattening pigs and this is beginning to reveal itself in UK slaughter numbers. Despite the first quarter kill being 1.5% higher than last year, the March kill was 0.5% lower than last year. It will be a while yet, Mr Ashworth said, before the greater number of in pig sows and gilts in the UK results in more prime pigs for the processors.
“Historically pig prices increase between February and September before sliding to a low at the end of January. Over the past five years the average increase from February to September across Europe has been around 15% and with the European breeding herd declining, producers will be hopeful of at least a similar movement this year,” he said.
However, Scottish pig producers have been facing costs of production around 10-12% higher than a year ago, eroding any improvement in producers’ prices.
One encouraging factor, however, for pig producers has been the easing of protein and cereal prices from their pre-Christmas highs.
While beef prices have increased by 6% and hogg prices by more than 30% since the start of 2013, pig prices have struggled to lift since the start of the year.
“However, compared with prices twelve months ago farm gate pig prices are about 10% higher which compares more favorably with sheepmeat producers where prices, despite the improvement since the turn of the year, are struggling to match prices of a year ago. Beef prices are however 12% higher than twelve months ago,” said Mr Ashworth.
“While Scottish producers have seen their prices inching forward in recent weeks, their European colleagues have seen prices slide although they do stand on average about 6% above a year ago,” said Mr Ashworth.