4 September 1998

Danes survive crisis through co-operation…

CO-OPERATION is helping Danish producers survive the pig crisis, despite production costs similar to EU competitors.

Karsten Flemin, head of economics and statistics at Danish pig producers association Danske Slagterier, explains: "Production costs arent that different – all EU producers face financial pressure."

Although Danish producers have higher labour and building costs, dependence on intensive systems – only 3% of sows are kept outdoors – brings cost a pig down in line with other EU countries.

"Labour is expensive in Denmark, but in the UK other costs, such as weaner feed, are higher. Overall, production costs are similar," says Mr Flemin.

Danish producers do face physical controls on production. Environmental restrictions on herd size and a maximum nationwide slurry application of 1.7 livestock units/ha have been imposed – a livestock unit is equal to a sow and 20 weaners a year or a finished pig from 30kg to finished weight a year, equal to 170kg N/ha (136 units/acre).

Slurry systems, which have lower ammonia losses than straw-based housing, are favoured, with over half of all finishers kept in slatted pens. Where straw is used producers compete with domestic buyers, who use it to fuel heating systems, pushing cost up to £50/t.

Where Danish producers benefit is in co-operation in supply, processing and marketing. Four co-op slaughterers handle 93% of all pigs and set prices for the year. They also pay an annual bonus, usually about 6p/kg deadweight depending on the co-ops performance.

Mr Flemin says the system provides price stability and allows some planning for production and investment. Pig supplies are based on contract, as are weaner sales. Weaner prices have fallen by £30/head to £20/head due to oversupply in the German market – a key export for Danish producers.

About 75% of piglets are sold on contract to finishers who split predicted gross margin with weaner producers. Spot price for weaners is about £6/head less than contract price.

As in the UK, a 65p levy per finished pig, plus 35p/pig from processors, funds Danske Slagterier, which acts as the industrys political voice while managing research, development and pigmeat promotion.

The funding has been used to develop a national breeding programme, giving access to high genetic merit stock. Most female lines are Landrace x Yorkshire, while Duroc has influenced the sire lines. Better breeding has improved daily liveweight gain from 658g to 968g while feed conversion has fallen from 3.6 to 2.79.

High health status units achieve top feed efficiencies, and where disease is prevalent, legislation forbids vets to profit from selling medicines.

Unit hygiene is monitored nationally. A £10m annual programme checks 98% of pigs for salmonella. Units failing hygiene tests are fined £1.76-£3.60 per finished pig depending on severity and duration of breakdown.

A two-tier renderers system. operates. Piglets are removed free while producers are charged for removal of older animals.

Danish production costs

&#8226 Similar to the UK

&#8226 Greater co-operation

&#8226 Price setting and bonuses

About 75% of weaners are sold on contract, realising £6/head over spot market prices. There is further pressure to cut antibiotic use.