Rising costs and conflict expected to slow global pork trade
© Anton/Adobe Stock Pork production growth and global trade are both expected to slow in 2022, as rising production costs hit producer returns.
Increased feed, energy, transport, veterinary and staffing costs will all put pressure on profit margins for producers, says Rabobank’s Global Pork Quarterly Q2 2022 report.
Conflict in Ukraine and a poor South American crop have pushed grain and protein meal costs higher, with markets also more volatile due to lower global stocks.
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Animal protein senior analyst Christine McCracken, the report’s lead author, said: “The recent spike in energy costs will put additional pressure on an already stressed global supply chain, just as it was emerging from an extended disruption.”
Production
Cost inflation and disease are both limiting global production growth. African Swine Fever is affecting production in South-east Asia, while tight margins in Europe and Brazil are also having an impact.
High hog prices in North America are offsetting some of the rise in production costs for the region.
Global trade
Global trade is expected to remain slow as a result of conflicts and uncertainty, according to the report. The value of global pork trade is predicted at $45bn (£34.5bn) in 2022, with higher values offsetting reduced traded volumes.
Ms McCracken said: “An estimated 11% of annual pork production is destined for global markets, with most export-dependent countries unable to absorb excess pork in local markets. This vulnerability could force some regions to re-evaluate their relative exposure to exports and export-led growth.”
The production response has been subdued in most regions so far, but will begin to affect availability during the second half of 2022, according to Ms McCracken.
US market for UK red meat
The US is becoming an important new market for UK red meat exports, with the trade worth £3m in January 2022.
The value of UK pork exports to the US rose by £600,000 on the previous year to £1.8m in January. Export volumes totalled 592t, an increase of nearly 50% on the same month last year.
UK beef exports to the US in January were valued at £1.3m, while export volumes for the month rose from 22t in 2021 to 220t in 2022.
The US beef import quota has been filled, and beef exports from the UK to the US will now slow, according to AHDB senior export manager Susana Morris.
“The figures for January are very encouraging and our pork exports to the US continue to grow,” Ms Morris said. “Unfortunately, we are expecting our beef exports to decrease in the year ahead, as exporters now face a tariff of 26.4 per cent, making it very difficult for the UK to compete on cost.”
UK lamb gained market access to the US from 3 January 2022 and export figures for lamb will become available in the coming months.
AHDB estimates suggest the US market for UK lamb could be worth £37m over the first five years of trade.
Ms Morris said: “We know that the US presents many opportunities for our red meat exporters, so AHDB is committed to showcasing our products to buyers across the US.
“We will continue to attend trade shows and host our own activities in this market, to help build on these impressive export figures in the year ahead.”
