Vietnam trade deal could open doors for EU pigs

Pig producers across Europe are expected to benefit from a €47.6bn (£42.7bn) general trade agreement with Vietnam.

The agreement will remove tariffs on nearly all goods on both sides once the deal is finalised by the European Parliament, according to the AHDB.

See also: Cautious optimism among pig farmers after tough nine months

Under the agreement, Vietnam will remove 65% of duties on EU exports with immediate effect, with the rest removed over a 10-year period, said AHDB analyst Felicity Rusk.

EU duties on Vietnamese exports will be eliminated over a seven-year period – a shorter phasing-in period due to Vietnam’s developing country status.

Among the trade barriers, imported pork attracts a 16% tariff on frozen product.

This will be removed over the seven years and could open up a market where demand is already increasing.

Up to April 2019, EU exports of pork and pig offal had increased by nearly 80% on the year, to 29,000t.

Almost two-thirds (64%) of exports are frozen offal products, with frozen pork making up the rest of the shipments, said Ms Rusk.

ASF slashes production

The increase is driven by reduced production in Vietnam which, like neighbouring China, is suffering from a widespread outbreak of African swine fever.

Vietnam has already culled 2.8 million pigs in a bid to contain the disease. That figure equates to about 10% of the nation’s pig herd.

“It is likely the nation will increase its reliance on imports as its domestic pig production continues to suffer,” Ms Rusk said.

However, UK producers will not be able to reap the long-term benefits of the deal as the agreement will only apply to EU member states.

The UK could try to negotiate with Vietnam on its own terms, though this would probably take some time.

Steep rise in continental weaner prices

Meanwhile, the AHDB has reported that European weaner prices have risen by 40% since the start of the year.

The 30kg average peaked at €58.85 (£52.54) a head in the week ended 9 June, less than €1 (89p) down on the record high of April 2017.

Despite a slight fall in the latest week (see below), the EU price was still €14 (£12.56) a head higher than last year.

AHDB Pork analyst Bethan Wilkins said the sharp rise was due to a combination of strong demand from ASF-hit China and tighter European supplies.

However, the UK weaner price has reacted more slowly. When the EU average price peaked in June, GB prices were £2 a head lower than the EU average.

Ms Wilkins said there was an optimistic outlook bolstering finisher confidence, which would reflect on weaner prices.

Weaner price changes in key member states over the past three weeks:

  • Denmark: +€2.57 to €60.68 a head
  • Germany: -€0.10 to €68.50 a head
  • Netherlands: -€1.50 to €51.75 a head
  • Poland: -€1.89 to €50.18 a head
  • Spain -€2.44 to €57.93 a head
  • United Kingdom +€1.47 to €58.05 a head