Release of private storage pigmeat to test EU market

Thousands of tonnes of private storage pigmeat will be released to the EU market over the next few weeks, leading to uncertainty for the sector at a time when prices had seemed to have stabilised.

About 30,000t of pork and fat is expected to be released to the market this week, with a further 30,000t due to be released before 1 May. More will follow in the summer.

The pigmeat has been in store since late January, following the European Commission’s decision to open a Private Storage Aid (PSA) scheme to re-establish market balance and increase pig prices.

See also: Poor pig prices force closure of farms

The PSA opened on  4 January 2016 and a total of 90,000t of pigmeat was entered into storage before it was suspended three weeks later on 25 January.

Under PSA rules, the EU agreed to pay for the storage of some of the meat for 90 days, some for 120 days and the rest for 150 days.

Once that period expires, it is down to the contractor to decide whether they want to sell the meat or pay to keep it in storage.

Zoe Davies, chief executive of the National Pig Association, said it was hard to know what the effect on UK pigmeat prices might be when the meat and fat in store was released.

“But the price is still low and this is not going to help. The vast majority of the meat that went into storage was bone-in leg, which is not one of the cheaper cuts.

“A lot of the meat may go for export, but it will have an effect and it is going to be negative.”

Stephen Howarth, market specialist manager with AHDB Pork, agreed that the bulk of product could head to export markets.

“I wouldn’t expect it to have a huge effect on the market because the export market is so strong,” he said. “Trade for the EU has been particularly strong – particularly into China.”

“The other positive is that we haven’t seen prices coming back in anticipation and people will know what the position is.”

However, Mr Howarth stressed that European pig prices were still very low and prices typically rose at this time of year, but there was little sign of that happening.

UK prices may have been more stable in recent weeks, but they remained at their lowest levels for about a decade, he said.

According to AHDB Pork figures, the EU-spec APP price for the week ending 2 April was 116.3p/kg deadweight, while average cost of production during the last quarter of 2015 was estimated at about 135p/kg.

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