Pig gloom Europe-wide as Far East demand vanishes

By Peter Crichton

WORRIED UK pig producers are trying to work out whats gone wrong – and are looking to both the UK and the EU for signs of recovery.

But more distant events will also continue to affect the home market, say analysts.

Financial chaos in the Far East has slashed buying power, making UK producers attempts to export to these markets almost impossible.

The price of rice has quadrupled in real terms, while earnings have remained static. With widespread unemployment and high staple food prices, expensive imported pigmeat is off the menu for the average family in the largest potential market in the world.

Canadian and US pig inventories are up, and with huge supplies of cheap grain and few of the welfare restrictions faced by the UK industry, meat traders say that Far East export opportunities will be grabbed by these countries. The Canadian pig herd has grown by 20% in the 1990s and the same trend is evident in the USA and Australia.

Bearing in mind that due to the currency collapse an Indonesian pig farmer receives around £5 for a bacon pig it is hard to see how UK pig farmers can compete.

Closer to home, other EU prices remain weak, with Dutch and Danish deadweight returns in the 60-65p band. Only Germany, in the mid-70s, is showing a slightly firmer trend.

A report of swine fever early this month in Parma, Italy, involving 1375 pigs at least raises the possibility that classical swine fever (CSF) might occur, as it did in 1997, to lift prices. But in view of the current size of the world herd, it would need a massive epidemic to have a significant effect.

The bearish trend throughout the EU is reflected by the latest quotes on the Dutch AEX pig futures market. September delivery contract prices slipped to the equivalent of 45p/kg liveweight, with quotes right through to January 1999 no higher than 48p, rising to 54p in March and 59p in June.

These prices will give little comfort here – they all far below the UK cost of production. Another worrying factor is that the Dutch expect their October slaughtering to rise by almost 15% to 400,000 per week in October, adding further pressure to an already oversupplied market.

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