African swine fever drives up European pork prices

0
19

Bringing home the bacon looks likely to become increasingly expensive this year, with European pork prices hitting a six-year high.

Demand from China, where the pig herd has been ravaged by African swine fever, has pushed up wholesale prices at a time when European farmers are wary of boosting production as the virus spreads in the eastern part of the continent.

Pork prices in Europe have jumped 35 per cent since the start of the year to €1.82 a kg, a leap with big potential implications for the Europe’s most voracious pork consumers in Spain, Germany and Poland.

Consumption of processed pork, including bacon and hams, represents more than 50 per cent of total pork eaten, according to analysts.

Poland has also been affected by African swine fever as a producer, as has Romania. Outbreaks of the disease — which is deadly to pigs but does not harm humans — have until recently been largely confined to wild boar, but the virus has been spreading to farmed pigs.

A graphic with no description

“[Producers] can see that if the disease spreads to the big exporters like Germany this could lead to big problems [in Europe],” said Bethan Wilkins, senior analyst at the UK’s Agriculture and Horticulture Development Board, a state-backed market information body.

There is normally a time lag before the wholesale price of pork gets passed on to consumers, especially in countries where retailers are more powerful. In the UK, for example, the retail price index for sausages has risen just 1.6 per cent since the start of the year.

Analysts said meat processors were mainly absorbing the price increases by accepting reduced profit margins, but if prices continued to rise further, retailers would have to pay dearly for pork chops and bacon and pass that on to customers.

A graphic with no description

A rise in pork retail prices could affect demand, especially in the region’s top markets. Spaniards consume the most pork in the EU, eating 55kg per capita annually, followed by Poles at 54kg and Germans at 52kg, according to data from AHDB.

Pork prices in Europe have been volatile over the past few years, affected by feed prices and export demand. Prices hit another high in 2013, pushed up by higher feed costs after severe droughts in key grain and oilseed-producing countries.

European pork exports to China normally peak at the end the year ahead of Chinese new year, but there was a possibility that this year demand could continue rising beyond that because of African swine fever, said Justin Sherrard, global strategist for animal protein at Rabobank. “The end of the year will be the biggest test [for European prices],” he said.

A graphic with no description

Romania has seen by far the most number of outbreaks. More than 1,160 outbreaks of African swine flu have occurred in 360 villages and backyard holdings that have led to more than 110,000 dead and slaughtered pigs, while 19 commercial farms have been affected, causing the death of more than 380,000 pigs, according to the Romanian Association of Pork Producers.

Ioan Ladosi, the association’s president, said the risk of further spread of the disease “is increasing considering the worker movements between Romania and EU countries”.

Mr Ladosi said the government had not responded to producers’ repeated calls for action to stem the spread of the disease. He blamed the government’s reluctance to institute a widespread cull of affected producers was down to the upcoming elections in November — a claim the ruling Social Democratic party rejects.

Meanwhile, the rate of infection is also increasing in neighbouring Hungary, with more than 1,100 wild boars outbreaks reported this year.

A graphic with no description

In Asia, African swine flu is forecast to cut China’s pork meat output by a quarter this year, according to Rabobank. Pork prices in the country have hit record levels, while the virus is also spreading elsewhere in the region, including Vietnam, Cambodia and Myanmar, with outbreaks also reported in the Philippines and South Korea.

Ms Wilkins said that despite the rising export demand, some European producers especially in Germany and the Netherlands had little scope to increase production capacity because of tightening environmental and livestock regulation, while others were concerned about flatlining pork demand in their own markets.

Uncertainty over the outcome of the US-China trade war was also making the region’s pork producers wary of investing in expansion, she added, as a possible return of US pork exports to China would cut the need for European supplies.

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here