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Bethan Wilkins

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AHDB Pork Market Intelligence

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Measures to ease pressure on EU pig market announced

Home \ Prices & Stats \ News \ 2015 \ September \ Measures to ease pressure on EU pig market announced

Several reports have emerged in recent weeks about the problems facing not only the pig sector but agriculture in general. This cumulated in the introduction of a package of measures, worth €500 million, to support the farming sector by the European Commission on 7 September.

Particular reference was made to the dairy and pig meat sectors. For pig meat this included a proposal to open a new private storage aid (PSA) scheme and an increase in the budget for promotion.  An assessment will also be undertaken of what additional resources can be provided to help eradicate African Swine Fever (ASF).  For the dairy and pig meat sectors there will be a direct aid package worth €420 million of which €36 million has been allocated to the UK.  Member states have flexibility as to how funds are to be allocated between the two sectors.  It has also been proposed that a pig market observatory would be set up by the Commission to enable more timely monitoring of the market similar to the one already in operation in the dairy sector.

The cumulative impact of ongoing lower pig prices year on year, in spite of favourable feed prices, is starting to bite hard, with producers having major cash flow problems.  The situation is being exacerbated by outbreaks of African Swine Fever (ASF) in the Baltic States and Poland

In the largest pig producer, Germany, both breeders and finishers are in a loss making position especially the former with both finished pig and weaner prices well below last year’s levels.  According to reports from the Netherlands 20% of producers are in difficulty and a rescue plan is being worked upon involving Rabobank, the dominant lender to the sector.  In neighbouring Belgium pig producers are also in difficulty and a deal is being arranged to provide financial support. The financial crisis and need for structural adjustment among French producers has already been given publicity which has included a national aid package for the sector. The situation has also become very difficult for Italian breeders.

The June EU pig census are not complete but for those for which results are available they show contrasting results. For the female breeding herd numbers in both Belgium and Poland were 6% lower than a year earlier with further falls to come given the sharp falls in in-pig gilt numbers. In the Netherlands and Italy numbers were actually up by 1% while in the largest producer Germany they were 3% lower.

PSA has already been opened this year in the spring, when 63,000 tonnes was contracted in the EU as a whole but was not widely used in the United Kingdom as less than 200 tonnes were contracted for. When final details are announced, due on Thursday, it is expected that the new scheme, unlike the previous one, will include some low valued cuts, such as fresh lard, which have been particularly affected by Russia’s food import ban. It is also understood that the storage aid rate will be increased by 20% and that there will be no ceiling on the quantity contracted for.  Uptake will be monitored on a regular basis to assess what impact it has on the market.