Potential reduction of European sow herd may benefit pig prices
Profits in European pig production may rise in the next couple of years as the EU sow herd may see a substantial reduction, an analyst at the Dutch bank ABN Amro expects.
Dutch agricultural newspaper Agrarisch Dablad reports on the outlook, mentioning other factors as well, that may positively influence profits, like the finding of new market segments and a rise in global demand.
Wilbert Hilkens, the bank’s sector manager for Animal Industries, said that the total sow herd in Europe may shrink by as much as 30% when the stricter animal welfare rules will come into place in 2013 in the European Union. “Even if it would only be 15%, this could be a significant reduction.”
This will mean a lower meat production, with a demand that stays at the same level and will increase on the other continents.
According to the bank, for about 20% of its customers in the pig industry investments for animal welfare may not be feasible. Those pig farms that will remain in business, will grow and thus the number of animals will eventually come back to the current level.
In the meantime, better pig prices will become possible and the larger pig farms will be having a better turnover.
According to Wyno Zwanenburg, chairman, Dutch Union of Pig Producers (NVV), the drop out of pig producers may even be larger. “We think that in the Netherlands ther is about one third of the pig farms that has already taken care of all investments, there is one third can do it and there is one third that is going to have a difficult time.”
It is doubtful that a trade deal with the Mercosur (Latin America) will create any difficulty for the European market, Hilkens said. “Brazil produces about 33 tonnes of pork, the EU produces 150 tonnes. The increase that is necessary in Brazil will not happen overnight or very easily.”