Better times ahead?
The Herning Congress is the main annual gathering of the Danish pig industry. This year’s event in October was attended by over 2,000 delegates, representing all stakeholders in the supply chain - from farmers and their stockmen, the meat and farm supply industries, politicians and numerous others.The Herning Congress is the main annual gathering of the Danish pig industry. This year’s event in October was attended by over 2,000 delegates, representing all stakeholders in the supply chain - from farmers and their stockmen, the meat and farm supply industries, politicians and numerous others.
This year’s assembly followed a difficult year for Danish pig farmers. The effects of the Russian embargo on EU exports are still weighing heavily on pig prices both in Denmark and Europe as a whole, although the top third of Denmark’s producers are still in profit (just!).
This year’s theme was ‘Danish and competitiveness’ (‘Dansk og Konkurrencedygtighed’) and Chairman, Erik Larsen, called on the new Danish government to take action to improve the market environment in which Danish farmers have to operate and create a more level playing field both within the EU internal market and beyond.
More finishing capacity needed
Although Danish farmers are efficient in relation to most of their European competitors, the costs of overly rigid environmental rules place them at a significant competitive disadvantage, as well as discouraging much needed investment in modern facilities for finishing pigs.
The export of piglets to Germany, Poland and other EU markets continues to increase and has damaging knock-on effects on Denmark’s economy, with implications for employment and economic growth. In the first ten months of the year, exports of live pigs reached 10.2m head compared to 9.4 m head in the same period last year.
However, the likelihood of additional grants becoming available from funds available under the EU Rural Development Fund to support investment in new pig finishing capacity is to be welcomed. The Danish government proposes to use DKK 252m in 2016 on modernising pig and cattle housing – of which DKK 126m will be available for pig producers, who will have to meet 80% of the cost of the new investments.
The new proposals will have more emphasis on the refurbishment of old units, the rationale being that environmental benefits will be realised when the new systems come into operation. However, an additional DKK 126m will still be available for investment in new environmental technology installed in existing pig and cattle units – of which DKK 44m will be available for pig farmers.
SEGES Pig Research Centre has initiated a wide-ranging programme to spread ‘best practice’ for finishing pigs to all pig units in Denmark. In recent years, spectacular results have been achieved by sow and piglet producers and SEGES is determined to replicate that success among Denmark’s finisher producers.
The new government has promised to deliver an improved ‘economic framework’ to allow future growth, but urgent action is now needed. A particular issue related to the permitted levels of N-application to crops in Denmark – 140kg per hectare, compared to the 170kg permitted under EU rules. The protein content of Danish crops has progressively fallen in recent years and has necessitated additional imports of soya and other proteins from outside Denmark.
Outlook for 2016
Despite the difficult market conditions in 2015, the October pig census showed a modest reduction in the Danish breeding herd, which was just 0.3% down on the previous year’s level. During the Congress, DAFC Senior Economist, Karsten Flemin, forecast a relatively stable position for producers in 2016. Production in the EU will almost certainly decline in the second half of the year. Good demand from the Chinese market will continue, but production will increase in the US, Canada and Brazil, the main competitors for the EU on global markets.
The EU Commission has announced details of a new Private Storage scheme for pig meat, which will hopefully bring some benefit to the market during a traditionally quiet period for the EU pig meat trade. The scheme will commence on 4th January. The subsidy rates are higher than those offered in the previous scheme in March 2015 and a wider range of products will be eligible for support, including fats and offal.
Negotiations between the EU and Russia concerning an easing of the ban on EU imports will continue. It is unlikely that Russia will ever return to being a major importer of pig meat, as the country is now moving decisively towards better overall self-sufficiency. But there will continue to be opportunities for EU exports of by-products, such as fats and trim to support the traditionally high level of sausage production in the country.
“Taking all into account, we’re looking at prices in the first quarter of 2016 at similar levels to 2015, with an improvement in the second and third quarters – assuming better weather gets European barbecues fired up in the early summer! Here’s hoping that 2016 will bring some more pleasant surprises rather than some of the more unpleasant ones of late,” concluded Mr Flemin.