Cost price Dutch pig sector in perspective

Several parties have compared and compared the cost price of different producing countries on the world market. Boerenbusiness gives the results.

From a recent Australian cost price comparison, the production costs of Brazil, Canada, Denmark, the Netherlands, England and Australia are expressed in percentages based on the cost price in the US, which serves as the standard in this comparison and is valued at 100 percent. This results in the score below:

1. Brazil - 107%
2. Canada - 113%
3. Denmark - 131%
4. Netherlands - 139%
5. Great Britain - 164%
6. Australia - 175%

A more accurate comparison by AHDB Pork, the British product board for the pig sector, shows that the cost price in the Netherlands rose from 2010 euros to 2013 euros per kilo in the period between 1,42 and 1,77. In 2014 and 2015, production costs fell slightly compared to previous years. During the most recent measurement of AHDB Pork in 2015, the Dutch cost price recorded an average of 1,58 euros per kilo. With these figures, the Netherlands in Europe is reasonably in line with countries such as Germany and France. Countries such as Spain and Denmark perform considerably better, while Italy and the Scandinavian countries score less well.

However, there can be a lot of variation in the cost price per company per country. In the Netherlands, for example, the range is between 1,20 and 1,70 euros per kilo and everything in between, according to figures from Wageningen Economic Research. The same distribution is therefore likely in other countries. In the Netherlands, feed, housing, labor and manure are the most important factors that determine the cost price. Feed costs are by far the most important factor for more than 50 percent.

On balance, the average cost price in Europe was 1,61 euros per kilo. It should be noted that the high cost price in smaller pig countries, such as Ireland and Sweden, has a price-increasing effect on the average. Competing countries on the world market such as the US, Canada and Brazil score significantly better than Spain, Germany, France, Denmark and the Netherlands, the main producers in Europe.

However, the cost price comparison is not as 'black and white' as the results initially suggest. The calculation is based on the production costs incurred on a pig farm. Processing and logistics costs naturally also play a role in determining the final cost price of getting the meat to (export) destination.

A good example of this is Brazil, where pig farmers often grow their own feed crops and therefore have relatively low feed costs. Brazilian pig farmers also benefit from low labor and land costs, which means that the cost price in the province of Mato Grosso is even below euros per kilo. However, the logistics infrastructure in the processing process is many times more cumbersome than in Europe. To get pigs to the slaughterhouse, you sometimes have to drive hundreds of kilometers on dirt roads, which causes a lot of loss of quality.

On balance, the Dutch pig sector can still compete reasonably well on the world market with current cost prices. However, if negative shifts take place, because feed and fertilizer costs continue to rise, there is a chance that the Netherlands will price itself out of the market. Especially because the Dutch pig sector is increasingly selling meat on the cost-price-oriented world market.