'2018 will not be a good year for pigs'

In the first 3 quarters of this year, the pig price was satisfactory, after that it went down. Robert Hoste, economist pig production at Wageningen Economic Research and also speaker at the National Economic Agriculture Congress, looks ahead to 2018.

The pig cycle is a well-known phenomenon in the pig market. Are we entering a new price trough?
"My expectation is that we are well on the way to a new price decline, so 2018 will not be a good year for pigs either. That is a combination of more sows in the European Union (EU), less demand from China and more production in the United States ( In addition, the price peak was particularly high in 2017, prompting a price decline to set in more quickly. In addition, the self-sufficiency rate of European pig production has increased in recent years, meaning that we are more dependent on market developments in third countries. we reaped the good fruits last year, but now the bitter fruits."

If sow productivity increases, should the sow herd shrink?
"Sow productivity continues to increase. This means that the number of sows in the EU needs to decrease by 2% to 2,5% per year to have pork production at a constant level. However, last spring the number of sows was 1,2, 2016% higher than in the spring of XNUMX. In my view, the EU should focus on self-care. We are more expensive in Europe than other world producers such as the US and Brazil. The EU cannot compete with these countries in the long term. Therefore, the number of sows in the EU is expected to decrease again in the near future."

What do you expect in terms of the market in 2018 and countries like the US and Brazil are getting stronger?
"I expect a difficult market in 2018, both in third markets and within the EU. To be a global competitor, you have to be large and work more economically than your competitors and you also have access to sales countries. Brazil and the US have that good The EU produces more expensive than competitors due to high wages, but also stricter environmental and welfare requirements.In addition, production in the US and Brazil is highly organized in vertical integrations, which increases the clout. Euro is currently quite strong, which is a disadvantage for exporters. An oversupply of pork will also put pressure on the price within the EU."

Is a Dutch pig farmer, in the long run, better off in an integration?
"Some can benefit from producing in an integration. It is desirable and inevitable for most pig farmers to start working together more, but that is quite different from an integration. Vertical integrations arise due to a lack of entrepreneurship, or when market conditions are so difficult that the continuity of a sector is endangered. Customers want to secure their supply and will contract it, or take production under their own management."

Dutch pig farmers are often good entrepreneurs. However, the risks have increased in recent years: more price volatility under the influence of third markets, companies have invested heavily to meet all legal requirements, and the advantage of family businesses (buffer through equity and labour) decreases with increasing scale. . In an integration, a pig farmer no longer bears the risks himself. If you want to stop in the long run, this can be a great way to live with fewer worries and challenges."

"The same is true with feed money contracts. Market concepts are an answer to the tough competition in conventional production. By supplying a distinctive product, you have more 'license to produce' and 'license to sell'. However, that does not help against the strong price fluctuations. This requires market regulation. Agreements can be made within market concepts about sales security and price regulation. I expect that we will move towards that more, if only because chain agreements also allow you to save costs through better coordination of numbers and quality of the delivered animals."

Is the Netherlands increasingly becoming the country of propagators?
"I don't think so. Despite the fact that Dutch piglet production can compete well with neighboring countries in relation to finishing pig production, we have hardly seen any change in the ratio between numbers of sows and finishing pigs over the past decades. The number of piglets raised per sow is increasing. The market risks in the event of a border closure in the event of a disease outbreak are so great that we should not strive to be the nursery of Europe."

Is the pig market better off without quotations?
"Quotations are necessary, if only to keep chains and slaughterhouses on their toes. However, weekly price fluctuations can lead to a fluctuating supply of slaughter pigs, which costs money for the chain below. It is better if slaughterhouses have enough fat on the have bones to absorb price fluctuations. However, the interests are great, because € 0,01 per 1 kilo can easily make a margin difference of tens of thousands of euros for an average slaughterhouse. Perhaps we can take an example from Denmark, where the pig price shows less fluctuations."

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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