The fact that there are 25% fewer pigs in China has not only resulted in a rapidly increasing pig price. It also leads to falling feed prices. Before the African swine fever hit China, most of the soy traded worldwide went to China.
According to Robert Hoste, pig production economist at Wageningen Economic Research, this is expected to cause a large price drop in a few years' time. This is because the agricultural sector in both North and South America will then decide to produce feed for fattening pigs domestically, instead of animal feed for export. This is reinforced by a combination of high pig prices and low soy prices.
'Increasing supply of pigs'
As a result, the supply of pigs outside China will increase sharply in the coming years, which could lead to a large surplus when calm returns to China. "It is difficult to estimate exactly in which year this will take place," says Hoste. "With the pig cycle in mind, I expect that in a few years. It is very likely that it will happen. Moreover, it is also plausible that pork consumption will decrease in favor of chicken meat due to rising prices."
Hoste is not in favor of market regulation through quotes. "There is already a form of quotation in the Netherlands: animal rights. Elsewhere in Europe this is not the case. Market regulation for pig farming is also not negotiable in European politics. Leave it to the free market. The market will arrange it. ."
'Building up financial reserves'
Hoste advises pig farmers to build up financial reserves, instead of investing in economies of scale. "Further scaling up is tempting, but the question is whether that will yield a lot on many farms. The bottom will be reached once. If you invest, it is better to sort for, for example, stables where you can one day switch to free-range farrowing pens. It is more convenient to take the well plan and walkways into account now. In addition, as a collective you also have to invest in chain collaboration and manure valorisation."
The price fluctuations are and will be stronger than before, Hoste expects. "Partly due to an outbreak of an animal disease or borders that are closed due to a trade conflict. That is the price of dependence on the world market. It is therefore advisable to build up sufficient financial reserves."
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