'2020 can also be a good pig year'

These are bizarre times in the pig market. Due to the large meat shortage in China, the export of European pork is booming. And that leads to high prices. At the same time, African swine fever has been detected near Germany, in western Poland. Robert Hoste, pig production economist at Wageningen Economic Research (WUR), looks back and ahead. 

You have been following the pig market closely for years. How would you label 2019?
"Last I predicted a turbulent year and that expectation has more than come true. However, I did not expect that the prices would rise so fast. The pig price has even broken the psychological barrier of €2 per kilo and for piglets â85 has been paid at the top, including supplements. These are unprecedentedly high prices when we look back at the recent past. All in all, you can label 2019 as a bizarre pig year."

And all because of the outbreaks of African swine fever in China?
"For the most part, yes. The Chinese pig population has been hit hard, causing a huge meat shortage in the country. Last summer I was in China and when I visited a restaurant there, the pork was sold out. It was even crossed out on the menu. This shows how dire the shortages are. And this in a country where pork is extremely popular. Poultry or beef meat is now an absolute alternative. Chinese prefer to chew meat with cartilage and fatty products. That is why the by-products (such as the heads and feet) are so loved."

"A Chinese person is willing to pay a lot of money for pork. This means that pig prices in China have risen sharply to more than €5 per kilo of live weight. This price increase is much faster than in other Asian countries, which were also affected by ASF. The trade war is also one of the reasons why pork prices in China have risen so sharply. American exporters have had less access to China due to the increased import tariffs, as a result of which they have moved to other markets, such as South Korea and the Philippines. thus enjoyed a competitive advantage, which also explains why pig prices are much higher here than in the United States."

How long do the high prices last?
"That is a difficult question. The pig price was almost unpredictable in the past and now it is even more difficult. The Chinese pig price has been corrected somewhat in November. It is therefore possible that European pig prices may drop slightly in the new year, when meat sales are traditionally somewhat laurelled.The danger of African swine fever lurks here too, given that the virus has meanwhile been detected just 40 kilometers from the German border in western Poland.If Germany and us save an ASF outbreak remains, however, 2020 could be another good year for pigs."

"We have models within the WUR that show that the meat shortage in China will last for about 5 years. Although the Chinese government claims that the pig population will not shrink any further, the recovery will take several years. Even if pig farmers in China reduce production The breeding stock is simply not available to bring pig numbers back to their previous levels in the foreseeable future, and the outbreaks in Russia show that the virus is almost beyond control, despite serious government measures. The means to control the animal disease is a vaccine that works well, but I have been told by vets that it will take years before this is available."

This means that the pig price will remain good for years to come?
"You would think so. However, the price of pork is also rising. This is also apparent from the meat price index that the WUR monitors. The consumer price has now risen to a record level of 110 points. Compared to previous price peaks in the pig market, the pork price in the store is now rising much more strongly. Supermarkets have therefore anticipated the rising pig price, which is justified in my view. Consumers therefore have to dig deeper into their pockets and may switch to alternatives. This can create a new equilibrium. With the current market excesses, however, it is difficult to predict the timeline to a new equilibrium using a calculation model. Then you fall back on your gut feeling and that says that, if you cancel out all the pluses and minuses, the market prospects for pig farmers are still good for a few years to come. Provided we remain free of AVP of course."

What will we notice in the new year from the 2020 stopper scheme?
"I do not expect a major effect from this. The pig rights remain available and are (or have already been) bought by the permanent producers. The high pig prices stimulate the stayers to refurbish and expand old locations. I therefore do not expect any effect on the pig supply in January."

And what about the warm remediation?
"Pig farmers have until mid-January to register for this and advisers are calling on them to do so. This is because it is non-binding and involves little or no costs. The scheme is expected to be considerably oversubscribed. Pig farmers in concentration areas East receive €52 per pig entitlement that is surrendered.This is €151 for concentration area South. In addition, there is a compensation for the actual value of the stables.However, practice must show whether pig farmers who have registered actually want to stop. strongly depend on whether pig prices remain good in the coming period. The choice between participating or not depends on each entrepreneur. This makes it difficult to estimate the numbers of stoppers. The first effects of the warm remediation will probably only become clear at the end of 2020, so that will take some time for a bit."

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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