Tension in pig market is running high

Not the outbreak of African swine fever in Germany that has been feared for months, but the coronavirus has taken hold of the pig market. The price drop in recent weeks is unprecedented: the German VEZG quotation has fallen by as much as 42 cents to €1,60 per kilo since March as a result of the lockdowns in Europe. A shame, because since last year the quotations have finally reached a level where pig farming had become profitable. 2020 was also going to be a good year, but due to the corona crisis, all promising forecasts could be thrown into the trash.

The bottom of the market is still not in sight. In fact, the situation is deteriorating day by day. Because hairdressers and schools are allowed to open again in various countries, some slaughterhouses are being closed.

At the beginning of last week, the curtain fell on a relatively small Vion cattle slaughterhouse in northern Germany. A few days later it became clear that a large Westfleisch pig slaughtering location would also have to close at least this week, because hundreds of employees had been diagnosed with the virus. The German government uses the benchmark that a region has a maximum of 50 corona infections per 100.000 inhabitants, otherwise the measures will be immediately tightened again. That happened in Coesfeld (North Rhine-Westphalia), not far from Winterswijk.

Contract pigs are slaughtered
The cooperative meat group has indicated that all contract pigs will be purchased. A rough estimate is that 70% of Westfleisch's supply is under contract. The free market is therefore more vulnerable in times of crisis, but that is besides the point. The weight limits are also being stretched. If it remains the short-term closure of the Westfleisch factory, then the problems are manageable and the supply will probably find its way.

But does it stop there? There are rumors that investigations are underway in Germany into traces of contamination at slaughterhouses and there may be consequences. The many outbreaks in the meat sector are high on the agenda in German politics. When a second large slaughter location is closed, the problems pile up. And that is not inconceivable, given that (Eastern European) slaughterhouse employees often live in clusters. The limit of 50 is quickly exceeded.

After all, in the US the problems also started with one location of Smithfield in the Midwest, but within a short period of time almost 50% of the slaughter capacity was shut down. With all its consequences: empty shelves in supermarkets and millions of euthanized people pigs. In fact, consumers in rural America now even buy porkers directly from the farm to be assured of meat. In times of crisis, the Western world appears to fall back on old-fashioned practices.

a lot of impact
The loss of slaughter capacity can turn society upside down, as the situation in the US illustrates. Even President Donald Trump joined the discussion at one point and demanded that slaughterhouses reopen to prevent empty shelves. That is happening now and then. In the meantime, Trump has freed up billions of euros to buy meat stocks (beef). Belgian pig farmers are also pushing for this. So far, the European Commission has not considered the purchasing/storage of pork, although the scheme has been opened for beef, sheep and goat meat. Probably because pig prices were good until recently and the meat shortage in the world (particularly in China) is large on paper.

In the Netherlands, slaughterhouses are running despite infections at Vion in Scherpenzeel, still on. However, the closure at Westfleisch will also be noticeable in our country. Between 20.000 and 30.000 fattening pigs go to Germany every week. The number of piglets sold in Germany amounts to 80.000. It is not without reason that the Netherlands is often jokingly labeled as a province of Germany.

The fallen German slaughter hooks are a loss. The situation is not yet problematic, because pigs can still be pushed around. The number of pigs in Germany has been declining for years and that is now a good thing. The situation changes when the authorities lock down even more (German) slaughter locations. And that is not unthinkable.