Interview Verriet and Duteweerd
POV talks to ministry about liquidity support
The pig sector is having a hard time. High costs and low yields make profitable production almost impossible. How does the Producers Organization for Pig Farming (POV) view the situation and what can it do to support companies? In conversation with chair Linda Verriet (photo) and director Theo Duteweerd.
A number of factors are currently causing a difficult market situation for pig farmers. Prices have been under pressure for almost a year and a half. The marketing of pigs and piglets is also difficult, which causes many puzzles and headaches on farms, but also stress and uncertainty. An increased Chinese production of pork, outbreaks of African swine fever in Germany, but certainly also corona are playing tricks on the market. Marc van Rooi recently spoke with Boerenbusiness to that corona one immense impact on the pork chain has. He estimates that meat consumption in Europe is 15% lower due to the pandemic. The POV calculated that an average Dutch sow farm (750 sows) will be short of €225.000 over a period of several months.
However, the producer organization is trying to do everything in its power to try to mitigate the situation where possible. For example, talks are currently being held with the Ministry of Agriculture for liquid support for pig farms. Verriet: "The prices are dramatic, but also largely attributable to corona-related problems and restrictions. In our view, this falls outside the entrepreneurial risk and we must prevent financial gaps being created that could further make the sector more sustainable in the future." stand in the way of the next decade".
The sector is currently in a difficult package, what are the main causes according to the POV?
Duteweerd: "I think it is good to briefly outline how we ended up in the current situation. The first blow came from the burgeoning corona problem in April 2020. Part of the demand fell away and the prices were set back a bit. The problem was especially greater in June and July last year. The outbreaks of corona among staff from that moment on resulted in a syrupy sales for fattening pigs and, by extension, also for the piglets. Then, of course, the outbreak of African swine fever made a contribution, which, in combination with an increasing supply of Spanish meat, resulted in a difficult sales development. That is why we are currently in talks with the Ministry of Agriculture, Nature and Food Quality about liquidity support for our pig farms. We have submitted a detailed market analysis to the Ministry for this."
Is support justified? Are the problems not a business risk?
Verriet: "We certainly do not think so. At the moment, slaughterhouses are still running at a lower speed due to the corona measures. This puts pressure on the purchasing capacity. Although Chinese import demand has fallen sharply, historically it is still at a reasonable level. level. A significant part of the poor pricing is therefore corona related. Many sectors have already received compensation for corona-related damage, pig farming is also entitled to this. In addition, a lot will be demanded from pig farmers from the government in the coming years. now that there is a large liquid backlog, the sustainability of the sector is also at risk."
Duteweerd about this: "In addition, pig farming has never claimed income-supporting subsidies in the past. Even when the first support packages were created at the start of the corona pandemic, we as a sector indicated: we will survive for the time being. pandemic is now in the tail of the pig farmer. That is just as powerless."
What is the prospect for the coming period?
Duteweerd: "Estimates are difficult to make, but we foresee that pig farmers will have to take low prices into account in the coming period. We have made forecasts for quarter 4 of 2020 and quarter 1 of 2021. We expect sow farms to have a liquidity requirement of at least €300 about €20 per present sow and fattening pig farms per average pig present. After that, we may foresee some price recovery. Some of the farms will not be able to fill these gaps themselves. We therefore advise companies to proactively sound the alarm when there are shortages."
At the moment too, many farms have heavy pigs waiting for slaughter and the slaughter figures do not seem high enough to process all the supply. What can the POV mean in this?
Duteweerd: "Last autumn we saw slaughter weights rise significantly to 103 to 104 kilos. We then entered into discussions with the slaughterhouses to slaughter additional pigs. This must all be done in consultation with the Dutch Food and Consumer Product Safety Authority (NVWA) and the Quality Inspection Animal Sector (KDS). These are processes that do not run quickly because these parties are also asked to work on Saturdays, for example. Then there is a bit of voluntary participation on the part of the employees at these bodies. a solution and the POV production monitor played a role in this. The above-mentioned authorities see the usefulness of this tool, so that extra demand for manpower can be anticipated at an early stage. Last year this solution may have come too late, but now there are considerably extra number of slaughter days ahead that could provide some relief to the market.”
Is that enough to stay 'on'?
Verriet: "The agreements about extra slaughter days run until January 1. There is too much uncertainty about sales at slaughterhouses to say that they want to keep it up in the new year. However, our production monitor shows that we have to deal with the period from October 1 to and by March 31, an average of 315.000 pigs had to be slaughtered to keep the weights within limits (98 kilos – 99 kilos).Although the upcoming extra slaughterings therefore give room, it remains uncertain whether we will also have sufficient processing capacity in the first months of the new year ."
The POV invests a lot of energy in setting up Holland Varken quality assurance in order to strengthen the export markets and realize added value. Is that a feasible option, some meat traders we spoke to indicate that the majority of the international meat market is very price-oriented?
Verriet: "That sound is not recognizable to us. What we hear from the slaughter and meat world is that there are opportunities for us as a country to strengthen our position by focusing on quality and chain assurance. However, it differs per sales market as to what the possibilities and what a buyer may need. To give an example: the demand for meat from guaranteed lifelong antibiotics-free animals is considerable in some parts of Asia. If we can guarantee this as a chain, it will provide real marketing opportunities. However, there are many more things to distinguish yourself on, such as animal welfare and the CO2 footprint Although I can partly agree that too much focus on export markets is risky, we must be realistic that this will also affect our pricing in the future Denmark, Germany, Belgium, Spain, they all produce more than is necessary. This also limits sales opportunities in these neighboring countries. ee means: if we don't have good export markets, this means a considerably smaller sector. Internationally, the sector in our country is the frontrunner in sustainability, is that what we want?"
Yet have you already indicated that the project and the chain are getting off the ground more slowly than previously hoped?
Verriet: "Yes, that's right, things are going well, but the further development has to be faster now. In bad times like now, it becomes seriously clear how important it is to be distinctive. In the coming period, accelerated follow-up steps will be taken. Holland Varken is the base under the Dutch pig and Dutch pork. It must guarantee quality from the Netherlands."
Does this bring extra euros to the farm?
Verriet: "I dare not say that. I do hope that a uniform quality scheme will lead to lower costs, a better position in export and possibly also tax reduction on other subjects. The vitalization program for pig farming that has been drawn up together with LNV also states that we want to remain a global leader in quality, and the Holland Varken is a very important tool in this."
Finally, will we have a cold remediation in the coming period?
Duteweerd: "As a POV, we do everything we can to prevent this: a call for liquidity support for companies at the ministry and the intensive consultation that was/is necessary to increase the slaughter capacity and maintain it at the required level. Cold remediation means companies are destroyed. let it go, we won't let that happen."
Verriet adds: "What we do have to think about are the companies that may already be considering business termination anyway. We must guide these as well as possible. This means that we make sure that the arrangements that are already in place (National termination scheme for livestock farms ed.) offer the best possible conditions for this group of entrepreneurs. We are of course not talking about a cold remediation, but the best possible implementation of a further warm remediation. This arrangement will lead to further shrinkage of the Dutch pig herd. We can't stop that and hopefully it offers more prospects for the companies that do remain active."
Steve Wissink
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