'Fire Spanish competition, but plenty of opportunities in the sector'

The European fattening pig market is groaning under a long period of price pressure. One of the reasons is the large supply of Spanish pork. Spain has a low cost price compared to the Netherlands. This, in combination with a good positioning in the export markets outside Europe, has resulted in a rapid growth in the number of pigs in the country in recent years.

Now that the export flow to Asia has dried up, Spanish suppliers are increasingly becoming direct competitors in the European home market. Although the current cost price level is in favor of the Spaniards, it is not a given that this will remain so. Young pig farmer Jens Houben immersed himself in the Spanish market for his education at the HAS, and for DanBred Nederland and KLASSE Ki. He looked at the starting position of the Spaniards, but also at leads for Dutch pig farmers. What opportunities does a future Dutch pig farmer see for the sector in his own country? Houben: "I am convinced of my future prospects and that of the Dutch sector."

Strong industry growth
Half of Spanish pig farming is concentrated in the two northern provinces of Aragon and Catalonia. In eight years, the number of pigs in Spain grew by 28%. Spain is home to around 25% of European pigs, which means that 12,5% ​​of European production is produced in two Spanish regions. The country now has 2,6 million sows, of which 300.000 sows for the production of Iberico products. 

The number of slaughters per week averages around 1,1 million units. However, the slaughter capacity has grown considerably and foreign parties such as Tönnies and the Italian Pini are major newcomers and are investing heavily in the Spanish slaughter capacity. This anticipates further growth in animal numbers.

Integration model
A significant portion of Spanish pork production comes from major integrations. 26 of these integrations, with an average of 50.000 sows, keep half of the Spanish pigs. The integrations often produce their own feed and sometimes have their own slaughterhouses. Both the sows and the finishing pig locations are sometimes owned, but pigs are often also produced through feed money contracts.

The affiliated leased companies usually receive a compensation per piglet or pig delivered, sometimes with a bonus for good technical performance. It gives affiliated entrepreneurs a certain amount of compensation for stable and labour. In recent years, a number of integrators have invested in new sow locations. Because they were then looking for new fattening pig houses, the fees per pig delivered rose considerably: from an average of about €12 to €14 to €16 per delivered pig.

Cooperative models can also be regularly found in Spain. These account for 17% of the country's production. In addition, there are still 'free pig farmers' who run their businesses on their own strength and organisation.

Cost price advantage in the field of manure and housing
Part of the rapid Spanish growth is explained by the relatively favorable cost price. Compared to their Dutch colleagues, Spanish pig farmers have an advantage of about €0,13 per kilo of meat produced (source: Hoste, 2020). The main cause of the large difference in cost price is the manure disposal costs. These are on average €0,08 per kilo slaughtered weight lower for Spanish companies than for an average Dutch company.

In addition to the disposal costs of manure, the costs of housing and labor also play a role. Emission-reducing techniques such as air scrubbers are not yet known in Spain, which contributes to the difference of €0,07 per kilo slaughtered weight in the housing costs. Labor costs are also low in Spain. Although salaries are sometimes even 40% to 50% lower, this is largely compensated by the higher productivity of Dutch employees. On balance, a Spanish advantage of €0,03 per kilo of slaughtered weight remains.

The Dutch pig farmer trumps his Spanish colleagues in one area, and that is in terms of feed costs. The Spanish pig farming sector is largely dependent on the import of raw materials for the composition of pig feeds. There are hardly any residual flows from food industries. Certainly for the protein part of the ration, this leads to higher costs than at Dutch pig farms. Dutch companies also perform better technically on average.

Opportunities for the Netherlands
What does a young Dutch pig farmer learn from the information he has gained in Spain? Are there any leads for our sector, despite the current adverse cost differences? Houben sees opportunities: "Although the Dutch sector is currently suffering from competition from Spain, it is not certain that the cost price advantage in favor of the Spaniards will continue to exist. Both developments in Spain and the Netherlands can bring the cost price levels closer together. a quality product. We already claim a number of things in the field of environmental impact, for example, but we also have to add value as a chain."

The point at which cost prices may converge most in the coming years are the costs of fertilizer disposal. The sectors in Spain and the Netherlands are moving in the opposite direction in terms of size. "The growth of the Spanish sector is leading to more pressure on the fertilizer market and increasing social pressure on the sector. Manure sales in certain regions in Catalonia already cost money, which was not the case in the past. relaxation in the offing, especially if the livestock shows further shrinkage." And it is not just a smaller supply of manure that offers these opportunities. "If we can bring better value to our sales flows of nitrogen and phosphate, then we can bring the cost prices even better together. With the current extremely high prices for fertilizers, there are enormous opportunities here."

In addition to the developments surrounding fertilizer costs, the Spanish dependence on imported protein sources is a risk for the sector there, according to Houben. "Although the Dutch sector is also affected by increased raw material prices, pig farmers can use residual flows to meet part of the feed requirement. It is not inconceivable that this advantage will increase in a volatile raw material market. We have a lot of food processing industry in our region. re-use of these flows fits in seamlessly with the circular agriculture that the government is aiming for and can also give us a lasting cost advantage."

Our technical achievements also provide clues. "We see that the Netherlands is technically a step ahead, both in the number of kilograms of pork delivered per sow and the feed consumption per kilogram of growth. Especially with the high feed prices, this gives us an opportunity to distinguish ourselves significantly." Houben thinks it is one of the weaknesses of the Spanish integration model. At affiliated companies there is sometimes insufficient incentive to achieve the best possible performance. "I saw with my own eyes how feed disappeared in the pens and pits. The entrepreneurship of the individual Dutch pig farmer can make the difference. It is important to continue to improve and work towards a higher and more efficient growth of our finishing pigs: if we increase the growth as a sector by 10%, 1,5 million fewer piglets have to cross the border, it also makes us less dependent on piglet exports. We can even achieve a higher output with fewer animals on average in our country."

Taking steps to add value to the end product
Last but not least, Dutch pork has a lower carbon footprint. "Our pork, which is largely produced from residual flows and in which manure is processed and added to value, leads to a lower environmental impact. The concentration of pig, feed and slaughter companies also leads to relatively short transport distances and lower emissions. a low carbon foot print in itself does not give rise to existence, there are plenty of opportunities to capitalize on our advantage in the sale of our products. The circular era in which we live will provide market opportunities to also get sustainability paid."

Despite the current situation, Houben is optimistic: "I look forward to using my knowledge gained in Spain to compete with the country as a future pig farmer in Limburg. As an entrepreneur, we should take advantage of the obvious opportunities. to grab."