The year 2023 was an incredibly strong year for pig farmers, as the income estimates of Wageningen University recently showed. Robert Hoste, pig production economist at Wageningen Economic Research, looks back on the year and talks about his expectations for 2024.
Clearly good money has been made. Fattening pig farmers earn on average €186.000 per oaje (unpaid unit of work years), or per cooperating family member. Sow farmers in particular have benefited considerably from the situation. They have an average income of €560.000 per year. Closed pig farms average €440.000 per farm. Actually the conclusion is very simple. If you spent more time in the piglets, you would have a better year. The expectation is that another fat year will follow, especially for the piglet market.
The year 2023 seems to have exceeded the expectations of the greatest optimists, with a peak price of €2,41 per kilo. The price is now slightly lower at €2,08, but that is still historically high. What is your explanation for this?
"It was indeed a very good year for pig farmers. As you say, this has to do with a high pig price. Pig prices are currently about 20% higher than last year. Piglet prices are even 60% higher. The main reason These high prices are due to the contraction on the European market. On average, production in the European Union has fallen by 8% compared to last year. High prices are not the whole story. Feed prices have fallen by more than 10%. That is of course the largest cost item, so pig farmers notice this enormously, especially fattening pig farmers."
The piglet price is proportionately higher than the fattening pig price. Are piglets overrated?
"I would not like to use the term overvalued, but piglets are indeed sold for a high price. That is to be expected, because in practice fluctuations in the market are always borne most by sow farmers. Piglets are valued at what the fattening pig farmers think they will earn when selling the pigs for slaughter. The expectations were favorable, so piglet prices can then increase."
Robert Hoste
Feed prices have fallen significantly this year. Are we going back to the old normal?
"I don't know if there has ever been a normal on the feed market. Since 2007, feed prices have risen sharply for a short period. After that, prices did fall, but to a higher level than before the increase. We have achieved this due to the Ukraine war will also be seen again in 2022 and I think that the current level is the new lower limit. In the short term I expect a small increase. You can already see that on the futures markets. Overall, prices remain fairly stable. That is my opinion, by the way. prediction if nothing crazy happens. For example, if a flood or conflict occurs somewhere, the price can simply skyrocket again."
Will 2024 be just as strong a year for pig farmers?
"I expect the market in 2024 to resemble 2023. It will probably still be a good year for sow farmers. Due to the scarcity, there is a lot of room to sell piglets, especially in Germany and still in Spain. If feed prices do not go crazy If you do things, then fattening pig farmers will also do well. It would not surprise me if the pig price drops after the New Year. Prices on the world market are a lot lower than in Europe, making export difficult. Given the tightness on the pig market, the price will remain at a reasonably good level next year. Although there has been a decline in pork consumption in Europe, total production has fallen more."
The high manure disposal costs are a hindrance in cattle farming. To what extent is this also the case in pig farming?
"Costs are much higher on pig farms than on dairy farms. And selling manure has indeed become considerably more expensive. The price has risen by 20% this year, by about €4 per tonne. The price of manure is now about 4 % to 5% in the costs for a closed pig farm. The rising sales price makes a few cents difference in the cost price. Due to the high income, entrepreneurs do not feel this way yet, but the increase is worrying in the future. Compared to a long-term income per For example, with roughly €40.000 you spend considerably more on manure sales than you have left to live on."
Perhaps it is worth looking a little further into the future. In a recent vision of the future, you predict that the real costs of pig farming will increase by 2040% in 25. That seems very solid to me. How did that happen?
"Let me first say that this column is mainly intended to be stimulating. My intention was not to be very precise, but to convey a number of messages. The 25% in extra costs is due to animal welfare measures that will probably be introduced, such as free-range farrowing pens and a ban on castration and docking. It is also conceivable that there will be an upper limit on the number of piglets that may be born, for example no more piglets than the sow has teats."
You expect the income of pig farmers to double. That seems very optimistic to me?
"Look, we think it is very important that our chocolate is produced in a fair manner and that farmers from, say, Ghana, receive a good income. If the income of our Dutch pig farmers is structurally under pressure, we say: they are free entrepreneurs , that is their own problem. Such a system is of course not sustainable in the long term. That is why I expect that supermarkets and companies in the meat industry must demonstrate that they are sustainable in all areas. This includes offering a decent income. Chain collaborations are an obvious choice. Pig farmers have earned well this year, but in the long term most pig farmers will not achieve an income of € 40.000 per year. A doubling of that would be 80.000 per year. That is especially true for entrepreneurs in other branches of sport. Not very much. A doubling of income seems perfectly defensible to me."