2024 a silver-edged year for pig farmers

Hoste called last year a year with a silver lining. Although the situation at the end of 2024 is significantly less rosy than a year ago, Hoste speaks of this year as a year with a silver lining. The price of pigs has fallen sharply, but on the other hand, costs have also fallen. However, not everything is positive. For example, Hoste expresses his doubts about the future of Europe as an exporter of pork. 

Last year, the price of pigs was €2,08 at this time. Prices have now fallen to €1,85, but you still speak of a year with a silver lining. Can you explain that?
"Because the incomes of pig farmers, despite the lower pig prices, are still quite high. On average, the price of meat pigs fell by 2024% in 9. Partly because of this, the income of meat pig farmers fell by 21,4%. Nevertheless, the income of €184.000 is still good compared to previous years, due to a significant decrease in a number of important cost items. For example, the price of pig feed fell by 14%. A decrease in the piglet price of 12% also provided relief for meat pig farmers. Sow farmers saw their incomes fall considerably as a result. In 2024, their income fell by 60%, but it is actually a correction to last year's level. Then the income was a lot higher than we actually expected, around half a million euros. This year, the income will be €230.000, which is still slightly higher than the income of meat pig farmers."  

You say that all kinds of costs have decreased, but the costs of removing manure have taken a big bite out of the income of pig farmers.
"The costs for manure disposal were indeed very high this year. The price rose this year by about ten euros per cubic meter. That is immediately a major blow to your income. However, we should not overestimate these costs. If feed prices increase by one euro, the effects of that are stronger. I do not mean to say that the price of manure disposal is not important. While, for example, an increase in the feed price affects pig farmers everywhere, the high manure price is an exclusively Dutch problem. That makes the Netherlands less competitive."

Pig prices have fallen sharply this winter. What do you expect next year?
"Despite the lower prices, I do not expect 2025 to be a bad year. Next year will be dominated by the LBV and LBV+ scheme. This termination scheme will be a significant shakeout in the market. The ministry hopes that about 65% of the applicants will actually stop. In the meantime, just over that number of applicants have definitively confirmed their participation. It seems that by the end of next year the number of pigs will be 10 to 12% lower than at the May 2024 count.

This will ensure that oversupply in the Netherlands does not occur, although I think that major market effects will not occur. The pig market is a European market and in the Netherlands we slaughter 6,7% of all European pigs. If the Dutch market shrinks by 10%, the size of the European market will decrease by two-thirds of a percent. If that drop in demand were to occur overnight, you would see a clear price effect. In practice, however, the supply decreases over a longer period. The shrinkage has already started somewhat at the end of 2024, but will mainly become visible in 2025. Because the LBV+ scheme has only just ended, that shrinkage may continue somewhat into 2026. You may well see some ripples in the price, but that will be temporary. The expected increase in supply in other European countries compensates for the Dutch shrinkage. In Germany too, the pig population is currently stable in size."

You mention the stabilization in Germany as an important factor. Do you expect the shrinkage in the German market to stop now?
"We see that the decline in the German pig population has been paused for the time being, but the pig population is probably not yet at a low point. In recent years, the size of the German pig population has decreased significantly, because many pig farmers who were not prepared to comply with new, stricter regulations stopped. This phase is now over, but the welfare regulations have not yet been implemented. That is why I expect a new wave of stoppers in a few years. For example, all healthy sows must be kept in group housing by 2029, with a minimum of five square meters per sow. In addition, free-range farrowing crates will be mandatory by 2036."

Exports to China are still falling. Are muscle meat parts sales a lost cause?
"China has become almost self-sufficient in recent years. That actually has little to do with the growth of the pig population. Those stories about pig flats with 25 floors are considerably exaggerated. They only make up a few percent of the total production. Even more important is the declining demand for pork, which is causing the Chinese sales market to shrink. In addition, the Brazilians, Mexicans, Americans and Canadians export there, who produce at considerably lower costs. As far as I'm concerned, export to China should be a declining story. Export to such countries mainly creates a lot of uncertainty. That also applies to filling other gaps where production can temporarily be reduced. We would do better to focus on Europe, where consumers have higher demands and can pay a higher market price. The export of edible slaughter by-products remains strong. Those prices fluctuate less, because those components can actually only be sold on a large scale in China and other Asian countries."

So Europe produces at higher costs. Are we losing out to emerging markets like Brazil and Russia?
"You could say that. As far as Russia is concerned, however, the question is whether exports will get going structurally. The volumes they supply seem to be increasing rapidly. However, the question remains whether those exports are sustainable. I honestly think that Russia is growing too fast and that the tide is turning. Russia has always suffered greatly from African swine fever. Sales depend on China. So I would still be very cautious about Russia's future successes.

Brazil is a different story. The country's pig production has been growing very consistently for years now. The country is doing incredibly well and is positioning itself as a very reliable trading partner. Brazil really behaves like a developed country in that sense. Yet they produce at very low costs and have a whole portfolio of sales countries. I believe that Brazil will become a very strong player."