How the battle for pigs broke out in the Netherlands

The number of slaughters in the Netherlands will drop considerably this year due to the many people who are quitting pig farming. Although the shrinkage scenario has been in sight for a long time, slaughterhouses in our country are still being hit hard. Filling the slaughter shackles every week will be a huge task that could turn the pig market upside down. 

First, let's look at the figures, because they speak volumes. If all pig farmers who have registered for the Lbv or Lbv-plus termination schemes participate, the number of pigs will decrease by 1,3 million, as BBB agriculture minister Femke Wiersma has already calculated for us. This means that the number of pigs in our country will drop to around 8,5 million. Not so long ago, this was still more than 12 million. The halving of the livestock population that some politicians so desire has not yet been achieved, but it is certainly moving in that direction. Based on the expected reduction, the number of pig slaughters will decrease in the course of this year to a maximum of around 250.000 per week. For the time being, 2025 will still follow the long-term average, but the slaughter figure cannot fail to drop in the coming months. The weeks in which more than 300.000 pigs are slaughtered in the Netherlands will soon be behind us, although the impact of the termination scheme will not be felt in one go. 

Too autonomous to work together
Shrinkage often leads to consolidation in the chain. But within the guild of pig slaughterers, there is still little to consolidate or merge. In recent years, two large pig slaughterers have disappeared, namely Hilckmann and more recently Gosschalk. This has reduced the number of slaughtering companies that dominate the market to four. In order of size, these are: Vion, Van Rooi, Westfort and Compaxo. These companies are here to stay and also seem too autonomous to cluster together, although market conditions do invite this. If the desire does exist, there is a chance that the Netherlands Authority for Consumers and Markets will put a stop to it.

Vion CEO Tjarda Klimp did not beat around the bush at the end of 2024 and said aptly in the FD that 'our industry must adapt' to the shrinking supply. According to her, slaughter shackles must disappear, but she did not want to say much more than that. Understandably, because cutting into slaughter shackles is going to hurt and is also a difficult puzzle to solve. There are hardly any outdated slaughter locations in our country that are suitable in advance. The majority of the slaughter takes place at the main locations of the companies mentioned. However, several boning locations have been closed in recent years.

Export can ease the pain
Compaxo searched in 2023 handy to fly forward by catching the pigs of Pali Group. This concerns a capacity of approximately 15.000 meat pigs per week. However, there are hardly any such opportunities in the Netherlands anymore. A limited part of the shrinkage can still be absorbed by the export of live pigs that are now mainly going to German slaughterhouses. But this does not offer much relief either, since less than 15.000 live pigs cross the border every week. 

Part of the shrinkage has already been absorbed in recent years by the export buffer, which used to be much higher. In addition, the remainder of the live export is often based on strong relationships that Dutch pig traders have with German slaughterhouses, which are difficult to intervene in. It is an illusion for slaughterhouses in our country to think that this figure will drop to zero, but there is still some room for improvement. In addition, slaughterhouses can anticipate internally by, for example, scaling down double shifts at their own locations. This means that large slaughterhouses do not necessarily have to close due to the shrinkage. The occupancy rate will be affected, but the question is who will feel this most.  

Individual listing becomes decisive
Much will depend on the pig price and associated surcharges. However, the scope for slaughterhouses to accelerate with the quotations is limited, given the net profit margins of often less than 2%. Those with the most fat on their bones have the best cards in hand, should it come to a war of attrition. The slaughterhouses in family hands all have excellent solvency and can withstand a blow. However, this has been a sensitive point for Vion for years, because the slaughterhouse is just above the danger zone in this respect. In addition, Vion is the most susceptible to the shrinkage that is coming due to its size.  

Van Rooi recently made a brave attempt to make a good impression by suddenly increasing the price of pigs by four cents. This led to a similar reaction at Westfort, which immediately followed the breakaway. Vion and Compaxo may have been surprised by the move, but responded a week later in their pricing. These spontaneous increases should be seen in the light of the expected decline. This is probably also the reason that Vion has not been listed on Mondays since this year, because the company simply cannot afford to lag behind in a rising market. In the current circumstances, it seems a sensible decision, whereby Vion implicitly no longer pretends to be able to estimate the market as the market leader at the beginning of the week. 

Primary producer emerges as winner from the battle
That the price of pigs will be more in the direction of the primary producer in the coming years is beyond dispute. The permanent pig farmer will apparently emerge as the winner in this battle, but the question is how much celebration this will bring. The prices of Dutch piglets are being driven up more than ever by Spanish buying enthusiasm. In addition, the Dutch pig market remains strongly dependent on the sentiment on the world market, which is accompanied by wave movements. Some 1,3 million fewer pigs from the Netherlands will not make a difference here.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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