What’s rare is precious
The supply of pigmeat in Ireland and across mainland Europe is rapidly becoming limited, if not quite yet rare!
This is primarily because of the tough economic conditions over the last two years but also due to pig disease (ASF & PRRS), welfare legislation (Germany) and climate/environmental issues (Netherlands, Denmark). How much has pig supply fallen and what’s in the pipeline for the next few months?
Sow Herd Decline
The EU herd has seen a massive decline in the last two years with Eurostat estimating the reduction in-excess of 870,000 sows or 8.2% of the total sow herd (Fig.1). This excludes the UK herd decline which is estimated at a further 70,000 sows. The Irish herd is not included in this table but it is estimated to have fallen by 12,000 sows (9%) over the last 12 months. In total, the European sow herd reduction is over 900,000 sows with the majority of the decline (500,000) occurring during 2022.
Fig 1. EU sow herd change
When will we see a recovery in the sow herd? It’s difficult to see any significant sow herd recovery in the next two years as African Swine Fever continues to depress eastern European expansion, German producers are attempting to respond to imminent welfare requirements and the UK outdoor production is struggling to get a premium price for their product during a ‘cost of living crisis’. Spain has the largest sow herd and was the fastest growing herd in recent years but their new PRRS disease outbreak, allied to the zinc oxide ban, new environmental controls and the high regional concentration of sow units, indicates that their future herd expansion will be much more limited. When all of these limitations across Europe are considered, in the short term, its’ difficult to see the sow herd regaining much of the 900,000 lost sows. Unusually it’s not just Europe that’s seeing a sow herd decline. China and the U.S. are also seeing sow numbers in their respective herds falling due to ASF (China) and high feed costs (US). The European, US & Chinese sow herds comprise 70% of the total global pig output so on this basis it indicates a much tighter global supply of pigmeat in the coming months/year.
Pig Supply Decline
The sow reduction has obviously resulted in a decline in pig slaughter volumes over the last 18 months. The Teagasc PDD forecast in April 2022 was that the ROI weekly slaughter volume would reduce by 6,000 pigs / week in Q1 2023. The actual reduction was marginally higher than the forecast at 6,670 pigs /week. It is expected that this volume will decline further to reach a low of -12% in Q2 2023, when compared to 2022, before stabilising (Fig.2). If proven correct then the last time ROI pig slaughterings were this low was back in 2015! While a small reduction may have given a much needed and welcome slaughter capacity buffer, a sustained drop of 12% would begin to erode the operational efficiency of our slaughter industry.
Fig 2: ROI Slaughter Plant Volume (versus previous year). *Estimated
Across the E.U., the slaughter volume trend is similar with aggregate volume down 8%. However within this average some countries are down much lower; Denmark (-16%), Germany (-9%), Spain (-9%).
Outlook
The tight pig supply should dictate upward pressure on the pig price or at a minimum price remaining steady. This is a necessity for pig producers in order for them to restructure and recoup their losses (average -€522,000) from the previous two year. A reduction in the current margins, in the short term, may lead to a further reduction in pig supply in the medium term as some producers may view declining margins as an opportune time to exit the industry.