Downfall

Paraphrasing the title of Oliver Hirschbiegel’s film seems a good option to describe the state of the European pig market.

Twelve consecutive sessions of our reference market (Mercolleida, Spain) have had a downward trend, and the last two have had drops in the verge of the allowed maximum (€0.06/kg live weight). Since the maximum price of this year in 3 July (€1.48/kg LW) to the current price, €0.2680 per kg have vanished... We are sinking. We are sinking and we have not reached the bottom yet!

Germany, France, The Netherlands, Belgium and even Denmark, usually more cautious, lower the price at full speed, in a kind of unstoppable race to position their meat as best as possible with respect to their competitors.

Several important factors explain the situation:

• Germany does not get to find alternatives to the loss of the Russian market: its surplus is being sold in the EU, and in order to attain it they give up price as much as needed.
• In general, Europe is not finding a solution to the lack of its first foreign market. Months without exporting to Russia have caused meat blockages everywhere in source markets as different as Spain or Denmark. The cold storage facilties are full.
• The European pork consumption is still at its lowest. It seems that the historical patterns are changing little by little, and pork loses ground in the diets of our fellow citizens.
• The increase in productivity of the sector as a whole plus a small structural growth have translated as an increase of the pig herd. These ‘surplus’ pigs must be slaughtered in a moment in which there is a closure of the markets.
• The Asian countries, in view of the downward trend, practice dilettantism: they delay the confirmation of their orders expecting to buy cheaper a bit later.

The impact of the successive drops in the pig price has been enormous for some cuts (hams, shoulders, loins). It is to be expected that the new prices are attractive enough (or almost) to reactivate consumption on their own. This, and almost only this, should be the solution.

The search for alternative markets (South America has not been well explored enough) is essential for diversifying destinations and future risks. It would be desirable that the government agreed on specific actions in this directions together with the sector.

In US and Canada the prices rebound since two weeks ago. The predictions point towards an important revaluation of pig in China and Asia, in general. I one way or another, the European market will find somewhere to hold on to somewhere in the planet. We hope this to happen sooner than later.

The confirmed drop in the prices of food is a cold comfort, but a consolation in the end.

Guillem Burset