BPEX warns of price rises and supply shortages

BPEX warns of price rises and supply shortages

Bigger falls in pig meat production next year than originally forecast are possible and likely to lead to substantial price increases and some supply shortages. The warning comes in the latest BPEX report examining the impact of the introduction of the partial sow stall ban to come into force across Europe on January 1st 2013.

The cost of complying with the new EU regulations together with the recent rocketing costs of livestock feed have combined to drive a significant number of producers out of business and leave those remaining with significantly increased cost of production. With such a double whammy, BPEX says a sharp rise in prices for pork and pork products is, therefore, inevitable.

The latest BPEX report – Market Impact of EU Regulations on Group Housing of Sows (Update October 2012) – shows only 18 EU countries say they will be ready for the new legislation, though even some of these still have a long way to go.

The report shows three possible scenarios as a result of the changes:

  • A fall in pig meat production of around five per cent from 2011 levels by 2014, leading to price increases but with fairly rapid recovery as productivity improves
  • A sharper fall in production as higher feed prices add to the impact of the stall ban, leading to shortages of pig meat and substantial price increases, resulting in pressure for political intervention
  • Realignment of production so that breeding is concentrated in North West Europe and finishing in Eastern and Southern Europe, reducing overall production costs.

Report author Stephen Howarth said: “It is difficult to say which scenario is most likely, because of the impact of huge feed price rises.

“Recent pig price rises in Europe have, to some extent, mitigated the feed price rise which means scenario one remains the most likely. However, if the high level of EU pig prices isn’t sustained then scenario two could easily become reality.”

BPEX chairman Stewart Houston said: “The sow stall ban cannot be taken in isolation. It is happening at a time when pig producers are under considerable financial pressure due to high feed costs.

“Most producers have been left in a loss-making position. The situation is not likely to improve markedly in the immediate future, unlessrecent pig price rises are sustained, since feed prices are expected to remain high.

“We are already seeing producers leave the industry both in the UK and across Europe. This will lead to a fall in production and a consequent rise in prices.

“A BPEX report published last week said shoppers could end up paying as much as 60p more for a packet of eight sausages, 70p more for a standard pack of bacon or £2.50 extra for a pork roasting joint within months if mounting losses force more pig farmers out of business.

“However small increases now in the price shoppers pay for bacon, sausages and ham will keep farmers in business and stave off these massive price increases.”

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