Mercedes Vega, General Director for Spain, Italy and Portugal
We have started the month of May and if we analyze the situation, the truth is that due to various circumstances that have occurred over time, all the molds that have governed the pork market in Spain, the EU and perhaps worldwide are being broken.
- The price in Spain broke records until April, when it reached a value that a few months ago we would have said was impossible, and it has been repeating for 5 weeks now at 2.03€/kg live weight.
Supply in the EU is clearly below demand. In the last year, prices in the EU are not the usual ones either. Each of the countries, following their own trend, are very high. And these prices are much higher than in the USA and more expensive than in China.
Piglets are at levels never seen before. There is a lack of piglets but buying them at these prices…. How much do you have to sell the fattening for the numbers to be positive?
The producer has had a very tough year with rising costs, but raw materials have been coming down. Although they are still high, production costs are being offset by sales values and therefore profits.
- And with all this, the sales weight is increasing. These weights have never been achieved. The trend in recent years has been upward, but they have never been this high at 121.5 kg.
- Processing plants need pigs to be able to operate. There is less supply, but processing plants have the same capacity and need a minimum to maintain their structures and consequently costs. There is clearly a greater slaughter capacity than availability of pigs, both in Spain and in the EU.
– The meat industry has been able to increase the price of meat, but not enough to compensate the live price. The type of pork being made is a “Commodity” and the price is increasing, but how far will the consumer pay high prices for such a pork? Or will they prefer to consume another type of cheaper protein? - Exports are complicated due to the high price compared to countries such as the U.S., for example, for countries out of EU.
And all this leads me to a reflexion, the market is very uncertain, it is a reality. Not many years ago, we turned “a threat into an opportunity”. We were able to get ahead of other countries with initiatives that have allowed us to become the 3rd WORLD PRODUCER, behind China and the USA; and the 2nd EXPORTER, after the USA. Perhaps we have to get ahead again and turn the “threat into an opportunity”. We have to build loyalty to our domestic consumer and to the consumer outside our borders.
Perhaps the time has come to start making a “quality meat” that differentiates us and thus helps us to gain market loyalty both at home and abroad. To support us in this loyalty, not all of it, that would be impossible, but perhaps an important part that would balance our market.
It is difficult to predict how the market will evolve, the meat industry has been able to pass on the price increase to meat, but we do not know to what extent the consumer will be able/willing to pay this higher price.
Categorised in: Featured News, Global Markets
This post was written by Genesus