W13 Pork Update: UK Pig Industry Adjustment and US Pork Market Concerns

Published 2024년 4월 5일

In W13 in the pork landscape, the UK pig industry faces a period of adjustment characterized by stabilized prices, declining feed costs, and reduced pig herd sizes, prompting reliance on imports. While the (SPP) has stabilized in recent months, it remains below the levels from years ago, albeit with positive signs of declining feed prices. However, challenges persist, including rising wages and energy costs. Data from Defra indicates a significant decline in pig throughput and finishing pig numbers, particularly in England, although Scotland shows some positive momentum. External trade balances have shifted, with higher import volumes from the EU supporting market supplies. Meanwhile the US pork industry grapples with the impact of Prop 12, leading to price hikes and consumption declines in California.

UK Pig Industry’s Rebalancing Act Amidst Shrinking Herd and Evolving Global Dynamics

The United Kingdom (UK) pig industry is undergoing a period of adjustment. While prices have stabilized and feed costs are declining, a smaller pig herd size necessitates a reliance on imports. After an initial downward pressure in 2024, the Standard Pig Price (SPP) exhibited relative stability in Feb-24 and Mar-24. However, they remained below the levels from years ago for the first time in two years. The positive news comes from declining feed prices. Grain prices in Jan-24 were down 25 to 30% year-on-year (YoY), with protein meal prices following suit. This trend is expected to continue, supported by factors like improved Ukrainian export capacity and favorable growing conditions in South America. While rising wages, energy costs, and borrowing remain concerns, the current balance between falling production costs and output prices suggests a gradual improvement in pig producer finances compared to the 2021/22 crisis.

The Department for Environment, Food and Rural Affairs (Defra) slaughter data reveals an 11% YoY decline in prime pig throughput at Great Britain abattoirs in 2023, with the trend continuing in early 2024 with 4% YoY decline. This reduction is attributed to the 2021/22 crisis. The Dec-23 pig census results in England show finishing pig numbers were still down 11% YoY and 18% compared to the peak two years ago. Sow numbers in England exhibited a marginal rebound in Dec-23, but remained 19% lower than Dec-21. While some recovery is possible in H2-24, a significant rebound in prime pig slaughter in England seems unlikely. Scottish EID Livestock Traceability Research (ScotEID) data suggests a stronger momentum in Scotland's pig herd, with the number of pigs leaving farms for slaughter rising 14% YoY in the first two months of 2024. However, Scotland accounts for only 8% of Great Britain’s finishing pigs, limiting the overall impact.

The sharp reduction in domestic pork production has been partially offset by an external trade balance, with UK export volumes declining and imports increasing in 2023. Higher import volumes from the European Union (EU), initially priced competitively compared to Great Britain pigs, have supported market supplies. However, EU pig prices have shown a seasonal rebound since Feb-24, narrowing the price gap with Great Britain. China's rising pork import requirements in 2024 due to herd liquidation present a potential opportunity for UK exporters. However, UK exports to China have fallen back to pre-shortage levels, and competition remains.

California Pork Law Drives Price Increases, Raises Concerns Over National Regulations

The implementation of Proposition 12 (Prop 12), a law mandating stricter breeding sow welfare standards in California, has triggered price hikes and concerns within the United States (US) pork industry. Data from the United States Department of Agriculture (USDA) suggests an average 20% increase in consumer pork prices (cuts like chops, bacon, and ribs) following the introduction of Prop 12 in mid-2023. The price of pork loin increased by 41%. These price increases have led to a decrease in pork consumption in California.

The National Pork Producers Council (NPPC) reiterates its opposition to Prop 12, highlighting the financial burden placed on producers for compliance. The NPPC estimates compliance costs at USD 30 per pig, requiring farm modernization or construction, which is financially challenging for many producers, and expresses concerns about the potential for similar regulations to be enacted in other US states, creating a complex and inconsistent legal landscape for the industry.