Pigmeat Market
Performance and Prospects
David Owens
Wednesday January 21st 2009
Agenda
•
Ireland and EU markets
– Herd numbers
– Production trends
• 2008 and 2009
– Pigmeat exports
– Pig prices
– Consumption trends
•
International markets
– Outlook and prospects
Decline in Irish herd
Total Irish herd
‘000 head
1,800
1,700
1,600
•
8 % fall year-on-year to 1.47 m
•
Fall of 121,000 head
•
Largest ever decrease
•
Impact of low profitability on
producers
•
Main fall seen in pigs < 50kg
1,500
1,400
1,300
1,200
1,100
1,000
'00 '01 '02 '03 '04 '05 '06 '07 '08
SOURCE: CSO
Irish breeding herd
‘000 head
•
•
⇓ 5% or 9,000 year-on-year to
157,000 head
190
Fall of 16% since 2001 peak
180
Breeding herd - 5%
185
175
•
•
Sows ⇓ 10%
Gilts ⇑ for first time a few
years
170
165
160
155
150
145
140
'00 '01 '02 '03 '04 '05 '06 '07 '08
Irish pig supplies
2008
Irish pig supplies (‘000 head)
Total
2007
2008
% Ch
08 vs 07
3,127
3,010
-3.7
2,475
2,435
-1.6
95
76
-19.6
% Ch
09 vs 08
Of which:
- Finished pigs
- Sows
-10.0
•
Fall of 4% or 117,000 head
•
Finished pigs 2% lower
•
Cull sows disposals ⇓ 20%
•
Exports to NI ⇓ 11%
2009 (forecast)
- Exports to NI
- Local abattoirs
512
45
457
42 (e)
Source: DAFF / CSO / Bord Bia estimates
-10.7
-6.6
•
Oct ‘08 - 4/5% fall
•
Jan ’09 – 10% reduction
• ⇓ 245,000 head
• + 200,000 vs ‘08
Irish pigmeat production
•
Down almost 3% in 2008 to 201,000
tonnes cwe
•
Only 1% of EU-27 production
•
Main fall evident if first (-2.6%) and
final (-7.0%) quarters
20,000
2007
2008
tonnes cwe
18,000
16,000
14,000
12,000
10,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: CSO
EU production trends
2008
• EU-27 sow herd ⇓ 9%
23,000
– Eastern Europe
– Spain and Denmark
-1.3%
22,500
22,000
-3.2%
•
Production ⇓ 1.3% to 22.6m tns
•
– Jan to June stable
– July to Dec ⇓ 3%
– More dramatic as year progressed
EU 107% self sufficient in pigmeat
21,500
21,000
2009 forecast
• Production fall to accelerate
• ⇓ 3.2% full year to 21.8m tns
20,500
20,000
'04 '05 '06 '07 '08 '09
– Jan to June ⇓ 5%
German and UK
production trends
Germany 20% of EU production
UK >50% of Irish exports
•
2008
– ⇑ 2% production
– ⇑ live imports
– 18% fewer holdings
– Breeding herd ⇓ 6%
– Domestic consumption ⇓
– ⇑ 15% exports esp NMS and
International
•
•
2009
•
– Production decline – fewer
domestic pigs
– Consumption and exports to fall
2008
– Sows ⇓ 7%, replacements ⇓ 10%
– Further reduction forecast
– Jan to Sept supplies stable
– Oct/Nov - supplies ⇓ 10%
– ⇓ 2 % production
– ⇑ bacon & ham imports – lower
production
– ⇓ pork imports – Sterling impact
2009
– Carryover from Dec ’07 due to FMD
• 1st Qtr ’09 ⇓ 11%
– ⇓ pork and bacon production
– Fall in consumer demand = lower imports
• 1991 recession lower consumer demand
EU Production
Netherlands
•
2008
– Producers held out
– August census - sows ⇓ 4%
– Further falls expected
– But total numbers increase
– ⇑ production and exports
– Welfare / environment issues
•
2009
– ⇓ 4% production and exports
– Depends on live trade
•
•
Denmark
2008
– ⇓ 5% annual production
– ⇓ 8% in final quarter
– Stabilisation of herd in recent Oct census
– Reflects high replacement policy
– ⇑ exports – carryover of frozen stocks
from 2007
•
2009
– ⇓ 4% production
– Supplies 6/7% lower in early ’09
• Strong live exports in Autumn ‘08
– Reduced pigmeat exports
Irish Pigmeat Consumption
Total meat
•
Growing annually by 5% in value due to price inflation as volumes
lower
•
Short term market growth is flat with volume 3% lower
•
Some evidence of switching to cheaper meats /cuts
Pork
•
Annual growth of 4% despite lower volume sales – price inflation
•
Short term volume has increased with some consumers switching to
pork as average pork retail prices fall
•
Increase of late due to HH buying pork more often
Source: TNS
Irish Pigmeat Consumption
Sausages
• Growing ahead of the total meat and pork markets
– 11% annually, 5% quarterly
•
Showing largest rate of volume increase
•
⇑ annual penetration of the market, more HH now buying sausages
Bacon
• Volume is increasing but showing static value growth – gains from new
buyers balanced by loss from lower frequency of purchase
•
Even though average prices were in decline in the latest period
Source: TNS
Irish Pigmeat Consumption
Post Recall
600
Pork '07
Tonnes / week
500
Pork '08
recall
400
300
Final week
⇑ sales
200
100
0
w/e Nov
23
w/e Nov
30
Source: TNS
w/e Dec
07
w/e Dec
14
w/e Dec
21
w/e Dec
28
Consumption trends
GB
•
•
•
Pigmeat market is growing due to price inflation
Pork volumes stable annually but falling in short term due to strong
price increases
– HH penetration and frequency of purchase in decline
Bacon and sausage volumes increasing
France
•
Switch to cheaper meat alternatives as fresh pork purchases only fell
by 1% in 2008, a lot less than other meats
•
Especially evident in recent periods
•
Processed pigmeat products performed best of all meats
Since 2007 the rise in pigmeat retail prices across Europe was generally lower than other
meats
Irish pig price trends
162 c/kg
170
Ireland 2008
c/kg dw excl. VAT
160
+ 23%
150
140
130
Ireland 2007
120
110
•
2008: +9% or 12 c/kg @144 c/kg
100
•
Peak of 162 c/kg
90
•
94% of EU average
80
Jan
Feb
Mar
Apr
May
Source: EU Commission
Jun
Jul
Aug
Sep
Oct
Nov
Dec
EU pig price trends
175 c/kg
180
c/kg dw excl. VAT
170
EU ‘08
160
150
140
130
120
110
100
90
80
Jan
EU ‘07
2008: + 13% or 18 c/kg @ 153 c/kg
DE: + 16%
NL: + 15%
DK: + 11%
Feb Mar
Apr
May
Source: EU Commission
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Irish Pigmeat Exports
Volume ⇓ 8% to 131,000 tns
‘000 tns cwe
160
Value of €360 m
140
UK
• 53% of exports, 10% decline to 70,000 tns
• Weakening of sterling
• Strong Dutch and Danish supplies
2007
2008
120
Continental EU
• Stable shipments, diversion of UK product
• 38,000 tns, 29% of exports
• Increased shipments to Germany offset
lower trade to Italy and France
100
80
60
International Markets
• Marginally lower at 23,000 tns
• Lower shipments to Russia during autumn
• Euro vs dollar impacted on trade
• Growth to China and HK
40
20
0
Total
UK
Cont EU
Source: CSO / Bord Bia estimates
Int
EU pigmeat exports
Jan to Oct ’08 vs ‘07
‘000 tonnes
1,200
+ 42%
1,000
800
600
400
Pigmeat
• exports ⇑ 42% to over 1 m tns
• Aided by export refunds – suspended in
early August
• Competitive EU prices plus strong world
market demand
• World financial crisis led to lower exports as
year ended
• DK, NL, DE and PL
Offals
• Increased by over 40%
200
0
Jan - Oct '07 Jan - Oct '08
Source: EU Commission
2009
Weaker export demand forecast, but offset by
lower EU supplies
EU exports by destination
Jan to Oct ’08 vs ‘07
350
‘000 tonnes
300
250
2007
2008
200
150
100
50
Source: EU Commission
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International market
developments
World pigmeat consumption ⇑ 3% annually, mostly in Far East
US
• First fall in sow herd since 2002
• ⇓ 2009 production
• Lower pig prices in latter part of
2008.
• Exports ⇑ 2/3 in 2008
– China/HK and Russia
– 2009 TRQ to Russia doubled
China
• 50% of global pigmeat production
• 60% of Chinese meat consumption
• 2008 production disrupted combined with
Olympic Games increased demand for
pigmeat imports
•
Brazil
• Production doubled in last decade
• Growth of 3% in 2008
• Pigmeat exports increased by 600% •
– Russia, HK and Ukraine
• No access to EU or Far East
• Exports to fall in 2009
2009 production ⇑ 3%
– Recovery from 2007 disease outbreak
– Lower feed costs and government support
for domestic production
Consumption recovery in 2009 by 3%
– Improved disease detection
– Lower domestic pork prices due to
government intervention
International market
developments
Russia
•
•
Large increase in pigmeat imports in early 2008 met by EU exports (benefiting from
export refunds)
– High oil prices and booming Russian economy
– Falling domestic production and reduced Brazilian supplies
– Imports reduced in autumn due to removal of export refunds and financial crisis
2009 outlook is not positive
– Sharp fall in energy prices and credit problems
Japan
•
Strong 2008 demand in 2008 due to ongoing problems with US beef
•
2009 trade could fall as demand slowed for pigmeat in autumn 2008
– Weak dollar will affect EU supplies
Ukraine
–
–
EU supplies ¾ of import requirement - 91,000 tonnes in Jan to Sept ’08 from Poland
and Germany
Government looking to impose tariffs to reduce imports and restrict trade
2009 prospects
Positive consumer reaction to pigmeat recall
Decline in Irish pig production
Lower Continental supplies esp in Eastern Europe
Increased consumer focus on lower priced cuts and meats
Lower feed costs
However
Rebuilding of presence in export markets will take time
UK fall in consumption and import requirement and impact of
sterling
Consumption across Europe
Reopening of international markets
International import demand
Pig prices – difficult to predict!
Pigmeat Market
Performance and Prospects
David Owens
Wednesday January 21st 2009