• Aleksander Dargiewicz of Polpig points out that the crisis in the pig market is global and affects even countries with the lowest production costs, such as Brazil
  • China is expected to be a key factor behind price pressure, having increased pork production, while exporters are now seeking alternative markets amid weak demand
  • In the EU and Poland, purchase prices remain under pressure, and in the expert’s view, improvement may come only with a reduction in the pig herd
  • We will discuss more topics related to pig production on 18 November at the National Challenges in Agriculture conference. Register now to take part in the event!

The president of Polpig points out that currently, pig farmers are suffering losses in practically all major production regions:

- This also applies to Brazil, which is among the countries with the lowest production costs. In the past, problems in one region were sometimes offset by better conditions in another. The crisis is now global, however, and the possibilities for easing it are much more limited, the expert told our editorial team.

The expert pays particular attention to China, which accounts for about half of global pork production. In recent years, the country has significantly increased production, contributing to a market surplus:

- The situation in this country has significant consequences for other market participants. Countries that have so far exported large quantities of pork to China have to look for alternative markets. This is not easy, however, because demand is not growing fast enough to absorb the entire surplus. As a result, supply pressure persists in many regions of the world, and prices remain under pressure, says Dargiewicz.

The European Union under pressure

The expert drew attention to the varied situation regarding pig populations in Europe. Spain and Denmark have continued to increase their herd sizes recently, while, for example, the pig population in the Netherlands fell by nearly 7 percent. However, production cuts in some countries are not enough to offset growth in other countries.

- The situation is further worsened by limited export opportunities. The problem is particularly evident in Spain, which, due to the closure of the Chinese market, could not fully use its existing sales channels. The production surplus therefore remains on the European market, increasing pressure on purchase prices, says the president of Polpig.

As he added, if farmers continue to incur losses in production—and unfortunately, this is likely to happen—the pig population will start to decline across the European Union.

Situation in Poland

Unlike in some European countries, the pig population has increased slightly recently. According to our interviewee, this is one of the reasons why purchase prices in Poland are lower than in Germany, for example.

- In addition, the German market has partly rebuilt its export capacity, partly thanks to access to selected markets outside the EU. The Philippines are among the destinations that have gained importance. Better sales opportunities somewhat ease the crisis in the German industry.

The level of pork consumption in Poland is not improving the situation. Although pork consumption has risen slightly recently, this change is not enough to offset the oversupply.

EU pork cannot compete in the global market

The president of Polpig notes that European producers’ ability to compete in markets outside the EU is limited. In many of them, price is the main criterion for choosing:

- In third-country markets, we are unable to compete effectively on higher animal-welfare standards or meat quality alone, because for many buyers these differences matter less than the purchase cost. Meanwhile, European producers incur higher costs associated, among other things, with regulatory requirements and production standards. As a result, it is difficult for them to offer pork at a price competitive with products from the USA or Brazil. Therefore, I do not currently see significant opportunities for a rapid improvement in the situation of European exports in third-country markets. In the longer term, competitive conditions may change. For now, however, price competitiveness remains one of the most important constraints, Dargiewicz assesses.

When can an improvement in the situation be expected?

According to Aleksander Dargiewicz, an improvement in the pig market will largely depend on how quickly the global pig population is reduced:

- It is difficult to determine the pace of this process with certainty today, but since producers are making losses practically all over the world, there should be strong pressure to limit production. Forecasts that assume the situation will improve in the second quarter of the coming year do not seem unfounded to me. There are grounds to believe that by then the pig population may have declined enough to result in lower supply and improved price relationships on the market, comments the expert.

However, it points out that a decline in livestock numbers does not automatically mean a rapid rise in prices. Demand, the export situation, and the pace at which individual countries reduce production will also matter.

A difficult year for producers

The expert also points to the difficult situation faced by domestic pig producers. In recent months, there have been only two—and relatively short—periods of more favorable market conditions:

- Sentiment among farmers is poor. In a crisis, few are thinking about expansion or new investments. The priority is survival and maintaining financial liquidity. Farms with larger cash reserves have a chance of maintaining their current production scale. Those without such a safety net have to scale back their operations. This is not surprising. That is how the pig cycle works: periods of high prices encourage increased production, while the subsequent rise in supply leads to falling prices and losses. As a result, some producers reduce their herd, which after some time lowers supply and creates conditions for prices to recover, the expert concludes.