Likely impact of an ASF outbreak in Germany on EU pig prices
The sharp rise in Chinese import demand has drawn enough product from the EU market that if German pork is retained within the bloc, the market is unlikely to be swamped, says the UK’s AHDB in a report.
“Prices are still likely to fall, but probably not to the historic lows we might have seen otherwise. Much of this analysis is dependent on the assumption that Chinese import demand holds, and even increases this year. The pork supply gap is expected to be even larger than in 2019, so this seems likely, but international relations and the current coronavirus situation do bring some uncertainty.”
Germany is the largest European pork producer and exporter. Recently, there has been concerns that ASF may cross over the Polish border and spread to German wild boars.
Many key importers outside the EU tend to place a total ban on pork imports from ASF infected countries, even if the disease is just in wild boar. This means, if Germany is exposed to ASF, the pork products it previously exported to most third countries would effectively be trapped on the EU market.
“In 2017, we estimated approximately 300,000 tons of pork could be displaced if ASF entered Germany, due to import bans from third countries. Using 2019 volumes, this figure would be closer to 500,000 tons. This is about 9% of annual German production, or 2% of total EU production. This trade was worth an estimated €1.1bn, rising to €1.6 billion if offal is included,” noted the UK teams.
EU pig prices are currently at historically high levels, driven by strong export demand and tightening domestic supplies, said the AHDB.
“By October [last year], the price of pork traded within the EU was typically between 20-40% higher than in 2018. So, [in an ASF-in-Germany scenario] we might expect the decline in price for pork traded within the EU to fall within this range. At farmgate level, the EU average pig price would probably fall a little less than this, as over 10% of pork production is still being exported to Asia.
“We would expect to see a more significant impact on the German market [in an ASF-in Germany scenario], but less effect on countries that are still more export-oriented, like Denmark and Spain."
Live trade
Over 10 million weaners and 3 million pigs for slaughter are received each year. The AHDB outlined how in an ASF-in-Germany scenario, it would expect the demand for these weaners to contract, as opportunities to market German pork would be limited.
“Weaners have limited alternative markets, with a lack of finishing space in Denmark and the Netherlands making it difficult to finish these pigs domestically. So, weaner prices may be hit harder than finished pig prices in the short term. Ultimately, this is likely to signal a reduction in weaner production.”
