A majority of European Union (EU) Member States recently voted to close the pig meat Private Storage Aid scheme (PSA) that opened on January 4. The measure was intended to provide EU funding to help cover the costs of storing selected pig meat products for a period of 3 to 5 months.
The PSA scheme took a substantial amount of pig meat off the market over the three weeks of its existence. The decision to suspend and then close the scheme was taken after the planned volumes of products were reached. The most recent information shows that the total quantity of product put into storage, most of it for a period of five months, was 89,841 metric tons (mt) at an estimated cost of EUR27.6 million (US$30 million).
According to the European Commission, the more meat being stored, the more will return to the market in a few months all at once - a situation that would increase the risk of a return to imbalance between supply and demand.
The quantities put into the PSA were higher than last year's scheme, which amounted to around 60,000 mt.
The decline in prices seen during the end of 2015 appears to have been halted and there are indications of a modest recovery in prices in the early weeks of 2016, according to the commission.
In addition to the PSA scheme, 15 Member States have announced that they will use some of the direct targeted aid from the Commission's EUR420-million (US$457-million) solidarity package directly for the pig meat sector.
Eighteen of the 28 EU Member States participated in the scheme. Four account for around 75 percent of the pig meat in the PSA scheme: Germany (26,000 mt; 29 percent), Spain (19,000 mt; 22 percent), Denmark (12,000 mt; 13 percent) and the Netherlands (11,000 mt; 12 percent). The volume of pig meat in storage - 90,000 mt – represents around 4.5 percent of the monthly production in the EU.
According to the UK’s National Pig Association (NPA), some of the biggest beneficiaries of the scheme voted in favor of closing the PSA: Belgium, Czech Republic, Germany, Greece, Spain, Italy, Cyprus, Lithuania, Luxembourg, Malta, Netherlands, Slovakia, Finland, Sweden and the United Kingdom. Those that opposed ending the scheme were Denmark, Estonia, Ireland, France, Hungary, Croatia, Austria, Poland, Portugal and Romania.
Germany’s pig industry organization, ISN, says the ending of the PSA should be no cause for alarm in the sector. The volume of German pig meat in the scheme represents just 8 percent of the total produced over the four-week period that the PSA was in existence. ISN points out that pig meat prices are always at their lowest at this time of year and that the processors regularly put some of their production in storage – at their own expense - to await the better market conditions that return with the summer barbecue season.
