World pork output leaps barriers to growth

World pork production defied many expectations by growing in 2012 at a rate of about 1.9 percent, according to the latest data from national and international agencies. Previously, there had been widespread forecasts that 2012 would see a standstill in global pork output or even a reduction.

Global pork output could expand by another 14 million metric tons over the next eight years.
Global pork output could expand by another 14 million metric tons over the next eight years.

World pork production defied many expectations by growing in 2012 at a rate of about 1.9 percent, according to the latest data from national and international agencies. Previously, there had been widespread forecasts that 2012 would see a standstill or even a reduction in global pork output.

At the start of 2012, it certainly seemed that global pork producers were confronted by examples of all the main potential barriers to the growth of the industry. The most obvious was a lack of profitability as expensive grains increased feed costs, and a weak economic environment in most countries depressed meat demand and prices.

Pig diseases represented another major consideration in several regions. Various territories faced a change in market conditions due to new trading agreements or new animal welfare regulations that required a substantial investment for compliance.

Pork production trends

Against the odds, however, the volume of pork produced worldwide still managed to increase from approximately 110 million metric tons in 2001 to about 112 million metric tons in 2012. Chart 1 shows how these values fit in with the trend since 1995 and with projections from FAO-OECD on annual increases up to 2021. It is still possible that global pork output could expand by another 14 million metric tons over the next eight years, although an earlier forecast of reaching 155 million metric tons by 2030 now looks more optimistic. 

The regional shares of global pork production in 2012 are shown in Chart 2. Generally the numbers confirm the continued dominance of Asia, Europe and North America in terms of market share. However, the regions differed quite strongly for growth last year.

Asia-Pacific registered an increased pork tonnage of about 2.5 percent, ahead of 2 percent for North America and 1.5 percent each for Latin America and Africa. All of these contrasted with a combined annual pork volume from the European countries with Russia that was practically identical - in fact, marginally lower - comparing 2012 to 2011.

Table 1 demonstrates the difference by showing the amount of pork produced in 2012 in the 20 largest countries for recorded output. Members of the European Union struggled to maintain its yearly total, whereas those from other parts of the world forged ahead.

Slowdown in Europe

The contrast is further underlined by Table 2, in which sow numbers are listed for the 30 countries rated as having the largest national pig breeding herds. Their combined inventory of sows in 2012 was 1.5 percent less than in the peak period of 2007 to 2009, as Chart 3 illustrates. Only continued increases in productivity - pigs per sow and slaughter weights - in these countries have ensured that their pork production volumes keep increasing.

Breeding herd size was hit especially hard in Europe in 2012, because of the added factor of costly regulations. With the European Union's administrators ruling that single-place gestation stalls would no longer be allowed, piglet producers had either to invest in changed accommodation for pregnancy or quit keeping sows.

Chart 4 shows how the decreasing trend in the EU-27 sow inventory accelerated in 2012. In the past 10 years, The European Union's sow inventory has decreased by more than 3.8 million animals, almost 23.5 percent.

China drives expansion

Korea demonstrated the opposite tendency in 2012 by restoring a large part of its pig breeding herd that followed its foot-and-mouth disease outbreak of 2010 and 2011. After dropping about 7.5 percent during 2011, Korean sow numbers increased 6.5 percent in 2012. However, recent indications have shown an over-supply of pork in 2013 because of weak domestic demand. As a result, local producers plan to reduce their sow establishments voluntarily by up to 10 percent.

China's campaign to promote piglet production by offering a financial subsidy per sow ran until June 2013. The subsidy seems likely to drive another 3 percent increase in national pork output this year, coupled with improvements in productivity due to better disease control and by better profitability as feed cost pressures decline.

Backyard pig farms disappearing

In China, as in a number of Asian markets, the rate of growth in pork production also depends currently on the extent to which commercial-scale units replace the inventory of pigs represented by disappearing backyard producers. Estimates from Asia in 2012 found that the proportion of pig farms by country of backyard size went from at least 70 percent in the Philippines to 80 percent in Thailand and Vietnam, and 85 percent in China. But there was agreement everywhere that the smallholders were quitting pork production and their rapid departure had brought a short-term drop in total pig numbers.

An example from the Philippines is that backyard farms provided 8 million of the 12.25 million pigs nationwide in mid-2012. Backyard farms contribution a year later was down to 7.75 million pigs out of a national total that remained at almost exactly 12 million. In other words, while their inventory slipped by 250,000 pigs, their commercial herds increased by about 40,000.

Looking ahead

Globally, the early signs for 2013 have generally pointed to a limited expansion of output by the largest pork-producing countries. Although Russia has been forecast to see an increase in volume this year of about 4 percent, the annual growth in other places such as Brazil and the U.S. is predicted to be closer to 1 percent.

At the other extreme it is thought that production of pig meat in the EU-27 countries of the European Union could fall by 2 percent --- but data for the EU will now have to be amended to cover 28 countries with the arrival of Croatia as the latest member in mid-2013.

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