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News and analysis on the global poultry
and animal feed industries.
on May 23, 2008

Price comparisons Europe-style

Despite common reference prices, pig prices in the EU still differ. As a result, reference prices are either adjusted or unadjusted.

Comparing pig prices in the member states of the European Union should be easy, in view of the community’s use of a common reference price mechanism. But a British report explains that the reference prices relate to pigs in which the lean content is 55-59%. Only about 10% of the pigs produced in Britain fall in this grade, against about 40% for Germany.

Clearly, says the report for BPEX, if the average lean meat percentage in a country does not fall within the 55-59% band, then the reference price will not reflect the average gross price the producer receives in that country. Prices have been adjusted to a grade mid-point of 57.5% if the national average lean percentage is outside the range.

By far the most significant adjustment for lean meat percentage is to prices in Italy, where the average lean meat percentage is only 47%. However, a marked difference between adjusted and unadjusted reference prices also occurs in Denmark, France and Sweden, due to the bonuses paid to producers in these countries on top of the normal per kilogram price. A recent example is given in the accompanying BPEX chart.

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