World pork output grows again

Our latest review of figures for the world pork market finds a return to growth after the uncertainties of the past two or three years.

Hog slaughter for April 2011 totaled 8.63 million head, down 5% from April 2010.
Hog slaughter for April 2011 totaled 8.63 million head, down 5% from April 2010.

World pork production is back on track to set new records for its annual volume after a period of pauses in growth. On figures from the Food and Agriculture Organization (FAO) of the United Nations, the quantity of pork produced globally reached around 106.5 million metric tons in 2009 and seems likely to total between 108.5-109 million tons this year.

See in our accompanying Figure 1 how these estimates and forecasts fit with the pattern seen since 1990. The peak output in any year had been 103.5 million tons in 2005, before the new high recorded in 2009.

But see also Figure 2, extracted from a bulletin by the foreign agricultural service of the United States Department of Agriculture (USDA). It confirms the contrasting trends that are being observed between annual production in China, as the world’s largest single pork-producing country, and all other producers globally.

Our data analysis last year had blamed the turmoil then occurring in world economies as complicating any attempt to forecast the outlook for meat. To prove the point since then, even the estimates of recent production have needed to be revised. We already knew that global output in 2006 and 2007 had been over-estimated. It now seems that a total of 280 million metric tons of all meats was produced worldwide in 2008 and that this increased slightly in 2009, to about 281.5 million tons.

This would mean pork accounted for 37.8% of last year’s all-meats total (up from almost 37.3% the year before), compared with 32.6% for poultry meat (down marginally from 32.8%) and 22.8% for beef/ruminant (down from a previous 23.2%). In 2007, on FAO data, approximately 36% of world meat output had been in the form of pork, compared with nearly 33% for poultry and nearly 24% for beef.

The pattern of production country by country for the 20 largest national producers of pork is shown in Table 1, taken from our database. As usual, it compares the position of each country on the lists for 2009 and 2000. Worth noting, however, are the positional changes that have occurred since the 2008 list. Russia moves up because of its expanded output, for example, while Denmark and Italy swap places and Korea has moved to a lower position.

After the cost difficulties presented to producers everywhere by the record-high feed grain prices of 2007, the question for pork since 2008 has been whether the demand for the meat from consumers would be affected severely by the widespread economic crisis and by the mis-naming of a variant H1N1 influenza virus, suggesting that it was transmitted by pigs. In particular, any significant alteration in sales would be reflected in the trade between countries.

Table 1 --- recently updated on the strength of new FAO figures --- could give part of the answer, where it suggests that imports/exports of pork did indeed slow last year. However, it also spotlights swings in output for the various world regions.

Table 2: Changes in regional production and trade 

The Asia-Pacific area is shown to have produced 6% more pork in 2009 than in 2008. Europe recorded virtually a standstill year by producing only 0.7% less than previously. In North America there was also a reduction, but of 1.4% --- the same rate of cutback recorded for Africa. But Latin America’s production was down by almost 9.1%.

Although exports of pork apparently fell back in 2009, a graph compiled by the Food and Agriculture Research Institute (FAPRI) in the US (Figure 3) makes clear that this was a correction in line with longer-term trends. FAPRI’s graph also advises that a more normal pattern of world trade will return this year while the volume of pork produced globally continues to rise.

Figure 4 has been extracted from the same source as a reminder of who are the major exporters of the meat. On this analysis, therefore, the European Union has exported more pork in the past five years than any other country or trading bloc.

A view from within the European Union has been given by a European Commission document in which recent changes to the size of the EU-27 pig sector were described as a continuation of structural adjustments at an accelerated pace. Producers had relatively low feed costs last year, it added, but the average price at €1.41 (US$1.74) per kilogram carcase weight was 1.2 Euros less than in 2008.

Prices struggled to be stronger because of an upset in trade flows in and out of the union, it said. Exporting pork became more difficult not only due to a removal of export refunds that had helped sales rise by 34% in 2008, but also because of currency devaluations in several countries including Russia, and enhanced competition from North America in trying to sell to Japan.

The overall result was a 19% reduction for EU exports to non-member countries in 2009. This contraction especially concerned shipments to Japan (lower by 21%), to Korea (down by 18%) and to Hong Kong (reduced by 11%). According to FAPRI, the outlook is for the European Union to lose market share in the pork export business in the coming years. The institute said a period of decline is in prospect for Europe’s export sales, commenting that “the long-term competitiveness of the EU is not very promising, given its strict animal welfare and environmental regulations”.

The suggested winners in terms of export market share are named as Brazil and the USA. It projects, by the year 2019, a gain of 13.2 percentage points for the US share and of 4.4 points for percentage held by Brazil. However, Canada’s share is seen as decreasing by 6.4 percentage points.

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