Pigmeat prices continue to drift downwards with the threat of Covid-19 and ASF

For much of 2020, the volume of pigmeat leaving UK abattoirs has been lower than earlier recorded levels, a contributory factor in the firmness of farmgate prices, according to the latest market commentary from Quality Meat Scotland (QMS).

However, June and July broke this trend with year-on-year increases in production which, in turn, led to farmgate prices softening.

“The latest estimates for UK production show volumes have once again dipped below year earlier levels,” said Stuart Ashworth, Director of Economics Services at QMS.

Despite this slight tightening in supplies, UK prices have continued to drift downwards through August and into September.

“Nevertheless, Scottish pig producers find farmgate prices remain 5% higher than last year and 9% higher than in 2018, with heavier carcase weights resulting in larger increases in the value of each pig sold,” he added.

“In contrast to the UK average farmgate prices, across Europe they are much lower than last year, and also much lower than the five-year average.

“With the UK price significantly higher than elsewhere in Europe, some of the fall in UK prices, despite lower production, may be accounted for by competitiveness of European prices,” said Ashworth.

Threat of ASF

Ashworth then talked about the potential threat posed by African swine fever (ASF).

“In this regard, UK pigmeat producers are keeping a wary eye on the implications of the conformation of ASF in Germany.

Although not unexpected because of the presence of ASF in Poland, close to the German border, the conformation of ASF in Germany could be very destabilising for the European and UK market.

“One consequence of ASF is that most importers of pigmeat immediately suspend all imports from countries with ASF.

“This has proven to be the case with significant importers of German pigmeat like China, Japan, South Korea all suspending imports from Germany.

“Germany is hoping that China, in particular, may be persuaded to adopt a regionalisation policy where regions within a country can be considered to be ASF-free and trade can continue and mitigate the impact of the restrictions on exporting to China and elsewhere.

“This is the policy adopted internally within the EU and which would allow pigmeat from some parts of Germany to be exported to EU countries,” Ashworth concluded.