Simon Grey, General Manager Europe
Across Europe farm gate pig price is following its usual seasonal decrease. Average (estimated) price for Europe is €1.59 per kg liveweight. What is surprising is the difference between country.
Calculated using data from Pig333.com
These numbers also are not what farmers actually get for their pigs. Quoted prices are “average and for a country specific grade’.
What the figures clearly show is there is not a single market in the Europe, contrary to what many people would imagine (the European single market)…
The following table shows another market price comparison. This is retail price in UK per kg for same (as near as possible) product in different supermarkets.
This table shows that even within country pork is sold at quite different prices, with significant premium for premium pork.
Conventional wisdom has always been that pork is a globally traded commodity product and therefore the lowest cost producer has the advantage. Looking at the numbers this is clearly not correct. There are significant differences in farm gate prices in the different countries within the ‘single market’ European Union. Supermarket prices from UK show that within country pork can be sold at very significantly different prices.
Market price is very variable. So as pig farmers should our focus on being the lowest cost producer be such an obsession? Also should focus on “market price” also be an obsession. The numbers say not!!
From a live pig about 62% is edible meat so about 75kg of pork from a 120kg live pig at slaughter. Taking the difference between discounter and premium pork at just over €4 per kg implies there is a ‘potential’ retail value of up to €300 per pig.
Compare this to €190.80 for a 120kg live pig (average European farm gate price at €1.59 / kg).
Can we as pig farmers expect to get the full value from producing better quality. Absolutely zero chance. Pig farmers produce a product no consumer will buy – a live pig. But it is reasonable to expect some level of premium for producing a better quality product (which is likely to cost more to produce).
Is there an opportunity for all pork to be sold at a premium. Again, absolutely zero chance. If all pork was the same quality then there would be no differentiation and pork would be a commodity product and sold at a standard and lower price!
Reality is that a lot of consumers do not have the money to pay for premium products. Add to that the amount of pork products that are heavily processed (where the quality of pork has little or no effect on the quality of the processed product) there will always be a need for low-cost commodity pork.
What these numbers do tell us is there is an opportunity to make more profit by producing a better quality product.
Globally there are about 770 million pigs so we can assume about 77 million sows. If the “quality market” is just 10% of the total then 7.7 million sows. As a % of production this may be low but 7.7 million sows is a lot of production!!
What is the potential for the quality market. I have no idea other than it can never be anywhere near to 100%. What I do know is it does exist and there are significant premiums for retailers, processors and farmers to share.
