Germany losses export markets one by one
So far, South Korea, China, Japan, the Philippines and Brazil have placed bans on pork imports from Germany after the European country reported the first case of African swine fever (ASF) in wild boars. "For now, risky products will no longer be imported into Brazil, whether they are pig meat or have been processed," said José Guilherme Lea, state secretary in the Ministry of Agriculture. It is expected that other Asian countries will impose soon similar measures considering that similar treatments were applied for other major EU pork exporters, such as Belgium or Poland. Also, South American markets that are open for German pork may place a ban on these products as they are trying to avoid getting ASF in their national pig herd.
Germany has exported €1 billion of pork to China in 2019 as it was China’s largest pork supplier. Korea and Japan were also significant markets and, for now, seems that all the pork shipped by Germany to third-countries may end up in the EU single market. A key part of the EU’s export growth so far this year have been German exports to countries that tend to ban suppliers with ASF. These volumes increased by 54% between January and May, to 270,000 tonnes. If this growth rate was maintained for 2020 overall, volumes would reach 780,000 tonnes.
Looking on an annualised basis, if the 780,000 tonnes earmarked for export in 2020 remained in the EU instead, total EU exports would be below 2019 levels, but still higher than 2018. Supplies on the EU market would be a little higher than 2019 levels (+1%), but still below supplies available in 2015-2018.
"Of course this year, the situation is complicated by the COVID-19 pandemic. While the EU has been able to consume this volume of pork in the past, it is unclear if this could be achieved in the current market conditions, which are far from normal. If the German export market is restricted, downward price pressure would always be expected to some extent, to stimulate latent European demand. Current conditions may accentuate the situation.
Further complications may also arise from the practicalities of processing the pork for consumption in the EU. Shipping pork to China is particularly attractive as less processing is required on the products in the EU. This is especially useful at present when EU processing capacity has been challenged by coronavirus regulations and outbreaks, while China has an excess of processing capacity due to its own ASF situation.
For now, we wait to see how China will react to this latest development. UK producers have already seen how disruption on the German market can quickly feed through to lower cull sow prices this year. With the potential for even more significant disruption to the German market now looming, the outlook for finished pigs looks more uncertain than ever," commented Bethan Wilkins, Senior Analyst for AHDB.
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