Pork prices – what does the future hold?
Fast Food Professional asked Ivan Bond, Sales and Marketing Director for McWhinneys Sausages Ltd of Bangor, Northern Ireland, to give us his insider knowledge on the subject and it makes for interesting reading
“Anyone connected with the Foodservice sector cannot have failed to notice the steep rises in the price of pork and pork products, such as bacon and sausages over the past year.
The reason has been well publicised – an outbreak of African Swine Fever in China, which has resulted in the necessity to cull as many as 50% of the total pig population in China. This has resulted in the destruction of around 250 million pigs in China alone. The disease has spread to other countries in South East Asia and has also spread to sub-Saharan Africa. The European Food Safety Authority confirmed in its latest report (published on 30th January) that the disease had spread to
Poland, Latvia, Lithuania, Estonia, Slovakia, Belgium, Romania, Bulgaria and Hungary.
African Swine Fever is a highly contagious viral infection for which there is no vaccine. It cannot be contracted by humans, but the virus can survive for several months in pig products. If discovered, it must be reported to the necessary authorities and the infected farm will be quarantined and the whole pig herd culled.
Pork has been the main meat consumed in China and represented around 60% of the total animal protein consumed. The fall in domestic production has resulted in a significant increase in the importation of pork from all around the world. Last December, China waived their high tariffs on the import of pork from the USA as a gesture of goodwill. In reality, their increased demand for pork was so great that they needed the world’s third largest pork producer as a supplier. China also dropped their ban on the import of pork from Canada, which they had imposed following the arrest of an executive from the Chinese communications company Huawei.
The resulting vast increase in demand from China has given pork producing factories an opportunity to considerably increase their prices in the UK for manufacturing pork. Sausage manufacturers have also had to raise their prices for their products which have all impacted on the cost to Fast Food outlets and other users in our industry. Imported bacon form Denmark and the Netherlands have also increased steeply in price in recent months.
In the longer term there will be an impact on the future of UK based sausage and bacon manufacturers. The increased cost of raw materials will cause cash flow problems and it is anticipated that there will be casualties, unless prices fall to a more manageable level. In the longer term there will come a time when China stops importing at the current level and the pork producers will have to return to their previous customer base, which could be considerably smaller. The short-term view may not have taken this into account.
The immediate future looks somewhat more confusing. There are many reports stating that the Chinese people who are expected to buy the higher priced imported pork are unwilling, or unable to pay the high prices. In addition, the coronavirus outbreak has resulted in the necessity to quarantine Chinese cities. This in turn has reduced the movement of goods within China and has detained imports at Chinese ports.
There may be a necessity to return to existing UK users and reduce the price of pork to more realistic prices.
Watch this space.”