Despite changeable prices on the continent and throughout the world, pig values in Scotland have remained relatively stable and some 10% higher than this time last year.
This compares to European pig farmers who are typically seeing prices 7-8% lower than this time year with larger falls reported in Brazil, the USA and Canada.
According to Stuart Ashworth, director of economic services at Quality Meat Scotland, the general firmness in the UK market has been achieved despite slaughter statistics showing a small increase in both the numbers slaughtered over the first third of the year and increased prime pig carcase weights.
“Market firmness has been helped by firm retail demand particularly for bacon and sausages, although the market for pork roasts has been more challenging,” he said.
“Market sentiment has also been helped by continuing firm demand from China and reduced imports.”
Looking at the major pig meat exporting countries, all have reported considerable growth in exports to China despite the Coronavirus outbreak.
“The European Union, reported exports to China in the first quarter of 2020, 75% higher than the same period last year.
“Similarly, despite trade tensions between China and the USA, the US reported exports to China in the first quarter of the year nearly five-fold higher than a year earlier,” he commented.
The longer-term effects of African Swine Fever in China are expected to result in continued firm demand from China for pig meat well into 2021. However, there are indications that import prices paid may not remain as firm as they currently are as Chinese producer prices, although double the levels of a year ago, have fallen more than 20% over the past quarter.
Commenting on the Brexit negotiations, Mr Ashworth said: “The UK has published its new import tariffs to apply from January 1, 2021 and they include import tariffs on pork and pork products.
“With no indication of any new quotas in the document, this would mean that all pig meat imports from the EU, and elsewhere, would face import tariffs unless negotiated otherwise.”
The European Union report that, historically, around 20% of EU pig meat exports come to the UK making the UK the second most important export market for the EU, although growth in trade with China has reduced the importance of the UK market to Europe more recently.
In the same way, the EU is an important export market for the UK; as is the Chinese market.
“While import tariffs would offer some protection to producer prices, without tariff-free access to export markets for cuts less popular in the UK, the benefit would be less robust,” said Mr Ashworth.
He added that tariffs are only one part of trade terms and conditions, of equal importance are the non-tariff barriers. These can include, abattoir operating standards, the level microbiological and medicine residues and border control inspections.
“As the UK exits the EU, it will bring current EU food safety and hygiene standards into UK law maintaining the status quo.
“However, when the UK then enters into trade negotiations with the EU and other countries, concerns have been raised that the UK may revise the non-tariff barriers to trade with the potential for imports from third countries that are produced to lower standards than are currently applied in the UK.
“An example in the pig sector is the use of growth stimulant ractopamine in the US pig sector, which, in turn, could compromise our trading position with the EU and other countries,” he added.
The implications of trade disruptions can be considerable not only for the pig sector but also for the cattle and sheep sectors.
“Historically, agreeing the terms and conditions of trade take considerable time to negotiate and inevitably involve compromise. That compromise should not result in the high standards of animal welfare and food safety demanded of Scottish producers being compromised by relaxation of non-tariff barriers to trade,” concluded Mr Ashworth.
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