An increased preference by UK pork buyers for domestically sourced produce has restricted the rise in pigmeat imports this year to just 4%, despite a growing UK-EU price gap, according to BPEX.
The gap, which has risen to unprecedented levels during the first three quarters of 2014, would have been expected to lead to a surge in pigmeat imports, rather than the 4% increase which has taken place. It might also have led to a fall in exports as they struggled to compete on price, when, in fact, exports are up 11% for the year to date, prompting BPEX to ask if the link between UK and EU pig prices has been broken.
“The main answer appears to be that UK pork buyers have shown an increased preference for sourcing domestically,” said BPEX, in response to its own question. “In the past, their preference for British pork was price dependent. If imported pigmeat was cheap enough, therefore, relative to the UK equivalent, they were prepared to switch. That no longer seems to be the case for many.”
Citing the housemeat scandal as the trigger for the pro-British move by supermarkets, BPEX said that their latest bi-monthly PorkWatch survey confirmed that the domestic preference was continuing to hold up in the face of the current price gap.
The survey, which measures how much supermarket shelf space is allocated to British products across each of the main pigmeat categories, shows the British share having risen in recent years for most categories. In addition, the latest figures show that between September 2013 and September 2014, there was little change in the position, despite the UK-EU pig price gap rising from the equivalent of 5p in September 2013 to 26p a month ago.
“The big question now, of course, is whether import and export trends will remain immune to the gap between UK and EU prices,” said BPEX. “For exports, the answer may well be yes, as future trends will mainly be driven by demand, particularly from emerging markets in Asia.
“For imports, the answer is less certain. It will largely depend on how the big pork buyers respond. If their commitment to sourcing from the UK wavers then the price gap will have to close. However, if support for UK pork remains strong then supply and demand on the domestic market will be the key price drivers, with the EU market having only a limited effect.”