Uncertainty in global markets, driven by a slowdown in growth in China, while worrying at first sight, could present opportunities for the UK pig industry, according to AHDB Pork.
“A push towards a more consumer-led society (in China) with a predilection for imported products over domestic could be a continued source of opportunity for the UK pig industry,” said AHDB Pork in a detailed analysis of recent market developments, both in Asia and the EU.
Noting the global fall-out from China’s attempts to transition from a state-led investment and manufacturing economy to one more dependent on consumption and services, AHDB Pork has highlighted some of the potential positives which may emerge from recent changes.
“There has already been a significant increase in the amount of pork and offal exported to China, exacerbated in 2015 by a significant reduction in the Chinese domestic herd,” it said, adding that many Chinese consumers are also now showing a preference for imported pork, amidst several domestic health scares.
The continued low price of oil is another key factor, given that there has historically been a link between oil prices and global food prices.
“With the oil price falling over the past two years, the food price index has followed the same trend,” said AHDB Pork. “Whilst this means that producers have received a lower price for their product, it has also translated into lower input costs.
“For pig producers, feed costs have reduced significantly over the last three years and there have also been lower costs for fuel, heating and lighting. So, whilst falling pig prices have not been welcomed, the blow has been slightly softened by decreases in the cost of production.”
The other part of the “new opportunities” story concerns the prospect of the UK leaving the EU and the impact this has already had in weakening sterling against the euro since mid-January.
“The weakening of the pound against the euro has come as some welcome news for UK pig producers, resulting in the narrowing of the gap between EU and UK prices, helping to make UK pork more competitive both domestically and abroad,” said AHDB Pork.