How pig farm structures influence market prices and recovery

The evolving structure of EU pig farms, featuring the loss of many smaller units and the increasing specialisation of those which remain, has implications for the overall pig market, according to AHDB Pork.

Pointing out that around three-quarters of the EU’s pigs are now on holdings of 1,000 head or more, AHDB Pork said that a consequence of having larger, more specialised farms, is that their responses to market signals may be “less agile”.

“Large farms are likely to have more capital tied up, reducing their ability or willingness to scale back or stop production,” said AHDB Pork. “This is particularly true of specialist pig farms, which, by definition, do not have other agricultural activities they can switch to when the profitability of pig production is poor.

“Therefore, production may respond more slowly as prices fall, as seems to have been the case over the last year, with potential implications for the speed of market recovery.”

These comments are included in an analysis of the “considerable differences” which exist between the structures of pig farms across the EU, based on recently published figures from the 2013 farm structure survey.

The survey, which is carried out every three years, shows there were just under 2.2 million EU farm holdings keeping pigs in 2013. Over half of these farms were in Romania, however, with 99% of them having fewer than 10 pigs.

“These ‘backyard farms’ accounted for over half of the Romanian pig herd, the EU’s 10th largest and only slightly smaller than the UK herd,” said AHDB Pork, adding that around 3% of the EU pig herd is still in backyard farms.

At the same time, however, large farms are the norm in many other countries, such a Denmark, where 97% of the country’s pigs are on holdings with 1,000 or more animals.

“The loss of many smaller farms and the increasing specialisation of those which remain has been a key factor in improving the productivity and efficiency of the EU herd,” said AHDB Pork. “That means that, despite the long-term decline in the breeding herd, EU pigmeat production has been relatively stable. With further concentration of production expected, productivity gains are likely to continue.”

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