The findings were published by Bpex in a report delivered by Bpex chairman Stewart Houston. The report outlines the impact on the EU pig sector of the animal welfare legislation, as well as the level of compliance across member states.
Fewer than half of the EU member states are expected to fully meet the terms of the directive when it comes into force, and the European Commission has already said it will take a hard line to ensure compliance, with no derogations being granted. Although the onus will be on member states to enforce the new legislation, the EU has made it clear that it will initiate proceedings against companies that fail to comply or enforce the legislation.
The report says that ‘significant numbers’ of producers are set to quit the industry because they are unwilling or unable to comply. At present, only three member states are fully compliant (the UK, Sweden and Denmark) with a further nine expected to announce that they will meet the criteria by the end of the year.
Bpex is urging the pig meat supply chain to work together to avoid the worst impacts of disruption and ensure the long-term interests of both the industry and consumers.
Houston said: “The UK pork and pork products market is worth £5bn annually and it is imperative the whole of the supply chain works together if we are to avoid the worst impacts of market disruption. Such co-operation is also in the long-term interests of the industry and consumers alike.
“Getting this right will demonstrate the integrity of the EU Commission and member states in enforcing legislation that they have agreed, it will demonstrate the integrity of the whole supply chain that it will protect pig welfare and, above all, it will benefit consumers through the continued supply of high-welfare, high-quality pork and pork products.”
Houston said the pig industry needed to learn from the directive on laying hens, which came into effect on 1 January and has seen serious disruption, with the price of shell eggs rising 75% higher than the same period last year.
“It is imperative for retailers and processors to ensure contract arrangements that guarantee the supply of pig meat under terms that allow sensible business decisions to be made and for everyone in the supply chain to work towards a sustainable, profitable sector.”
He also pointed out that those producers who are compliant will be in a stronger position to operate at a profit and be able to reinvest with confidence, noting that profit potential can improve pig welfare faster than legislation.
The report outlined three possible outcomes to the introduction of the new EU directive:
• Pig meat production in the EU during 2013 could fall by 5% compared to 2011 levels, leading to a 10% price increase for finished pigs. Prices for non-compliant pigs would most likely fall, and the processing sector, already suffering from over-capacity, could see further rationalisation.
• Rigorous enforcement of the new directive might result in pig production declining by 10%, as producers quit the industry if they are unable or unwilling to comply. Losses on that scale could lead to serious shortages of pig meat across the EU, resulting in substantial price increases, with processors and retailers competing for supply. Price increases would inevitably be passed to consumers, increasing pressure to expand pigmeat supplies. This could potentially come from outside the EU, which could increase the difficulty of sourcing welfare-compliant products from the world market.
• A third possibility would be a fundamental realignment of pig production across the EU, with pig breeding and finishing concentrated in different member states. However, there would likely be resistance to large-scale transportation of piglets across Europe from breeders in north west Europe to lower-cost finishers in eastern and southern Europe.
Following the publication of the report, George Lyon, Liberal Democrat MEP for Scotland said that the major retailers across Europe have an important role to play in putting pressure on all their suppliers of pork to comply with the new welfare rules. He said that, along with several other MEPs, he will be inviting all the major European retailers to a round table meeting in Brussels to hear what they are doing to ensure that market disruption is minimised.
He said: “They also have to make it crystal clear to their suppliers that they will only source pork products from producers who are fully compliant with the new EU rules from the 1st January 2013.
“They must do everything in their power to avoid a rerun of the eggs fiasco that happened earlier this year.
“We will also seek assurances from retailers that all pork products they sell after 1st January will be sourced only from producers that are fully compliant with the new rules.”