5 signs German pig production is declining

Germany was the No. 1 nation in Europe for the production of pigs. However, now the country seems to have lost this status. losing it to Spain. The fall of Germany as a leading pig-breeding nation is closely related to the reasons for its rise, which is clearly demonstrated by 5 indicators.

Germany's historic rise from leading pork importer to leading meat exporter in less than three decades has been a remarkable success story. However, the background of economic success - the high risk of dynamic development - is often ignored. The climb to the top was based not only on domestic pig production, but also depended heavily on unrestricted imports of animal feed raw materials, imports of piglets and finishers from the Netherlands and Denmark, and the ability to sell pork on international markets.

Thanks to this system, farmers and large slaughterhouses in the northwest of Germany have made great strides. They expanded production to make a profit and used the profits to expand further.

The system worked flawlessly as long as the surplus pork could be exported, but when that became impossible, the system ran into economic problems. What are the signs of this fall?

Reducing the number of pigs

In November 2012, pig stocks in Germany peaked at 28.3 million heads. In the following years, inventory hovered around 27 million before falling to under 26 million in 2020. While inventories increased by 12.5% ​​in Spain, 12.5% ​​in the US and 5.4% in Denmark between 2015 and 2020, Germany's hog inventory declined by nearly 1.7 million hogs ( 5.9%)  

Reduced pig slaughter

The decrease in pig slaughter is the second indicator of problems in the German meat industry. While in Germany the number of slaughtered pigs decreased by 4.2 million (8.9%) between 2010 and 2020, in Spain it increased by 15.6 million (38.2%). Spain ranked first among the 27 countries of the European Union, not only in the number of pigs, but also in the slaughter of pigs. The country has become for Germany the main competitor in the world market. The decrease in pig slaughter reflects not only the dynamics of the pig population, but also a sharp change in the import of piglets and pigs.

Sharp decline in imports of live pigs

As mentioned earlier, the past success of the German pork industry has depended heavily on imports of piglets and pigs. The closure of large slaughterhouses during the Covid-19 pandemic and import bans in some countries following the first outbreaks of African swine fever (ASF) in September 2020 have led to an oversupply of slaughter pigs and a sharp drop in prices for farmers.

Back in 2018, imports were already declining as farmers hesitated to buy piglets due to low pig prices. Massive declines occurred in 2019 and 2020. Imports of slaughter pigs have practically fallen. Compared to 2015, imports are 40% less; imports from the Netherlands fell by more than 60%. The closure of slaughterhouses and reduced demand for pork due to several lockdowns has led to a huge oversupply of heavy pigs for slaughter, further lowering prices for pig farmers and reducing imports of piglets. Prices remained low, which limited the economic opportunities for pig producers. Even in the fourth quarter of 2021, a solution to this problem is not expected.

Reduced pork production

One would expect that due to the reduction in pig slaughter, pig meat production would fall by the same percentage. But that did not happen. The reason is the temporary shutdown of slaughterhouses and the high slaughter weight of pigs when the slaughterhouses started working again.

A comparison with Spain shows a completely different dynamic. Although Germany surpassed Spain's pork production by 78,000 tons in 2020, it is clear that it will lose its leading position in 2021. While pork production in Germany fell by 366,000 tons (6.7%) between 2015 and 2020, it increased by almost 1.7 million tons (49.1%) in Spain.

Pork export decline

For many years, the leading position in the world pork export was contested between the USA, Germany and Spain. Although Germany was still in the lead in 2017, it lost it not only in terms of volume, but also in the value of exports in 2020.

One reason for Spain's success is that it signed veterinary contracts with several Asian countries at a much earlier stage than Germany. In particular, Spain has benefited from a rapid increase in China 's imports of pig meat , as well as to the US and Canada, a market that was no longer open to Germany due to ASF outbreaks.

In 2015, Germany was still in traditional trade relations with other EU member states. Between 2015 and 2020, the share of exports to other countries increased from 27.3% to 37.1%; in Spain, on the contrary, it increased from 29.1% to 60.2%. In 2020, China alone accounted for 1.3 million tonnes (45.1%) of Spain's pork exports.

prospects

This analysis documented a sharp decline in German pig stocks, slaughter, pig imports, pork production and exports between 2018 and 2020. These years have convincingly demonstrated the fragility of the German production system. This large mass production system, based on high levels of imports of fodder, piglets and fattening pigs, worked only as long as the surplus could be exported. As soon as there were problems, the whole system was in economic difficulties.

In addition, discussions about animal welfare and the environmental impact of intensive animal husbandry have become major issues. Even in livestock centers, a transformation of the existing production system is required. This shows that, blinded by economic success, stakeholders have for far too long ignored society's changing attitude towards intensive animal husbandry and high meat consumption as one of the sources of global warming and climate change. Denmark shows through its own example that another form of pork production is possible, a system which - due to high standards regarding animal welfare, sustainability and quality of meat - is not only accepted by Danish society, but at the same time is successful in the global pork market.

Given the decline in domestic pork consumption per capita, falling export volumes and growing competition from plant-based meat substitutes, we can expect further reductions in hog stocks, production and exports of pork in Germany.