Thursday, 3 December 2020
By Felicity Rusk
In mid-September, the first cases of African swine fever (ASF) were confirmed in the wild boar population in Germany. In response, the major export destination, China, placed a ban on imports of pig meat from the entire nation. So what have the ramifications on trade been?
Despite the ban, volumes shipped rose
Despite the ban from Germany’s top export destination, volumes in September actually recorded a significant rise. Fresh/frozen pork exports reached 174,000 tonnes, which is the highest quantity shipped in a single month since October 2012. Volumes were 38% (48,000 tonnes) higher than in August, and 13% (20,000 tonnes) more than in the previous year.
Shipments to China were just under half of that in the previous year, at 16,000 tonnes. This was also almost 20,000 tonnes less than what had been shipped in the previous month, which would line up with when the ban was implemented on the 14th.
Meanwhile, Germany exported 135,000 tonnes onto the EU-27 and UK market in September, 39,000 tonnes (37%) more than in the previous year.
The majority of the pork that would have been destined for the Chinese market was re-routed onto the European market. Virtually all pork exports to China are frozen and China was receiving over half of Germany’s frozen pork exports for the year up to August. However, despite the drop in Chinese trade, frozen volumes exported in September were only 5% (3,000 tonnes) lower than August. Increased trade with Romania and Hong Kong suggests these were key alternative outlets for product already frozen, though a number of other European destinations also took more frozen German pork.
Shift to fresh and chilled pork
In September, a considerable increase in the amount of fresh/chilled pork that Germany exported was recorded. The rise in overall pork export volumes came solely from this product, which accounted for 68% of the overall volume.
Generally, frozen pork is destined for nations with a longer transit period, while fresh/chilled is typically sent to nations with a shorter transit time due to its limited shelf life. However, fresh/chilled product is normally more desirable. With more pork now having to trade on the nearby European market, it would make sense to increase the portion shipped chilled. The shorter shelf life of chilled pork perhaps brought some of the export trade forward, if some of this was product that might have otherwise been frozen and shipped to China. Concern over the future direction of prices, or further spread of ASF, may have also encouraged increased exporting rather than holding pork in storage if avoidable.
Market pressure translated into lower export prices
The situation that has unfolded in Germany has put downwards pressure on European markets, which has extended to GB prices. As such, export prices in September were generally lower than in the previous month. Prices for frozen products recorded a larger decline than prices for fresh/chilled products. While prices for frozen carcases recorded the largest decline in prices on the month, exported volumes are consistently very small (100 tonnes).
With China’s ban still in place, Germany will have to continue to find alternative outlets for its pork exports. With only a few destinations outside the EU accepting a regional approach to ASF outbreaks, the European market is likely to absorb the majority of the product that would have otherwise gone to China. This will likely lead to ongoing pressure on prices unless regionalisation agreements can be made.
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