Pork market outlook
- Production growth limited in 2024 with tight supplies of clean pigs in H1 and stable carcase weights.
- Minimal change in the female breeding herd.
- Potential for a small uplift in exports, with opportunities in the USA and Mexico.
- Competitive EU product pricing likely to increase imports.
- Challenging demand picture continues, with consumers remaining sensitive to prices, reducing volumes purchased and switching to cheaper proteins.
2023 was another challenging year for the UK pig industry. The contraction in the breeding herd in 2022 led to a significant reduction in the number of finishing pigs in 2023. This in turn resulted in production volumes falling 11% year on year as clean pig slaughter fell to its lowest number in a decade.
The estimated cost of pig production did fall in 2023 and moved net margins into a positive position for the first time in over two years. Although the cost of key inputs such as feed and fuel has eased, inflation has remained historically high and higher interest rates are likely to be negatively impacting working capital. Paired alongside this, after strong growth in the first half of the year, UK pig prices have been on a steady downward trend since late summer, following movement in the EU market. This has meant producer sentiment has remained uncertain.
It is no secret that the UK remains in a position of tight supply for pigs, and we forecast this will continue through the first half of 2024. This is weighted towards Q1 with throughputs back year on year as many processors pulled pigs forward for kill at the back end of last year to meet Christmas demand. Although numbers in Q2 marginally pick up year on year, we are comparing to a historic low and are forecast to be very similar to Q1. As we enter the latter half of the year, we anticipate a small uptick in throughputs as the gilts intended for first-time breeding recorded in the June 2023 census start farrowing.
Overall, we forecast that pig meat production in 2024 will grow marginally by 0.6% year on year to around 933,000 tonnes. This will be driven by a 0.8% increase in clean pig kill, totalling somewhere near 10.14 million head for the year. This forecast is based on average carcase weights of 89 kg, remaining in line with 2023.
Some risks to this forecast include further disease outbreaks, with Swine Dysentery continuing to present challenges for the industry, and the threat of ASF crossing our borders ever present. Extreme weather events could also have a limiting impact. The summer heatwave of 2022 hampered the fertility of breeding stock, influencing production in the early part of 2023. It has been reported that adverse wet weather witnessed in recent months is taking its toll on farm productivity, especially on outdoor units.
Despite improved farm margins, hesitancy remains within industry, as the new year continues the theme of uncertainty. Easing pig prices, high inflation rates and an impending general election are limiting interest in large-scale investment, and instead of expanding herd sizes in 2024 we expect to see a further focus on herd rejuvenation.
On this basis, we are forecasting the breeding herd to sit steady in 2024 at around 340,000 head. Looking further ahead we believe growth will remain subdued over the next couple of years as the market rebalances.
Imports of pig meat to the UK were down 2% year on year in volume terms in 2023 (Jan – Nov). This overall figure doesn’t tell the full story though, as 2023 was very much a year of two parts when it comes to import volumes. In the first four months of the year, imported pig meat volumes were down on average 14% year on year following lowered domestic demand, tight EU availability and little differential between UK and EU pricing. However, since May monthly import volumes have been recording growth year on year, averaging 5%. This has been driven by an increase in the price differential between UK and EU product alongside improved demand, especially in foodservice, which typically holds a greater weighting of non-British product.
We anticipate this trend to continue into 2024, with imported volumes of pig meat ending the year up 3% on 2023. Our demand trend is forecast to be negative for both retail and foodservice sectors (see further detail below), with the cost-of-living crisis very much continuing to define both consumer and business behaviour. As a result, if the price differential currently seen between EU and UK product continues, we believe that there will be increased demand for cheaper cuts from cheaper origins. These market dynamics are similar to those seen in 2022, minus the production volumes, which have fallen across the EU in 2023.
Exports of pig meat from the UK were, as expected, significantly lower year on year in 2023, down 19% (Jan – Nov) on the back of lower production and higher pricing. The biggest volume loss was seen in the fresh/frozen category, with offal shipments now taking the largest market share of UK pig meat export volume, a positive movement in challenging times as offal exports help support farmgate prices. Processed pig meat was the only category to see any growth in exports, and overtook bacon volumes.
For 2024, we are forecasting slightly better prospects for UK pig meat export volumes compared to 2023, up 1% year on year, but volumes are expected to remain historically low. A marginal increase in production will feed into this as exports remain vital for carcase balance. However, we anticipate the majority of this growth will be allocated to some minor movements following new opportunities such as the USA following proposition 12 in California and the opening of Mexico’s market to offal.
The EU will remain the most important destination for UK trade in terms of volumes, and is essential for our cull sows and boars. This will mean that, like imports, pricing will be a key watch point. Volumes shipped to China and the wider Southeast Asia region are likely to remain subdued and limited to cheaper cuts and the fifth quarter as economic growth slows and global competition from Brazil and the USA increases.
A risk to these forecasts is, as ever, any changes in political sentiment and government policy. Since Brexit, the UK has had to forge new relationships with key trading partners and implement changes to long standing regulations. The Windsor Framework replaced the Northern Ireland Protocol last year, and the Border Target Operating Model is another policy that comes into force in early 2024. Business readiness to comply with the new rules will determine the smoothness of this transition, and could potentially impact on trade volumes to and from the UK.
UK pig prices have been under pressure since late summer/early autumn. Despite this downward trend in pricing, producers have been seeing improved returns in their net margins as pricing remains above year ago levels and the cost of key inputs has eased. However, producers are wary of continued price declines as large holes remain in farm finances which will take time to infill.
We expect to see the UK continue to closely follow movements in the EU market to maintain competitiveness. With supplies still running tight in both regions, prices may stabilise as the year progresses, but ultimately the balance of supply verses changes in demand throughout the year will dictate where pig prices sit.
In 2023, total pork volumes declined by 1% year-on-year as growth in foodservice was not enough to balance for retail losses (source: AHDB/Kantar, 52 w/e 24 December 2023). For more details on 2023 trends and cut specifics, see our retail and foodservice dashboards.
For the year ahead we expect inflation will continue to fall, and wages will continue to rise. The overall economic outlook will improve, although there are headwinds, including world conflicts, which have the potential to derail this.
This means that some shoppers will feel genuinely better off, while others will continue to struggle and look to make savings when then can. After three years of overcoming challenges and reconsidering how to spend their money, we expect any changes in shopping behaviour will be gradual.
Overall pork volumes for 2024 are expected to be down by 2% compared to 2023 and by 4% compared to 2019. This is as a result of eating-out not returning to pre-Covid levels and retail sales of meat suffering from the cost-of-living crisis.
In retail, the price difference between pork and chicken is widening, and we expect to see more shoppers switching out of the pork category than it gains from beef and lamb. However, pork is likely to continue to benefit from switching from more expensive proteins as well as shoppers moving some of their out-of-home spend to in home. Cheaper pork cuts, such as sausages and mince, are expected to do well, and we could see a boost to BBQs if there is good summer weather. However, shoppers will continue to restrict how often and how much they buy in store – by reducing waste and stretching meat over more meals. Meals eaten for health reasons is also continuing to decline (Source: Kantar Usage) but we expect to see this start to recover in 2024. However, this is not a benefit to pork, as many consumers do not currently associate it with health. We therefore predict that pork volumes via retail will continue to decline during 2024.
The out-of-home market for pork is also likely to struggle. Dine in, on-the-go and takeaways are expected to decline slightly year-on-year as consumers restrict spending and choose to take breakfast and lunch to the office from home. This particularly impacts pork over other meats, as it is more reliant on the food-to-go sales from ham sandwiches, sausage rolls and pasties. However, we do see takeaways remain much higher than 2019 due to the increase in availability of deliveries with apps, as well as more offerings for pork takeaways.
Opportunities for the pork industry to improve demand include:
- For cheaper cuts, encourage tasty and versatile pork dishes which play on value for money. Inspire using batch cooking and filling meals, coupled with retail promotional support.
- For more premium products, capture meal occasions lost from more expensive proteins and the out-of-home market by inspiring treat dinners such as fake aways or restaurant quality dine-in recipes.
- Addressing health concerns by communicating the health benefits of pork, such as B12, protein and lean cuts where applicable.
- Encouraging consumers with the right messaging in-store, online, on pack and in foodservice.
- In the longer term, look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship, and expertise) are shared with consumers. See our consumer reputation landscape hub for more information.
AHDB have a range of marketing activities planned for the year, including a new pork campaign. Please visit our marketing pages for more information. For more insight around consumer demand visit our retail and consumer page.
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