Pork market outlook

July 2021

  • UK pig meat production growth expected to be slower in the second half of 2021
  • Exports remain challenging, with Chinese demand slowing and some friction supplying the EU
  • Higher production and lower exports boost domestic supply availability and should restrain import levels
  • Demand remains strong, but volumes increasingly moving through foodservice rather than retail, which may be less beneficial for British producers
Image of staff member Bethan Wilkins

Bethan Wilkins

Senior Analyst - Red Meat

Overview

In the latter part of this year, pig meat production growth is expected to slow. Demand in Britain is anticipated to remain strong overall, although the eating-out market will start to grow at the expense of retail volumes. Much of the strong demand will be served by our higher domestic production levels and lower export volumes, which have struggled with logistical difficulties supplying both the EU and China. This ought to keep a cap on import levels.

A more in-depth look at the outlook for the British pork market can be found here.


UK production

Clean pig slaughter is expected to remain above 2020 levels for the latter part of the year, although growth should slow compared to the first half, which was influenced by a backlog of pigs from 2020. Overall, slaughter is forecast to reach 11.4 million head, nearly 5% higher than last year. Slaughter numbers should be lower in 2022, influenced by a declining breeding herd.

Up to the end of 2020, we believe herd expansion was underway, which supports slaughter numbers up to the middle of this year. However, poor profitability in 2021 has likely led to some herd contraction this year. At this time, we estimate a 2% contraction in sow numbers this year followed by a smaller contraction in 2022. For physical performance, this forecast assumes a continuing slow upward trend of about 1% more pigs sold per sow per year going forward.

Carcase weights were well above those in previous years in late 2020 and early 2021. The general trend is for increasing carcase weights, influenced by improving genetic potential and contracts that allow higher weights. In general, we would expect a modest upward trend to continue. This winter is an exception, as weights in the 2020/21 winter were excessively high due to slaughter delays.

Sow slaughter was lower than expected in 2020 and early 2021, with disruption related to both COVID-19 and our departure from the EU limiting throughput. For the rest of this year, we are expecting culling levels to be higher than last year, as producers catch-up with culling older animals and some exit the industry.

Altogether, pig meat production is forecast to increase by 6% this year, reaching 1.04 million tonnes. However, in 2022 volumes are expected to be about 2% lower, at 1.02 million tonnes.

chart, bar chart

UK pig meat trade

Exports

Pig meat exports across July-December (excluding offal) are expected to be higher than in the first half of the year, but volumes are expected to remain below 2020 levels. For 2021 overall, shipments are forecast to be 13% lower than last year, at 262,000 tonnes carcase weight equivalent. Logistical challenges supplying the EU have eased somewhat since the start of the year, although some disruption remains. The Chinese pig herd also now appears to be recovering from African Swine Fever, and so it is expected that China’s import requirements will start to ease back.

Imports

Import levels have been lower so far this year. This has been influenced by disruption following our departure from the European Union, as well as weaker demand for imported product as the foodservice market continued to face restrictions. With lower exports and increased domestic production, our import requirements have also reduced. Foodservice is expected to pick up in the latter half of the year, at the expense of retail sales. This will likely offer some support to imported product over domestically produced pork. Altogether, we expect import volumes to be more similar to year earlier levels in the second half of 2021. This means UK pig meat imports in 2021 are expected to be about 7% lower than in 2020, at 832,000 tonnes carcase weight equivalent.

Pork consumption trends

Retail volumes of pig meat have remained buoyant over the course of the pandemic, with year-on-year growth still in double-digits into the first two months of 2021. As volumes started to compare back to the start of the pandemic in March 2020, year-on-year comparisons have moved into decline. However, when compared to 2019, a more typical year, volumes are still up significantly. Overall, pig meat retail volumes in the 52 w/e 13 June 2021 were 4.9% higher year-on-year and up 6.9% when compared to 2019, with processed pig meat driving nearly two thirds of this growth.

Comfort foods and scratch cooking appear to have benefitted pig meat volumes. Pork roast dinner occasions grew by 12%, while bacon/sausage sandwiches have been a bigger driver, up 34%, equal to an extra 77 million occasions (Kantar Usage, 52 w/e 16 May 2021).

Retail has undoubtedly benefitted from extended closures in the eating out market, as well as reduced footfall to food-to-go. For pork, the latter is particularly important due to the reliance on sausage rolls and pork-based sandwiches/wraps (including ham, sausage and bacon). AHDB estimates that for eating-out pork volumes were down 53% in the 52 w/e 13 June 2021. The biggest losses came from sandwiches, which accounted for 16% of this decline. More typical dine-in dishes that faced declines were full English breakfasts, which accounted for a further 14% of out of home losses.

However, delivery/takeaways have proved to be particularly positive for pig meat, over the same period, with the protein growing well ahead of the market. Estimated delivery/takeaway volumes of pig meat rose by 137% over the year. Pastries (including sausage rolls) accounted for nearly a quarter of this growth, with the nationwide rollout of Greggs delivery in 2020 likely to be a major contributor.

We believe that the volume gains in retail and delivery/takeaway are enough to have compensated for the eating-out and public sector losses in the 52 w/e 13 Jun 2021.

What next?

As lockdowns gradually ease consumers have showed signs of getting back to some normality. ‘Freedom day’ during July means we anticipate more of a return to eating out in the second half of 2021 but the market will not fully recover to pre-COVID levels due to closures, the economic back drop and still some levels of uncertainty.

Pig meat volumes via retail are not predicted to maintain high year-on-year growth in 2021, but we do expect it to track above levels seen in 2019. Not only has pig meat proven to be an important comfort food during the pandemic, the protein meets the needs of those who are more price conscious or allocating their budget differently – these consumers account an estimated 50% of GB adults, according to the AHDB/YouGov Consumer Tracker (May 2021).

Retail forecasts will be subject to the fortunes of the foodservice market, which has been badly affected by the pandemic. For pig meat, the fact that more consumers expect to continue working from home post-pandemic is also a negative, as this will lead to a continued reduction in footfall to food-to-go categories, which pork is more reliant on than other proteins. Therefore, estimated eating-out volumes for pig meat will still be approximately half of that seen in 2019. Pork-based deliveries and takeaways will however remain buoyant.

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In 2022, AHDB predicts these trends will continue as we see retail and foodservice continue on its path back to normality. Eating-out will not return to pre-COVID levels this year and retail sales of red meat may start to suffer again as media noise around the industry accelerates. Overall pig meat volumes for the full year 2022 are expected to be down -3% versus 2021, and down -1% versus 2019.

To maintain momentum:
  • Encourage consumers back out-of-home. Opportunities in the eating-out market include personalisation, indulgence, quality cues and pushing reputational factors such as health, sustainability and backing British.
  • Encourage shoppers in-store by improving the experience of the meat aisle. AHDB has commissioned a research project on the opportunities here with the report due to be published in September.
  • Continue to innovate, to tap into demand for big seasonal events such as BBQ and Christmas, while also meeting different price points to meet the need for consumer budgeting.
  • Address health concerns by communicating the health benefits of pork.
  • 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. For more information on consumer views on the environment see here.

Visit the retail and consumer page for more insight

Visit the Trade section for more information

For more detail see the full Pig Market Outlook


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Read the full UK Pig Meat Outlook

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