The plight of EU pig farmers
EU officials acknowledge that prospects for European pig farms have been critical since last autumn, with profitability severely affected by higher feed prices, and Germany’s dioxin tainting scandal early in 2011.
Then along comes Commissioner Ciolos with CAP reform proposals which are expected to hit pig farmers harder than any other sector.
His greening proposal, which ties 30% of income support to protection of the environment, is expected to knock EU farm income by 2% on average. An expected rise in feed costs of around 8% would put livestock profits under pressure. However, the fall would be substantially greater on pig and poultry farms, due to the higher feed costs in these farms.
Feed costs will be higher primarily because of the effective reintroduction of setaside for all farmers with more than three hectares of crops.
This will reduce the grain supply and boost EU prices 3% for wheat and 12% for barley — according to the Commission’s own projections of the effect of its proposals.
In this respect, the proposals copper-fasten the Commission’s grip on EU farmers — of whom pig and poultry farmers are the nearest to depending on the markets for their profit, and the least burdened by regulations, other than understandably strict environmental rules for their intensive enterprises.
The commission will say their plan is designed to protect EU farmers from an increasingly volatile global food market. Ironically, it may be the last straw for many pig and poultry farmers, the EU’s most resilient farmers, who have survived for decades without much help from Brussels. Unfortunately, being good at their business counts for little in the EU’s artificial trading environment — and they look like losers in this latest rebirth of the CAP.
There is a glimmer of light for them, in EU farmers’ current plan to bring 700,000 hectares of non-productive land back under the plough, for increased production of durum wheat (for pasta) and of barley.
Strategie Grains predicts EU farmers will have 56.3m hectares of cereals in 2012, the highest since 2009. That could mean cheaper feed for pig and poultry producers — but it may be a last hurrah for crop growers, before “greening” halts their progress. They see the possibility of extra profit by tilling non-productive land, while grain prices are high globally. But the EU wants to rule out that option from 2013, with the greening proposals that permanent pasture be maintained at current levels, de facto 7% setaside, and a move away from monoculture.
Even though the commission has viable food production as an objective, sustainable management of natural resources, climate action, and balanced territorial development are the other two main objectives — which run counter to farming for profit.
There may be a growing Asian middle class, and an extra 200,000 people globally per day to feed, but the obvious farmer’s objective of how to satisfy the new demands for meat, while staying profitable, is not shared in Brussels. So it will be left to Brazil and the USA to expand pig and poultry production.
Decades could pass before the agenda in Brussels will change again, and the EU will try to boost its production of these most globally important meats. The pig and poultry industries will then have the same experience as the EU dairy industry, now gearing up for the attempt, from a standing start in 2015, to catch up with New Zealand before they go out of sight.
Unfortunately, Brussels cannot switch farming on and off with a new set of proposals every few years, and it is a measure of how far the EU has turned its back on farming for profit, that relatively few dairy farmers in Europe are interested in expanding milk production.
Price prospects are encouraging, but EU measures have added to milk production costs, causing EU milk deliveries to fall about 8% behind permitted quota levels.
The latest proposals are likely to add even more to milk production costs, by making grain-based feeds more expensive. Irish dairy farmers can only hope that will make their grass-based milk production even more competitive — and that they come relatively unscathed through the hundreds of other policy measures that will be argued over in Brussels over the next couple of years.
