Pork industry animal welfare standards scheduled to take effect in the European Union on Jan. 1, 2013, could increase opportunities for U.S. pork exports, according to a report released by the U.S. Meat Export Federation (USMEF). The report is based on interviews with more than 30 EU importers, retailers and further processors.
The new animal welfare regulations will require EU farmers to keep pregnant sows in loose housing systems rather than in confinement stalls. While the regulation has been applauded by many in the EU pork industry, and compliance is recognized in “welfare labeling” on pork products, the price of complying is a challenge for many EU farmers, according to USMEF.
Based on the responses from those in the EU pork industry, the rising costs for compliance with the animal welfare regulations are expected to lead to a decline in EU pork production of anywhere from 3 percent to 7 percent by 2013. Factors that could affect this are the compliance rate of the EU industry with the regulations and the timing of implementation.
Those EU producers who are not currently in compliance with the new standards may be forced to exit the industry. “EU pork producers have known that this was coming for ten years,” according to Dermot Hayes, Iowa State University economist. “Those producers who left this until now are probably going to shut down rather than comply.”
According to the report, EU pork producers have been losing money since 2007. EU banks reportedly are hesitant to lend farmers the money and producers who have already complied with the new regulations are at a distinct advantage. “I suspect that modern (EU) producers have already adapted and costs associated with compliance are already accounted for,” adds Hayes.
There could be a gap between EU pork production and demand, according to Dan Halstrom, USMEF senior vice president of global marketing and communication. “The question remains whether the larger opportunity will be in the EU or in those export markets now served by the EU that could feel the squeeze as pork is held back to serve EU customers.”
Even if the higher costs of compliance do not affect the supply of EU pork, the higher price of the final product could drive some consumers – and importers – to seek out lower cost suppliers. “If there is a substantial reduction in EU pork production, then the U.S. will benefit in markets where we compete such as Japan, Russia and South Korea,” said Hayes.
Chile, Switzerland and the United States are the top exporters of pork to the EU-27 this year. Hayes believes adoption of the animal welfare standards alone may not produce an increase in U.S. pork exports to EU countries. “I do not think this new policy will create a big market for U.S. pork exports in the EU itself because they can now use these regulations to refuse pork from countries that do not meet the regulations.”
Source: USMEF, Iowa State University