Pork price increase in China affecting Estonian market
African swine fever (ASF) currently ravaging domestic pig populations in China has driven up pork prices there more than 70 percent, and the price increase there has not left Estonia untouched either. While the local increase in prices has not yet been that significant for consumers, the pressure nonetheless remains, and beef and chicken prices may soon begin to increase as well.
ASF, which has been spreading among domestic pigs in China for over a year already, has reduced the country's pig herd by more than half. 24 million tons of pork has disappeared from the Chinese market, approximately as much pork as is produced in the entire EU annually. Pork prices in the region have increased more than 70 percent on year, and pork imports 45 percent. This is having a direct impact on Estonia as well, reported ETV news broadcast Aktuaalne kaamera.
Anne Mere, CEO of HKScan Estonia, parent company of Rakvere lihatööstus, said that their buying-in prices have increased significantly.
"We're talking about an increase in the buying-in price of nearly 40 percent," Mere said. "If we're talking about the raw materials for sausage, for example, then compared to the beginning of the year, prices have gone up an entire 50 percent."
Europe may not escape an increase in beef and chicken prices either, as China wants to make up for its meat shortage with these products as well.
Retail prices in Estonia have not reflected such drastic increases, however. As of September, for example, pork chop prices have increased approximately 5 percent since the beginning of the year, while boneless pork prices are up some 10 percent. Chicken prices, meanwhile, are down. Meat processors are crediting competition with staving off a bigger increase in prices.
"If you look around at the store, shelves are full of product and competition is stiff," explained Atria Eesti director Olle Horm. "Second, it just takes time for raw materials prices to reflect in a product's retail price. Competition keeps prices down, but there is clearly pressure for prices to increase. If raw materials are 50 percent more expensive, what can you do?"
Horm added that there will be pressure at the beginning of the new year for a bigger increase, "but I am not talking now about some kind of revolutionary leap. Just competition and intended sales keep it at a reasonable level."
Bigger producers in Germany, Denmark, Spain and Finland are profiting off of sales to China, but Estonia's market is small enough not to have any business there, and besides, getting certified in China would interfere with the local battle against ASF.
Mere noted that Tallegg, a chicken producer also owned by HKScan, is attempting to work its way onto the Chinese market, but it will take them time before they are certified in China.
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Editor: Aili Vahtla