Cost challenges squeeze margin but demand better

The challenges around high production costs continue to impact Irish and European pigmeat production.

During 2023, output levels are expected to tighten as the impact of the decline in the European breeding herd from last year materialises.

Despite record inflationary pressure, tight supplies and some improvement in export market conditions have helped to boost market demand for pigmeat.

Bord Bia’s promotional activities will be intensified over the coming months to help build preference for Irish pigmeat across the domestic and target export markets.

Irish and EU pigmeat production

Irish domestic pig supplies were 2% lower at 3.54m pigs during 2022 compared to the previous year’s levels. Supplies tightened significantly during the second half of 2022 as some producers responded to high production costs by downsizing their operations, or exiting the industry.

During January 2023, the trend of lower pig supplies has continued, with throughput levels at export meat plants running 5% lower at 261,000 head.

The European Commission in their autumn 2022 outlook forecast that production would fall by just 1% to 22.3m tonnes during 2023. However, GIRA, a leading meat market research agency, anticipates that EU pigmeat production is likely to fall by at least 3%, reflecting the impact of the breeding herd falling by 5% in 2022, combined with market access and local pricing being affected in certain EU member states where African swine fever has been detected.

The recent slowdown in supply across Europe has helped to underpin market returns, with the EU average price strengthening to €2.03/kg excluding VAT for January 2023.

International market focus changes

The majority of Ireland’s primary pigmeat exports are destined for international markets.

Markets outside of the EU and UK accounted for approximately two-thirds (€350m) of the value of Ireland’s primary exports during 2022. However, the volume of pigmeat traded to China cooled significantly during the year as Chinese production recovered, combined with the lingering impact from Covid-19 on demand levels.

A similar pattern was also evident for other EU pigmeat exporters, with China only accounting for one-third of exports, compared to 62% back in 2020.

This resulted in more pigmeat being diverted into alternative markets such as the Philippines and South Korea during 2022.

Domestic meat consumption impacted by inflation

Results from the latest meat shopper insights research undertaken by Bord Bia show that the overall consideration of pork by consumers across a number of European markets (Ireland, Italy, Germany and the UK) has fallen. This trend is in line with the overall meat category, which has also seen a fall in shopper engagement, mainly due to inflationary pressure.

In Ireland, grocery price inflation is running at over 16% year-on-year, for the month of January 2023. Meat consumption for the latest 12-month period up to 22 January has fallen by 9% on the back of higher average retail prices.

The pigmeat category showed a mixed performance, with certain “staple” items such as sliced cooked ham and sausages outperforming pork and bacon.

The latest results from the Bord Bia retail audit show that the proportion of product carrying the Quality Mark is running close to record levels for bacon and rashers, at 94% and 97%, respectively.

The home market is a critical outlet for Irish pigmeat suppliers. Approximately half of Ireland’s pigmeat production is consumed locally.

Bord Bia will intensify its marketing campaign for quality-assured pigmeat throughout 2023, which include activity-bursts during January, April, May and November, designed to target female shoppers in-particular, aged between 30 to 60 years old through TV and radio advertising.

This promotion will be supported by secondary activity around social media and influencer engagement.

Collaboration with the Chef Network is being undertaken to build the profile of quality-assured Irish pigmeat with key decision-makers in the supply chain.

Bord Bia has developed a suite of videos that it will share with the Chef Network (approximately 4,000 members) for the first half of 2023 to highlight the benefits of using quality-assured pigmeat, and to maximise opportunities to include it in different mealtime occasions.

In addition, Bord Bia is sponsoring an exhibit with the Chef Network at the Catex food service event in the RDS, Dublin, at the end of February. This event attracts around 12,000 visitors including key decision-makers.

In addition, Bord Bia is continuing to build on partnerships with leading food service operators to enhance the preference for Irish pigmeat within this channel.

Bord Bia is engaged in a series of export market activities targeting priority and high potential markets.

Bord Bia will be exhibiting at several trade shows over the coming months to raise the awareness of Irish pigmeat with potential new customers in Mexico and China.

In addition, trade seminars and chef engagement events will be held to highlight the benefits of sourcing pigmeat from Ireland with key decision-makers across target markets.

Late last year, Ireland secured market access to supply pigmeat to Malaysia.

Bord Bia is currently preparing in-depth analysis of the market and will present a market-entry guide to the industry over the coming weeks.

With the Asian region now gradually reopening after the Covid-19 epidemic, Bord Bia will over the coming months be welcoming inward buyer visits from a range of markets to highlight the high standards of pigmeat production in Ireland.

Through its network of 15 overseas offices, Bord Bia will continue to provide partnership support to pigmeat exporters, who receive promotional assistance to grow their business with high-potential customers across priority markets.

Bord Bia also supports client companies through its industry talent programmes, which enable them to deepen their market understanding and export capability.