German feed-to-pork value chain shows long-term strength – report

The German and Spanish pork industries are primed for expansion, while the Netherlands' competitive edge is being challenged by higher input costs.

A report comparing feed-to-pork value chains in Germany, the Netherlands and Spain is most bullish on Germany’s long-term growth prospects, due to its large consumer base and a network of rivers for sourcing inputs.

Although Rabobank’s Where is the Upside in the European Grains to Pork Value Chain also says that falling pork consumption and rising labour costs in Germany are challenging the country’s feed-to-pork value chain, its authors argue that further integration at the slaughter and processing level is a path for industry growth.

The report also found that increasing farm productivity, integrated supply chains and high consumer prices bode well for Spain in the medium term.

Traditionally the Dutch value chain benefits from low input and production costs. But falling input prices in Germany and Spain are levelling the field, and the Netherlands’ low upstream costs are being challenged, threatening the Dutch’s competitive advantage.

“[Feed] cost advantages are declining. Livestock producer costs for the removal of manure are rapidly increasing, consumers are opposing large-scale pork production, and productivity growth is stagnating when compared with the competition,” the report finds. “This puts pressure on the Dutch pork value chain, as its historical success factors are losing their edge.”

In contrast, upstream costs in Spain have been a weak point in the value chain. Cross-country transport is hindered by a lack of rivers and poor inland road infrastructure. Smaller scale in the Spanish feed industry also drives input prices up. However, a focus on low labour and fixed costs on the farm, high added-value meat products and rising productivity allow the sector to overcome these disadvantages. The report notes that Spanish farms have capacity for growth, and could support pork industry expansion.

Spain Netherlands Germany Unit
Pig pellet margins 55.6 38 31.8 €/tonne
Pig feed pellet price 280 250 245 €/tonne
Grain and oilseed input costs 211.9 205.3 207.6 €/tonne
Labour costs (livestock level) 110 150 150 €/tonne of meat
Pig production costs 1.9 1.7 2 €/kg