With the rising costs, Rabobank is expecting increasing numbers to leave the sector, which will increase the supply of pork meat into the market, putting pressure on prices to drop for the remainder of the year, and affect farmers’ profitability.
However, the decline in pork production into 2013 will see prices rebound, but the bank is unsure whether the increases will be enough to cover the ever-increasing costs of feed, which it predicts will continue to rise until the middle of the year.
The ongoing economic crisis will also have an impact, while a slowdown in the previously high-growth Asian markets could affect the demand for imported pork.
In a statement, the bank said: “It is clear that we have passed the ‘no margin for error’ feed supply situation. The drought can be seen as a major error, and the industry has entered into a situation where sufficient sourcing at any price is the primary concern for both farmers and processors. The goal now is to limit losses.”