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As a result of the outbreak of African swine fever in Germany, Denmark has stopped exporting pigs for slaughter to that country. Due to the fact that several Danish Crown member producers are offering animals for slaughter to the cooperative that would have been destined for Germany, Danish Crown is currently facing a volume of animals for slaughter that is higher than its normal capacity.
In order to be able to slaughter the additional large number of animals, Danish Crown is currently expanding slaughterhouse capacity and expects to have hired more than 400 new employees before the new year. It has also decided to put a night team in place at the Ringsted slaughterhouse, so that up to 14,000 additional pigs can be slaughtered per week.
In light of this situation, the company has decided to set two types of prices that divide the members' deliveries into A pigs and B pigs, so that B pigs will suffer a DKK 142 (EUR 19) reduction. This price will be applied starting November 30th, it will be a variable deduction that will be determined once a month.
To calculate the quota for group A pigs for each member, the largest number of pigs delivered in the last two fiscal years, plus 4%, will be taken into account. For example, if a member delivered 5,000 pigs in the 18/19 period and 4,000 pigs in the 19/20 period, the member will be granted a quota of 5,200 A pigs for the 20/21 period.
The need for a tiered pricing agreement is mainly due to Danish Crown's limited opportunities to export to countries outside the EU. Export capacity outside the EU is mainly driven by two factors: the packaging capacity of the slaughterhouses and the freezing and storage capacity of the cold stores. These capacities are already full, so a large part of the additional pigs that Danish Crown must now slaughter must be sold as fresh meat within the EU. In the EU, prices for most products are significantly lower than when exported to markets outside the EU. In addition, the European market must already absorb the 600,000 tons of meat that Germany cannot export from the EU after the outbreak of ASF.
November 26, 2020/ 333 Staff with information from Danish Crown.
