WRITTEN QUESTION P-2482/99

by Liam Hyland (UEN) to the Commission

(16 December 1999)

Subject: EU's response to the crisis in the pigmeat market

As the Commission will recall, prices for pigmeat in 1998 were severely hit by the combination of internal supply and world market trading conditions. Despite market support measures, they ended the year 40 % lower than the equivalent periods in 1996 and 1997. The Commission stated that the consensus view was that the mechanisms were deemed to be sufficient when effectively used.

Will the Commission now give its up-to-date assessment of the market in pigmeat for the EU as a whole as we approach the end of 1999 and, in particular, indicate its current assessment of the effectiveness of the mechanisms which it considered were sufficient to deal with the crisis?

Answer given by Mr Fischler on behalf of the Commission

(18 January 2000)

It is regrettable that the pigmeat market has suffered since summer 1998. The main reason for the poor prices is the continuous oversupply of pigmeat. It is also true that for certain periods there were difficulties in export markets, but poor exports can hardly be blamed for poor pigmeat prices as exports have continuously increased. In 1997 exports of pigmeat increased by 13 %, in 1998 16 %, and in 1999 the increase is estimated to be more than 20 %.

Pig farmers all over Europe expanded their herds after exceptionally good years of 1996 and 1997, which resulted in record high production. Production increased in 1998 by 1,2 million tonnes or by 8 % reaching a total of 17,6 million tonnes. Production is expected to increase in 1999 by 2 % and to remain at a high level in 2000. Export markets cannot be expected to absorb this kind of supply increase, as the volume of the world market has traditionally been just over 3 million tonnes.

The Commission has supported the pigmeat market quite actively from spring 1998 increasing export refunds, providing for aid for private storage and supplying pigmeat as food aid to Russia. The Commission is committed to support the market at difficult times to avoid extensive harm to the sector, but the pigmeat market is supposed to be self-regulating. The prices will affect supply and vice versa. The Commission has used export refunds extensively to support the market but, as the world markets are limited, there is a limit to the extent it is feasible to support exports. Also, World trade organisation (WTO) ceilings have to be taken into account in European export policy.

Since summer 1999 the prices improved considerably, but more recently the prices again have seen a seasonal low, as the supply tends to be very high in the last quarter of each year.

One should remember that in the pig sector there are seasonal trends as well as longer cycles, where prices adjust according to the supply and vice-versa. The pig farmers are aware that after good times there always come poor times and they should be prepared. Unfortunately, many have not been prepared.

The Commission has discussed other possible measures (e.g. to create voluntary based funds) with Member States on several occasions, but so far these ideas have received little support from the majority of Member States.