French deli meats makers are taking a hit by surging pork prices linked to the African swine fever (ASF) epidemic in China, they said on Thursday, warning of potential bankruptcies in the sector.
In a knock-on effect, French live pork prices have gained 24% since early March, Reuters reported, with a rise of as much as 30% for some ingredients used in making deli meats like saucisson, cooked ham and dry-cured ham. This price increase has made it difficult for producers to pass such price rises on to clients.
Price increases penalize the deli meat industries because commercial deals were signed earlier, based on historically low prices.
France vies with the Netherlands for the title of third-largest cold meats producer after Spain and Germany. Deals between suppliers and retailers in France are negotiated annually and close at the end of February, Reuters reported. Buyers are not bound to accept price rises after that without a special clause written into the contract.
FICT Chairman Bernard Vallat, previously head of the World Organisation for Animal Health, warned of bankruptcies if price hikes could not be passed on to buyers. And prices are expected to rise, he said.
“No company can survive if there is no rebalancing with buyers,” he added. “We expect that (the crisis) will last because the situation is not under control in China and it will take time to reconstitute stocks.”
Average European Union pork prices rose 21.9% since last year, with a sharp rise recorded since early March, according to EU official data released on Thursday. EU’s pork exports to China have also increased to 25.9% in the first three months of 2019 as compared to the same period a year ago.
ASF is a disease that affects pigs only and is not transmissible to humans. There is no food safety risk with pork. For more information on how it spreads and how to prevent it, visit porkbusiness.com/ASF.
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