Trade pays higher prices than the pork side price gives

The price of pork hits a new low. But the trade pays the farmers surcharges and holds back with actions. Nevertheless, he calls on sausage manufacturers to adjust their prices to the cheaper raw material. Buying and selling pork is becoming more and more of a political challenge for the food trade. While under the pressure of the oversupply on the producer side the prices plummet from 2,30 (in July at 1,42 €) to 1,25 € per kg slaughter weight, discounters and supermarkets are holding back on stimulating sales with lower prices.
"The trade is very intimidated," states Hans-Richard Schneeweiß, head of Edeka Hessenring. Consideration of public opinion led traders to try to overturn the laws of supply and demand. The farmers are protesting in front of the shops these days, Federal Minister Julia Klöckner is even threatening legal bans on low prices. Agriculture and politics hold the food trade responsible for a development on which it, as the buyer of barely a third of the quantity, has only limited influence. In addition, direct supply relationships with Bauen tend to be the exception. Nevertheless, the Edeka regions North, Southwest and South Bavaria are trying to save at least the suppliers of their regional programs from financial collapse. With a surcharge on top of the current market price, you secure a minimum of 1,40 euros per kg of pork. Kaufland introduces minimum quotation for husbandry form 2 Rewe has been paying prices since the end of 2020 that correspond to the market level before the outbreak of African swine fever and the collapse of the export market. From September 2021, the additional payments will be increased again. Lidl has been sticking to the price level before the beginning of the African swine fever crisis for more than a year and pays its suppliers prices that are based on a price of over 1,45 euros per kilogram of pork - even if the price is below that. Despite the collapse in the listing, the procurement prices were not renegotiated, the discounter emphasizes. Aldi Nord explains that there are "no direct contractual relationships with farmers, and price agreements or specifications for our suppliers are regulated by the cartel office."

Kaufland introduces a minimum quotation for pork from level 2 husbandry. The suppliers receive at least 1,40 euros / kg pork. The discounter refers to the discussions he has had with farmers, processors and politicians for months, but at the same time emphasizes that prices are the result of supply and demand on international markets. The trade is only one of several buyers. It is a matter of politics to support the change in agriculture and to contribute to a financial relief for farmers in the long term. Above all, however, constructive cooperation between all those involved continues to be needed, according to the discounter's appeal. Distribution battles continue The distribution battles are not over. The meat products industry is confronted by the Edeka headquarters, for example, with the demand to convert the current cost advantages when purchasing meat into lower prices. The current contracts are mostly based on quotations of 1,50 euros / kg. Somewhere in the value chain made up of breeders, fatteners, butchers, processors and marketers, "money is stuck without end", says one participant. The question is where the industry would like to offset this advantage and points to the increased costs for the termination of work contracts, for transport, energy and packaging. The trade, in turn, suspects that the suppliers reap higher returns. Trade managers are convinced that the manufacturers would not pass the money on to the farmers.

From the meat industry, on the other hand, it is said that the trade is achieving significantly higher margins of up to 35 percent because of the waiver of the campaign. Actions only bring single-digit margins. There is too much pork on the market across Europe. Because of the African swine fever, the exporting countries, especially China, have closed their borders. Corona measures permanently reduce domestic demand, the rainy summer also spoils the barbecue business, and demand is tending to decline anyway. At 850.000, the number of weekly slaughterings in Germany is far from the previous high of 1,1 million and will continue to decrease. Conventional pig farming in particular is coming under increasing pressure as a result. The gap between the historically low producer prices and the opportunistic store prices is growing. Food newspaper 02.09.21