Danish Crown: market report on COVID-19
After Germany was hit by African swine fever in September, and is now cut off from exports to most countries outside Europe, the supply of pork in Europe - despite low slaughter rates in Germany - has increased considerably, putting the market under pressure following the introduction of the extensive COVID-19 restrictions across Europe.
At the same time, the slaughterhouses in both Sæby and Horsens are currently cut off from exports to China, which could have largely offset the losses in Europe.
"These are external factors that are currently straining our legs. We can not change that, so there is only one way forward, and that is to adapt our production to the demand that is currently there. Fortunately, we have many large and regular customers across Europe, which gives us a reasonable flow in sales, but unfortunately this does not change the fact that prices are generally under pressure due to a larger supply than usual", says Lars Albertsen, who is global sales director in Danish Crown Pork.
With a comprehensive test program, Danish Crown has now found a formula that to a very high degree protects employees against infection in slaughterhouses. With over 6000 employees in production and a high infection pressure in Danish society, it can not be avoided that some employees become infected, but an effective screening program prevents them from coming to work and exposing their colleagues to infection.
Precisely because large resources have been used in the slaughterhouses in recent months to prevent the spread of COVID-19 among the employees, Danish Crown has slaughtered a quarter of a million fewer pigs than originally planned.
At the same time, in the last eight weeks, based on a very competitive Danish listing, around 125,000 more pigs have been registered for slaughter than expected on the basis of the owners' reports.
However, capacity has been continuously increased, and this week the number of exposed pigs will be reduced by 25,000. Nevertheless, Danish Crown is still four days behind with the slaughter.
"We are in a situation reminiscent of the time when we soon had extensive fires at two of our slaughterhouses. Just like then, we could not have planned out the challenges we have ended up in. There is good support for overtime at the slaughterhouses, and we have made a plan where we catch up, what we are right now behind before Christmas , but we need flexibility from the owners and an extraordinary effort from the employees", says Per Laursen, production director at Danish Crown Pork.
In Europe, there is just a steady market for boneless goods and production meat, while the prices of pieces such as forender and ham, on the other hand, are under massive pressure. The explanation is that there is a lack of staff for boning all over Europe.
In order to meet demand in both Europe and Asia in the best possible way, Danish Crown is currently hiring an additional 375 employees, who will primarily be engaged in boning and packing of pork.
"It is not optimal that the supply of pigs increases at a time when the market is under pressure, but fortunately there is good interest in Danish pork. We have a strong focus on optimizing exports out of Europe and especially to Asia, where we are out and finding new customers for some of our goods. It costs a little because the prices are not as high as in China, but they are still well above the level in Europe", says Lars Albertsen.
Danish Crown expects a further increase in the supply of pigs from mid-December, because, following the outbreak of African swine fever in Germany, more pigs are fattening up in Denmark.
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