Spain hasn’t seen the end of its growth yet

It was only a tiny news item in April 2016: Spain had taken the number 1 position in terms of pigs in the European Union. A tiny news item, perhaps, but in fact, it was quite a remarkable feat. Germany, for ages the largest pig-producing state in Europe, had lost its throne. The figures for 2016 confirm this tendency: the total amount of pigs in Spain amounted to 29.2 million, whereas the number of sows was 2.41 million. Germany, had a total of 27.4 million pigs and 1.93 million. Still a sizeable amount – but with no leading position.

To put things in perspective, Spain did not take over in all aspects of pig production. In terms of pork output, Spain comes second, as due to large imports of live pigs, the Germans still slaughter more pigs and also produce more tonnes of pig meat as a consequence. According to data by Eurostat and the French Pig and Pork Institute (IFIP), by the end of 2016, Germany slaughtered 59.3 million heads of pigs, whereas Spain was ‘only’ at 47.7 million.

Spain’s amount of pigs sent for slaughter is growing rapidly nevertheless. The balance was equivalent to about the carcass weight of 3 million tonnes in 2000, by late 2016 it was well beyond 4 million tonnes, which corresponds to an average growth of 2.2% every year. The total amount of pork produced thus grew by 38% between 2000 and 2016.

Similarly, in terms of pork exports, again by Eurostat and IFIP, Spain is not topping the list yet. Although growing rapidly, in 2016 the country takes a third place in Europe – behind Germany and Denmark.

Pork output

So although Spain may not have a number one position in all pig statistics, it is evident that the country has made its way up. It is worth asking – what is behind Spain’s recent success? And will its dominance last?

The big engine behind the success of Spain as a pig country can be found in the country’s north east. Catalonia and Aragón together house over 50% of the country’s pig herd. To illustrate Catalonia’s dominance in Spain, in 2016 Catalonia alone had 26.1% of the total Spanish herd inventory and even 43% of total slaughtering capacity. The exact figures can be seen in Figure 1.

When zooming in on the set-up of Spain’s pig industry, it becomes clear that the sector has ‘industrialised’ very quickly over the last few years. The number of sows in small-size farms has come down very rapidly and, on the contrary, the numbers of sows in large-scale operations has grown tremendously. Already in 2010, almost half of all the country’s sows were in operations that housed more than 1,000 sows.

Figure 1 – Distribution of the total swine herd in Spain in 2016 (in % per autonomous community).

Spain and integrations

Spain is distinctly differently organised than other Western European pig countries. Where pig farms throughout Western Europe are usually independent businesses, often making their own decisions, in Spain integrations take an important place. In Catalonia, for instance, 63% of all pig facilities are contract farms within an integration of some sort – some cover the entire process from feed to slaughter, like e.g. Vall Companys or El Pozo, others combine feed production with pig production, see Table 1.

The relatively integrated industry in combination with a lot of space available, gives a picture of Spain’s pig landscape being characterised by a strong site specialisation between farrowing, post-weaning and finishing, leading to optimised logistics and a higher-than-average sanitary status.

Spain managed to improve its performance by investing in the modernisation of existing buildings, the improvement of practices and husbandry as well as the increased use of foreign genetics. These improvements have proven to weigh up against relatively high feed prices.

Investments in processing

The investments in the pig sector are reflected in more investments in the processing side as well. Both slaughter and cutting lines have seen some major improvements in the last decade, and so have the freezing and storage capacities. For the next few years, even more are expected, as further expansions are announced, e.g. by Jorge Pork Meat, a large swine producer that grew by 32% in 2016 alone, owing to investments in their slaughterhouses in Aragón. An overview of Spain’s largest pig producers in terms of slaughtered heads of pigs in 2016 can be found in Table 2.

In this development, value adding takes an important position. About half of the consumption and production of Spanish pork is dry salted, and names like Serrano, Iberico or Teruel hams are known far beyond the borders of Spain. Some of these pigs are even branded as ‘premium’. Truth be told, these businesses suffered quite a lot from the economic crisis but those that survived, came out stronger.

Pork exports

Also in terms of exports, Spain has managed to get the wind in its sails. Especially towards Asia, exports have soared in terms of tonnes. Meat products, but also co-products like offal, fat and grease are increasingly being exported to e.g. Russia, Greater China, Japan South Korea. Also the European destinations have seen a growth, e.g. to Italy and Portugal.

In terms of volume, the value-added cuts take about 10% of the total exports, but in terms of value, this amounts to 20% of the total. Here, the majority of the produce goes to destinations within Europe – France, Germany, UK, Italy and Portugal taking a major place here.

Consumption stays behind

The entire picture for Spain looks fairly rosy. Are there any downsides to the continuous growth of Spain’s ever-growing pig production? Well – consumption to name one. Just like in other EU countries, about 35% of consumed produce in Spain is fresh, the majority (65%) is processed. During the economic crisis, consumption went down, leading to a drop in retail prices. Ever since 2013, however, marketing campaigns have restored the balance somewhat leading to rising prices. Nevertheless, there is no growth, meaning that this situation remains fragile and that the country’s pig industry is strongly reliant on exports.

Spain at a glance

Ever since 2015, Spain has been the European Union’s largest pig country in terms of absolute numbers of pigs with 28.4 million animals. The country, which is slightly larger than California and has 46.5 million inhabitants, has a strong and diverse tradition in both pork production and consumption. Well-known worldwide are the processed iberico hams which are derived from outdoor pigs, eating acorns in the south of Spain. The most conventional production, however, can be found in the north east, with high densities in Aragón and Catalonia.

Outlooks?

For the longer term – what are the outlooks for Spain’s pig industry? Is it set to keep that number one position in the EU?

Further growth definitely seems possible, especially in areas where there is currently a low animal and population density and where there are surfaces available for manure spreading. Seeing that Catalonia is relatively densely populated with pigs already – most expansions are likely to be driven by Catalonia’s pig industry, but will likely take place in Aragón or further afield, in the east of Castille-León and the north of Castilla-La-Mancha.

To see more information per country, visit the interactive map in the Country Focus section.

It is expected that growth of the larger farms will continue and that the vast majority of piglets will be produced in farms that have 3,000 sows or more. This will all happen against the backdrop of more integration – a challenge that remains for cooperative and independent producers is how to organise themselves better and make their produce stand out.

In terms of outlook, the EU will continue to form a market predominantly for Spain’s quality processed pork products, whereas to outside of Europe, fresh meat can be exported. Export opportunities are plentiful – North America for processed products, and South America and Asia for fresh meat.

* This article is an approved summary of a presentation by Estelle Antoine, French Pork and Pig Institute (IFIP). The presentation was given at an event organised by Adisseo.