This means that several farmers send their pigs to Tican, which is Danish Crown’s biggest competitor on the Danish market.
– What is happening with Tican now is that they pay a better price than Danish Crown. This is something that has been seen for two to three years south of the border. It is a problem that has existed for a long time at Danish Crown, which has now spread to Denmark, says Palle Jakobsen, who is founder and chief analyst at Agrocom.
Competition from abroad
However, it is not only the Danish market that the slaughterhouses have to worry about, as several slaughterhouses in Denmark are being outcompeted by slaughterhouses in e.g. Germany, Spain, the Netherlands and Poland, Børsen writes in an article.
Tican is owned by the German pig slaughter group Tönnies Holding, where Steen Sønnichsen is temporarily employed as managing director, and he wants to narrow the price gap to the German market in 2025.
In Germany, you currently pay DKK 2-3 more per kg of fattening pig than the Danes, Børsen writes.
– I think that in periods of 2025 we will be able to give prices that are down to DKK 0.5-1 after the German prices. I don’t want to put my head on the block that we can do it all year, but I think we can do that in 2026, says Steen Sønnichsen to Børsen.
Palle Jakobsen elaborates that the European market settles significantly higher prices than the world market, and that has been the case for a year and a half.
If Tican can sell their meat on the European market, they can obtain a better price for it than Danish Crown, which primarily sells on the world market, where competition from Chinese pig production has increased dramatically in the past few years.
– Those to whom Tican sells meat pay better than those to whom Danish Crown sells. The better prices at Tican send more pork in their direction, as they can pay the farmers more, notes Palle Jakobsen.
Farmers must choose the best economic choice
When you as a farmer have to choose where you want to slaughter your pigs, it has a clear meaning where you can make the most money.
– You want to shop where you can get the best price, and it is no different with farmers, says Palle Jakobsen.
– I usually say to people, I advise them to choose what gives them the best finances. Ultimately, it is the economy that pays their bills and costs and gives them the profit that allows them to stay on the property.
He adds that the day they are squeezed because it is bad to be a farmer, it is not the case that neither Danish Crown nor Tican will come and help them, even if they have been loyal to the slaughterhouse.
– Therefore, farmers have to think about themselves and their own finances, says Palle Jakobsen.
Tican cannot slaughter all pigs in Denmark
Although several farmers choose to send their pigs to Tican, they cannot slaughter all pigs in Denmark.
Danish Crown is in a situation where they have cut back a lot and closed several slaughterhouses. They need to keep the pigs they have now to fill their slaughterhouse.
– The decisive thing for pig production in Denmark is that Danish Crown gets things right, because even if Tican attracts more pigs now, they will not be able to slaughter the number of pigs that are in Denmark, says Palle Jakobsen.
Tican has permission to slaughter up to 4.4 million pigs, where in 2023 they slaughtered 2.8 million. Danish Crown has permission to slaughter 12.4 million and slaughtered 10.7 million pigs in 2023, according to Børsen.
Palle Jakobsen emphasizes that Danish pig production is dependent on Danish Crown surviving as a company.
– They will have to do more to send their pork to the same places as Tican to obtain a better price. This means they are forced to concentrate even more on the European market instead of selling their meat to China, he concludes.
2024-11-04 18:18:00
#Slaughterhouses #price #war #Farmers #finances
**Interview with Palle Jakobsen, Founder and Chief Analyst at Agrocom**
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**Interviewer:** Good afternoon, Palle. Thank you for joining us today. The dynamics in the Danish meat market are certainly shifting, especially with Tican’s competitive pricing. Can you explain what factors are driving this change?
**Palle Jakobsen:** Good afternoon, and thank you for having me. The primary factor at play is the price discrepancy between Tican and Danish Crown. Over the last few years, we’ve observed that Tican has been able to offer farmers better prices for their pigs—often a DKK 2-3 higher per kilogram than Danish Crown. This price gap is prompting farmers to reconsider their options when it comes to where they send their livestock.
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**Interviewer:** Interesting! It seems the situation isn’t just a local issue but also influenced by international competition. How has the European market shaped these dynamics?
**Palle Jakobsen:** Absolutely. The European market is consistently offering higher prices compared to the world market, where Danish Crown primarily operates. With increased competition from China affecting global prices, Tican can better capitalize on the European market’s higher demand and readiness to pay more for quality meat. If Tican leverages this effectively, it could significantly bolster their position against Danish Crown.
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**Interviewer:** That’s a pivotal insight. Given the farmers’ need to optimize their profits, how should they navigate this landscape?
**Palle Jakobsen:** Farmers must be strategic. Ultimately, their decisions will boil down to economics. If Tican is offering more lucrative prices, it only makes sense for farmers to send their pigs there. My advice is to prioritize financial health and choose the option that aligns best with their economic goals. This choice will directly impact their ability to sustain their operations in the long run.
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**Interviewer:** With Tican aiming to narrow the price gap further by 2026, what implications could that have for your industry as a whole?
**Palle Jakobsen:** If Tican succeeds in closing that gap, we may see even more farmers flocking to them for slaughtering services, which would further challenge Danish Crown’s market share. This could lead to a shift in industry standards, with price competition ultimately benefitting farmers and potentially reshaping the landscape of meat production in Denmark.
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**Interviewer:** Thank you for sharing your insights, Palle. It seems the future holds significant changes for the Danish meat market.
**Palle Jakobsen:** Thank you for having me! Yes, it’s a transformative period, and I encourage stakeholders in the industry to stay informed and adaptable as these dynamics evolve.
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**End of Interview**
