The forecast follows a recent report by the country’s Agricultural Ministry, which recorded an overall jump in profit for meat and poultry producers and processors in 2014.
"Production of pork at current market prices is clearly loss-making, and this situation will not last for long, as some firms will begin to leave the market," said Olle Horm, chairman of Atria Eesti, one of the largest operators of food and meat in the country. "A similar situation is already happening in the dairy market, as many farms are unprofitable and have already closed production capacity or are on the brink of doing so."
Producers explained that the profit hikes of last year were mostly in the poultry industry and, to a lesser extent, in the beef industry, both of which were only slightly affected by the Russian embargo. Also, the statistics released included pork processors, which boosted their profits amid low purchasing prices for raw meat – especially pork.
"In January and February [of 2015] the price of pork declined. Although the purchase price of live pigs is falling, the cost of production remains the same. Estonian pig farmers have to sell pigs in Latvia and Lithuania, as they have no alternative markets where they can offer their products and most of them are seeing an oversupply of pork," added Horm.
Atria estimated that Estonia’s level of self-sufficiency in pork products currently amounted to 106%, while in the European Union (EU) this figure was about 111%. The company’s forecast said that, to bring the market into balance, the EU would have to reduce pork production by 3% or by about 700,000 tonnes.
"Reducing pork production is a long-term process, the results of which we will see in 2016-2017. The development of pork exports from Estonia to third countries is difficult, because we have common certificates for export. The future of pig farmers seems gloomy – either it will end in a painful correction of the market’s size or political interference. Unlike Estonia, other European countries are increasingly supporting their agricultural sectors, as the main reason for the current difficulties lies in the political arena," said Horm.
Estonian pork producers are not counting on the resumption of exports to Russia in August 2015, when the embargo is expected to be lifted. As previously claimed by Russian veterinary watchdog Rosselkhoznadzor, the Baltic States, including Latvia, Lithuania and Estonia, will not be able to resume supplies, even after the cancellation of the embargo – at least not until they have eliminated African swine fever. Rosselkhoznadzor deputy head Alexei Alexeenko said recently that the disease was "smouldering" in all three countries.