Danish Crown’s board of representatives agreed last week to raise the price it pays famers for slaughter pigs by DKK 0.60 per kg over the next five years – between now and 2021.
Meat processor Danish Crown said the “ambitious promise” is part of a strategy to raise earnings for the company owners – Danish pig farmers.
In the future Danish Crown’s settlement price will be matched against prices paid by processors for livestock in other key pork-producing European countries. The German pig price will weigh the most heavily on Danish Crown’s new price, accounting for 44%. Pig prices in Spain, France and the Netherlands will collectively account for the remaining percentage.
“In the past, we have almost exclusively compared our prices with the prices paid in Germany, but looking at a single country does not, I feel, paint the right picture, neither for our owners nor the Danish Crown management,” said Erik Bredholt, chairman of Danish Crown’s board of directors.
“Due to the impact of one‐off events, the German pig price is at times a poor yardstick,” he added.
“One of the biggest challenges facing Danish Crown is the decline in the supply of slaughter animals in Denmark, where supplies are dropping by 2‐3% a year. The diminishing supply of slaughter animals is basically a cost for the company.
“If we can guarantee a settlement price for pigs which makes it attractive for our cooperative owners to produce pigs in Denmark, I am convinced that we will see an increase in the supply of slaughter pigs and thus job creation at the slaughterhouses,” said Bredholt.
Danish Crown is set to unveil a host of initiatives needed to raise capital to realise its ambitious target of providing more cash for farmers on Wednesday 9 November. CEO Jais Valeur will present the strategy to the company’s Danish employees, followed by a press conference for the media.