EU welfare rules to trigger exodus of pig farmers
* EU exporter position under threat
* Welfare rules kick in at start of 2013
* Higher cereal prices compound tight credit backdrop
LONDON, May 2 (Reuters) - Pig numbers in the European Union could fall by as much as 10 percent and the price of pork could rise substantially when tougher animal welfare regulations come into force next year.
Some farmers are likely to leave the industry, especially in Spain, a major producer where a credit squeeze will make it harder to comply with the new rules.
Alberto Herranz, director of the Ancoporc pork trader's association in Spain, said estimates of a 5-10 percent drop in herd numbers were "very reasonable".
"Some farms won't be able to adapt because they cannot get the financing, or geographical conditions will leave them without room to expand and they won't be viable with a lower head-count," he said.
EU regulations stipulate that traditional stalls for pregnant sows must not be used from the start of next year. The stalls are already banned in Britain and Sweden.
Animal welfare groups argue the stalls, where the sows are kept for their 16-1/2 week pregnancy, are so narrow that they cannot turn around or interact with other pigs and the only exercise they can take is to lie down and stand up.
From Jan. 1 2013, sows will have to be kept in groups rather than in individual stalls during most of their pregnancy.
A 10 percent drop in pig numbers would threaten the EU's position as a pork exporter.
"There are expectations that the changes in 2013 will make the EU a net importer of pork," a spokesman for the German Farmers' Association said.
The EU exports pork to countries such as Russia, Hong Kong and China. Exports in 2011 were worth about 4.6 billion euros ($6 billion), according to European Commission figures. Germany and Spain are the EU's top two pork producers.
SHRINKING HERD, RISING PRICES
Stewart Houston, chairman of English pig farming group BPEX, said the new welfare regulations would lead to a fall of between 5 and 10 percent in the EU's pork production.
"There are only three countries that are 100 percent compliant now, and that's Luxembourg, the United Kingdom and Sweden," Houston said. "What it means is that some (pig farmers) will change and some will exit the industry."
He said some farmers would struggle to get planning permission and implement changes that cost about 300 pounds ($485) a sow before the end of the year.
Moreover, high cereal and soya costs mean there is little incentive to do so, Houston said, adding that preliminary BPEX figures showing a 3 percent drop in the European sow herd between 2011 and 2012 indicated the change was already underway.
A recent report issued by BPEX estimated that a drop of the EU pig herd of 5 percent would lead to a price increase for finished pigs of 10 percent.
However, a 10 percent decline in the herd would lead to serious shortages of pigmeat across the EU and "substantial price increases," the report said.
Nevertheless, Houston believes the EU Commission should be rigorous in implementing the welfare standards.
"UK producers had the pain back in '99. So it's difficult to feel sympathetic for our colleagues in Europe who had over 12 years to comply," Houston said. "And indeed it wouldn't be fair on those in Europe who have made the change to allow those who haven't to continue in production."
Danish Agriculture and Food Council analyst Karsten Flemin estimated that sow production could drop about 5 percent in Denmark, one of the world's largest pigmeat exporters.
He said the new rules could curtail EU pork exports but may not lead to an increase in imports.
"The reaction from politicians and consumers will influence how much EU production will drop, and if we are going to get imports to the EU from countries not fulfilling the EU (welfare) standards," he said. (Reporting by Nigel Hunt; Editing by Veronica Brown and Giles Elgood)
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