Danish technology sizzles

Pig meat exports - notably to Germany and the smaller volume but more valuable UK market - are so important to the Danish economy that its processors, such as farmer co-operatives Danish Crown and Tican, like to differentiate themselves from their competitors on issues such as the safety of their processes and the high quality of their products. Denmark lays claim to being the biggest pig meat exporter in the world, followed by Canada and the US.

Sensitive to criticism about lower animal welfare standards on the Continent than in the UK, the Danish pig meat industry also makes great play of the number of its pig farmers (13% of the total) that have signed up to the high welfare standards demanded under the so-called 'UK contract' for rearing livestock. In accordance with the demands of the big UK multiples, this includes using group housing for sows (65% of herds), and strict rules on the flooring and misting systems used on farms.

However, the Danish pig sector faces the prospect of falling pig prices and much tougher environmental restrictions on pig producers and processors next year. Combined with continuing high butchery staff costs, compared even to countries such as Germany, its costs are set to rise. Which is a further compelling reason for Danish pig processors to improve their efficiency even more. With pressure from low cost producers such as Brazil and Canada, they know they have to raise their game.

The Danes' response to the competitive pressures they face can be seen by the their huge investment in the latest technology. And this is no better demonstrated than at Danish Crown's relatively new Horsens abattoir - one of the most automated slaughtering and pig processing plants in the world.

Pig production in Denmark has increased by over one-third in the past 10 years, while over the same period the number of pig farmers has more than halved. The costs and problems associated with implementing the new environmental legislation is part of the reason farmer numbers are set for further decline, from current levels of 8,300 to around 3,500 by 2015, according to Danish Meat Association (DMA) researcher Jacob Rasmussen. "You need fantastic efficiency in Denmark to survive as a pig farmer," he says.

While some private slaughterhouses have come on stream in Denmark, most capacity is in the hands of the two co-operatives: Danish Crown (92.7% of co-operative production) and Tican (7.3%), and the trend over the years has been for them to concentrate on fewer larger plants. In recent years the companies have invested around £636M (DKK 7bn) in new and existing pig processing plants.

Horsens abattoir

The huge £182M (DKK 2bn) Horsens abattoir, which slaughters 77,000 pigs a week, is part of an integrated supply chain, which is central to Danish Crown's strategy of adding value while reducing costs. "[Customers] are willing to pay a higher price because of our good food safety and quality," says Danish Crown's communications director Anne Villemoes. But with competitive market pressures very much in mind, she adds: "Every year we need to focus on bringing down the costs."

More food companies in the UK could learn lessons about reconnecting the public with the origins of their food from Danish Crown, which has designed its Horsens plant with visitors - which it welcomes in huge numbers each year - very much in mind. From the large viewing windows the whole process is visible from start to finish - including the gorier bits.

Horsens is at the cutting edge of ... well, of cutting edge technology. Like 70% of the abattoirs in Denmark, it uses carbon dioxide 'group stunning' of pigs prior to slaughter at abattoirs. This is said to reduce the stress on the animals considerably, since electric goads are not required to encourage the piggies to meet their maker. Mind you, pigs are smart creatures and I suspect that not all are totally convinced of the innocuous intent of the semi-automated transfer system that moves them steadily through the lairage to the stunner.

Highly automated

The abattoir is highly automated from lairage, through to slaughter and subsequent scalding to eradicate unwanted bacteria such as Salmonella; dehairing and flame treatment; carcass opening and evisceration and cutting.

In conjunction with the Danish Meat Research Institute (DMRI) and the agricultural machinery industry, a total of 10 projects have been undertaken at Horsens to automate slaughterline and cutting processes, while reducing bacterial contamination. Machines, such as height adjustable 'christmas tree' hooks have been designed to carry out some of the more physically demanding handling and de-boning work. Full traceability throughout the plant is also a central feature.

Great strides in automation have already been made and further work should see automation projects rolled out into other areas, such as the automatic removal of carcass tongue, heart and lungs and another designed to automate the deboning of fore-ends. But, as the DMRI's Claus Hagdrup points out, there is a limit to how well machines can emulate the flexibility of humans. "In some cases these machines can improve yield, but must be compared with the skilled professional," says Hagdrup. "We can do it as well as the skilled worker, but not very much better."

Responding to changing market conditions Danish pig producers have doubled sales to Russia over the past year, as exports to Japan - another important export market - have fallen. "We have to be extremely fast at adapting to changing markets," says Danish Crown's Villemoes.

However, overall exports to Russia are expected to fall this year, according DMA researcher Karsten Flemin. Organic pig meat is another sector thatis becoming increasingly important to companies such as Danish Crown, which expects to double its output over the next few years.

Adding greater value to pork products is a central plank of Danish Crown's strategy, enabling it to distance itself to some degree form its farming roots. As part of this strategy, it plans to reduce the number of farmer delegates that advise on its policy, while bringing in new non-executive board skills. "We are moving into markets closer to the consumer," says Villemoes.

While much of Danish Crown's output has historically gone into food manufacture, in future it plans to increase its retail sales. However, Villemoes admits: "In the UK over the last year we have had a rough time with pressure from retailers. We've managed quite well there, although we have been affected by the competition."

According to Flemin, pig meat prices are expected to fall to an average of £0.77/kg (DKK 8.44/kg) this year compared with £0.84/kg (9.24DKK/kg) in 2006. "If you can't survive at this price, you can't survive in the long term," he says. Rasmussen adds: "The trend for payment per kilogramme of carcass will continue down."

Denmark strives to cut its production costs but, like the UK, which says the DMA has some of the highest costs in the world, it has problems competing on price alone with cheaper producers; hence the emphasis on quality and safety.

While competition from low cost pig producing Brazil has been recently hit by problems of foot and mouth disease, it will inevitably re-emerge as a cheap world player. And then there is the issue of the world's biggest pig producer, China, which currently consumes at home all of its huge 50Mt/year of pigmeat production.

A huge uncertainty surrounds what effect there would be on world trade should China start to export significant quantities. "China is the big unknown," says Rasmussen.

The fear is that China could start dumping higher quality cuts - those not on the shopping list of most Chinese consumers - on world markets. If this were to happen, the consequences for the Danes could be dire. But, with increasing prosperity in China, you never know, they might even develop a taste for a bit of Danissshhhhh sizzle rather than snouts, tails and trotters. FM

Danish pigmeat sector

No. of pig producers 8,300

No. of pigs/ year produced 25.8M (2Mt of pigmeat, value £1.66bn (DKK 18.1bn))

End market value £2.73bn (DKK 30bn)

No. of live exports 3.7M (many to Germany)

Exports 90% (value £2.35bn (DKK 25.8bn))

Printer friendly version

Email this article to a friend