Prospects of commodity feed markets: Prospective analysis of price differences of pig feed in the EU, USA and Brazil

Pig feed formulations depend on the local availability of raw materials. The comparison of grain and meal prices revealed a comparative advantage against the EU of $ 48 / t over 2000-2009 for the pig feed in the U.S. and $ 30 / t for Brazil, where corn and soybeans are common feedstuffs. FAPRI, USDA and OECD projection models were used as a source for nutrient composition and prices of raw materials. In a situation of market stability, without political or economic breakdown, differences in pig feed prices would be reduced by 2020. Four breakdown scenarios were applied to this baseline to assess the evolution of these differences based on assumptions of market liberalization, agricultural investments in the EU and the Black Sea, more environmental constraints and consumer demand and finally investments in transport infrastructures of Brazil. The EU would strengthen its competitiveness in the case of agricultural investments, assuming economic growth and some acceptance by society (GMOs). Market liberalization would increase the feed price convergence between countries. The worst situation for European pork productions would be a strengthening of environmental and public health concerns. The real cost of pig feed in 2020 would combine several of these assumptions and then the profitability of European pig production would depend on the consistency between agricultural, environmental and public health policies.