Market Monitor - Focus on the food industry - Denmark

市場監測

  • 丹麥
  • 食品

2014年12月01日

Payments in the Danish food sector remained unchanged and are, on average, 30 days.

Market performance at a glance

Denmark

  • Lower sales prices for pork affect meat industry and farmers
  • Payment terms remain at 30 days
  • Close monitoring of businesses affected by Russian food ban

The Danish agro-industrial sector accounts for nearly 25% of Danish commodity exports and altogether more than two thirds of Danish food production is exported. In recent years China has joined Germany and the UK as Denmark’s most important export markets and the industry’s progress in 2013 and 2014 has been driven mainly by demand from emerging markets. Production of meat - mainly pig meat - is one of the most important subsectors, with around 90% exported, and this subsector is generally resilient and generates positive results. The dairy industry accounts for more than 20% of all Danish agricultural exports. 2013 was a record year for the Danish dairy sales and 2014 is expected to be even better, despite the recent dip in the global raw milk price.

From spring 2014 Danish food exports to Russia were adversely affected by the Russian ban on importing pig meat and, from August, by a more comprehensive food ban. In 2013 Danish food exports to Russia accounted for around EUR 600 million (4% of total food exports), of which 80% - again mainly pig meat - is affected by the ban.

While the Danish food industry has been largely able to find new markets to compensate for this, it has had to settle for lower prices. The initial panic that followed the Russian ban seems to have subsided and the European market for pig meat has now stabilised, albeit at a lower price level, while the Asian markets remain quite positive. Overall, the Russian embargo, combined with declining prices of pig meat, milk and grain, is expected to dent the performance of most Danish food subsectors in the coming months.

In general, large Danish food businesses have performed well over the past couple of years, and this trend continued into early 2014. Smaller meat manufacturers and wholesalers, including catering companies, have also performed quite well. Among the most vulnerable smaller companies are exporters to Russia and Southern Europe and suppliers/sub-suppliers to hotels, restaurants and private canteens, including some wholesalers and small fruit retailers. In recent months Danish farmers, mainly pig and milk farmers, have been hit by declining sales prices following the Russian ban and, despite expected national and EU initiatives to support the sector, the situation is expected to be quite serious for many (highly indebted) farmers in 2015. 

On average, payments in the food sector take 30 days: unchanged since 2013. In the last six months we have seen a stable or marginally improving trend in insolvencies in the food manufacturing sector as well as in retail and wholesale, and our experience remains good with relatively few notifications of payment default.  Compared to other industries, we have received few credit insurance claims relating to the food sector and we expect this to remain the case in 2015.

For the time being, our underwriting approach remains positive across all subsectors. However, we are closely monitoring the consequences of the Russian ban on affected subsectors and businesses.

 

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