Next year looks set to be more positive for the pig sector, offering greater price stability after almost two years of depressed prices and negative margins.
The shift in the pound/sterling exchange rate has narrowed the UK price premium compared with Continental supplies – allowing export growth into Europe.
In addition, exports outside the EU look set to improve, with the quantity exported to China in 2016 increasing by more than 10% (in volume terms) compared with the previous year.
“Chinese domestic pork growth is expected to be slow and as such the UK is in an excellent position to exploit this opportunity,” says Andersons consultant Lily Hiscock.
- Exports improving to EU and beyond
- Tightening UK supply should help prices
- UK productivity lags behind leading EU producers
- Consider forward buying feed to protect margins
Domestic prices in 2017 are expected to remain above those seen in early 2016, with increased exports contributing to a tightening of supply in the UK.
The UK pig sector still lags behind in productivity when compared with a number of EU producers, she says. “The current UK average for pigs finished a sow is about 26.2, compared with, for example, Denmark, which achieves 30.1.”
This is mainly due to fewer pigs born alive a litter. This affects cost of production. The UK average in 2015 was £1.27/kg deadweight, about 19p more than Denmark.
Planned UK investments in genetics, training and research should assist in improving UK productivity and therefore competitiveness on a global scale, says Ms Hiscock.
“It should be noted, however, when comparing productivity, that the UK has a larger-than-average outdoor pig herd, which generally has lower productivity than indoor herds.”
Although pig prices are expected to continue to improve, pig producers should be aware of changes in feed prices and consider booking feed forward, she advises.
The Co-op has announced it will source all of its fresh bacon from Britain. This, and further pledges anticipated by UK retailers, would have a positive effect on the sector, says Ms Hiscock.
Continued focus should be maintained on improved productivity through feed efficiency, management of costs and locking into margins through forward buying, she concludes.
Farmers Weekly says:
Rhian Price, deputy livestock editor
- Some optimism has returned, but currency will play a huge part in competitiveness again next year for both pig and feed prices
- Antibiotics use has been hitting the headlines, with the pig sector one of the largest users. However, progress is being made – sales of antibiotics in the sector fell 10% between 2014 and 2015
- Cull sows have almost doubled in value in a year – how will this affect decisions to stay or leave the sector?
The Farmers Weekly outlook articles are based on Andersons Outlook 2017. Copies of the full publication can be downloaded from the Andersons website by clicking on ‘Publications & Events’. Alternatively, request a printed copy by telephoning 01664 503 200.
Andersons is running a series of seminars in the spring looking at the prospects for UK agriculture in greater detail.
3 March – RAF Club, Piccadilly, London
7 March – Harper Adams University, Newport, Shropshire
8 March – Westmorland, J36 Auction Centre, Kendal
9 March – Carfraemill Lodge Hotel, Lauder, Berwickshire
10 March – York Racecourse, York, North Yorkshire
14 March – Yew Lodge Hotel, Kegworth Leicestershire
15 March – Perth Racecourse, Perth
17 March – Newmarket Racecourse, Newmarket, Suffolk
21 March – East of England Showground, Peterborough, Cambridgeshire
22 March – Salisbury Racecourse, Salisbury, Wiltshire
23 March – Exeter Racecourse, Exeter, Devon
24 March – Royal Agricultural University, Cirencester, Gloucestershire