Soaring grain prices mean there is a gap of between 20-25p/kg between pig production costs and farmgate selling prices. Retailers are being warned that unless prices improve, the pigs simply will not be there.
The National Pig Association (NPA) is calling for meetings with retailers to impress on them the effect of high costs of production – the most recent figures from BPEX Market Intelligence show a loss of £18/pig before accounting for the full effect of the most recent grain price hikes.
Achieving pig price rises of at least 20p/kg will be difficult, with consumers under pressure and retailers locked in price wars, making it increasingly difficult to see how sufficient production can be maintained, said the NPA.
The viability of pigmeat production in Britain and across the EU was causing increasing concern, said the NPA, with only 20% of pig producers having taken feed cover through to the end of the year, compared with the more usual 50%.
Grain prices have risen by up to £26/t in just three weeks on fears for the US maize crop, which is suffering prolonged searing heat at a critical point. Soya prices have also jumped, reaching more than £400/t last week
“There was a very brief period when the feed wheat price was at £140 back in October, but it is very difficult psychologically for pig-keepers to lock in at a loss, which is what many would have been doing,” said BPEX chairman Stewart Houston.
A briefing note including cost-price data is being prepared by BPEX to be sent by the NPA to Minister Jim Paice and to MPs. This will also form the main plank of the pig industry’s case in a new round of meetings with supermarkets which the NPA is calling for.
NFU Scotland pigs committee chairman, Phil Sleigh, predicted “a real scramble for pigs” when the partial stalls ban is introduced in January 2013. “The retailers should know that if they don’t act now, it won’t be our fault if prices go through the ceiling next year.”
In common with many, he sees the current rise in feed prices causing a significant number of continental producers to revisit their decision to stay in pigs post-January 2013.
The national breeding herd had dropped by about 8,000 sows in recent months, said NPA, with the gap between pig production costs and farmgate prices, worsening cashflow, insufficient funds for overdue reinvestment and key members of staff deciding to leave all seen as triggers for more producers to quit.