By Peter Crichton
FOR pig producers who have managed to survive the challenges of the past year, therre are signs the outlook is much better for 2001 than it was 12 months ago.
Disease, however, remains the major hurdle the industry has to clear in the year ahead.
Although the threat of Classical Swine Fever still hangs over the industry, PDNS and PMWS pose a much more widespread hazard.
On the price front, the year ended with the GB AESA at 103p, 38% higher than the equivalent figure a year ago.
The same pattern has been repeated throughout most of the major European pig producing countries.
In December the “Big Six” average was 66.5p deadweight and this has now risen to 84p over the year, a rise of 25%.
Weekly slaughter numbers in the UK have flagged up a dramatic decline in the size of the domestic herd.
The June UK pig census saw the number of sows and in-pig gilts fall to 709,000 head.
With the exception of Denmark the same downward shift has been seen in other major EU countries with Holland down by a massive 12%, Germany, Spain and France also showing more modest reductions.
The overall fall in the size of the European breeding herd is calculated by Signet at 3.6%.
The only expansion noted is in Denmark where the number of maiden gilts has increased by almost 5%.
The December 2000 weekly UK kill is estimated at 228,000 pigs, which shows a 12-month reduction of just over 20%.
Analysts have pointed to the fact that slaughter numbers during the first quarter of a new year are generally lower than they were for the previous quarter.
If this case is repeated in 2001, the UK kill could fall to about 200,000 pigs per week.
As a result of the decline in the number of UK finished pigs, the year has seen several abattoir closures and mergers.
Producers have been advised to look at the financial security of the outlets that they are currently dealing with as slaughtering margins become tighter.
Weaner prices have shown the most dramatic increase in value.
At the start of the year, the FARMERS WEEKLY 30kg weaner average stood at 18.61 per head, and this has doubled to 37.71.
Store-pig traders point to the rising problems of PDNS and PMWS, which have hit many weaner producers in the Eastern region very hard.
Mortality is reported to be between 20% and 30% in many cases with one or two exceptional instances where there has been up to 60% mortality for pigs in the 6-12-week-old range.
Vets have indicated that PDNS and PMWS are now becoming a problem beyond the Eastern region with herds in other parts of the country affected at varying levels.
Several of the major breeding pig companies have also reported that some of their breeding pig replacement supplies are contaminated with PCV2, the collective term for the virus.
Some vets are telling producers that if they are in a region where PDNS and PMWS are, they might be better advised to re-stock from positive rather than negative sources, in the same way that most breeding replacements are now Blue Ear positive.
The 08 August 2000 outbreak of Classical Swine Fever in East Anglia had a major impact on supplies throughout this region of the country.
About 200,000 pigs were either slaughtered on-farm or under the Welfare Scheme, and taken out of the food chain.
MAFF remains cautiously optimistic that the spate of CSF outbreaks is over but is maintaining a strong presence in the East Anglian region until it can be entirely sure that all danger of further outbreaks has passed.
One problem still troubling the industry is the source of the original outbreak which has yet to be clearly established.
During the course of the year, producers have seen feed prices fall, although following the BSE scare in Europe the price of soya has risen sharply.
A year ago feed wheat traded at 70.70/t and this has now fallen to 63.20/t, whereas soya has risen from 142/t to 190/t.
The launch of the Pig Industry Restructuring Scheme in early December will provide those pig breeders who have decided to leave the industry with a golden handshake of a share in up to 20 million of EU funding.
In return, they will have to decommission their pig facilities and agree to a 10-year ban on their holdings being used for any form of pig production.
It remains to be seen if the target figure for a 16% reduction in the capacity of the UK sow herd as at June 1998 will be met.
MAFF is reported to have received about 1000 requests for Outgoers Scheme application forms, 20% of which have been from Northern Ireland which has seen some of the greatest financial problems faced by the UK as a whole in the pig sector.
Hopes of firmer prices in 2001
LOOKING ahead to 2001, most traders feel that the reduction in pig numbers in the UK and to some extent in the EU will result in much firmer prices without some of the peaks and troughs seen in earlier years.
The BSE scare in Europe has encouraged better consumption levels for pig and poultry meat, and providing that no similar food safety issues concerning pig meat arise, demand should remain firm.
The strength of the Euro will also be a key factor and this has currently improved slightly in value to stand at about 62p.
City analysts are pointing to hopes of a further recovery in the value of this key currency in the year ahead.
Although it has been a buyers market for feed cereals, the very wet weather and delayed plantings for the 2001 crop may see UK prices harden in this sector coupled with much firmer soya prices due to the removal of meat and bonemeal from rations in many EU countries.
Further abattoir closures are forecast and Malton has already flagged up a reduction on their total kill of between 15,000 and 20,000 head which is down by over 60% of their capacity two years ago.
More abattoir vertical integration along the lines of the recent Dalehead Foods takeover of BQP is also forecast as processors look to “lock-in” supplies of a dwindling number of live pigs available.
On the retail front, innovative marketing should see demand for UK-produced pigmeat improving, although there is still concern within the industry of the failure to establish a universal UK “quality standard” mark.
Some supermarkets are displaying both the “Q” mark and the “Little Red Tractor”.
Retail analysts have suggested that one unified mark would be better than the present haphazard labelling systems being operated in different ways by some of the leading retailers.
To summarise, although in the past higher prices have generally led to herd expansion, the feeling in the UK is that even though some of the larger operators may step up herd sizes this will, to a great extent, be offset by smaller producers leaving the industry once and for all.
Many will be taking the opportunity to cash in their pigs and perhaps benefit from the Outgoers Scheme rather than face the risk of a further downturn two or three years hence.
For those who remain, the Ongoers Scheme may provide a vital cushion against borrowing costs in the year ahead.
- Peter Crichton is a Suffolk-based pig farmer offering independent valuation and consultancy services to the UK pig industry