15 January 1999

Big pig supply shake-up for Avonmore

AVONMORE Meats has announced a radical shake-up of its pig supply business.

The firm, which processed 720,000 pigs last year, is to cut supplier numbers to four, buying from them all its needs under a single contract from Feb 15.

The groups – BOCM Pauls, Dalgety Livestock Marketing, Meadow Valley Livestock and UPB Porcofram – will jointly negotiate a base price monthly.

It follows the shift by Malton Bacon, the countrys biggest pigmeat processor, away from a MLC price-related contract to a more spot-based system last year.

Closer links through the food chain – and with retailer Tesco – will bring more stability, says Avonmores Martin OKane. It should, he says, prevent a repeat of 1998 when the UK market slumped as supplies outstripped demand. "If we have learnt nothing from the current crisis it is a sad reflection on the industry."

It is good news for farmers, he claims, with monthly prices allowing them to take advantage of market upturns. The move to fewer, larger suppliers comes at a time when businesses are fighting for market share, with pig supplies expected to tighten later this year.

Suffolk farmer and consultant Peter Crichton says there are 150,000 fewer sows around than in 1998, and finished pig supplies could drop significantly from March.

Bargaining power

This shortage in numbers is likely to boost farmer prices and give sellers more bargaining power, reckons Mr Crichton. And competition could get a further boost, with the seven groups left out of the new deal continuing to supply other slaughterhouses. "Producers will be helped rather than hindered."

That view is echoed by NFU pig committee chairman, Graham England, who reckons the new set-up will bring benefits for its farmer suppliers. But he expresses concern for those suppliers who are no longer in the contract. "I have great sympathy for the seven companies who were supplying Avonmore and now have to market elsewhere in the current climate."

Midlands-based Avonmore Meats, meanwhile, plan to increase their weekly kill from 14,000 to 20,000 head, after a 20% annual increase in volume over the past three years. &#42