2 April 1999

British pig men hit by high cost of production

By Philip Clarke

BRITISH pig producers continue to suffer from a higher cost base than their competitors on the Continent, undermining their ability to cope with the current economic crisis.

A new report from the Meat and Livestock Commission* says the total cost of producing a kilo of pigmeat in Great Britain comes to 92p, compared with just 78p in Holland, 84p in Denmark, 87p in France and 88p in Ireland.

The report points to higher feed and labour charges as particular problems. "Labour costs are higher, principally due to the lower use of family labour. It is estimated family labour in Great Britain accounts for 35% to 40% of the total, whereas in Holland and Denmark it can account for up to 65%."

Continental producers also benefit from cheaper feed, it notes, due to the greater influence of producer co-operatives in this sector. For example, Dutch and Danish producers pay about 52p in feed for each kilo of pigmeat, compared with 65p in GB.

The lack of competitiveness is exacerbated by the fact other countries have overtaken GB in levels of physical performance, and carcass weights are also much higher on the continent. "It is estimated that production costs could be reduced by about 2p/kg for every 5kg increase in carcass weight," says the report, "though such a benefit would have to be balanced against any price adjustment for heavier carcass weights."

British pig producers have also had to bear the cost of early conversion of their buildings to loose housing systems, affecting about 40% of the pig herd. This has cost the industry about £214m, equivalent to £1 a pig.

Farm-gate prices are also the subject of larger deductions in GB, averaging £4.22 a pig, compared with £2.21 in Holland, £1.07 in France and less than £1 in Denmark. This puts GB producers at a 3p-5p/kg disadvantage.

The MLC estimates that a 10% drop in the £ against the k would reduce production costs by about 5p/kg.

The report also points to increasing environmental and welfare constraints in competing countries, notably Holland and Denmark.

But, while this may even things out in the EU, it will not help in the fight for global market share with the US, where average production costs are put at 75p/kg. The best 10% produce pigmeat for as little as 62p/kg. &#42

WHYTHEUKSUFFERS

&#8226 Expensive feed.

&#8226 Costly labour.

&#8226 Lower carcass weights.

&#8226 Loose housing costs.

&#8226 Price deductions.