2 May 1997

END UNSTABLE PRICES

Closer links between pig buyers and sellers are needed to provide a more stable price base from which producers can improve investment planning.

Current agreements between the two are too loose and over-exposed to the influences of changing production levels.

This adds to the instability of the weekly spot price and underlies the price peaks and troughs associated with pig production.

The unpredictable price even causes professional economists to forecast prices incorrectly.

Against this backdrop investment planning – be it for maintaining or updating equipment to comply with welfare legislation – is tricky.

And these investments require the commitment of large amounts of capital which must be absorbed within a long-term investment strategy.

Planning these strategies would be easier given a more stable pricing structure based on long-term contracts which are highlighted in this supplement.

The onus is, therefore, on both buyers and sellers to investigate suitable contract types and establish closer links to preserve the livelihoods of all parties.

A smoother pig cycle would then enable producers to invest not just in new equipment but to make investments in new technology which could reap financial benefits