6 August 1999

Price cut hits pig producers

By Robert Harris

PIG producers are reeling from shock price cuts announced by several big buyers just when the industry appeared to be recovering from the worst crisis for decades.

The cuts have raised fears that more producers will quit, though the Meat and Livestock Commission remains upbeat, forecasting a marked price climb towards the end of the year.

Malton Bacon, which processes 25-30% of UK pigmeat, cut its price by 3p/kg last Friday to 83p/kg.

Dalehead confirmed a price cut of 2p to 83p/kg for a top grade pig.

"We are taking less money for legs at a time that should be good for ham. And there is plenty of poultry and beef about, and a lot of imports," says Daleheads livestock buying manager, Doug Denny. "It is extremely difficult to make a margin in the manufacturing sector, and impossible in the export sector. Hopefully, by September, a bit of normality will return to the market."

Glanbia has confirmed a price cut of 3.5p/kg, and Cranswick a 2p/kg reduction.

The hot weather, a stronger £ and price promotions are combining to push prices down, says the MLCs Mick Sloyan. "Come the autumn when the schools go back demand should pick up – records show the volume shift can be quite substantial.

"But we had got to a point where there was some stability in the market. This will severely knock fragile confidence."

Graham England, NFU pig committee chairman, fears the news marks a renewed crisis for many producers. "Prices are a long way from making a profit. A lot of people have got financial backers, the last thing they wanted was this."

Given the shortage of pigs being slaughtered in this country to the welfare specifications required, the price should be climbing, he adds.

"This may be the straw that has broken the camels back," says Ian Campbell of the British Pig Industry Support Group. "It is impossible to overstate how serious the situation is."

But the MLC still expects a significant upturn before the end of the year. "By December, pig prices could average 107-113p/kg deadweight, 40p more than last year," says the latest Market Outlook report.

"From Jan 2000, prices are forecast to rise monthly by 1-2p, reflecting the downturn in EU supplies as well as lower domestic production." That could mean an average of 117-123p/kg next June, a rise of 35p on the year.

Over the next few months, plentiful EU supplies will overhang the European market, though a marked rise in prices across the Channel suggests production may have peaked, says the MLC. UK prices for top quality pigs are 2% above the EU average, compared with 20% two months ago (see graph).

That should reduce the incentive to import, despite a tightening in domestic output. Forecast kill this year is 13.87m pigs, compared with 15.68m in 1998. "A further marked fall of 17% is forecast for the first half of 2000," says the report. &#42

Brown seeks views

AGRICULTURE minister, Nick Brown, has launched a wide-ranging consultation, seeking industry views on the approach to be taken in the world trade talks which get under way in Seattle in November.

The document warns there will be real pressure on the EU to change its "blue box" payments, such as area aid and livestock premia, either by reducing them over time, or by de-coupling them from production.

Further reductions in import tariffs are also foreseen, and any less protection for pigmeat, sheepmeat and poultry will lead to real price pressure from imports in these markets.

As for export subsidies, the consultation document says the limits imposed by the last GATT round are already starting to bite, leading to an accumulation of stocks for several commodities. Pressure to eliminate them will increase.

The NFU has yet to finalise its response to the consultation. But its priorities will be to achieve some kind of trade protection for countries operating with higher animal welfare standards, and to maintain the maximum flexibility in the way subsidy cuts are allocated between sectors.

Protecting the blue box payments is also high on its list. "We always doubted the sense of this approach, but since Agenda 2000 has enshrined the concept, we are forced to defend it," says director of policy, Martin Haworth. &#42

Soaring soya lifts OSR

OILSEED rape growers should keep a close eye on the market as the US soya bean crop enters its critical pod-filling stage this month, says the Home Grown Cereals Authority.

Hot, dry weather in the Midwest sent Chicago prices soaring on Monday and Tuesday as speculators rushed to buy. Soya bean prices gained 10% in the two days. This helped UK ex-farm oilseed rape prices climb to £101.50/t, compared with Fridays sub-£100 level.

The US market is proving especially jumpy at the moment – last month prices fell to historic lows. &#42

Imports lose shelf space to assured UK venison

QUALITY assured British farmed venison is replacing cheaper imports on some supermarket shelves.

South Yorkshire producer/ wholesaler Dick Elmhirst, a partner in the Northern Venison Co Ltd, told would-be deer farmers attending an open day in Staffs that the venison market was moving into an exciting new phase.

He said the British Deer Farming Associations quality assurance scheme was providing the reassurances supermarkets and consumers wanted about welfare and production methods.

"We cannot compete with imports from New Zealand and Spain on price, but the assurance scheme has given us a wonderful marketing opportunity," said Mr Elmhirst, of Round Green Farm, Worsbrough. "Producers are getting lower returns than in the past and some people are getting out. But prospects are good for efficient new farmers as long as their numbers grow with the market."

John Fletcher, BDFA chairman, said years of hard work had succeeded in differentiating farmed and wild venison and this was reflected in the retail price. Now consumers and those who supplied them had to be convinced that the quality assured British product was special and worthy of a premium price.

"The quality assurance scheme is something we can hang our hats on," claimed Dr Fletcher. "We have to all work together to get the message across that we have an uniquely lean, low cholesterol healthy meat produced on farms with very high welfare standards." The shortage of farmed venison in the EU also created export opportunities. But potential producers were warned that there were worries about the impact of rising veterinary and meat hygiene service charges on low throughput abattoirs, and the collapse of the skin market. &#42