By Robert Harris
PIG producers will continue to lose money until at least the middle of next year, warns pig breeder PIC.
A global 4% rise in pigmeat supplies in the past year – mainly in exporting countries – is one factor driving prices down to the lowest levels since the second world war, says Jim Anderson, managing director of PIC Western Europe.
“UK pig producers are by far the worst hit. Indications are that we are not likely to get back to break-even before the middle of next year, and perhaps even next autumn.
“Sow numbers in the EU are at a record high. But a 4-5% reduction should start to swing things round.” The UK will take the brunt, reducing its sow count by 10-20%, slightly more than the Netherlands and France.
The PIC admits it is also in for a tough time. First-half operating profit is expected to fall to about £7 million this year, half last years figure. Reorganisation plans include 50 redundancies across Western Europe, and rationalisation of PIC-owned farms. Savings of £600,000 this year, and twice that next year, are expected.
Mick Sloyan, head of pig strategy at the Meat and Livestock Commission, believes the forecast is pessimistic. He says prices will return to break-even values of about 95p/kg by April or May.
“Dutch futures suggest a rise at the beginning of next year.” Prices are already rising in Denmark and France, to 67p and 73p/kg, respectively, he adds.
Farmer pressure on retailers and caterers to source more UK pigmeat should also secure a slight price premium, he suggests.
But recent events could mark a fall in prices, rather than the bottom of the usual cycle, says UK general manager, Stephen Dunstan. “Producers must think, what does it take to be the best in the world?”
Reducing costs of production to the 70p/kg level enjoyed by the best North American and Spanish producers, 20p/kg below the UK average, should be the aim, he says.
- For this and other stories, see Farmers Weekly, 13-19 November, 1998
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