Pre-Christmas pig price rise in doubt

By Peter Crichton

CONTRACT sellers are being asked to book in their Christmas-period slots at abattoirs now, to cope with the extra numbers of pigs to be handled over the two short weeks during the holiday period.

Because of reduced killing periods in late December, contract pigs are normally pulled forwards, which will put more pigs on to an already weakened market.

At the same time, the spot buyers will have to absorb pigs from those Malton producers who did not sign up to the fixed 70p in September and find themselves looking for new homes in early December.

All these factors will conspire to hold down producer prices at a time when breeders had hoped for a late rally during the run-up to Christmas. Unless this occurs, the industry faces a very difficult couple of months at the end of the year, and many more will soon be forced to quit.

Although the MLC has calculated that there could be a shortfall of up to 31% in UK pig numbers next year, with plentiful supplies of cheap imports, it does not necessarily mean that producers will see their prices soar.

Predictions by industry leaders – such as Grenville Welsh, the British Pig Association boss, who announced “we will see 80p by Christmas” – now look to be misplaced, and many other analysts are now recalculating their figures.

For those producers forced to sell up, the asset value of their herds has collapsed when compared to year-end valuation figures.

Although Signet advises a September 1998 sow valuation figure of £109.46, cull prices stand at less than half of this, with the latest deadweight quotes of 35p converting to per-head values of no more than £45 for the average sow.

The negative equity suffered by many UK house-owners in the early 1990s is now becoming a feature of the pig industry, too. When December 1998 annual valuations are calculated, balance sheets are expected to show that some are technically insolvent.

• Peter Crichton is a Suffolk-based pig farmer offering independent valuation and consultancy services to the UK pig industry