12 March 1999

Producer looks to build on direct supply market

MANY pig producers are struggling to keep units afloat because of continuing low prices and tough decisions have to be made. Suffolk-based outdoor producer-finisher Mark Hayward is no exception to this.

The 790-sow outdoor unit at Ashmoor Hall Farm, Wickham Market, was losing about £4500 a week when pig prices collapsed in August last year – the time farmers weekly first visited the unit. Although prices are recovering, all effort is now channelled into boosting income as debts mount.

"I dont believe were better off that other producers, apart from the fact weve got an arable enterprise keeping the unit going," says Mr Hayward. "Aside from that, we are all facing the same decisions."

For Mr Hayward the decision has been taken to seek new markets for finishers from his FABPigs and Freedom Foods registered unit. "Were failing to get the sort of premium Freedom Foods should attract for the extra hassle. As a result, we must look beyond the farm gate to find ways of clawing back that missing premium."

Talks with local buyers have begun to establish new outlets and this may be helped, ironically, by the demise of the local livestock market. Local butchers and retail trade are his top targets. "Its a risky business, but new sales will be based on spot prices which are already above contract prices. Our intention is to build up as much direct supply as possible," says Mr Hayward.

Hes not keen on break-even contracts being offered by some processors because he says theyve benefited from low prices and now could stop producers benefiting from higher prices. "Im sceptical about whos going to benefit. They had the advantage of low prices and just as theyre predicted to rise processors want to cap them."

On the production side theres little that can be improved. Costs are under scrutiny and feed costs have been renegotiated. Lower prices and better credit facilities have been agreed through a buying group in return for commitment to a six-month contract.

Elsewhere, Mr Hayward is reviewing other inputs. This extends to the arable enterprise run by his brother, Paul. "Paul is looking to cut input costs on the arable side to support the pig business. Fortunately, equipment was bought on a fleet deal so no major maintenance bills are expected," he says.

To ensure support from the bank, cashflows have been revised using a monthly improvement of 6p/kg from a base price of 60p/kg in January this year. "Support exists for us to look at new outlets, but its important the bank knows whats going on.

"Like all producers we cannot afford to sit back. Weve got to take this crisis head on," he says. Lack of action elsewhere has led to criticism, particularly of the MLC. "It failed to make a marketing opportunity of the stall and tether ban which was a travesty. It would be like opening the Millennium Dome on Jan 3 next year."

Returning to matters on-farm, he believes the first priority once prices pass break-even is to reduce borrowing. "This is surely a common goal for producers," he says.

THIS is the first of a new series following the changes being made by pig producers to survive the crisis. FARMERS WEEKLY will be returning to participating farms to give a monthly update looking at what aspects of the business are under scrutiny, what changes are being made, and whether it helps boost income.

LOOKINGAHEAD

&#8226 No premium for welfare.

&#8226 Direct sales main priority.

&#8226 Feed contracts renegotiated.

&#8226 Cashflows prepared for bank.