12 June 1998

Union acts on Malton moves

NFU leaders are pressing pig processor Malton Foods to minimise the contract cutbacks and price reductions it announced last week.

Union president Ben Gill said the "extreme concern" of pig producers will be discussed in meetings over the next few weeks.

The decision to cut payments follows a profitable year at the Unigate subsidiary, though chief executive Sir Ross Buckland would not say how much money it made.

He stressed that a 17% fall in product prices during the year, mainly caused by consumers switching back to beef and lamb, pushed turnover down £53m to £653m. This years profits are also being squeezed, he added. With £100m of production going for export, the strength of sterling is much to blame.

Payments to the one-in-three pig producers in the UK who supply Malton Foods are currently based on the Adjusted Euro Specification Average pig price, formerly the All Average Pigs Price.

"The AAPP has served us well for over a decade. It has borne a relation to the spot market in the UK and prices of cuts from Europe.

"That is no longer the case. We are looking to buy at a more commercial rate, so we have given notice that we will establish a price that is more relative," said Sir Ross. The current AESA price is about 94p/kg, whereas the spot price is about 9p less.

Given Maltons reputation for adding value, Sir Ross believes pig producers would still receive a premium of sorts.

Mr Gill forecast that if other pig buyers maintain existing pricing any fall in values is unlikely to be excessive.

"Malton can only bid in that market, or they will lose suppliers," he said.

To minimise cutbacks, an "aggressive and positive" campaign to promote British pigmeat is vital, he added.

"This underlines the importance of our British Food promotion. British pigmeat is produced to the highest standards in the world as far as feedingstuffs and welfare is concerned."

&#8226 The newly-published German April pig census shows a near 4% rise in the number of breeding sows to 2.65m head. Total pig numbers rose 3.2% to 25.2m at April, prompting predictions of a 4% rise in production in the year to Mar 1999.

According to the Meat and Livestock Commission, the expansion reflects the bouyant profits made in Germany over the past two years.

The extra production is unlikely, however, to be exported. Germany is a net importer of pigmeat from the rest of the EU, says MLCs Mick Sloyan. The extra output will put pressure on prices and this, in turn, will stimulate consumption. "Theyre likely to eat it themselves," says Mr Sloyan.