Pig producers could have saved themselves from being forced out of business if they had listened to advice on handling the burgeoning cost of feed, according to the Home-Grown Cereals Authority.

Speaking at the Meat and Livestock Commission‘s final Outlook conference in London this week, a frustrated Alastair Dickie, HGCA director of crop marketing, repeated his advice to producers to take advantage of the volatile wheat market in a bid to ease their raw material costs.

“I got up here last year and said the very same thing, and I haven’t met a single farmer who took my advice,” he told delegates.

“[As a result] many producers have been forced out of business and others are struggling more than they need to be.”

Surge in prices

Mr Dickie said last year’s surge in wheat prices had led to a 5.6% increase in plantings globally, taking the planted area to 222m ha (549m acres).

“But this isn’t enough to get excited about relaxing the wheat market. You need to look at raw material costs now.”

He said the issues of pig price and feed price needed to be managed separately as there was no correlation between the cost of raw materials and how much producers were paid for pig meat.

“The industry just isn’t important enough to influence the price of grain.

“You need more planning and to be more aggressive in commercial ideas to exploit volatility in the grain market.

“Volatility is seen as a demon but it can be a life source is you read it properly. When the opportunity is there you have to take it seriously.”

Mr Dickie said trading in options and analysing risk management were key actions pig producers should be taking (see box).

“Waiting to be hit by the market isn’t a plan,” he said. “The temptation is to be driven by markets, but you need to look at margins in the other way.

“In a situation where you are nervous about prices, you should be buying in raw materials and buying a protection in case the market goes down.

“I’m not saying it’s easy, but that’s the way it is. You’ve got to learn to cope with it.”

Mick Sloyan, BPEX chief executive, agreed that pig producers needed to look at buying feed as soon as they could.

“Going forward prices might come down, but they will still be in excess of £150/tonne.

“It’s no good hanging around for prices to go back to what they were – it won’t happen. You need to act now.”

Pig producer action plan

• Talk to your feed provider, ask if they can offer buyers fixing
  
• Monitor the £/€ rate against your pig price
  
• Talk to your bank
  
• Talk to your pig buyer, ask if they would like fixed-price forward contracts