Outlook 2026: Consolidation poses threats to pork sector

Are integrated supply chains good for the industry? And who actually controls the UK’s pig supply chain?

As we look towards a further year of uncertain financial stability in the pig sector, these are questions that need serious consideration, says Andersons partner Harry Batt.

See also: GB pig price falls

The National Pig Association has identified a consolidated group of producers, comprising 600-700 businesses, supplying more than 95% of the UK’s production, with most operating across multiple holdings.

At the other end of the scale, Defra data suggests that more than 87% of UK-registered pig holdings had fewer than 300 pig movements over a two-year period.

This would categorise these businesses as smallholdings or “hobby farmers”.

Meanwhile, abattoir numbers have continued to decline, with approximately just 200 still operational – a 92% reduction from the 1970s, when there were more than 2,500.

While 81 existing abattoirs take pigs, it is estimated that more than 90% of production is consolidated in just eight specialist facilities.

The ongoing consolidation of producers and processing facilities should be leading to greater economies of scale and efficiencies of production.

Average slaughter weight has increased by about 10kg, or 12%, over the past decade.

Likewise, litter sizes, mortality rates and feed conversion all show positive trends, as would be expected with fewer, more specialised operators.

Key processors

Is this model actually delivering for producers and processors financially?

It would be assumed that three or four key processors would achieve a much tighter grip on supply, which would in turn improve margins.

The theory does not appear to be the case in practice, with the processors converting less than 6% of turnover into profit.

For context, the target for a good farm business should be a profit conversion rate in excess of 15%.

To highlight this further, in the early 1990s, the producer was receiving 40-45% of the average retail price of pork sausages (a low-value cut). Today, that has fallen to below 32%.

Furthermore, inflation over this 35-year period would give a current producer price of 232p/kg, some 30p/kg above prices at the time of writing.

Has the integrated supply chain just increased the race to the bottom? Are the efficiencies achieved by keeping just enough air in the lifejackets for producers and processors alike?

This ongoing trend will continue to benefit consumers to the detriment of large, established and once-profitable businesses.

Greater risk

More consolidated supply chains also open the door to greater risk. Biosecurity is a constant threat to farms, with producers largely responsible for managing it.

A study by the National Audit Office warned that the UK isn’t ready for a serious animal disease outbreak.

Despite producers’ best biosecurity efforts, the sector is highly exposed by more vertical integration.

Fewer abattoirs, fewer hauliers and fewer producers can only mean any outbreak will pose a bigger risk to the supply chain.

It is unlikely that the industry will ever move away from the vertically integrated model, nor should it. However, the chain must take more responsibility for its own destiny.

Only three companies control the breeding lines; do we not need to be aware of the impact of reducing gene pools?

Efficiencies and financial demands have resulted in this situation, but does this not inadvertently make the system more fragile?

Food security

Government must take notice of its role in the food security debate.

Although that statement is likely to fall on deaf ears, Defra estimates that only 5% of live animal imports are physically checked against a target of 100%.

This greatly increases the chance of a disease outbreak.

Processors, most of whom own the farms and the pigs, need to be more astute in controlling and managing supply. The answer to long-term financial stability is sometimes the ability to say “no”.