Sainsbury’s offers £2.8m to counter pig production cost rise

Sainsbury’s has announced a £2.8m package to its pork suppliers to help cover increasing costs of production.

Producers supplying the retailer are able to align to a fixed price for a 12-week period from 13 March to 5 June for all pigs supplied during that window.

While no detail has been released for how much this equates to as a p/kg figure, it is understood the additional money will go straight to producers and is a significant improvement to help towards covering the cost of production.

Support has been made available both for producers on its aligned pork development group, and for Sainsbury’s producers who are not currently part of the model.

See also: Retailers keeping ‘unfair share’ of pig sale price – NFUS

Gavin Hodgson, Sainsbury’s head of agriculture, aquaculture and horticulture, said: “The pork sector has seen unprecedented cost challenges and we hope our further investment will provide our producers with security while maintaining high levels of animal health and welfare, as well as product quality and great value for our customers.”

Industry reaction

The support package has been welcomed by National Pig Association chief executive Zoe Davies.

“We understand why there is a focus by some retailers on trying to keep consumer prices down, but that must not be at the cost of the producers who supply their pork and are currently hanging on by a thread,” said Dr Davies.

“Retailers need to understand that if they lose their supply of British pork, they won’t get it back and their consumers will be missing out,” she said.

Retailer support

Morrisons announced a 30p/kg rise in its pig contribution price in March through its meat processing arm, Woodhead Bros, in response to rising costs of production.

Waitrose committed in February to support producers by paying a market-leading price.

Pig prices

The EU-spec standard pig price rose by 1.91p/kg on the previous week to 166.83p/kg in the week ending 30 April, according to the AHDB.

Prices are up by more than 16p/kg on month-earlier levels and are almost 20p/kg higher than the same week last year, having risen for the past 10 consecutive weeks.

Despite rising prices, producers are still frequently making a loss due to exceptionally high costs of production.

In April, average costs of production were estimated by the AHDB at about 203-216p/kg, with feed costs accounting for about 70% of this.

Carol Davis, AHDB lead analyst in farm economics, said: “As feed ingredient prices and compound feed prices start to trickle through, indications are that feed price increases alone are likely to add another 20p/kg onto the cost of producing a kg of pork.”