Pig-growing contracts offer business opportunities

Quality pig spaces are in demand, but what does a growing contract offer the farmer? Jez Fredenburgh finds out what’s involved.

Waitrose is expanding, and to keep up with demand its sole pigmeat supplier BQP is searching for 30,000 new pig places this year alone.

“There is a national shortage of Freedom Food straw-based pig-growing places right now,” says Mark Jagger, BQP’s growers manager. “We will look at any model, such as share farming, that gets someone started in the business.”

The picture is similar with other pig companies, says pig industry adviser Peter Crichton. Most companies are looking for more quality pig spaces to replace housing reaching the end of its life or which doesn’t meet Freedom Food standards.

“There is nobody in the pig industry who would turn down good pig housing – there is a strong, unsatisfied demand for high-quality spaces,” says Mr Crichton.

Pig-growing contracts generally provide a safe income stream, without the fluctuations of the pigmeat market and with little evidence of late payments. “It is a brilliant way into agriculture for young farmers,” says Mr Crichton, who reckons that a satisfying, long-term relationship is the result for about 80% of growers.

BQP is offering contributions of 15% of the cost of a new-build shed are being offered by BQP to encourage more pig spaces. Sixty BQP farmers have put up new builds in the past three years as a result – half of them new to the industry.

The minimum area needed for a BQP 500 pig space shed is 50x100ft. The labour requirement is one to two hours a day for 1,000 pigs, and with support from four vets and seven field staff, growers can enter the industry with little previous experience, says Mr Jagger.

Growers provide on-farm facilities including land, equipment, buildings, labour, straw and water, while BQP contributes the pigs, feed, vets and field-staff support. Waitrose specifications demand straw bedding, loading ramps, higher light levels and 10sq ft a pig. Farms must have tight biosecurity, a tidy yard and become Freedom Food certified.

New growers can enter with a five-year new-build contract, which sees BQP contribute 15% of the cost of a new-build shed paid out over the five years.

Between £175,000 and £220,000 is needed to build and equip a 1,000 pig-space shed to the company’s specifications. The final figure depends on how much building work the grower undertakes himself.

The main running costs are water, labour and about 120kg of straw a pig space a year, although muck-for-straw contracts can help reduce this cost. Pigs come in at 7kg and must achieve 110kg in 21 weeks. Bonuses are paid for achieving the weight range and feed conversion rate, while vaccination costs and 50% of pressure-washing costs are covered by BQP.

Growers are paid every four weeks on the number of pigs they have and are asked to budget for a mortality rate of 4%, though the company’s average is 3.5%. All farmers are paid the same for each pig before bonuses, and this amount has never been reduced.

For a 1,000-pig unit, growers expect a minimum turnover of £40,000/year.

Planning and building takes one to three years, so it can be four years before the first batch of pigs arrives. “It depends on your neighbours,” says Mr Jagger. “It can be hard as the public’s attitude to pig sheds is not always great. It’s a long process and we stick with growers through it.”

Once growers start with BQP, they tend to stay. The last farmer to leave did so about three years ago, and only 1% of BQP farmers have left in the past 10 years. Their units range from 500-4,000 pig spaces and are spread across many farm types and counties.

BQP is part of Dalehead Foods, owned by meat processor Tulip, and has 40 breeding farms supplying 330 finishing farms with a capacity of 300,000 pig places.

Pig-growing contract advice

Peter Crichton, a consultant in the pig industry, suggests the following advice:

  • Choose steel-framed buildings that can easily be converted to other farm uses
  • Existing buildings or cattle yards can be converted, but speak to pig companies first
  • A medium-sized mixed farm where a son/daughter needs to expand is ideal – straw can be used for the pigs, while pig muck is a valuable fertiliser or can be used in AD plants
  • When considering a contract, ask what period it will cover, who will provide what and what standards need to be met
  • Be confident you can access enough straw
  • Biosecurity demands that no pig shed should be built closer than one to two miles from another farm’s pigs
  • A successful pig-growing business relies on a steady supply of healthy pigs from the breeder, good vet and field-person support and a good relationship
  • The most common problems come from unhealthy pigs being supplied or an inconsistent flow of pigs

Case study: Tom Wright

    Increasingly, BQP growers are young people looking to enter farming or expand the family business. Tom Wright became a BQP grower with 1,500 pig spaces at 23, having bought 1ha from his parents.

    Mr Wright came from nine generations of farmers, but the family farm wasn’t big enough to support him. After working on a neighbouring farm that grew for BQP, Mr Wright considered becoming a contracted grower so he could farm in his own right.

    “The contract farming aspect was the first opportunity I could see to start in farming,” says Mr Wright, now 29. “Being paid monthly and knowing what I was going to earn in a year, within a couple of thousand pounds, appealed to me.”

    From his first meeting with BQP it took 18 months to plan and build his first two sheds, and get the first batch of pigs in. He designed the sheds himself, which were so successful that BQP uses them as standard for all of its new builds. To keep costs down, he built everything apart from the roofs.

    The BQP model made financial sense to him and his bank, says Mr Wright. “The bank manager was happy to lend to me because of BQP’s reputation.” However it was difficult to have the sheds valued high enough to get a big enough loan. He worked and saved, invested £30,000 of his savings and took out a £140,000 loan with his parents acting as guarantors for the first two years.

    “Building everything on my own and borrowing lots of money was very daunting.” But after three years, Mr Wright built a third shed and expanded to 2,000 pig spaces with a further loan. Overall he borrowed no more than £100/pig space. He remortgaged the sheds to pay them off in 13 years rather than seven, took on a house mortgage and built a home.

    BQP pays him 57p a pig a week before bonuses and shed payments. His annual turnover is £70,000 and his main running costs include about £7,000 of straw annually, £1,500 of insurance, shed loan repayments of £1,800/month, and a pigman employed for three hours, five days a week. A borehole keeps water costs down.

    Looking after the pigs takes about three hours a day, allowing him to earn further income from building and fitting pig sheds for other farmers.

    Good organisation, money management and attention to detail are needed. “Also consider whether you can work seven days a week and have just a few days off a year,” he says. “It’s allowed me to create a stable business and have confidence to expand and look to the future.”