Demand for bio-fuel and falling grain stocks is driving up feed costs for the EU-wide pig industry.
But UK producers who have an inferior FCR (Feed Conversion Ratio) and make less use of by-products may find that these feed price rises hit them harder than their EU mainland counterparts.
According to the EU Agricultural Directorate, feed costs could rise by up to 600% over the next 3 years.
Pig production to fall?
They also claim that by 2010 pork production could fall by one third as a result.
UK wheat production is forecast at 11 million tonnes against normal consumption of 10 million tonnes.
But the EU have dictated that bio-fuels in the future must supply over 10% of UK transport needs. This requires the UK crop to increase by 3 million tonnes more than currently grown.
As a result feed wheat supplies to the UK pig industry will be put under further pressure.
Currently UK feed wheat is being traded at ex farm prices of over £129/tonne compared with £63 two years ago.
Producers are currently operating barely above break even levels with the DAPP at 109.98p before the full effects of feed price rises are allowed for.
Compound feed prices are expected to increase between £25 – £30/tonne when existing contracts run out of time.
Pig finishers have calculated that these feed price rises need to be matched by an increase of up to 10p/kg deadweight to hit break even levels.
National Pig Association Chairman Stewart Houston has called on retailers to work with the industry to mitigate the impact of higher pig feed prices.
But without a significant increase in pig prices this autumn the UK herd, which now accounts for less than 4% of the EU total, may shrink further.