Producers urged to contact banks as pig prices plummet

Plunging farmgate pig prices have prompted the National Pig Association (NPA) to urge producers to speak to their bankers about potential overdraft facilities.

The warning comes as farmgate prices have fallen to their lowest level for eight years, with little prospect of much improvement for the rest of the year.

The NPA says most pig-keepers will be operating in the red for some or all of this year as the European pig cycle reaches its lowest point in more than half a decade, driven by higher output and compounded by Russia’s embargo on European Union pigmeat.

See also: Pig prices slide further, leaving producers facing big losses

Latest data from the Agriculture and Horticulture Development Board (AHDB) shows the current Standard Pig Price had fallen in the week ending 9 January by nearly 3p to 119.09p/kg. British producers currently need 139p/kg deadweight to cover all costs, including reinvestment.

Martin Doherty, AHDB senior analyst, said the downward trend in prices had been taking place over the past two months: “This is the eighth consecutive week prices have fallen and represents the largest weekly drop in prices in well over a decade.”

Richard Longthorp, NPA vice-chairman, urged producers to contact their bank manager now rather than wait until their cashflows were under serious pressure.

“Some producers may not be aware how much banking culture has changed since they last needed to renegotiate overdraft arrangements, or apply for a term-loan.

“Local managers have far less freedom and flexibility and consequently putting new arrangements in place can now be a lengthy process, involving policy-makers further up the banking chain.”

British producers are still better placed than their European colleagues, as British pork attracts a 20-30p/kg premium due to our higher welfare husbandry and the strength of sterling against the euro.

The worsening situation for producers prompted NPA chief executive Zoe Davies to urge retailers to continue to source British pork. Seven supermarkets – Aldi, Co-op, Lidl, M&S, Morrisons, Sainsbury’s and Waitrose – source 100% British fresh pork and are classed by the NPA as “hundred-percenters”.

Dr Davies said: “We’d like to remind all retailers that British pig producers have a world-wide reputation for their high welfare. For instance, most continental pig producers still confine sows in steel gestation crates or “stalls” for part of the time, whereas they have been outlawed on British farms for 16 years.”

NPA chair Richard Lister added: “Producing high-welfare pigs outdoors or on straw carries a significant cost disadvantage and retailers must be mindful not to kill their golden goose.

“If they do, they will have let down their customers, who continue to demonstrate they want reasonably priced high-welfare, quality-assured British pork.”