Avonmore pig contract under pressure as farmers stay away

By Peter Crichton

THE newly launched Avonmore contract is failing to attract enough pigs, according to industry rumours.

The contract, which promised producers a fixed price for four weeks ahead, is apparently under pressure, with the 76.5p/kg fixed price unattractive to many pig farmers.

The big four groups who signed up to the Avonmore deal are finding it hard to attract the numbers needed to meet their contractual requirements.

They have been forced to buy the extra numbers needed on the spot market, as well as footing the bill for the differential, said to run into many thousands of pounds.

With the UK AESA for the week ending 27 February ending at 73.42p – compared with spot quotes of 85-90p/kg – contract-priced pig numbers will continue to dry up as cash-strapped producers sell to the highest bidders.

A further feature of the pig shortage hitting the home market is another surge in weaner prices, with reports of delivered and vaccinated 30kg stores hitting as high as 40 in some exceptional cases, and most trading between 32 and 35/head.

Cull sow values have also benefited from the lull in sow slaughterings, with prices moving up to close at 37p/kg liveweight, almost double the rock-bottom returns at the end of 1998.

EU pigmeat prices are still running at lower levels than in the UK, and trade sources fear this will put a brake on further rises in home producer prices.

At the same time, some EU countries will be developing their own production systems to produce pigs to comply with the higher UK specifications, and designed to compete on the home market.

But while the shortage in live pigs continues in the UK, there will be more competition for stock between abattoirs, according to pig industry analysts.

They expect home prices to strengthen throughout the rest of 1999, but point out that an average producer price of over 110p/kg will be necessary for at least 18 months to put many back on an even keel.

Weaner shortage makes prices rocket, FWi Markets, yesterday (04 March, 1999)

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